A NEW KIND OF
INDUSTRIAL COMPANY
GE 2014
ANNUAL REPORT
GE’s mission is
to invent the
next industrial
era, to build,
move, power
and cure the
world.
GE imagines things others don’t,
builds things others can’t and delivers
outcomes that make the world work
better. GE brings together the physical
and digital worlds in ways no other
company can. In its labs and factories
and on the ground with customers,
GE is inventing the next industrial era to
move, power, build and cure the world.
On the cover:
Christie Drabic, Richard Simpson, Foday Bayon (seated in
locomotive) and Dennis Peters, GE Transportation
GE EXECUTIVE TEAM
Back row
(left to right):
JOHN G. RICE
Vice Chairman and
CEO, Global Growth
Organization
MARK M. LITTLE
Senior Vice
President and Chief
Technology Offi cer
JEFFREY R. IMMELT
Chairman of the
Board and Chief
Executive Offi cer
DANIEL C.
HEINTZELMAN
Vice Chairman,
Enterprise Risk
and Operations
KEITH S. SHERIN
Vice Chairman,
GE, and Chairman
and Chief Executive
Offi cer, GE Capital
Front row
(left to right):
JAMIE S. MILLER
Senior Vice President
and Chief
Information Offi cer
BRACKETT B.
DENNISTON III
Senior Vice President
and General Counsel
SUSAN P. PETERS
Senior Vice
President,
Human Resources
BETH COMSTOCK
Senior Vice President
and Chief
Marketing Offi cer
JEFFREY S.
BORNSTEIN
Senior Vice President
and Chief
Financial Offi cer
2014 PERFORMANCE
2015 GOALS
2014 GOALS
2014 RESULTS
Grow Industrial segments
Organic revenue growth
Margin expansion
10%
4%–7%
+
Disciplined/balanced
capital allocation
GE CFOA
Buyback + dividend
Dispositions
GE Capital
GE Capital earnings
GECC dividend
10%
7%
50bps
$15.2B
$10.8B
$14B–$17B
$3.0B
$4.7B announced
~$6.7B
$4B
$7B
$3B
Key Transactions (announced)
Alstom Power & Grid | Synchrony IPO | Appliances disposition
1
2
3
4
Industrial Operating EPS: $1.10–$1.20
• Double-digit EPS growth
• Margin expansion
GE Capital Operating EPS: ~$0.60
• EPS could be lower if ENI reduced faster
than expected
Free Cash Flow + Dispositions: $12B–$15B
Cash Returned to Investors: $10B–$30B
• Dividend + Synchrony split-off
GE 2014 ANNUAL REPORT 1
LETTER TO SHAREOWNERS
A New Kind of Industrial Company
Companies and leadership teams go through cycles.
Sometimes companies play it safe, defend the status quo
or manage momentum. Not GE. We have the ambition
to lead the next generation of industrial progress. So we
have been profoundly changing our company.
We have reshaped the portfolio from a broad conglomerate
to a more focused infrastructure leader and took important
steps in that pivot last year. We invested in enterprise
capability that allows GE to win in a volatile world. We lead
the merger of machines and analytics through the Industrial
Internet to drive new levels of productivity. We positioned
our businesses to achieve superior customer outcomes.
And, we ran the Company in a simpler, faster and more
accountable way. We have rebuilt GE in a volatile economy,
one that favors only the most competitive.
>
%
%
CAPITAL
INDUSTRIAL
GE STRATEGY
Portfolio goal for 2016
The world’s best infrastructure
company, with a valuable
specialty fi nance business
2 GE 2014 ANNUAL REPORT
LETTER TO SHAREOWNERS
We are creating a more valuable GE for you.
From 2014 to 2016, we are focused on
delivering an important fi nancial pivot. This
includes: growing EPS each year; achieving
75% of our earnings from industrial busi-
nesses; returning $50 billion to investors;
and growing margins and returns. In 2014,
our share performance trailed S&P 500
returns; over the past fi ve years, our total
returns grew by 96%. And, we are convinced
that this pivot will deliver a much higher
valuation over time.
Today, we offer you consistent growth in
a volatile world, with a strong dividend
yield. Our businesses are performing well.
We have a foundation of broad and deep
competitive advantage. Our best days are
ahead of us, and we are determined to
deliver for you.
A Year of Purposeful Portfolio Moves
In 2014 we continued to reshape the
Company.
In May, we announced an agreement for
the acquisition of Alstom’s Power & Grid busi-
ness, the largest in GE’s history. This highly
strategic investment brings complementary
products and services in power and greatly
strengthens GE’s position in the grid sector.
Alstom will benefi t from GE’s strength in
technology, service and in growth markets.
In July, we began the spinoff of Synchrony
Financial, our Retail Finance business. GE
still owns 85% of this new company, cur-
rently valued at $26 billion. By the end of
2015, we expect to spin this company to
GE investors in a capital-effi cient exchange
for about 8% of our shares outstanding.
In September, we announced the sale of
our Appliances business to Electrolux for
$3.3 billion, a good price which will generate
a pretax gain of more than $1 billion. Despite
our 100-year history in appliances, the
business did not fi t our core strengths, nor
was our competitive position favorable.
We believe that the capital can best be
deployed elsewhere.1
These portfolio moves cap a decade where
we repositioned GE as a more focused,
high-value industrial company. During this
time, we have completed more than
$100 billion of acquisitions and disposi-
tions. This includes major investments to
strengthen our infrastructure portfolio,
substantially reducing fi nancial services
and selling businesses where we lacked
competitive advantage. Going forward, GE
is built on businesses that fi t our strength
and purpose.
GE remains unique in the sense of combining
industrial strength with a signifi cant fi nan-
cial services capability. To be clear, GE is
an industrial company fi rst and foremost.
GE Capital must enhance our industrial
competitiveness, not detract from it. We
see a signifi cant advantage in our ability
to bring fi nancial solutions to industries
like aviation, energy and healthcare. But
make no mistake, the ultimate size of GE
Capital will be based on competitiveness,
returns and the impact of regulation on
the entire company.
The result of these moves is a strong, multi-
business industrial company, and proudly
so. Each of our businesses is a leader in
their industries. Our diversity gives GE the
fi nancial strength to capitalize on cycles
OUR STRATEGIC CHOICES
1. The Alstom, Synchrony and Appliances transactions are each subject to regulatory approval.
GE 2014 ANNUAL REPORT 3
HA-TURBINE
The largest, most fuel-effi cient gas turbine in the world, which
can save our customers millions of dollars every year on fuel
costs. Using a FastWorks approach, the GE Power & Water team
launched the turbine in just under two years, bringing
it to market in about half the time traditionally required.
>950,000
POUNDS
UP TO
510 MW
OF ELECTRICITY
GENERATED
OPERATES
OVER
2900˚F
3,000
SENSORS
OVER
61%
EFFICIENT
ADVANCED MANUFACTURING IMPACT
• Improves turbine performance
• Boosts fuel range and effi ciency
• Increases speed to market
>$10M
PER UNIT IN
ANNUAL FUEL
SAVINGS1
1. Compared to today’s F-class and fuel cost of $10/mmbtu.
4 GE 2014 ANNUAL REPORT
LETTER TO SHAREOWNERS
and uncertainty. And, we generate incremen-
tal earnings through our shared capabilities,
harnessing the value of collaboration.
Building Valuable Businesses
GE leads in power, healthcare, aviation, water,
transportation, and oil & gas—the infrastruc-
ture markets that move, power, cure and build
the world. We compete in infrastructure
markets because they are big, growing and
essential for global economic progress.
We estimate that more than $70 trillion will
be invested in infrastructure by 2030.
Leadership in infrastructure requires breadth
and depth. This is how we win.
We innovate at scale. In 2014, we launched
two products that will generate $100 billion
of revenue over their lives. The CFM LEAPTM jet
BLADE TIPS
MOVE AT
1,200
MPH
HA-TURBINE TEAM
The HA-Turbine team has produced the world’s
largest and most effi cient H-Class turbine.
Back row (left to right): Jim Sutton, John Lammas and Brenda
Reynolds. Middle row (left to right): Jim Suciu, Scott Strazik and Jatila
Ranasinghe. In front (left to right): Monte Atwell and Vic Abate.
engine will power the next generation of
narrow-body aircraft and is 15% more
fuel-effi cient than the engine it replaces. Since
launch, we have captured 79% market share,
and LEAP is the fastest-growing engine in our
history. Similarly, the H turbine is a technologi-
cal marvel—the largest, most fuel-effi cient gas
turbine in the world—and will save our cus-
tomers $8 billion per year on fuel. It is on pace
to be one of our most successful gas turbine
launches in history.
We deliver customer outcomes. GE is the
only company positioned to deliver locomotives
that meet new EPA standards in 2015. This
machine is a modern miracle. The Tier 4 loco-
motive’s emissions are 76% lower in nitrogen
oxide with 85% fewer particulates than our
engines from 10 years ago. We invested ahead
of demand, fi nishing our product to be ready for
2015 deliveries. As a result, GE was ready and
our competition was not, allowing us to capture
the majority of the market, shipping more than
2,000 locomotives over the next two years.
We solve global problems. GE is the largest
industrial multinational, with about $80 billion
of revenue outside the U.S. This allows us to
execute projects that others can’t. In Ghana,
GE will bring 1,500 MW of electricity to a
GE 2014 ANNUAL REPORT 5
LETTER TO SHAREOWNERS
power-starved country over the next
few years by linking gas exploration, project
fi nance and power generation. In 2015,
Ghana will join 22 other countries where
GE sells at least $1 billion of products
and services.
We are deep. The markets where we com-
pete have technical risk. As a result, deep
domain expertise is required. In addition,
achieving low cost requires capturing supply
chain value. GE has decades of experience
that is necessary to develop complex techni-
cal systems and build customer trust.
We constantly improve. The healthcare
industry is 10% of global GDP and going
through change. It is an area where we’ve
been repositioning our business to succeed
in a market that is demanding more tech-
nology, more fl exibility and more tailored
solutions. We are confi dent that all the inno-
vations we are developing—from portable
diagnostic tools to analytical offerings and
next-gen imaging—are going to be critical
growth drivers for the future.
We expand our capability. Markets are
constantly in motion. And, we must pivot to
stay in the lead. Over the past 10 years,
we have invested $20 billion to establish
positions in businesses such as Life Sciences,
Water, Aviation Systems and Renewable
Energy. In Life Sciences, GE has a leadership
position in bioprocess manufacturing and
diagnostics for drug discovery. In Water, we
are a leader in industrial reuse; in 2014, we
were rated the industry’s most innovative
company. In Aviation Systems, GE captured
the valuable Common Core Avionics Systems
for the new Boeing 777, establishing us as
a tier one avionics company.
We create value through cycles. Our
fi nancial strength allows GE to invest when
others walk away. For instance, Europe is
a big economy, but it’s stuck in neutral, and
EU consensus and governance are proving
challenging. But in Europe, we can develop
infrastructure innovation for global markets.
We export $15 billion from that region. We
see capability in Europe and will invest there
today for long-term benefi t.
We innovate with new business models. Our
customers want more fl exibility, converting
capital investments to operating expenses.
We can apply our expertise in GE Capital to
enhance the value of our industrial offer-
ings. By packaging fi nancing with high-tech
products, we can deliver customer value
in markets like healthcare, oil and gas and
distributed power.
Since becoming CEO, I have seen cycles.
In each case, GE improved its share. We
experienced strong headwinds at the end
of the U.S. power bubble in 2002. But, in
subsequent years, we made operational
improvement, and broadened our reach.
We invested in renewable energy and
distributed power. Today, our business is
bigger and stronger. Most memorably,
6 GE 2014 ANNUAL REPORT
our Aviation business experienced signifi -
cant downdrafts after the 9/11 tragedy,
SARS and fi nancial crisis. But, we made
billions in investment decisions at the bot-
tom of the cycle that today you know as
the GEnx, LEAP and GE9X engines. We have
$134 billion in backlog and expanding stra-
tegic leadership within the entire sector.
In down years, other businesses funded
Power and Aviation competitiveness.
Yes, today, we are facing a 50% drop in
the price of oil, and the industry is in
turmoil. But a growing population creates
long-term resource demand and, over
time, prices will recover. We view this
cycle as an opportunity. GE plans to be
a stable partner to our oil and gas custom-
ers during good times and bad; and a
very tough competitor. Similar to Aviation
cycles, we will offer solutions to our cus-
tomers’ effi ciency challenges. The oil and
gas industry should be able to compete
at current oil pricing. GE will lead.
We compete. Each of our businesses lead
in their industries. Each has the potential
for high margins and returns. Each has
suffi cient scale and capability to deliver for
customers and capitalize on growth themes.
Enterprise Strength: The GE Store
We drive enterprise advantages that benefi t
the entire company, through what we call
the “GE Store.” It means that every business
in GE can share and access the same tech-
nology, markets, structure and intellect. The
value of the GE Store is captured by faster
GE WATER TEAM
GE Water & Process Technologies has posi-
tioned itself as an industry leader for water
treatment and reuse across all main industrial
verticals. Over the last four years, GE’s Water
business has grown revenues by $400 million,
increased profi t margins more than 4x, and
delivered nearly $700 million in cash. The unit
has also reduced its SG&A costs by 10% while
improving on-time delivery to its customers.
GE Water was named Water Company of
the Year 2014 by Global Water Intelligence,
Supplier of the Year by multiple customers,
and is the preferred provider for tough-to-
treat water solutions.
In back (left to right): Bart Reekmans, Kevin
Cassidy, John Kochavatr, Nancy White, Yuvbir
Singh, Brian Davies, Patricia Garofalo, Mauro Cruz
and Ralph Exton. In front (left to right): Ashim
Gupta, Deborah Lloyd, Jon Freedman, Heiner
Markhoff and David Wu.
HOW WE POWER THE WORLD WITH INNOVATION
MAJOR PRODUCT LAUNCHES IN 2014
79%
market share
to date
LEAP1 ENGINE
• Unique technology developments
in additive manufacturing and
advanced materials
• Breakthrough pressure ratio
10
orders
globally in
2014
SIGNA PET/MR SCANNER
• 3x more sensitive than previous
generation of PET scanners
• Proprietary detector technology
1. LEAP is a trademark of CFM International, a 50-50
joint venture between Snecma (Safran) and GE.
1,355
orders in
2014
TIER 4
LOCOMOTIVE
• First freight locomotive to meet the EPA’s
Tier 4 emissions standard in North America
• 70% reduction in emissions (estimated)
compared to GE’s Tier 3 locomotive
HA-TURBINE
15 units
in backlog
+30 units
technically
selected
• World’s largest, most
effi cient gas turbine
• Generates power
equivalent to >750,000
homes, in combined cycle
Working with
BP and Maersk
Drilling on their
joint Project
20K™ Rigs design
program
20K BLOWOUT
PREVENTER
• The oil and gas industry’s
fi rst 20,000-psi rated
deepwater drilling system
• Reliable and durable
in ultra-deepwater,
at temperatures up
to 350°F
GE 2014 ANNUAL REPORT 7
19
3-D PRINTED
FUEL NOZZLES
DESIGNED TO
STAY ON-WING
8–10 YEARS
BEFORE FIRST
MAJOR OVERHAUL
CAN SAVE AIRLINES
$1.2M
A YEAR IN FUEL COSTS
PER PLANE
MORE THAN
$100B
IN ORDERS
(AT LIST PRICE)
PARTS MADE FROM
CERAMIC-MATRIX
COMPOSITES, WITH
20%
HIGHER TEMPERATURE
CAPABILITY THAN
METAL
LEAP1 ENGINE
The LEAP will power the next
generation of narrow-body aircraft,
and is 15% more fuel-effi cient than
the engine it replaces.
ADVANCED MANUFACTURING IMPACT
• Improves part durability
• Decreases engine weight
• Increases fuel effi ciency
1. LEAP is a trademark of CFM International, a 50-50 joint venture between Snecma (Safran) and GE.
8 GE 2014 ANNUAL REPORT
LETTER TO SHAREOWNERS
growth at higher margins; it makes the totality
of GE more competitive than the parts.
No other company has the ability to transfer
intellect and technology as GE can through the
Store. We take alternators from our aircraft
engines, designed to pass rigorous FAA certifi -
cation, and use them to improve the motors for
pumping oil from the ground. We use imaging
technology from healthcare equipment to
inspect oil pipelines. And we bring the compos-
ite materials from our aircraft engines to our
MRI equipment, to reduce weight and enhance
image quality.
All of our businesses can shop at the GE
Store, and it lets us continue to win in several
crucial areas:
GE wins with technology. Our Global Research
Centers let us develop common technology
that we can push across the Company’s busi-
nesses. For instance, we are currently making
substantial investments in advanced manufac-
turing. We are developing a common approach
to materials and additive manufacturing. We
expect to signifi cantly increase the number of
our parts manufactured through additive pro-
cesses by 2020 with advancements in all of our
businesses. The GE Store will allow GE to achieve
generational leadership in manufacturing.
GE wins in growth markets. GE has close to
$50 billion of orders in growth markets, up
9% in 2014. And, with $21 billion of exports,
we lead economic development around
the world. The source of our strength is our
Global Growth Organization. Winning globally
requires scale to build new positions in growth
markets with the speed to solve local needs.
GE has built a $6 billion position in Africa
over the last decade, virtually from scratch.
We have built factories, training centers and
partnerships required for long-term growth.
At the same time, in markets like India, we can
deliver customized healthcare offerings in
rural settings. We take the healthcare products
we develop in India to other value markets in
China and Latin America.
GE wins with services. Our service orders were
nearly $50 billion in 2014, up 10%. We ended
the year with about $189 billion in long-term
service agreements. Our installed base is
valuable for our customers with a replace-
ment value of nearly $2 trillion. GE’s integrated
strength is in our Service Council. Here, our
top service leaders can utilize inspection
technology from Healthcare and apply it to
condition-based monitoring in Power; or use
repair technology from Aviation to improve
productivity in Transportation; or use data and
analytics to reduce customer downtime.
CULTURE OF SIMPLIFICATION
Integrated Culture Change
Running GE differently…fewer things better…
most decisions distributed…small headquarters &
functions…respect domain
Combining FastWorks with Lean, Six Sigma…
democratized; broad competitive intensity;
mistakes & pivots a part of good management
Seamless market alignment globally;
more horizontal solutions for customers…
only value winning
Smartest & most effi cient company
in the world…new talent base bringing
new skill set
GE 2014 ANNUAL REPORT 9
LETTER TO SHAREOWNERS
The GE Beliefs drive the performance of the Company
and the actions of our people.
CUSTOMERS
DETERMINE
OUR SUCCESS
STAY
LEAN TO
GO FAST
LEARN &
ADAPT
TO WIN
EMPOWER &
INSPIRE EACH
OTHER
DELIVER
RESULTS IN AN
UNCERTAIN
WORLD
GE has a lean structure. Our administrative
cost is heading toward 12% of sales, below
most of our peers. We run the Company
with small headquarters, common processes
and shared services. Through our Global
Operations, we aim to move 65% of our
processes into shared services at world-
class costs. A key part of our effi ciency
is a common and fl exible IT backbone. The
GE Store drives low cost.
We develop leaders. The cultural backbone
for the GE Store remains our leadership
institute at Crotonville. We invest $1 billion
in learning and development each year, and
we train 40,000 employees in Crotonville
courses each year. Around the world, we
offer “capability building” to countries where
we invest, as an additional benefi t to a
“GE job.” We train customer executives,
invest in schools, develop small business
and bring higher standards. This unique
cultural edge allows us to beat global com-
petitors far from home.
as well. Alstom has a similar customer base,
but different technologies; and we are
making the investment at the right point in
the cycle. The synergies are straightforward
and within our capability to execute. Just
by bringing the Alstom businesses to GE’s
operating standards, we will create billions
of dollars in value. Between GE and Alstom,
there are more than $1 billion of sourcing
opportunities on components one of us
currently manufactures. GE can add global
service, project fi nance and technology;
all from the GE Store.
Big Iron + Big Data = Big Outcomes
The most important addition to the GE Store
remains our expertise in building the con-
nective tissue of 21st century infrastructure.
Today, GE is leading the way toward an
age of brilliant machines that can harness
reams of data to deliver transformative
progress for people and businesses around
the world. This is the most important initia-
tive I have led at GE.
We will leverage all of the GE Store as we
embrace the Alstom acquisition. Alstom is a
big bet for the Company, and complicated
We call this the Industrial Internet and
are convinced that there are few limits to
its potential. Economists believe that the
10 GE 2014 ANNUAL REPORT
Industrial Internet has the ability to drive
unprecedented gains in productivity
and effi ciency. It will create high-skilled,
high-paying jobs for workers trained in
data analytics and engineering, and could
add $10–$15 trillion to global GDP.
GE can seize this opportunity in a way no
other company can. There are some busi-
nesses that design software, and others that
focus on building and manufacturing. But
GE is the only company that can join innova-
tive technology with industrial depth. That is
important as our customers seek outcomes
that deliver lower unit cost.
We are investing more in enterprise IT to
create a foundation for speed and effi ciency,
essential to win in the Industrial Internet.
We are putting 70% of our applications on
the cloud to improve fl exibility. And, we are
launching game-changing applications
to improve our effi ciency. An example is our
“Brilliant Factory” initiative where we are
unleashing the power of analytics in our
manufacturing plants. In Healthcare, we
already see improvements in yield, sourcing
and uptime; design changes can now be
done in 24 hours instead of three weeks.
We are investing in software and analytics
capability, investments that small compa-
nies or one-dimensional companies cannot
make. GE’s installed base has 10 million sen-
sors and collects 50 million data elements.
By analyzing this data—and combining it
with our deep knowledge of our machines—
we can generate substantial savings for our
customers and GE.
In Aviation, we now collect performance
data for 10 million fl ights; more than
1,500 terabytes of data. This data can be
used to segment fl ight operations and
engine performance, which can allow for
customized maintenance cycles. Across
industry, these small changes in perfor-
mance create big benefi ts in profi tability.
With the Industrial Internet, analytics
become predictive, employees increase pro-
ductivity and machines are self-healing.
To achieve these customer outcomes, we
have attracted world-class talent in data
science, user interface, cybersecurity and
agile development. We have built an analyt-
ics operating system called PredixTM that is
used across the Company. On this, we have
launched 120 apps for asset optimization,
enterprise optimization and internal pro-
ductivity. We call this Predictivity. Our teams
have a Silicon Valley presence and develop
LETTER TO SHAREOWNERS
with a cycle of days and weeks. Because
of our industrial context, we can rapidly
co-create applications with customers. We
think of our Software COE as an Industrial
Internet “App Factory” producing outcomes
ranging from asset synchronization to
reducing unplanned downtime.
deep knowledge of machines is a profound
advantage, and our domain expertise is
necessary to make analytics meaningful.
Because of our existing service relation-
ships with customers, we have a gateway
to create valuable outcomes for them and
profi table growth for GE.
The Industrial Internet will transform GE.
Wind is one of our newest businesses.
“PowerUp” is a Predictivity app that
increases wind farm output by 5% and
profi tability by 20% through controls and
analytics. Lighting is our oldest business.
The combination of LEDs and analytics puts
a computer where a light bulb used to be.
In cities around the world, GE is working to
transform street lighting into the analytical
brain of urban life. Today, Lighting is becom-
ing a high-tech infrastructure business.
It is a gateway for most energy manage-
ment solutions.
GE will create investor value through our
leadership in the Industrial Internet. Our
Value Creating Execution
Last year, we asked you to look at our
earnings over a three-year period, from
2014–16. Over that time, we would improve
our earnings mix to more than 75% indus-
trial, return $50 billion to investors
in dividends and share repurchase, while
growing returns and EPS each year.
In 2014, we executed the fi rst phase of that
journey. We grew operating EPS 1% to $1.65.
Our industrial segment profi ts were up 10%,
while fi nancial profi ts declined 12%. GE’s
industrial earnings are about 60% of our total.
GE Capital ENI declined 5% to $363 billion.
GE Capital ended the year with a Tier 1 capi-
tal ratio of 12.7% and $76 billion of liquidity.
Our industrial performance was broad-
based with 5/7 segments growing. Industrial
organic revenue growth was 7%, sub-
stantially above our peers. We ended the
year with $261 billion of backlog, a record.
Margins expanded to 16.2%. We contin-
ued to see the benefi ts from simplifi cation
and our productivity programs. CFOA
was $15.2 billion, and free cash fl ow was
$11.2 billion, up 6%. We had solid perfor-
mance on cash, but there is room for upside
in the future.
Our goal is to hit 17% margins and returns
by 2016. Over the last few years, we
have made substantial progress on our
structural cost, reducing it by $4 billion
to a world-class level. The next wave of
improvement will be targeting product
cost, segment gross margins and returns.
GE has approximately a $100 billion cost
base, 70% of which are direct product
and service costs. Our “segment gross
margins,” the revenue in excess of these
costs, are 27%.
THE BRILLIANT FACTORY
At factories like GE’s new multimodal manufacturing facility in Pune, India (pictured below), we are harnessing the power of analytics
to make our products—everything from wind turbines to locomotives in this facility—more effi ciently and at lower cost.
INTELLIGENT
MACHINES
Brilliant machines with
remote programming
capabilities
SUPERCOMPUTING
Real-time
computational modeling
and simulation
ADDITIVE
MANUFACTURING
Metallic and
non-metallic
3-D printing
VIRTUAL DESIGN
AND ENGINEERING
Rapid design and
prototyping in-house
MATERIAL SCIENCE
Transformative materials
used across multiple
GE businesses
GE 2014 ANNUAL REPORT 11
GE GLOBAL FOOTPRINT
We sell in 175 countries.
In 2014, 22 countries each
generated revenues of $1B+
GROWTH MARKET
HIGHLIGHTS
GROWTH MARKET PRESENCE (2014)
750+
Executives in growth markets
Growth market
revenues
Countries with
$1B+ orders
12,000 Services employees in Global Growth Organization
10,500 Commercial employees in Global Growth Organization
$43B
$27B
22
18
50+
100+
Service shops outside of the U.S.
Global factories
GLOBAL OPERATIONS CENTERS
GLOBAL RESEARCH CENTERS
Shared services locations allow GE
to do business effi ciently at scale.
• Pudong, China
• Cincinnati, USA
• Budapest, Hungary
• Riyadh, Saudi Arabia
• Monterrey, Mexico
GE’s nerve centers of innovation.
• Shanghai, China
• Bangalore, India
• Tirat Carmel, Israel
• Munich, Germany
• Rio de Janeiro, Brazil
• Niskayuna, USA
• Oklahoma City, USA
• San Ramon, USA
’10
’14
’10
’14
12 GE 2014 ANNUAL REPORT
LETTER TO SHAREOWNERS
GE CAPITAL REGULATORY TEAM
GE Capital Chairman & CEO Keith S. Sherin and his regulatory
team are building and optimizing GE Capital’s capabilities to
ensure a strong future.
Photo (left to right): Robert Green, Tom Gentile, Sharon Garavel, Michael
Silva, Joe Pizzuto, Keith S. Sherin, Jennifer VanBelle, Rob Casper and
Anne Kennelly Kratky.
Our aim is to grow this by 100–200 basis
points over the next few years.
Our big focus is reducing product cost, built
around the principles of “should cost”;
in other words, what is the ideal cost with
perfect execution. For the H Turbine, our
goal is a 25% reduction from present levels.
This requires automation, accelerating
learning curves from our suppliers and new
manufacturing tools. It will also result in
the insourcing of critical components like
precision castings.
We are still defi ning the competitive posi-
tion for GE in the fi nancial services industry,
driven by our domain. We are a great
competitor in the American heartland,
where our customers value the access to
GE industrial capability. But, we must
stay focused on improving returns at GE
Capital. GE Capital earned $7 billion in
2014, down about 12%. It returned a $3 bil-
lion dividend to the parent, a substantial
decline from 2013. GE Capital is fi nancially
secure, and we continue to make GE
Capital smaller and more connected to
GE’s strengths. We have about $83 billion
invested in Capital, but our returns are
below GE’s cost of capital. Improving our
capital effi ciency depends on returning
substantial dividends to GE, which is our
goal over the next few years.
We will continue to allocate capital in a
disciplined and balanced way. We will
grow the dividend in line with earnings and
consider this our highest investor priority.
We will execute the Synchrony split, which
is a capital effi cient way to reduce our fl oat,
and should reduce our shares by 8%. We will
invest $10–$15 billion each year in R&D, cap-
ital equipment and IT to grow the Company
globally and reduce our cost. And, we will do
limited M&A, as Alstom is our top priority.
We are on track for our fi nancial pivot, but
despite our work, total shareholder return
declined 7%, trailing the S&P 500. We have
made short-term tradeoffs to achieve long-
term gains. For instance, we gave up 15%
of Synchrony’s earnings through the IPO,
but investors have yet to feel the benefi t of
the stock split. And, we invested $0.12 EPS
to restructure the Company, which was a
5% drag on earnings and lowered returns in
2014. These moves will accelerate growth
in 2015 and 2016.
GE 2014 ANNUAL REPORT 13
LETTER TO SHAREOWNERS
ALSTOM INTEGRATION
PLANNING TEAM
The Alstom integration team is focused
on preparing to bring together two
world-class organizations. The acqui-
sition of Alstom’s power and grid
businesses, subject to regulatory
approval, will bring 65,000 employees in
more than 100 countries to GE, along
with $20 billion in revenue.
Back row (left to right): Jeff Eglash, Lisa Price,
Fernando Bertoni, Markus Becker, Kurt
Kemmerer, Jose Garcia, Sharon Daley.
Front row (left to right): Alyson Clark, Mark
Hutchinson, Jim Healy and Rick Stanley.
Again, it is important that you see 2014–16 as
a pivot. We expect to grow EPS each year.
Industrial earnings should expand by more
than 10% while Capital shrinks dramatically.
We expect industrial earnings to be 75% of
the total by 2016 and to return $50 billion
to you in dividends and buyback. We will
achieve higher margins and returns over this
period. We are making GE a better com-
pany and are confi dent this will be refl ected
in the share price.
Leading with Focus and Simplicity
Improving and sustaining execution requires
running the Company differently. We are
in the midst of a culture change that is
redefi ning the way we make decisions, work
together, align with customers and hold
ourselves accountable. We’re focusing on
effi ciency, speed and market impact—and
calling this the “Culture of Simplifi cation.”
We already see that simplifi cation is the
catalyst for improvement in GE’s operating
performance.
Simplifi cation has achieved a leaner
management structure. GE now has a slim
structure that can leverage our scale. We
run the Company with smaller headquarters,
fewer processes and shared services.
We have put everything on the clock,
launching a process called “FastWorks,”
based on the entrepreneurial spirit of
Silicon Valley. We are already seeing shorter
product cycles, quicker IT implementation,
and faster customer response than any
of our competitors. There are hundreds of
FastWorks projects underway. For example,
FastWorks is accelerating GE’s development
of solid oxide fuel cells, cutting our launch
cycle by years.
We have made every employee’s purpose to
win in the market. In Commercial Operations,
where we turn projects into orders, our
cycles have moved from months to weeks,
or even days.
We have changed the incentive compen-
sation plan for our senior leaders. The
old plan was tied to results, but it wasn’t
aligned tightly enough with shareholder
value. Our new plan keeps everyone
focused on the Company’s achievement
of investor commitments, targeting the
key fi nancial and strategic metrics in their
businesses that drive company success.
Everyone in the Company is now aligned to
win together and deliver for you.
As we continue to build the world’s premier
infrastructure business, we will not lose
touch with the values that brought us here.
I have worked for GE for 32 years, and over
that time, we have had a handful of import-
ant statements that defi ne our behavior.
There are fi ve GE Beliefs. These are the prin-
ciples we aspire to:
1. Customers determine our success.
This is a statement of fact. Great teams win
in the market.
2. Stay lean to go fast.
Scarcity drives teamwork, will and
accountability.
3. Learn and adapt to win.
Good companies make mistakes quickly,
WE WILL
RETURN
$50B TO
INVESTORS
IN 2014–16 THROUGH
DIVIDENDS AND SHARE
REPURCHASES.
14 GE 2014 ANNUAL REPORT
LETTER TO SHAREOWNERS
but they learn and adjust. And, winning has
to be our goal.
periods of doubt. Resilience is a trait I
respect; I expect it from GE leaders.
4. Empower and inspire each other.
The days of centralized command are in the
past. Our teams have the expertise to accept
empowerment and drive results.
5. Deliver results in an uncertain world.
This is our commitment to you. GE Beliefs
drive performance and shape careers.
As investors, you can see the big changes
in portfolio or product launches. You can’t
always see how we run the Company.
The fact is, we think very differently about
business leadership today.
It takes courage to lead in an era of volatility
and uncertainty. In a company as broad as
GE, we cannot time cycles or avoid them.
Rather, we capitalize on cycles by investing
when others can’t and persisting through
Leadership is about doing fewer things bet-
ter. Great organizations have fewer layers,
organizations, initiatives and processes.
We have greatly reduced “headquarters”
throughout GE. Management is more local
and less central. In a fast-paced global
environment, centralization doesn’t work.
From far away, it is easy to see risks that
don’t exist; and you miss the real dynamics.
We will have more senior leaders in the
markets; headquarters will drive outcomes
and not meetings.
Leadership requires domain understanding.
GE leaders will be deep fi rst and broad sec-
ond, and they will spend more time in a job.
We are more willing today to hire leaders
from outside the Company who bring unique
knowledge. Our leaders must be tech-savvy.
The digital wave is impacting GE, just like
MARGINS + RETURNS
Industrial Segment
Operating Margin
15.7% 16.2% + ~17.0%
2013
2014 2015E 2016F
Industrial Return on
Total Capital (ROTC)
14.3% 14.0%
~17.0%
+
2013
2014 2015E 2016F
GE + ALSTOM
ENHANCING THE GE PORTFOLIO WITH COMPLEMENTARY TECHNOLOGY,
GLOBAL CAPABILITY, A LARGE INSTALLED BASE AND TALENT.
TECHNOLOGY FOR THE FUTURE OF POWER
+
+
=
GE gas
turbine
Alstom steam
turbine
Enhanced value
of GE’s investment in
Industrial Internet
Optimized plant
performance
MORE GLOBAL
CAPABILITY
SIGNIFICANT ADDITION TO
OUR INSTALLED BASE
$10B
of additional revenue
in growth regions
Brazil
China
India
Middle East
35%
increase in GE’s installed
base of turbines
ALSTOM
~350 GW
GE
~1000 GW
INSTALLED
THERMAL BASE
CLEAR SYNERGIES WILL BE REALIZED THROUGH INTEGRATION PROCESS
GE 2014 ANNUAL REPORT 15
GE DIFFERENTIATION: PHYSICAL & ANALYTICAL
VALUE FOR INVESTORS
POWER OF 1%
1% Reduction in Fuel =
Aviation Savings
Power Savings
$30B
$66B
1% Reduction in System Inefficiencies =
$27B
$63B
Healthcare Savings
Rail Savings
1% Reduction in Capital Expenditures =
$90B
Oil & Gas Savings
+
+
+
+
$/IB
MARGINS
+
+
PREDICTIVITYTM REVENUE
PRODUCT FEEDBACK
DELIVERING CUSTOMER
OUTCOMES… POWER OF 1%
EFFICIENCY
UPTIME
+
+
SYSTEM COST
SAFETY & QUALITY
CUSTOMER
POWER OF
1%
GE SOFTWARE PREDIXTM TEAM
The GE Software team has developed Predix™, the
operating system for the Industrial Internet, which
is transforming the way GE creates outcomes
for customers.
Standing (left to right): Jiaqi Wu, Matt Momot, Fermin Ordaz,
Vineet Banga and Cliff Collins. Seated (left to right): Lauren Bridge,
Michael Hart, Stella Yu, Srinagesh Nayudu and Dave Chen.
16 GE 2014 ANNUAL REPORT
INDUSTRIAL INTERNET = CUSTOMER OUTCOMES
OIL & GAS
Intelligent Pipeline
The Columbia Pipeline Group
is using Intelligent Pipeline to make better, faster
decisions on its pipeline operations.
EXTRACT AND
DEFINE
PRIORITY DATA
CONSTRUCT
PREDICTIVE
MODELS
ESTIMATE
RISK IN
REAL TIME
TRANSPORTATION
Movement Planner
Norfolk Southern’s Georgia
division has continued to see
a 10% improvement
in network velocity.
AVIATION
Flight Effi ciency Services
GOL Airlines forecasts
$90M in fuel savings
over fi ve years.
POWER & WATER
Advanced Gas Path
Dubai Aluminium increased
output 3.4% and increased
fuel effi ciency.
HEALTHCARE
Centricity
121 health centers in
Västra Götaland collaborate
on 40,000 images in the
cloud per year.
every other company. Professional “general
management” is on the wane. We need deep
and technical leaders who are broad enough
to see around corners.
Leaders understand that mistakes are an
essential part of getting things done. I have
never made a mistake in my conference
room; only the market determines success.
Winning in the market requires experimen-
tation. We are putting a premium on speed
and competitiveness versus perfection. I
support our leaders to use their judgment,
not being a slave to process.
I, too, have become a different leader. To run
GE, complacency is not an option; that is
not my style anyway. But after 13 years, it
is easy to develop blind spots.
businesses so there is a different context
for priorities and a sense of urgency.
One fl aw I have seen in myself, and others,
is confusing tailwind with good management.
It is diffi cult to spot the best leaders when
times are good. Some businesses are doing
well, but should do better; some businesses
do well when they merely outperform a
tough market.
Personally, I have learned to be a better
risk manager. The fi nancial crisis was hum-
bling but also a great teacher of lessons.
Really bad things happen. I take no comfort
in checklists or large presentations that look
backward. I spend my time in areas that
can drive forward-leaning impact like cyber-
security, product quality and liquidity.
to push myself and the team. Inside GE,
there is no task beneath me, even today.
I am committed to deliver results in an
uncertain world.
Today, GE is a different company—a
company in motion; a company that
is well-positioned to seize this moment,
and lead as we always have. I am
proud of the GE team. And I am more
confi dent than ever that our best
days lie ahead.
Jeffrey R. Immelt
I have surrounded myself with different
people. At the staff level, the team has
recently come to headquarters from the
I am both more informal and more open.
I like our team, our customers and our
investors. I learn a lot from them. I continue
Chairman of the Board
and Chief Executive Offi cer
February 27, 2015
GE 2014 ANNUAL REPORT 17
THE GE BOARD
The GE Board held 14 meetings during 2014, including three meetings of the
independent directors of the Board. Each outside Board member is
expected to visit at least two GE businesses without the involvement of corporate
management in order to develop his or her own feel for the Company.
Board members focus on the areas that are important to shareowners —
strategy, risk management, leadership development, and regulatory and compliance matters. In 2014, they received
briefi ngs on a variety of issues, including capital allocation and business development with a focus on Alstom,
risk management with a focus on GE Capital, business simplifi cation, emerging markets growth, leadership development,
technology excellence, IT and cybersecurity, strategy, advanced manufacturing, global research
and development strategy, Industrial Internet initiatives, and GE’s branding, marketing and operating initiatives.
At the end of the year, the Board and each of its committees conducted a thorough self-evaluation.
DIRECTORS (left to right)
1. Audit Committee
2. Management
Development and
Compensation
Committee
3. Governance and Public
Affairs Committee
4. Risk Committee
5. Science and
Technology Committee
6. Presiding Director
James J. Mulva 1,5
Former Chairman
of the Board and
Chief Executive Offi cer,
ConocoPhillips,
international, integrated
energy company,
Houston, Texas.
> Director since 2008.
Ann M. Fudge 3
Former Chairman of the
Board and Chief Executive
Offi cer, Young & Rubicam
Group, global marketing
communications network,
New York, New York.
> Director since 1999.
Andrea Jung 2,3,5
President & Chief
Executive Offi cer,
Grameen America, non-
profi t microfi nance, and
Former Chairman of the
Board and Chief Executive
Offi cer, Avon Products,
Inc., beauty products,
New York, New York.
> Director since 1998.
Mary L. Schapiro 4
Vice Chairman,
Advisory Board of
Promontory Financial
Group, consulting fi rm,
and former Chairman,
U.S. Securities and
Exchange Commission,
Washington, D.C.
> Director since 2013.
Rochelle B. Lazarus 3
Chairman Emeritus
and former Chief
Executive Offi cer, Ogilvy
& Mather Worldwide,
global marketing
communications
company, New York,
New York.
> Director since 2000.
Douglas A. Warner III 1,2,3
Former Chairman of
the Board, J.P. Morgan
Chase & Co., The Chase
Manhattan Bank, and
Morgan Guaranty Trust
Company, investment
banking, New York,
New York.
> Director since 1992.
James I. Cash, Jr. 2,5
Emeritus James E.
Robison Professor of
Business Administration,
Harvard Graduate School
of Business, Boston,
Massachusetts.
> Director since 1997.
John J. Brennan 2,3,4,6
Chairman Emeritus and
Senior Advisor, The
Vanguard Group, Inc.,
global investment
management, Malvern,
Pennsylvania.
> Director since 2012.
James E. Rohr 4
Former Chairman of the
Board and Chief Executive
Offi cer, The PNC Financial
Services Group, fi nancial
services, Pittsburgh,
Pennsylvania.
> Director since 2013
Robert W. Lane 1,2
Former Chairman
of the Board and
Chief Executive Offi cer,
Deere & Company,
agricultural, construction
and forestry equipment,
Moline, Illinois.
> Director since 2005.
Robert J. Swieringa 1
Professor of Accounting
and former Anne and
Elmer Lindseth Dean,
Johnson Graduate
School of Management,
Cornell University,
Ithaca, New York.
> Director since 2002.
Francisco D’Souza 1,5
Chief Executive Offi cer,
Cognizant Technology
Solutions Corporation,
global information
technology, consulting
and business process
outsourcing, Teaneck,
New Jersey.
> Director since 2013.
Jeffrey R. Immelt
(not pictured;
pictured on page 1)
Chairman of the
Board and Chief
Executive Offi cer, General
Electric Company,
Fairfi eld, Connecticut.
> Director since 2000.
James S. Tisch
President and Chief
Executive Offi cer, Loews
Corporation, diversifi ed
holding company,
New York, New York.
> Director since 2010.
Susan Hockfi eld 3,5
President Emerita
and Professor of
Neuroscience,
Massachusetts Institute
of Technology, Cambridge,
Massachusetts.
> Director since 2006.
Marijn E. Dekkers 2,5
Chairman of the Board
of Management, Bayer
AG, global healthcare,
crop science and material
science, Leverkusen,
Germany.
> Director since 2012.
W. Geoffrey Beattie 4
Chief Executive Offi cer,
Generation Capital,
investment company, and
former Chief Executive
Offi cer, The Woodbridge
Company, and former
Deputy Chairman,
Thomson Reuters,
information technology
company, Toronto,
Canada.
> Director since 2009.
18 GE 2014 ANNUAL REPORT
United States Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2014
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 charter)
New York
(State or other jurisdiction of incorporation or
organization)
14-0689340
(I.R.S. Employer Identification No.)
3135 Easton Turnpike, Fairfield, CT
(Address of principal executive offices)
06828-0001
(Zip Code)
203/373-2211
(Telephone No.)
Title of each class
Common stock, par value $0.06 per share
Name of each exchange on which registered
New York Stock Exchange
Securities Registered Pursuant to Section 12(b) of the Act:
Securities Registered Pursuant to Section 12(g) of the Act:
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the outstanding common equity of the registrant not held by affiliates as of the last business day of the registrant’s most
recently completed second fiscal quarter was at least $261.1 billion. There were 10,064,909,484 shares of voting common stock with a par value of
$0.06 outstanding at January 31, 2015.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant’s Annual Meeting of Shareowners, to be held April 22, 2015, is incorporated by reference into
Part III to the extent described therein.
GE 2014 FORM 10-K 1
2 GE 2014 FORM 10-K
Table of
Contents
10-K Introduction & Summary
About General Electric
Management’s Discussion and Analysis of Financial
Condition and Results of Operations (MD&A)
Key Performance Indicators
Consolidated Results
Segment Operations
GE Corporate Items and Eliminations
Discontinued Operations
Other Consolidated Information
Statement of Financial Position
Financial Resources and Liquidity
Exposures
Critical Accounting Estimates
Other Items
Supplemental Information
Other Financial Data
Regulations and Supervision
Risk Management
Risk Factors
Legal Proceedings
Glossary
Management and Auditor’s Reports
Audited Financial Statements and Notes
Directors, Executive Offi cers and Corporate Governance
Exhibits and Financial Statement Schedules
Form 10-K Cross Reference Index
Signatures
Forward Looking Statements
4
19
23
24
27
30
58
61
62
70
73
83
85
92
94
103
105
107
112
118
120
124
127
225
226
231
232
233
GE 2014 FORM 10-K 3
10-K
Introduction
& Summary
This section provides an overview of
General Electric. It does not contain all
of the information you should consider.
Please read the entire Annual Report
on Form 10-K carefully before voting or
making an investment decision.
IN PARTICULAR, PLEASE SEE THE FOLLOWING SECTIONS
Forward-
Looking
Statements
page 233
Legal
Proceedings
page 118
Risk
Management
page 107
Risk Factors
page 112
Financial
Resources and
Liquidity
page 73
Financial Measures
That Supplement
U.S. GAAP Measures
page 94
INDEX OF FREQUENTLY REQUESTED 10-K INFORMATION
Management’s Discussion & Analysis
Five-Year Financial Performance Graph
Segment Operations
Corporate Items & Eliminations
Pension Costs
Income Taxes
Share Repurchase Program
page 23
page 26
page 30
page 58
page 62
page 63
page 187
Many of the General Electric–
specifi c terms & acronyms
used in this section are
explained in About General
Electric on page 19 and
Glossary on page 120.
Some of the information
we provide in this section
is forward-looking and
therefore could change over
time to refl ect changes
in the environment in which
General Electric competes.
Throughout the Annual Report on Form 10-K, we use the following icons:
Power & Water
Oil & Gas
Energy Mgmt.
Aviation
Healthcare
Transportation
Appliances & Lighting
GE Capital
4 GE 2014 FORM 10-K
GE in 2014
$15.3B
earnings from
continuing operations
$16.7B
operating earnings1
305,000
employees
175
countries
in which
we compete
$148.6B
revenues
How We Performed Against Our 2014 Operating Goals
REVENUES
Industrial segment organic revenues1
OPERATING EARNINGS1
Industrial segment profi t
GE Capital earnings
GE CFOA
OPERATING MARGINS
INDUSTRIAL SG&A EXPENSES AS % OF SALES
TOTAL CORPORATE COSTS (OPERATING)4
Adjusted total corporate costs (operating)4
Target
Actual
Year-over-Year
Change
0%–5% growth
4%–7% growth
$148.6B
$108.0B
+
++
~$6.7B2
$16.7B
$17.8B
$7.0B2
$14B–$17B
$15.2B
+
~14%
16.2%
14.0%
$4.1B
2%
7%
1%
10%
12%
6%
50bps3
190bps3
22%
$500M
$953M
–
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 94.
2. Includes impact from GECC preferred stock dividend.
3. 100 basis points (bps) equals 1%.
4. For information on how we calculate these metrics, see GE Corporate Items and Eliminations on page 58.
GE 2014 FORM 10-K 5
How We Are Shaping a New Kind of Industrial Company
OUR STRATEGIC
CHOICES
BE IN MARKETS
WHERE WE WIN
BUILD COMPETITIVE
ADVANTAGE
2014 ACTIONS
• Recognized infrastructure leader
• Aggressively repositioning portfolio
— Announced Alstom & GE Appliances transactions1
• Refocused & reduced size of GE Capital
— Completed Synchrony IPO
— Reduced GE Capital ENI by 5% from 2013
• Built out GE Store to create unique competitive advantage
— Expanded software & analytics product offerings based on Predix
(GE’s Industrial Internet software platform)
— Services order growth of 10%; Industrial growth market orders +9%
— Big new product introduction (NPI) launches: H-turbine, LEAP engine,2
Tier 4 locomotive, SIGNA PET/MR scanner, 20K blowout preventer
• Accelerated cost reductions
— Reduced Industrial SG&A as a percentage of sales 190 basis points
CREATE
SHAREOWNER VALUE
from 2013
— Reduced corporate costs ~$1B3
• Intensifi ed focus on gross margins
UNIFIED TEAM
• Drove culture of simplifi cation & accountability
— Released GE Beliefs
— Changed executive cash bonus program to align it more closely with key
investor goals, including operating margin, free cash fl ow & ROIC
See the following pages of the 10-K Introduction & Summary for more information.
EPS GROWTH THROUGH 2016
Industrial
Organic Industrial
earnings growth
+ Alstom earnings1
+ restructuring
benefi ts + reduction
in GE’s overall
share count
+
GE Capital
~20¢
EPS loss due
to split-off of
Synchrony
Financial1 & sale
of non-core
assets
=
Expect
EPS
growth
in 2015 & 2016
2015 OPERATING EPS GOAL4
$1.70–$1.80
Industrial…$1.10–$1.20 • GE Capital…~$0.60 5
1. Subject to regulatory approvals.
2. LEAP is a trademark of CFM International, a 50-50 joint venture between Snecma (Safran) and GE.
3. For information on how we calculate this metric, see GE Corporate Items and Eliminations on page 58.
4. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 94.
5. May be lower, depending on pace of GE Capital ENI reduction.
6 GE 2014 FORM 10-K
Value From a Multi-business Company
Great infrastructure businesses built upon technical &
market leadership
critical scale to take advantage of global
demographic trends
Diversity provides strength through disruptive events & commodity cycles
1
2
Year
Event
2001
9/11
attacks
Business
Impacted
Businesses
Mitigating Impact
GE Response
Outcome
Energy, GE Capital
Invested in
next-gen aircraft
engines
GE 90, GENx,
next-gen CFM
2004
U.S. gas
turbine cycle
bottom
Most other
businesses saw
double-digit growth
Invested to
diversify Energy
2009
Financial
crisis
Industrial businesses
generated ~$17B of
cash fl ow
Supported GE
Capital with
cash infusions
Stronger, more
diversifi ed
Energy1
Smaller GE
Capital that is
stronger &
more focused1
2015
Oil price drop
Aviation,
Healthcare
Restructuring Oil & Gas & acquiring
Alstom energy businesses at
attractive price2
3
Each business contributes to GE by providing unique expertise to the GE
Store & leverages the GE Store to compete more effectively (see page 11)
How We Are Performing
CONSOLIDATED
INDUSTRIAL
Revenues
Earnings from
Continuing Operations
Attributable to GE
Backlog
Margins
–
$146.0B
2%
$148.6B
$146.7B
7%
$261B
16%
$244B
$210B
60bps
15.7%
50bps
16.2%
15.1%
4%
$15.2B
1%
$15.3B
$14.6B
POWER & WATER
MISSION: Leading globally in power
generation & water technologies
Major products: gas turbines, engines &
generators, steam turbines & generators,
wind turbines, nuclear reactors, water
systems, power generation services
Revenues
Profi ts
$28.3B
13%
$24.7B
11%
$27.6B
8%
$5.0B
7%
$5.4B
$5.4B
2012
2013
2014
2012
2013
2014
Other 2014 results
Margins: 19.4%
# gas turbines shipped: 108
# wind turbines shipped: 2,879
Backlog: $65B
+ Positive: Growing demand for H-technology,
strong services model, continued growth
in natural gas & strong global demand in
renewables
– Negative: Excess capacity in developed
markets & macroeconomic/geopolitical
environments
Outlook: Outperforming the competition in
a challenging environment
2012 2013 2014
2012 2013 2014
2012 2013 2014
2012 2013 2014
Contribution
to GE Store
Combustion science &
services installed base
1. See How We’ve Made Purposeful Portfolio Moves on page 14 for further details.
2. Subject to regulatory approvals.
GE 2014 FORM 10-K 7
OIL & GAS
ENERGY MANAGEMENT
AVIATION
MISSION: Pushing the boundaries of
technology in oil & gas to bring energy to
the world
MISSION: Being a global technology
leader for the transmission, distribution &
conversion of electrical power
Major products: surface & subsea drilling &
production systems, fl oating production
platform equipment, mechanical drives &
compressors, high-pressure reactors,
artifi cial lift solutions, sensing & inspection
solutions
Major products: electrical distribution &
control products & services, lighting &
power panels, grid management products
& grid modernization services, industrial
automation & software solutions, advanced
motor, drive & control technologies
MISSION: Providing our aviation
customers with the most technologically
advanced & productive engines,
systems & services for their success
Major products: jet & turboprop engines,
components & integrated systems for
commercial, military, business & general
aviation aircraft & ship propulsion
applications, global service network
Revenues
Profi ts
Revenues
Profi ts
Revenues
Profi ts
10%
$18.7B
11%
$17.0B
$15.2B
2%
$7.6B
3%
$7.3B
$7.4B
9%
$24.0B
10%
$21.9B
$20.0B
13%
$2.2B
19%
$2.6B
$1.9B
16%
$0.1B
124%
$0.2B
$0.1B
16%
$4.3B
14%
$5.0B
$3.7B
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
Other 2014 results
Other 2014 results
Other 2014 results
Margins: 13.8%
Backlog: $19B
Margins: 3.4%
Backlog: $5B
Margins: 20.7%
# commercial engines shipped: 2,571
# military engines shipped: 1,068
Backlog: $134B
+ Positive: Strong demand for
standardizing solutions & reducing
customer operating expenditures
– Negative: Industry challenges due to low oil
prices & reductions in customers’ forecasted
capital expenditures
Outlook: Aggressively reducing costs to help
prepare for multiple scenarios
+ Positive: Growth in energy & marine
industries driving demand for Power
Conversion equipment & services
– Negative: Slow European economic recovery
Outlook: Restructuring + investing +
expecting to close Alstom transaction
in 20151 = solid growth
+ Positive: Differentiating through technology &
supply chain momentum, lower fuel costs
resulting in increased airline profi tability &
continued growth in passenger traffi c & freight
– Negative: Lower military shipments due
to continued pressure on U.S. military budget
Outlook: Positioning the business for long-
term growth
Contribution
to GE Store
Services technology & fi rst-
mover in growth markets
Contribution
to GE Store
Electrifi cation, controls &
power conversion
technology
Contribution
to GE Store
Advanced materials/
manufacturing &
engineering productivity
1. Subject to regulatory approvals.
8 GE 2014 FORM 10-K
HEALTHCARE
TRANSPORTATION
APPLIANCES & LIGHTING
MISSION: Developing transformational
medical technologies & services that are
shaping a new age of patient care
Major products: diagnostic imaging
systems (MRI, CT, nuclear & molecular
imaging, digital mammography), surgical
imaging products, ultrasound, protein &
cellular analysis tools, software & analytics
solutions to optimize healthcare delivery
MISSION: Being a global technology
leader & supplier to the railroad, mining,
marine, stationary power, drilling & energy
storage industries
Major products: locomotives, diesel
engines, drilling motors, mining equipment
& propulsion systems, motorized drive
systems, signaling systems, software &
analytics solutions to optimize rail
transportation
MISSION: Answering real-life needs,
defi ning trends & simplifying routines.
Leading a global lighting revolution to deliver
innovative solutions that change the way
people light & think about their world
Major products: lighting products &
services, such as industrial-scale lighting
solutions & major home appliances, such
as refrigerators, cooktops, dishwashers &
hybrid water heaters
Revenues
Profi ts
Revenues
Profi ts
Revenues
Profi ts
–
$18.2B
1%
$18.3B
$18.3B
5%
$5.9B
4%
$5.7B
$5.6B
5%
$8.3B
1%
$8.4B
$8.0B
4%
$3.0B
–
$3.0B
$2.9B
13%
$1.2B
3%
$1.1B
$1.0B
23%
$0.4B
13%
$0.4B
$0.3B
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013 2014
2012
2013
2014
Other 2014 results
Margins: 16.7%
U.S. orders: $8.5B
Growth region orders: $5.7B
Backlog: $16B
Europe orders: $3.7B
Other 2014 results
Margins: 20.0%
# locomotives shipped: 796
Backlog: $21B
Other 2014 results
Margins: 5.1%
+ Positive: World-class data & analytics
capability, continued growth in most emerging
markets, hospital demand for services & IT
solutions & signs of improvement in U.S. market
– Negative: Slow growth in other developed
markets due to pressure on healthcare spend
& effects of a stronger U.S. dollar
Outlook: Growing through product leadership,
solution offerings & disciplined operations
+ Positive: Fewer parked locomotives & network
velocity, increased commodity volume &
U.S. growth driven by early demand for Tier 4
locomotives
– Negative: Continued softness in global
commodity prices pressuring mining
Outlook: Growing earnings through
technology leadership
+ Positive: U.S. housing up but normalizing &
strong global shift to energy-effi cient lighting
– Negative: Slowing demand in professional
non-LED market segment
Outlook: Expecting to close sale of Appliances
to Electrolux by mid-20151 & repositioning
Lighting
Contribution
to GE Store
Diagnostics technology,
software & fi rst-mover in
growth markets
Contribution
to GE Store
Engine technology & growth
market localization
Contribution
to GE Store
LED is gateway to energy
effi ciency
1. Subject to regulatory approvals.
GE 2014 FORM 10-K 9
GE CAPITAL
MISSION: Investing fi nancial, human & intellectual capital to help our
customers build their businesses
Major products: GE-industry-focused fi nancial services verticals,
commercial loans & leases, commercial real estate, fl eet management
services, consumer credit cards
VERTICALS
Financing infrastructure
investments through Energy
Financial Services, GE Capital
Aviation Services, Healthcare
Financial Services
Revenues
Profi ts
% of GE Capital’s segment profi ts
• 39% Consumer
• 29% Commercial Lending & Leasing
• 14% GE Capital Aviation Services
• 13% Real Estate
• 5% Energy Financial Services
$45.4B
3%
$44.1B
3%
$42.7B
10%
$8.0B
12%
$7.0B
$7.2B
2012
2013
2014
2012
2013
2014
Other 2014 results
ENI (ex. liquidity)1: $363B
Net Interest Margin: 5.0%
Tier 1 Common Ratio (Basel 1) (estimated)1: 12.7%
+ Positive: Growing verticals & commercial fi nance
–
Negative: Reduced earnings through continued reduction in non-core assets, including
split-off of Synchrony Financial, & regulatory cost2
Outlook: Executing portfolio transformation, including Synchrony Financial split-off,2
in investor-friendly manner
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures
(Non-GAAP Financial Measures) on page 94.
2. Subject to regulatory approvals.
10 GE 2014 FORM 10-K
ACCESS GE
Providing services beyond
traditional banking & leveraging
industrial businesses to provide
industry-specifi c expertise
The GE Store
Driving Competitive Advantage Across Our Businesses
POWER & WATER
Provides
combustion science
& services
installed base
GLOBAL
RESEARCH
CENTER
GLOBAL
GROWTH
ORGANIZATION
SOFTWARE
CENTER OF
EXCELLENCE
CULTURE &
SIMPLIFICATION
APPLIANCES &
LIGHTING
LED is gateway to
energy effi ciency
OIL & GAS
Provides services
technology &
is a fi rst-mover in
growth regions
AVIATION
Provides advanced
materials & manu-
facturing techniques,
& engineering
productivity
HEALTHCARE
Provides diagnostics
technology & is a fi rst-
mover & anchor tenant
in all of our growth
markets
TRANSPORTATION
Provides engine
technology &
localization in
growth regions
ENERGY
MANAGEMENT
Provides electrifi cation,
controls & power
conversion
technology
GE 2014 FORM 10-K 11
How We Use the GE Store to Win
Key Differentiators for GE
GLOBAL GROWTH ORGANIZATION
“We are driving GE’s global growth by leveraging our global scale,
building local capabilities & providing company-to-country
infrastructure solutions.”
John Rice
Vice Chairman & CEO,
Global Growth Organization
Industrial segment revenues from growth markets1
2010
2013
2014
$27B
$40B
$43B
13% average annual growth rate
SOFTWARE CENTER OF EXCELLENCE
“The Software Center of Excellence leads the intersection of the
physical & analytical & creates a new source of competitiveness.”
Bill Ruh
VP, Software Sciences & Analytics
Services revenue & margins
2012
2013
2014
MARGIN: 29%
MARGIN: 30%
MARGIN: 32%
$43B
$45B
$46B
SERVICES COUNCIL
20+
services
leaders
Vice Chairman Dan Heintzelman leads Services Council
across GE, combining hardware/domain expertise with
software/analytics capabilities to drive services growth
Current key initiatives: service contract optimization,
productivity, global asset strategy, fi eld engineer tools,
controls system convergence
12 GE 2014 FORM 10-K
BEST GROWTH MARKET FOOTPRINT1
Countries with $1B+ orders
2010
2013
2014
18
22
22
Non-U.S.
infrastructure orders
2010
2013
2014
$47B
$65B
$69B
Growth market localization
GE headcount (leadership,
commercial & services)
2010
2013
2014
13,500+
19,000+
19,500+
Factories & service shops
100+
Factories
50+
Service
Shops
1. GE launched the Global Growth Organization in 2010.
PREDIX™: OUR SOFTWARE PLATFORM FOR THE
INDUSTRIAL INTERNET
Opened up to third-party developers in 2014
$1.4B
revenues in 2014 from
GE PredictivityTM
40+
Industrial Internet
solutions across our
businesses
3%–5%
targeted annual growth
in $/installed base
$300M–$400M
annual
investment in PredixTM
capabilities
DELIVERING CUSTOMER OUTCOMES...
THE POWER OF PREDIX™
+
Effi ciency
+
Uptime
+
System
Cost
Reduction
+
Safety &
Quality
GLOBAL RESEARCH
“We are driving innovation & creativity by leveraging technology
across product platforms.”
Mark Little
SVP, Chief Technology Offi cer
Our Global Research Centers
Niskayuna, USA
Rio de Janeiro, Brazil
Shanghai, China
San Ramon, USA
Tirat Carmel, Israel
Bangalore, India
Munich, Germany
Oklahoma City, USA
CULTURE & SIMPLIFICATION
SHARING TECHNOLOGY ACROSS BUSINESSES
Carbon fi ber–reinforced composites
Industrial inspection technologies
Medical imaging modalities (X-ray, CT & ultrasound)
What’s an Example of Technology Sharing?
Global Research is using carbon fi ber–reinforced composites —
originally developed for fan blades in Aviation’s GE9X aircraft
engine — to drive advanced applications across other GE
businesses. Power & Water now uses this technology in wind
blades, Oil & Gas in offshore drilling impellers & riser pipes, &
Healthcare in MRI systems.
R&D SPEND
See How We Allocate Your Capital on page 15 for information
on our historical R&D spend.
SHARED SERVICES
LEADERSHIP
“We are centralizing support services to work smarter &
more effi ciently for sustainable growth.”
“GE’s culture of leadership is one of our greatest innovations.”
Shane Fitzsimons
SVP, Global Operations
Susan Peters
SVP, Human Resources
Industrial SG&A expenses as a percentage of sales
$1B invested in employee development each year
2012
2013
2014
17.5%
15.9%
14.0%
GLOBAL OPERATIONS SNAPSHOT
Accelerating the establishment of Shared Services to deliver better
outcomes at lower cost for our businesses & customers
~40%
of Industrial
functions
6
global
functions
6,000
Shared Services
employees
OUR GLOBAL LEADERSHIP INSTITUTE
Crotonville is at the forefront of thinking in leadership, culture,
strategy & innovation. Some of GE’s best-known initiatives — Lean
Six Sigma, WorkOut, Simplifi cation & FastWorks — took shape here.
2014 PROGRESS: RISING HIGHER
GE Is the World’s Best Company for Global Leaders
#1 GE ranked #1 in the world on the Aon Hewitt Top
Companies for Leaders list.
Building Top Talent & a Continuous Learning
Culture Worldwide
40,000
participants
37
countries
188
locations
2,100
sessions
GE 2014 FORM 10-K 13
How We’ve Made Purposeful Portfolio Moves
Over the past decade, we have repositioned GE as a more focused, high-value industrial company. This includes making
major investments to strengthen our infrastructure portfolio, substantially reducing our fi nancial services businesses & selling
businesses in which we lack competitive advantages.
MAJOR PORTFOLIO CHANGES SINCE 2001
INVESTMENTS
DISPOSITIONS
POWER & WATER
Rebuilt & diversifi ed business after the power
bubble to include Distributed Power, Water & Wind
• Enron wind assets
• Multiple water assets
• Jenbacher Gas Engines
• Alstom announced1
OIL & GAS
Built a competitive & diverse franchise
• Vetco Gray
• Hydril
• Dresser
• Wood Group Well Support
• Wellstream
• Lufkin
HEALTHCARE
Broadened Healthcare diagnostics franchise
beyond U.S. diagnostic imaging to include Life
Sciences & Healthcare IT
• Amersham
• Instrumentarium
• IDX/Healthcare IT
AVIATION
Expanded profi t pools for the business through
acquisitions focused on systems & supply chain
• Smiths Aerospace
• Avio
ENERGY MANAGEMENT
Added scale to the business
• Converteam
• Alstom announced1
2016 OPERATING EPS GOAL
1
2
3
4
5
MEDIA
Reposition NBC Universal & divest at
a good return
• Sold NBC Universal to Comcast
PLASTICS, SILICONES & SECURITY
Sell industrial businesses that do not fi t
GE’s core infrastructure platform
• Sold Plastics to Sabic
• Sold Silicones to Apollo
• Sold Security to United Technologies
APPLIANCES
Exit as it does not fi t GE’s core
infrastructure platform
• Announced sale of Appliances to Electrolux1
INSURANCE
Sell insurance before the storm to
reduce risk
• Completed staged exit of Genworth Financial
• Sold Reinsurance to Swiss Re
• Sold FGIC to Blackstone
CONSUMER FINANCE
Exit as it lacks GE competitive advantage
• Completed IPO of Synchrony Financial &
expect to split-off remaining interest1
• Exited Nordic & Swiss consumer fi nance
businesses & announced sale of Hungary
consumer fi nance business1
75%
INDUSTRIAL
25%
FINANCIAL SERVICES
GE only in businesses
that connect to our core
competencies
STRONGER & SMALLER GE CAPITAL
Ending net investment (ex. liquidity)2
Long-term debt outstanding
Commercial paper
Cash & liquidity
Tier 1 common ratio — Basel 1 (estimated)2
Adjusted debt:equity ratio2
2008
$513B
$381B
$72B
$37B
4.7%
8.95:1
2014
$363B
$207B
$25B
$76B
12.7%
3.15:1
STRONGER
IN 2014
1. Subject to regulatory approvals.
2. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 94.
14 GE 2014 FORM 10-K
How We Allocate Your Capital
“We are executing on a balanced and disciplined capital allocation
plan that returns signifi cant capital to investors, invests in the Company’s
future growth, and keeps GE safe and secure.”
Jeff Bornstein, SVP & Chief Financial Offi cer
GENERATING CAPITAL
ALLOCATING CAPITAL
+
+
+
+
Focus on free cash fl ow1 (GE CFOA less P&E)
Synchrony Financial split-off…investor friendly
GE Capital dividend
Dispositions…~$2B/year
~$76B
capital
to allocate in
2015 & 2016
1 Return ~$40B to investors in dividends & shares
repurchased through Synchrony Financial split-off
2 Focus on Alstom…other M&A focused & smaller
3 Invest organically
• 2012 • 2013 • 2014
HOW WE BALANCE CAPITAL ALLOCATION
ALLOCATION /AMOUNTS
GOALS
ALLOCATION /AMOUNTS
GOALS
Research &
Development
$5.2B $5.5B $5.3B
Annual investment at
~5%
Industrial sales
$0.7B $0.8B $1.0B
Externally funded portion
CFOA
Restructuring &
Other Charges
$2.0B $1.8B
$0.7B
Targeting world-class industrial
cost structure & margins…
~12% Industrial SG&A expenses
as a percentage of sales in 2016
Dividends
$7.2B $7.8B $8.9B
Buyback
(reported on a book basis)
$10.4B
$5.2B
$1.9B
Organic
Revenue Growth1
(Industrial segments)
7%
2%–5%
0%
Grow in line
with earnings... 1¢
per share
quarterly increase
for 2015
Offset employee share program dilution
& reduce share count (including through
Synchrony Financial split-off 2) to
9.0B–9.5B shares outstanding
Acquisitions
$9.0B
$1.5B
$2.1B
Plant & Equipment
$3.9B $3.7B $4.0B
Continue to reshape portfolio…
targeting for 2016
75% 25%
Industrial
GE Capital
Focus on low-cost multimodal
facilities in key growth markets
HOW CAPITAL ALLOCATION DRIVES RESULTS
Free Cash Flow1
(GE CFOA–P&E)
Margins
(Industrial segments,
’15 & ’16 ex. M&A3)
Returns1
(Industrial ROTC,
’15 & ’16 ex. M&A3)
$10.6B $11.2B $10B–$12B
15.7% 16.2% +
~17%
14.3% 14.0%
+
~17%
’13
’14
’15E
’13
’14
’15E
’13
’14
’15E
’16F
’13
’14
’15E
’16F
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 94.
2. Subject to regulatory approvals.
3. We are excluding M&A transactions from the margin & Industrial ROTC targets because these targets were set prior to the Company’s announcement of the
Alstom acquisition (which is subject to regulatory approvals).
GE 2014 FORM 10-K 15
How We Focus on the Most Critical Enterprise Risks
“I have asked GE’s leaders to go deep on what I believe are
the four most critical risks facing the Company: product
quality, cybersecurity, liquidity and global compliance. Over
the years, we have built lines of defense around these
core risk focus areas.”
JEFF IMMELT
Chairman of the Board & Chief Executive Offi cer
CORE RISK
FOCUS AREAS
Product quality
Cybersecurity
LINES OF DEFENSE
DEEP
DOMAIN
EXPERTISE
DISCIPLINED
BUSINESS PROCESSES &
CHALLENGE CULTURE
STRONG AUDIT &
THIRD PARTY
OVERSIGHT
BOARD
TRANSPARENCY &
MANAGEMENT
OVERSIGHT
• 45,000+ engineers,
including 1,000+ PhDs
• Global Research Centers
• Chief Engineers’ Council
• Regulators…e.g.,
• Product Safety Boards
• Services Council
FAA, FDA, CFPB, NRC
• 11,000+ IT & cyber
professionals
• IT Security
Operations Center
• Product/system design
• Internal audit…
for security
• Installed base
remediation
Corporate Audit Staff
• Penetration testing
challenges…red team
• Increased investment
• Cybersecurity Task Force
• Wurldtech…industrial
2.5x since 2009
• Product Security Incident
Response Team
product design
Liquidity
(through a crisis)
• 750+ Treasury
professionals
• Stress-testing
• Credit rating agencies
• Limits on commercial
paper levels to cash &
bank lines of credit
• Cash fl ow metrics
in compensation plans
• Federal Reserve,
OCC, FDIC
SEE NEXT
PAGE
Global
compliance
• 750+ compliance
professionals
• ~500 ombuds
• Policy Compliance Review
• External audit…KPMG
Board…3 meetings &
9 compliance operating
reviews in ’14
• Global Ombuds System
• Deep culture of integrity
(Spirit & Letter)…our leaders
own it
(~360 partners & 500k+
audit hours annually)
• Internal audit…
Corporate Audit Staff &
GE Capital Audit
• Ethisphere Magazine…
GE named world’s most
ethical company 8 years
in a row
16 GE 2014 FORM 10-K
How We Oversee Risk
GE BOARD
Each committee
oversees risk in its area
of expertise & reports
to the full Board
AUDIT
COMMITTEE
GOVERNANCE &
PUBLIC AFFAIRS
COMMITTEE
MANAGEMENT
DEVELOPMENT &
COMPENSATION
COMMITTEE
SCIENCE &
TECHNOLOGY
COMMITTEE
RISK
COMMITTEE
CORPORATE
AUDIT STAFF &
GECC AUDIT
POLICY
COMPLIANCE
REVIEW BOARD
GE
BLUEPRINT
REVIEWS
GECC BOARD
GE CAPITAL ENTERPRISE
RISK MANAGEMENT
COMMITTEE
O
V
E
R
S
I
G
H
T
B
O
A
R
D
O
V
E
R
S
I
G
H
T
M
A
N
A
G
E
M
E
N
T
STRATEGIC RISK
FINANCIAL RISK
GLOBAL MACRO-ENVIRONMENT
Our growth is subject to global economic and political risks.
M&A/RESTRUCTURING
The success of our business depends on achieving our strategic
objectives, including through acquisitions, joint ventures, dispositions
and restructurings.
INTELLECTUAL PROPERTY
Our intellectual property portfolio may not prevent competitors from
independently developing products and services similar to or duplicative
to ours.
OPERATIONAL RISK
OPERATIONS
We may face operational challenges that could have a material adverse
effect on our business, reputation, fi nancial position and results of
operations, and we are dependent on maintenance of existing product
lines, market acceptance of new product and service introductions
and product and service innovations for continued revenue and
earnings growth.
CYBERSECURITY
Increased cybersecurity requirements, vulnerabilities, threats and more
sophisticated and targeted computer crime could pose a risk to our
systems, networks, products, solutions, services and data.
SUPPLY CHAIN
Signifi cant raw material shortages, supplier capacity constraints,
supplier production disruptions, supplier quality and sourcing issues or
price increases could increase our operating costs and adversely impact
the competitive positions of our products.
ECONOMY/COUNTER-PARTIES
A deterioration of conditions in the global economy, the major industries
we serve or the fi nancial markets, or the soundness of fi nancial institu-
tions and governments we deal with, may adversely affect our business
and results of operations.
CREDIT RATINGS
Failure to maintain our credit ratings could adversely affect our cost of
funds and related margins, liquidity, competitive position and access to
capital markets.
FUNDING ACCESS/COSTS
Conditions in the fi nancial and credit markets may affect the availability
and cost of funding.
SOCIAL COSTS
Sustained increases in pension and healthcare benefi ts costs may
reduce our profi tability.
LEGAL & COMPLIANCE RISK
REGULATORY
We are subject to a wide variety of laws, regulations and government
policies that may change in signifi cant ways.
DODD-FRANK
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act,
we are subject to prudential oversight by the Federal Reserve, including
as a result of GECC’s designation as a nonbank systemically important
fi nancial institution (nonbank SIFI), which subjects us to increased and
evolving regulatory requirements.
LEGAL PROCEEDINGS
We are subject to legal proceedings and legal compliance risks.
For more details, please see Risk Management on page 107 & Risk Factors on page 112.
GE 2014 FORM 10-K 17
How We Address Social Costs
“We’ve taken signifi cant actions to control rising pension and healthcare costs,
but this remains an area of focus for GE as we continue to balance the interests of
our shareowners, employees and retirees.”
Jeff Immelt, Chairman of the Board & Chief Executive Offi cer
PENSION & HEALTHCARE
PLANS PRE-TAX EXPENSE1
$6.4B
$4.4B
$3.2B
$0.0B2
’00
’05
’10
’14
Cost increase drivers
• Declining interest rates
• Volatile fi nancial markets
• Healthcare cost infl ation
U.S. RETIREMENT PLANS
LIABILITY 3
$85B
~$90B
~$100B
$60B
$57B
$75B
~$75B
~$70B
’09
’14
’19F
’24F
Liability reduction4
Projected benefi t obligation5
Major GE actions to address rising
pension & healthcare costs
• Annually…negotiated healthcare supplier contracts
• 2005/2008…changed new hire retiree health benefi ts
• 2009…stratifi ed retiree health benefi ts for
salaried employees
• 2011…implemented Medicare-approved prescription
drug plan
• 2011/2012…moved to a defi ned contribution
retirement plan for new hires
• 2012...announced closing of retiree health plans to
salaried employees and pre-65 retirees (effective 2015)
• 2014…introduced private exchanges for salaried
Medicare-eligible retirees
1 Includes global pension plans, U.S. Retirement Savings Plan & U.S. principal employee/retiree health plans.
2 In 2000, primarily because of its funded status, GE Pension Plan pre-tax earnings offset the cost of the other plans included in this chart.
3 Includes GE Pension Plan & principal retiree health plans.
4 Refl ects GE’s estimate of liability reduction, based on GE actions as of December 31, 2014.
5 For a discussion of the assets associated with these liabilities, see Other Consolidated Information—Postretirement Benefi t Plans on page 62 and Note 12 to the consolidated
fi nancial statements in this Form 10-K Report.
18 GE 2014 FORM 10-K
A B O U T G E N E R A L E L E C T R I C
ABOUT GENERAL ELECTRIC
OUR BUSINESS AND HOW WE TALK ABOUT IT
We are one of the largest and most diversified infrastructure and financial services corporations in the world. With products
and services ranging from aircraft engines, power generation, oil and gas production equipment, and household appliances to
medical imaging, business and consumer financing and industrial products, we serve customers in approximately 175
countries and employ approximately 305,000 people worldwide. Since our incorporation in 1892, we have developed or
acquired new technologies and services that have considerably broadened and changed the scope of our activities.
We believe that investors will gain a better understanding of our company if they understand how we measure and talk about
our results. Because of the diversity in our businesses, we present our financial statements in a three- column format, which
allows investors to see our industrial operations separately from our financial services operations. We believe that this
provides useful information to investors. When used in this report, unless otherwise indicated by the context, we use the terms
to mean the following:
(cid:120) General Electric or the Company - the parent company, General Electric Company.
(cid:120) GE - the adding together of all affiliates other than General Electric Capital Corp., whose continuing operations are
presented on a one-line basis, giving effect to the elimination of transactions among such affiliates. Transactions between
GE and GECC have not been eliminated at the GE level. We present the results of GE in the center columns 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).
(cid:120) General Electric Capital Corporation or GECC or Financial Services – the adding together of all affiliates of GECC,
giving effect to the elimination of transactions among such affiliates. We present the results of GECC in the right- side
columns of our consolidated statements of earnings, financial position and cash flows. It should be noted that GECC is
sometimes referred to as GE Capital or Capital, when not in the context of discussing segment results.
(cid:120) GE consolidated – the adding together of GE and GECC, giving effect to the elimination of transactions between GE and
GECC. We present the results of GE consolidated in the left side columns of our consolidated statements of earnings,
financial position and cash flows.
(cid:120)
(cid:120)
Industrial – GE excluding GECC. 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, which is GE CFOA excluding the
effects of dividends from GECC.
Industrial segment – the sum of our seven industrial reporting segments shown below, without giving effect to the
elimination of transactions among such segments. We believe that 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.
(cid:120) Total segment – the sum of our seven industrial segments and one financial services segment, without giving effect to
the elimination of transactions among such segments. We believe that this provides investors with a view as to the results
of all of our segments, without inter-segment eliminations and corporate items.
GE 2014 FORM 10-K 19
AB O U T G E N E R AL E L E C T R I C
OUR INDUSTRIAL OPERATING SEGMENTS
Power & Water
Aviation
Transportation
Oil & Gas
Healthcare
Appliances & Lighting
Energy Management
OUR FINANCIAL SERVICES OPERATING SEGMENT
GE Capital
Business, operation and financial overviews for our operating segments are provided in the “Segment Operations” section
within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Form 10-K
Report.
OTHER TERMS USED BY GE
(cid:120) Revenues – unless otherwise indicated, we refer to captions such as “revenues and other income”, simply as revenues.
(cid:120) Organic revenues – revenues excluding the effects of acquisitions, dispositions and foreign currency exchange.
(cid:120) Earnings – unless otherwise indicated, we refer to captions such as “earnings from continuing operations attributable to
the company” simply as earnings
(cid:120) Earnings per share – unless otherwise indicated, we refer to earnings per share as “earnings from continuing operations
attributable to the company” simply as earnings per share
(cid:120) Operating earnings – GE earnings from continuing operations attributable to the company excluding the impact of non-
operating pension costs.
(cid:120) Segment profit – refers to the operating profit of the industrial segments and the net earnings of the financial services
segment. See page 30 for a description of the basis for segment profits.
(cid:120) Operating pension costs – comprise the service cost of benefits earned, prior service cost amortization and curtailment
loss for our principal pension plans.
(cid:120) Non-operating pension costs – comprise the expected return on plan assets, interest cost on benefit obligations and net
actuarial loss amortization for our principal pension plans.
(cid:120) Social cost – include the costs of our pension and healthcare costs for employees and retirees.
20 GE 2014 FORM 10-K
AB O U T G E N E R AL E L E C T R I C
NON-GAAP FINANCIAL MEASURES
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data
but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles
(GAAP). Certain of these data are considered “non-GAAP financial measures” under the SEC rules. Specifically, we have
referred, in various sections of this Form 10-K Report, to:
Industrial operating earnings
Industrial segment organic revenue growth
(cid:120) Operating earnings and operating EPS
(cid:120)
(cid:120)
(cid:120)
(cid:120) Operating and non-operating pension costs (income)
(cid:120) GE pre-tax earnings from continuing operations, excluding GECC earnings from continuing operations and the
Industrial cash flows from operating activities (Industrial CFOA)
corresponding effective tax rates
(cid:120) GE Capital ending net investment (ENI), excluding liquidity
(cid:120) GECC Tier 1 common ratio estimate
The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP
financial measures are included in the “Supplemental Information” section within the MD&A of this Form 10-K Report. Non-
GAAP financial measures referred to in this Form 10-K Report are designated with an asterisk (*).
COMPETITIVE CONDITIONS AND ENVIRONMENT
In virtually all of our global business activities, we encounter aggressive and able competition. In many instances, the
competitive climate is characterized by changing technology that requires continuing research and development. With respect
to manufacturing operations, we believe that, in general, we are one of the leading firms in most of the major industries in
which we participate. The businesses in which General Electric Capital Corporation (GECC) engages are subject to
competition from various types of financial institutions, including commercial banks, thrifts, investment banks, broker-dealers,
credit unions, leasing companies, consumer loan companies, independent finance companies, finance companies associated
with manufacturers and insurance and reinsurance companies.
As a diverse global company, we are affected by world economies, instability in certain regions, commodity prices, such as the
price of oil, and foreign currency volatility. Other factors impacting our business include:
(cid:120)
(cid:120)
product development cycles for many of our products are long and product quality and efficiency are critical to success,
research and development expenditures are important to our business and
(cid:120) many of our products are subject to a number of regulatory standards.
These factors are discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
GE 2014 FORM 10-K 21
A B O U T G E N E R A L E L E C T R I C
OUR EMPLOYEES AND EMPLOYEE RELATIONS
At year-end 2014, General Electric Company and consolidated affiliates employed approximately 305,000 persons, of whom
approximately 136,000 were employed in the United States. For further information about employees, see the “Other Financial
Data” section of this Form 10-K Report.
Approximately 16,400 GE manufacturing and service employees in the United States are represented for collective bargaining
purposes by one of 11 unions (approximately 82 different locals within such unions). A majority of such employees are
represented by union locals that are affiliated with the IUE-CWA, The Industrial Division of the Communication Workers of
America, AFL-CIO, CLC. During 2011, we negotiated four-year agreements with most of our U.S. unions. Most of these
contracts will terminate in June 2015, and we will be engaged in negotiations to attain new agreements. While results of 2015
union negotiations cannot be predicted, our recent past negotiations have resulted in agreements that increased costs.
Other GE affiliates are parties to labor contracts with various labor unions, also with varying terms and expiration dates that
cover approximately 3,800 employees.
PROPERTIES
Manufacturing operations are carried out at approximately 227 manufacturing plants located in 39 states in the United States
and Puerto Rico and at approximately 275 manufacturing plants located in 39 other countries.
CORPORATE INFORMATION AND WEBSITES
General Electric’s address is 1 River Road, Schenectady, NY, 12345-6999; we also maintain executive offices at 3135 Easton
Turnpike, Fairfield, CT 06828-0001.
The Company’s Internet address is www.ge.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports are available, without charge, on our website,
www.ge.com/investor-relations/investor-services/personal-investing/sec-filing, as soon as reasonably practicable after they are
filed electronically with the U.S. Securities and Exchange Commission (SEC). Copies are also available, without charge, from
GE Corporate Investor Communications, 3135 Easton Turnpike, Fairfield, CT 06828-0001. Reports filed with the SEC may be
viewed at www.sec.gov or obtained at the SEC Public Reference Room in Washington, D.C. Information regarding the
operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. References to our website
addressed in this report are provided as a convenience and do not constitute, and should not be viewed as, an incorporation
by reference of the information contained on, or available through, the website. Therefore, such information should not be
considered part of this report.
General Electric Capital Corporation filed a Form 10-K Report with the SEC, and this can also be viewed at
www.ge.com/investor-relations/investor-services/personal-investing/sec-filing.
GE’s Investor Relations website at www.ge.com/investor-relations and our corporate blog at www.gereports.com, as well as
GE’s Facebook page and Twitter accounts, including @GE_Reports, contain a significant amount of information about GE,
including financial and other information for investors. GE encourages investors to visit these websites from time to time, as
information is updated and new information is posted.
22 GE 2014 FORM 10-K
M D & A
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (MD&A)
PRESENTATION
The consolidated financial statements of General Electric Company (the Company) combine the industrial manufacturing and
services businesses of General Electric Company (GE) with the financial services businesses of General Electric Capital
Corporation (GECC or financial services). Unless otherwise indicated by the context, we use the terms “GE” and “GECC” on
the basis of consolidation described in Note 1 to the consolidated financial statements in this Form 10-K Report.
Net earnings of GECC and the effect of transactions between segments are eliminated to arrive at total consolidated data.
Prior to January 28, 2011, we operated a media company, NBC Universal, Inc. (NBCU). Effective January 28, 2011, we held a
49% interest in a media entity that included the NBC Universal businesses (NBCU LLC). On March 19, 2013, we completed
the sale of our remaining 49% common equity interest to Comcast Corporation.
We integrate acquisitions as quickly as possible. Revenues and earnings from the date we complete the acquisition through
the end of the following fourth quarter are considered the acquisition effect of such businesses.
Discussion of GECC’s total assets excludes deferred income tax liabilities, which are presented within assets for purposes of
our consolidating statement of financial position presentations for this filing.
See the Glossary section of this Form 10-K for a definition of equipment and services sales as used in this Form 10-K Report
as compared to the product and services split on the Statement of Earnings.
Amounts reported in billions in graphs and tables within this Form 10-K report are computed based on the amounts in millions.
As a result, the sum of the components reported in billions may not equal the total amount reported in billions due to rounding.
Discussions throughout this MD&A are based on continuing operations unless otherwise noted.
REFERENCES
The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements.
For additional information related to GE Capital segment operations and the portfolio quality of financing receivables, refer to
the General Electric Capital Corporation annual report on Form 10-K for the year ended December 31, 2014.
NON-GAAP FINANCIAL MEASURES
As discussed in the “About GE” section of this Form 10-K, we use certain “non-GAAP financial measures” throughout the
MD&A. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable
GAAP financial measures are included in the “Supplemental Information” section within the MD&A of this Form 10-K Report.
Non-GAAP financial measures referred to in this Form 10-K Report are designated with an asterisk (*).
GE 2014 FORM 10-K 23
M D & A K E Y P E R F O R M AN C E I N D I C AT O R S
KEY PERFORMANCE INDICATORS
(Dollars in billions; per-share amounts in dollars)
REVENUES PERFORMANCE
EARNINGS PER SHARE
(cid:132) (cid:132) Earnings (cid:132) (cid:132) Operating Earnings*
2013
1%
Flat
2014
6%
7%
Industrial Segment
Industrial Segment
Organic*
Financial Services
(3)%
(3)%
INDUSTRIAL SEGMENT PROFIT
INDUSTRIAL SEGMENT MARGIN
INDUSTRIAL ORDERS
INDUSTRIAL BACKLOG
Equipment
Services
Equipment
Services
(cid:3)
*Non-GAAP Financial Measure
24 GE 2014 FORM 10-K
M D & A K E Y P E R F O R M AN C E I N D I C AT O R S
KEY PERFORMANCE INDICATORS
(Dollars in billions)
INDUSTRIAL/GE CAPITAL OPERATING EARNINGS*
2014 Actual*
(cid:3)
(cid:3)
(cid:3)
2016 Goal
GE IS EXECUTING ON ITS
STRATEGY TO ACHIEVE 75% OF
ITS OPERATING EARNINGS FROM
ITS INDUSTRIAL BUSINESSES BY
2016(cid:856)(cid:3)
The effects of the Synchrony Financial
split-off and the Alstom acquisition and
alliances will result in progression towards
this target.
GE CFOA
SHAREHOLDER INFORMATION
GECC
Dividend
Industrial
CFOA*
RETURNED $10.8 BILLION TO
SHAREOWNERS IN 2014
Dividends $8.9 billion
Stock buyback $1.9 billion
ANNUAL MEETING
General Electric’s 2015 Annual Meeting of
Shareowners will be held on April 22, 2015,
in Oklahoma City, Oklahoma.
2013 GE CFOA excluding NBC Universal deal-related taxes was
$17.4 billion*
*Non-GAAP Financial Measure
GE 2014 FORM 10-K 25
M D & A K E Y P E R F O R M AN C E I N D I C AT O R S
KEY PERFORMANCE INDICATORS
(Amounts in dollars)
FIVE-YEAR PERFORMANCE GRAPH
The annual changes for the five-year period shown in the graph on this page are based on the assumption that $100 had been
invested in General Electric common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones Industrial
Average (DJIA) on December 31, 2009, and that all quarterly dividends were reinvested. The total cumulative dollar returns
shown on the graph represent the value that such investments would have had on December 31, 2014.
STOCK PRICE RANGE AND DIVIDENDS
With respect to “Market Information,” in the United States, General Electric common stock is listed on the New York Stock
Exchange (its principal market). General Electric common stock is also listed on the London Stock Exchange and the Frankfurt
Stock Exchange. The chart above shows trading prices, as reported on the New York Stock Exchange, Inc., Composite
Transactions Tape.
As of January 31, 2015, there were approximately 480,000 shareowner accounts of record.
On February 6, 2015, our Board of Directors approved a quarterly dividend of $0.23 per share of common stock, which is
payable April 27, 2015, to shareowners of record at close of business on February 23, 2015.
26 GE 2014 FORM 10-K
M D & A C O N S O L I D AT E D R E S U L T S
CONSOLIDATED RESULTS
(Dollars in billions)
2014 GEOGRAPHIC REVENUES
2014 SEGMENT REVENUES
SIGNIFICANT DEVELOPMENTS IN 2014
We completed the initial public offering of our North American Retail Finance business, Synchrony Financial,
resulting in proceeds of $2.8 billion and target to complete the exit through a split-off transaction.
We sold GE Money Bank AB, our consumer finance business in Sweden, Denmark and Norway to Santander for
$2.3 billion.
We acquired Milestone Aviation Group for $1.8 billion on January 30, 2015.
We signed an agreement to sell our consumer finance business in Hungary (Budapest Bank) to Hungary’s
government.
We agreed to sell our Appliances business to Electrolux for $3.3 billion; targeted to close in mid-2015.
We acquired Cameron’s Reciprocating Compression division for $0.6 billion.
We acquired API Healthcare for $0.3 billion and certain Thermo Fisher Scientific Inc. life-science businesses for
$1.1 billion.
We signed an agreement to sell our Signaling business to Alstom for approximately $0.8 billion.
We offered to acquire the Thermal, Renewables and Grid businesses of Alstom. The proposed transaction is
targeted to close in 2015. See the “Segment Operations” section within the MD&A of this Form 10-K for additional
information related to the proposed transaction.
GE 2014 FORM 10-K 27
M D & A C O N S O L I D AT E D R E S U L T S
CONSOLIDATED RESULTS
(Dollars in billions)
REVENUES
INDUSTRIAL SEGMENT EQUIPMENT
& SERVICES REVENUES
Equipment
Services
COMMENTARY:
2014 – 2013
2013 – 2012
Consolidated revenues increased $2.5 billion, or 2%.
(cid:120)
Industrial segment revenues increased 6%, reflecting
organic growth* of 7% and the effects of acquisitions
(primarily Lufkin Industries, Inc. (Lufkin), Avio S.p.A.
(Avio) and certain Thermo Fisher Scientific Inc.
businesses).
(cid:120) Financial Services revenues decreased 3% as a result of
the effects of dispositions, organic revenue declines,
primarily due to lower ending net investment (ENI)* and
lower gains, partially offset by lower impairments.
(cid:120) Other income decreased $2.3 billion, primarily due to the
sale of our remaining 49% common equity interest in
NBCU LLC in 2013 ($1.6 billion).
(cid:120) The effects of acquisitions increased consolidated
revenues $1.7 billion and $1.6 billion in 2014 and 2013,
respectively. Dispositions affected our ongoing results
through lower revenues of $4.1 billion and $0.1 billion in
2014 and 2013, respectively.
(cid:120) The effects of a stronger U.S. dollar compared to mainly
the Japanese yen, Canadian dollar and Brazilian real,
partially offset by the British pound, decreased
consolidated revenues by $0.9 billion.
Consolidated revenues decreased $0.6 billion, or less than
1%.
(cid:120)
Industrial segment revenues increased 1%. Organic
revenue growth* was flat.
(cid:120) Financial Services revenues decreased 3%, as a result
of organic revenue declines, primarily due to lower ENI*
and higher impairments, partially offset by higher gains.
(cid:120) Other income increased $0.5 billion, primarily due to
gains related to the sale of NBCU LLC.
(cid:120) The effects of acquisitions increased consolidated
revenues $1.6 billion and $2.0 billion in 2013 and 2012,
respectively. Dispositions affected our ongoing results
through lower revenues of $0.1 billion and $5.1 billion in
2013 and 2012, respectively.
(cid:120) The effects of a stronger U.S. dollar compared to mainly
the Japanese yen and Brazilian real, partially offset by
the euro, decreased consolidated revenues by $0.5
billion.
*Non-GAAP Financial Measure
28 GE 2014 FORM 10-K
M D & A C O N S O L I D AT E D R E S U L T S
CONSOLIDATED RESULTS
(Dollars in billions)
EARNINGS
(cid:132) (cid:132) Earnings (cid:132) (cid:132) Operating Earnings*
INDUSTRIAL SELLING, GENERAL &
ADIMINSTRATIVE (SG&A) AS A % OF SALES
COMMENTARY:
2014 – 2013
2013 – 2012
Consolidated earnings increased 1% primarily due to an
increase in the operating profit of the industrial segments,
partially offset by lower financial services income and the
absence of the NBCU LLC related income.
(cid:120)
(cid:120)
Industrial segment profit increased 10% with growth
driven by Aviation, Oil & Gas and Power & Water.
Industrial segment margin increased 50 basis points
(bps) driven by higher productivity and pricing, partially
offset by negative business mix and the effects of
inflation.
(cid:120) Financial Services earnings decreased 12% as a result
of the effects of dispositions, core decreases and lower
gains, partially offset by lower impairments and lower
provisions for losses on financing receivables.
(cid:120) The effects of acquisitions on our consolidated net
earnings were increases of $0.2 billion and $0.1 billion
in 2014 and 2013, respectively. The effects of
dispositions on net earnings were a decrease of $2.6
billion in 2014 and an increase of $1.4 billion in 2013.
(cid:120)
Industrial SG&A as a percentage of total sales
decreased to 14.0% as a result of global cost reduction
initiatives, primarily at Power & Water and Healthcare.
This was partially offset by higher acquisition-related
costs.
Consolidated earnings increased 4% on strong industrial
segment growth and continued stabilization in financial
services.
(cid:120) Industrial segment profit increased 5% with growth driven
by Aviation and Oil & Gas.
(cid:120) Industrial segment margin increased 60 bps driven by
higher pricing and favorable business mix, partially offset
by the effects of inflation.
(cid:120) Financial Services earnings increased 10%, as a result of
the effects of dispositions and higher gains, partially
offset by higher impairments and higher provisions for
losses on financing receivables.
(cid:120) The effects of acquisitions on our consolidated net
earnings were increases of $0.1 billion in both 2013 and
2012. The effects of dispositions on net earnings were an
increase of $1.4 billion in 2013 and a decrease of $0.3
billion in 2012.
(cid:120) Industrial SG&A as a percentage of total sales decreased
to 15.9% as a result of global cost reduction initiatives
related to simplification efforts both in the industrial
segments and corporate. This was partially offset by
increased acquisition-related costs and higher
restructuring.
See the “Other Consolidated Information” section within the MD&A of this Form 10-K for a discussion of postretirement benefit
plans costs, income taxes and geographic data.
*Non-GAAP Financial Measure
GE 2014 FORM 10-K 29
M D & A S E G M E N T O P E R AT I O N S
SEGMENT OPERATIONS
SEGMENT REVENUES AND PROFIT
Segment revenues include both revenues and other income related to the segment.
Segment profit is determined based on internal performance measures used by the Chief Executive Officer (CEO) to assess
the performance of each business in a given period. In connection with that assessment, the CEO may exclude matters such
as charges for restructuring; rationalization and other similar expenses; acquisition costs and other related charges;
technology and product development costs; certain gains and losses from acquisitions or dispositions; and litigation
settlements or other charges, for which responsibility preceded the current management team.
Segment profit excludes results reported as discontinued operations and accounting changes. Segment profit also excludes
the portion of earnings or loss attributable to noncontrolling interests of consolidated subsidiaries, and as such only includes
the portion of earnings or loss attributable to our share of the consolidated earnings or loss of consolidated subsidiaries.
Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular
segment’s management is measured:
(cid:120)
(cid:120)
Interest and other financial charges and income taxes are excluded in determining segment profit (which we sometimes
refer to as “operating profit”) for the industrial segments.
Interest and other financial charges and income taxes are included in determining segment profit (which we sometimes
refer to as “net earnings”) for the GE Capital segment.
Certain corporate costs, such as shared services, employee benefits and information technology are allocated to our
segments based on usage. A portion of the remaining corporate costs are allocated based on each segment’s relative net cost
of operations.
Effective in the second quarter of 2014, we began including the effects of the GECC preferred stock dividends in our GE
Capital segment. Previously, such dividends had been reported in the caption “Corporate items and eliminations” in the
Company’s Summary of Operating Segments table. Presenting GE Capital segment results including the effects of the GECC
preferred stock dividends is consistent with the way management measures the results of our financial services business.
Prior-period segment information has been recast to be consistent with how we currently evaluate the performance of the GE
Capital segment.
POTENTIAL ACQUISITIONS IMPACTING MULTIPLE SEGMENTS
GE’s offer to acquire the Thermal, Renewables and Grid businesses of Alstom for approximately € 12.4 billion (to be adjusted
for the assumed net cash or liability at closing) was positively recommended by Alstom’s board of directors. In addition, GE,
Alstom and the French Government signed a memorandum of understanding for the formation of three joint ventures in grid
technology, renewable energy, and global nuclear and French steam power and Alstom will invest approximately € 2.6 billion in
these joint ventures. In the fourth quarter of 2014, Alstom completed its review of the proposed transaction with the works
council and obtained approval from its shareholders. Also in the fourth quarter of 2014, GE and Alstom entered into an
amendment to the original agreement where GE has agreed to pay Alstom a net amount of approximately €0.3 b illion of
additional consideration at closing. In exchange for this funding, Alstom has agreed to extend the trademark licensing of the
Alstom name from 5 years to 25 years as well as other contractual amendments. The proposed transaction continues to be
subject to regulatory approvals. The transaction is targeted to close in 2015. The acquisition and alliances will impact our
Power & Water and Energy Management segments.
30 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S
SUMMARY OF OPERATING SEGMENTS
(In millions)
2014
2013
2012
2011
2010
General Electric Company and consolidated affiliates
Revenues
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial segment revenues
GE Capital
Total segment revenues
Corporate items and eliminations
Consolidated revenues
Segment profit
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial segment profit
GE Capital
Total segment profit
Corporate items and eliminations
GE interest and other financial charges
GE provision for income taxes
Earnings from continuing operations
attributable to the Company
Earnings (loss) from discontinued
operations, net of taxes
Consolidated net earnings
attributable to the Company
$
$
$
$
$
$
27,564
18,676
7,319
23,990
18,299
5,650
8,404
109,902
42,725
152,627
(4,038)
148,589
5,352
2,585
246
4,973
3,047
1,130
431
17,764
7,019
24,783
(6,225)
(1,579)
(1,634)
15,345
(112)
$
$
$
24,724
16,975
7,569
21,911
18,200
5,885
8,338
103,602
44,067
147,669
(1,624)
146,045
4,992
2,178
110
4,345
3,048
1,166
381
16,220
7,960
24,180
(6,002)
(1,333)
(1,668)
15,177
(2,120)
$
$
$
28,299
15,241
7,412
19,994
18,290
5,608
7,967
102,811
45,364
148,175
(1,491)
146,684
5,422
1,924
131
3,747
2,920
1,031
311
15,486
7,222
22,708
(4,718)
(1,353)
(2,013)
14,624
(983)
$
$
$
25,675
13,608
6,422
18,859
18,083
4,885
7,693
95,225
48,324
143,549
2,993
146,542
5,021
1,660
78
3,512
2,803
757
237
14,068
6,480
20,548
(288)
(1,299)
(4,839)
14,122
29
24,779
9,433
5,161
17,619
16,897
3,370
7,957
85,216
49,163
134,379
14,496
148,875
5,804
1,406
156
3,304
2,741
315
404
14,130
3,083
17,213
(1,012)
(1,600)
(2,024)
12,577
(933)
$
15,233
$
13,057
$
13,641
$
14,151
$
11,644
GE 2014 FORM 10-K 31
M D & A S E G M E N T O P E R AT I O N S | P O W E R & W AT E R
POWER & WATER
BUSINESS OVERVIEW
Leader: Steve Bolze
Headquarters & Operations
(cid:120) Senior Vice President (SVP) and
President & CEO, GE Power &
Water
(cid:120) Over 20 years of service with
General Electric
(cid:120) 18% of segment revenues in 2014
(cid:120) 25% of industrial segment revenues
(cid:120) 30% of industrial segment profit
(cid:120) Headquarters: Schenectady, NY
(cid:120) Serving customers in125+ countries
(cid:120) Employees: approximately 38,000
Products & Services
Power & Water serves power generation, industrial, government and other customers worldwide with
products and services related to energy production and water reuse. Our products and technologies
harness resources such as wind, oil, gas, diesel, nuclear and water to produce electric power.
(cid:120) Power Generation Products and Services (PGP and PGS) (cid:177) offers a wide spectrum of heavy-duty gas turbines and
supplies machines and services for utilities, independent power producers, and industrial application, from pure power
generation to cogeneration and district heating.
(cid:120) Renewable Energy – primarily our Wind business, which manufactures wind turbines and provides support services
ranging from development assistance to operation and maintenance.
(cid:120) Distributed Power (cid:177) provides technology-based products to generate reliable and efficient power at or near the point of
use. The product portfolio features aero derivative gas turbines, Jenbacher gas engines, and Waukesha gas engines.
(cid:120) Water Process Technologies – provides water treatment, wastewater treatment and process system solutions.
(cid:120) Nuclear – offers advanced reactor technologies solutions, including reactors, fuels and support services for boiling water
reactors, and is offered through joint ventures with Hitachi and Toshiba, for safety, reliability and performance for nuclear
fleets.
Competition & Regulation
Worldwide competition for power generation products and services is intense. Demand for power generation is global and, as
a result, is sensitive to the economic and political environments of each country in which we do business.
Our Wind business is subject to certain global policies and regulation including the U.S. Production Tax Credit and incentive
structures in China and various European countries. Changes in such policies may create unknown impacts or opportunities
for the business.
32 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | P O W E R & W AT E R
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $27.6 BILLION
(cid:3) ORDERS
(cid:3)
(cid:3)
2014 SUB-SEGMENT REVENUES
(cid:3) BACKLOG
EQUIPMENT/SERVICES REVENUES
(cid:3) UNIT SALES
Equipment
Services
Equipment
Services
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120)
(cid:120)
The Alstom transaction is expected to advance our strategic priorities and industrial growth. Alstom’s Thermal and
Renewables businesses are complementary in technology, operations and geography to our business. We expect the
integration to yield efficiencies in supply chain, service infrastructure, new product development and SG&A.
The business continues to invest in new product development, such as our new H-Turbine, larger wind turbines and
advanced upgrades, to expand our equipment and services offerings.
(cid:120) Excess capacity in developed markets and macroeconomic and geopolitical environments result in uncertainty for the
industry and business.
GE 2014 FORM 10-K 33
M D & A S E G M E N T O P E R AT I O N S | P O W E R & W AT E R
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
SEGMENT REVENUES & PROFIT WALK:
2014 – 2013
COMMENTARY:
2014 – 2013
Revenues
$
24.7
$
3.7
(0.4)
(0.2)
N/A
N/A
N/A
(0.2)
$
27.6
$
Revenues
$
28.3
$
(3.9)
0.2
(0.1)
N/A
N/A
N/A
0.2
$
24.7
$
Profit
5.0
0.7
(0.4)
-
0.1
(0.5)
0.7
(0.2)
5.4
Profit
5.4
(0.7)
0.2
-
0.2
0.3
(0.6)
0.2
5.0
Segment revenues up $2.8 billion (11%);
Segment profit up $0.4 billion (7%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was driven by higher volume,
primarily higher equipment sales at PGP and
Renewables, partially offset by lower prices at PGP and
Renewables and the impact of a stronger U.S. dollar.
The increase in profit was mainly due to the higher
volume at PGP and Renewables, and higher
productivity reflecting a 10% reduction in SG&A cost,
partially offset by negative business mix with equipment
revenue up 20% and lower prices.
2013 – 2012
Segment revenues down $3.6 billion (13%);
Segment profit down $0.4 billion (8%) as a result of:
(cid:120)
(cid:120)
The decrease in revenues was driven by lower volume,
primarily equipment sales at PGP and Renewables, and
the impact of a stronger U.S. dollar. These decreases
were partially offset by higher prices and higher other
income related to a sale of assets.
The decrease in profit was mainly due to lower volume,
primarily equipment sales at PGP and Renewables, and
lower productivity despite decreases in SG&A cost.
These decreases were partially offset by positive
business mix, the effects of deflation, higher prices and
higher other income.
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
2013 – 2012
2012
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2013
34 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | O I L & G AS
OIL & GAS
BUSINESS OVERVIEW
Leader: Lorenzo Simonelli
(cid:120) President & CEO, GE Oil & Gas
(cid:120) 20 years of service with General
Electric
Headquarters & Operations
(cid:120) 12% of segment revenues in 2014
(cid:120) 17% of industrial segment revenues
(cid:120) 15% of industrial segment profit
(cid:120) HQ: London, UK
(cid:120) Serving customers in 150+ countries
(cid:120) Employees: approximately 44,000
Products & Services
Oil & Gas serves all segments of the oil and gas industry, from drilling, completion, production and oil field
operations, to transportation via liquefied natural gas (LNG) and pipelines. In addition, Oil & Gas provides
industrial power generation and compression solutions to the refining and petrochemicals segments. Oil &
Gas also delivers pipeline integrity solutions and a wide range of sensing, inspection and monitoring
technologies. Oil & Gas exploits technological innovation from other GE businesses, such as Aviation and
Healthcare, to continuously improve oil and gas industry performance, output and productivity.
(cid:120)
Turbomachinery Solutions (TMS) – provides equipment and related services for mechanical-drive, compression and
power-generation applications across the oil and gas industry. Our designs deliver high capacities and efficiencies,
increase product flow and decrease both operational and environmental risks in the most extreme conditions, pressures
and temperatures. Our portfolio includes drivers (aero-derivative gas turbines, heavy-duty gas turbines and synchronous
and induction electric motors), compressors (centrifugal and axial, direct drive high speed, integrated, subsea
compressors and turbo expanders), and turn-key solutions (industrial modules and waste heat recovery).
(cid:120) Drilling & Surface (D&S) (cid:177) provides drilling, completion and production products and services for onshore & offshore oil
& gas wells, and manufactures artificial lift equipment for well production and gears. The products & services portfolio
includes blowout preventers, choke valves, drilling systems, drill stem valves, elastomers, pulsation dampeners
wellheads, and surface production equipment.
(cid:120) Measurement & Controls (M&C) – provides equipment and services for a wide range of industries, including oil & gas,
power generation, aerospace, metals, and transportation. The offerings include sensor-based measurement; non-
destructive testing and inspection; flow and process control; turbine, generator and plant controls and condition
monitoring, as well as pipeline integrity solutions.
(cid:120) Subsea Systems (SS) – offers our customers equipment and services for subsea well completion and production and
integrated systems for enhanced recovery and comprehensive well lifecycle support. From new subsea field design and
installation to mature field intervention and enhancement, SS offers all the equipment and expertise needed to safely and
reliably maximize long-term resource value and overall efficiency. Specific products include flow control valves (known as
"Christmas trees"), pressure control systems, wellheads, manifolds, integrated work over control systems and flexible
subsea risers.
(cid:120) Downstream Technology Solutions (DTS) – provides products and services to serve the downstream segments of the
industry including refining, petrochemical, distributed gas, and other industrial applications. Products include steam
turbines, reciprocating and centrifugal compressors, blowers, pumps, valves, and compressed natural gas (CNG) and
small-scale LNG solutions used primarily for shale oil and gas field development.
Competition & Regulation
Demand for oil and gas equipment and services is global and, as a result, is sensitive to the economic and political
environment of each country in which we do business. We are subject to the regulatory bodies of the countries in which we
operate. Our products are subject to regulation by U.S. and non-U.S. energy policies.
GE 2014 FORM 10-K 35
M D & A S E G M E N T O P E R AT I O N S | O I L & G AS
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $18.7 BILLION
ORDERS
2014 SUB-SEGMENT REVENUES
BACKLOG
EQUIPMENT/SERVICES REVENUES
Equipment
Services
Equipment
Services
Services Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) On June 2, 2014, we acquired Cameron’s Reciprocating Compression division for $0.6 billion. The division provides
reciprocating compression equipment and aftermarket services for oil and gas production, gas processing, gas distribution
and independent power industries.
(cid:120)
In July 2013, we completed the acquisition of Lufkin, a leading provider of artificial lift technologies for the oil and gas
industry and a manufacturer of gears, for $3.3 billion. Revenues for Lufkin are included in the D&S sub-segment.
(cid:120) Relatively lower oil prices leading to reductions in customers’ forecasted capital expenditures create industry challenges,
the effects of which are uncertain.
(cid:120) We are impacted by volatility in foreign currency exchange rates mainly due to a high concentration of non-U.S. dollar
denominated business as well as long-term contracts denominated in multiple currencies.
36 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | O I L & G AS
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
SEGMENT REVENUES & PROFIT WALK:
2014 – 2013
COMMENTARY:
2014 – 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
Profit
$
17.0
$
1.7
0.1
(0.1)
N/A
N/A
N/A
-
$
18.7
$
2.2
0.2
0.1
-
-
(0.2)
0.4
-
2.6
Segment revenues up $1.7 billion (10%);
Segment profit up $0.4 billion (19%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher
volume, mainly driven by higher equipment sales at SS,
D&S and TMS, as well as the $0.3 billion net impact of
acquisitions, primarily Lufkin, and dispositions, primarily
Wayne. Higher prices primarily at SS also increased
revenues. These increases were partially offset by the
effects of a stronger U.S. dollar.
The increase in profit was primarily due to higher
productivity, higher volume and higher prices. These
increases were partially offset by negative business
mix.
2013 – 2012
2013 – 2012
2012
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2013
Revenues
Profit
$
15.2
$
1.5
0.2
0.1
N/A
N/A
N/A
-
$
17.0
$
1.9
0.2
0.2
-
-
-
(0.1)
-
2.2
Segment revenues up $1.7 billion (11%);
Segment profit up $0.3 billion (13%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher
volume, mainly driven by increased equipment sales as
well as the impact of acquisitions ($0.7 billion), higher
prices at TMS, and the effects of a weaker U.S. dollar.
The increase in profit was due to higher volume, which
was positively impacted by acquisitions and organic
growth in the SS and D&S business, as well as higher
prices at TMS. This was partially offset by lower cost
productivity.
GE 2014 FORM 10-K 37
M D & A S E G M E N T O P E R AT I O N S | E N E R G Y M AN AG E M E N T
ENERGY MANAGEMENT
BUSINESS OVERVIEW
Leader: Mark W. Begor
Headquarters & Operations
(cid:120) President & CEO, GE Energy
Management
(cid:120) Over 30 years of service with
General Electric
(cid:120) 5% of segment revenues in 2014
(cid:120) 7% of industrial segment revenues
(cid:120) 1% of industrial segment profit
(cid:120) Headquarters: Atlanta, GA
(cid:120) Serving customers in 150+ countries
(cid:120) Employees: approximately 30,000
Products & Services
Energy Management designs, manufactures and services leading technology solutions for the delivery,
management, conversion and optimization of electrical power. Our energy solutions allow customers
across multiple energy-intensive industries such as oil & gas, marine, data centers, metals and mining to
efficiently manage electricity from the point of generation to the point of consumption.
(cid:120)
Industrial Solutions (cid:177) creates advanced technologies that safely, reliably and efficiently distribute and control electricity
to protect people, property and equipment. We provide high performance software and control solutions and offer
products such as circuit breakers, relays, arresters, switchgear, panel boards and repair for the commercial, data center,
healthcare, mining, renewables, oil & gas, water and telecom markets.
(cid:120) Digital Energy (cid:177) maximizes the reliability, efficiency and resiliency of the grid by preventing and detecting grid power
failures, digitizing substations, and reducing outages. We provide advanced products and services that modernize the
grid, from the power plant to the power consumer, such as protection and control, industrial strength communications,
smart meters, monitoring & diagnostics, visualization software and advanced analytics. We provide high voltage and
medium voltage (HV/MV) equipment, smart controls and sensors, software solutions and power projects for industries
such as generation, transmission, distribution, oil and gas, telecommunication, mining and water. We currently have
several strategic partnership ventures, primarily in Mexico and China, which allow us to support our customers through
various product and service offerings.
(cid:120) Power Conversion – applies the science and systems of power conversion to help drive the electric transformation of the
world’s energy infrastructure. Our product portfolio includes motors, generators, automation & control equipment & drives
for energy intensive industries such as marine, oil & gas, renewable energy, mining, rail, metals, test systems and water.
Competition & Regulation
Energy Management faces competition from businesses operating with global presence and with deep energy domain
expertise. Our products and services sold to end customers are often subject to a number of regulatory specification and
performance standards under different federal, state, foreign and energy industry standards.
38 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | E N E R G Y M AN AG E M E N T
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $7.3 BILLION
ORDERS
2014 SUB-SEGMENT REVENUES
BACKLOG
EQUIPMENT/SERVICES REVENUES
Equipment
Services
Equipment
Services
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) We are seeing growth in the liquefied natural gas, onshore electrification, offshore marine, and wind & solar industries,
which is driving demand in our Power Conversion business for equipment and services.
(cid:120) While we see signs of growth in the North American electrical distribution market, the European economic recovery is
slow, and demand remains soft in other parts of the developed world.
(cid:120)
The U.S. electrical grid capacity is high and load growth is expected to be slow in the near term; spending by utilities in
the U.S. continues to be focused more heavily on sustaining operations versus capital investment.
(cid:120) We plan to complement and expand the Digital Energy business with the acquisition of Alstom’s Grid business.
(cid:120) We expect continued reinvestment in our key products to drive growth and continued margin accretion in 2015 and
beyond.
GE 2014 FORM 10-K 39
M D & A S E G M E N T O P E R A T I O N S | E N E R G Y M A N A G E M E N T
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
COMMENTARY:
2014 – 2013
2013 – 2012
Segment revenues down $0.3 billion (3%) as a result
of:
(cid:120)
Lower volume ($0.2 billion) from weakness in North
American utility and electrical distribution markets,
partially offset by higher sales in Power Conversion.
Segment revenues up $0.2 billion (2%) as a result of:
(cid:120) Higher volume ($0.2 billion), partially offset by the
effects of the stronger U.S. dollar ($0.1 billion).
Segment profit up $0.1 billion as a result of:
(cid:120) Higher productivity ($0.1 billion) reflecting an 8%
reduction in SG&A cost.
Segment profit down 16% as a result of:
(cid:120)
Lower productivity ($0.1 billion).
40 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | A V I A T I O N
AVIATION
BUSINESS OVERVIEW
Leader: David Joyce
Headquarters & Operations
(cid:120) SVP and President & CEO, GE
Aviation
(cid:120) Over 30 years of service with
General Electric
(cid:120) 16% of segment revenues in 2014
(cid:120) 22% of industrial segment revenues
(cid:120) 28% of industrial segment profit
(cid:120) Headquarters: Cincinnati, OH
(cid:120) Serving customers in 125+ countries
(cid:120) Employees: approximately 44,000
Products & Services
Aviation designs and produces commercial and military aircraft engines, integrated digital
components, electric power and mechanical aircraft systems. We also provide aftermarket services
to support our products.
(cid:120) Commercial Engines (CEO) (cid:177) manufactures jet engines and turboprops for commercial airframes. Our commercial
engines power aircraft in all categories; regional, narrowbody and widebody. We also manufacture for Business and
General Aviation segments.
(cid:120) Commercial Services (cid:177) provides maintenance, component repair and overhaul services (MRO), including sales of
replacement parts.
(cid:120) Military (cid:177) manufactures jet engines for military airframes. Our military engines power a wide variety of military aircraft
including fighters, bombers, tankers, helicopters and surveillance aircraft, as well as marine applications. We provide
maintenance, component repair and overhaul services (MRO), including sales of replacement parts.
(cid:120) Systems (cid:177) provides components, systems and services for commercial and military segments. This includes avionics
systems, aviation electric power systems, flight efficiency and intelligent operation services, aircraft structures and Avio
Aero.
(cid:120) We also produce and market engines through CFM International, a company jointly owned by GE and Snecma, a
subsidiary of SAFRAN of France, and Engine Alliance, LLC, a company jointly owned by GE and the Pratt & Whitney
division of United Technologies Corporation. New engines are also being designed and marketed in a joint venture with
Honda Aero, Inc., a division of Honda Motor Co., Ltd.
Competition & Regulation
The global businesses for aircraft jet engines, maintenance component repair and overhaul services (including parts sales) are
highly competitive. Both U.S. and non-U.S. markets are important to the growth and success of the business. Product
development cycles are long and product quality and efficiency are critical to success. Research and development
expenditures are important in this business, as are focused intellectual property strategies and protection of key aircraft engine
design, manufacture, repair and product upgrade technologies. Aircraft engine orders and systems tend to follow military and
airline procurement transactions.
Our product, services and activities are subject to a number of regulators such as by the U.S. Federal Aviation Administration
(FAA), European Aviation Safety Agency (EASA) and other regulatory bodies.
GE 2014 FORM 10-K 41
M D & A S E G M E N T O P E R A T I O N S | A V I A T I O N
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $24.0 BILLION
ORDERS
2014 SUB-SEGMENT REVENUES
BACKLOG
Equipment
Services
Equipment
Services
EQUIPMENT/SERVICES REVENUES
UNIT SALES
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
(a) GEnx engines are a subset of commercial engines
(b) Commercial spares shipment rate in millions of dollars per day
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) On August 1, 2013, we completed the acquisition of the aviation business of Avio, a manufacturer of aviation propulsion
components and systems for $4.4 billion.
(cid:120) We expect military shipments to be lower due to continued pressure on the U.S. military budget.
(cid:120)
(cid:120)
The installed base continues to grow with new product launches.
Lower fuel costs are expected to result in increased airline profitability and continued growth in passenger traffic and
freight.
(cid:120) Revenue sharing programs are a standard form of cooperation for specific product programs in the aviation industry.
These programs are controlled by Aviation, but counterparties (with interests ranging from 1% to 39%) have an agreed
share of revenues as well as development and component production responsibilities.
42 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | AV I AT I O N
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
SEGMENT REVENUES & PROFIT WALK:
2014 – 2013
COMMENTARY:
2014 – 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
Profit
$
21.9
$
1.2
0.8
-
N/A
N/A
N/A
0.1
$
24.0
$
4.3
0.2
0.8
-
(0.3)
(0.2)
-
0.1
5.0
Segment revenues up $2.1 billion (9%);
Segment profit up $0.6 billion (14%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was due to higher volume
and higher prices driven by Commercial Engines
volume, spare parts volume and the third-quarter 2013
acquisition of Avio.
The increase in profit was mainly due to higher prices in
our Commercial Engines and Commercial Services
businesses and higher volume discussed above.
These increases were partially offset by effects of
inflation and negative business mix.
2013 – 2012
2013 – 2012
2012
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2013
Revenues
Profit
$
20.0
$
1.4
0.6
-
N/A
N/A
N/A
-
$
21.9
$
3.7
0.2
0.6
-
(0.2)
-
(0.1)
0.1
4.3
Segment revenues up $1.9 billion (10%) (including $0.5
billion from acquisitions);
Segment profit up $0.6 billion (16%) as a result of:
(cid:120)
The increase in revenues was primarily due to higher
volume and higher prices. Higher volume and prices
were driven by increased services revenues ($0.7
billion) and equipment ($1.2 billion). The increase in
service revenue was primarily due to higher commercial
spares sales, while the increase in equipment was
primarily due to increased Commercial Engine
shipments.
(cid:120)
The increase in profit was due to higher prices, higher
volume and increased other income, partially offset by
the effects of inflation and lower cost productivity.
GE 2014 FORM 10-K 43
M D & A S E G M E N T O P E R A T I O N S | H E A L T H C A R E
HEALTHCARE
BUSINESS OVERVIEW
Leader: John L. Flannery
Headquarters & Operations
(cid:120) President & CEO, GE Healthcare
(cid:120) Over 25 years of service with
General Electric
(cid:120) 12% of segment revenues in 2014
(cid:120) 17% of industrial segment revenues
(cid:120) 17% of industrial segment profit
(cid:120) Headquarters: Little Chalfont, UK
(cid:120) Serving customers in 140+ countries
(cid:120) Employees: approximately 51,000
Products & Services
Healthcare provides essential healthcare technologies to developed and emerging markets and has
expertise in medical imaging, software and information technology (IT), patient monitoring and diagnostics,
drug discovery, biopharmaceutical manufacturing technologies and performance improvement solutions.
Products and services are sold worldwide primarily to hospitals, medical facilities, pharmaceutical and
biotechnology companies, and to the life science research market.
(cid:120) Healthcare Systems (cid:177) provides a wide range of technologies and services that include diagnostic imaging and clinical
systems. Diagnostic imaging systems such as X-ray, digital mammography, computed tomography (CT), magnetic
resonance (MR), interventional imaging and molecular imaging technologies allow clinicians to see inside the human body
more clearly. Clinical systems such as ultrasound, electrocardiography (ECG), bone densitometry, patient monitoring,
incubators and infant warmers, respiratory care, and anesthesia management that enable clinicians to provide better care
for patients every day - from wellness screening to advanced diagnostics to life-saving treatment. Healthcare systems
also offers product services that include remote diagnostic and repair services for medical equipment manufactured by
GE and by others.
(cid:120)
Life Sciences – delivers products and services for drug discovery, biopharmaceutical manufacturing and cellular
technologies, so scientists and specialists discover new ways to predict, diagnose and treat disease. It also researches,
manufactures and markets innovative imaging agents used during medical scanning procedures to highlight organs,
tissue and functions inside the human body, to aid physicians in the early detection, diagnosis and management of
disease through advanced in-vivo and in-vitro diagnostics.
(cid:120) Healthcare IT – provides IT solutions including enterprise and departmental Information Technology products, Picture
Archiving System (PACS), Radiology Information System (RIS), Cardiovascular Information System (CVIS), revenue
cycle management and practice applications, to help customers streamline healthcare costs and improve the quality of
care.
Competition & Regulation
Healthcare competes with a variety of U.S. and non-U.S. manufacturers and services providers. Customers require products
and services that allow them to provide better access to healthcare, improve the affordability of care, and improve the quality
of patient outcomes. Technology innovation to provide products that improve these customer requirements and competitive
pricing are among the key factors affecting competition for these products and services. New technologies could make our
products and services obsolete unless we continue to develop new and improved products and services.
Our products are subject to regulation by numerous government agencies, including the U.S. Food and Drug Administration
(U.S. FDA), as well as various laws that apply to claims submitted under Medicare, Medicaid or other government funded
healthcare programs.
44 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | H E AL T H C AR E
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $18.3 BILLION
ORDERS
2014 SUB-SEGMENT REVENUES
BACKLOG
EQUIPMENT/SERVICES REVENUES
Equipment
Services
Equipment
Services
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) We continue to lead in technology innovation with greater focus on productivity based technology, services, and IT
solutions as healthcare providers seek greater productivity and efficiency.
(cid:120)
The U.S. market is improving but uncertainty remains regarding the impact of the Affordable Care Act. Emerging markets
are expected to grow long-term with short-term volatility.
(cid:120) API Healthcare (API), a healthcare workforce management software and analytics solutions provider, was acquired in
February 2014 for $0.3 billion.
(cid:120)
Life Sciences is expanding its business through bioprocess growth and the acquisition of certain Thermo Fisher Scientific
Inc. life-science businesses, which were acquired in March 2014 for $1.1 billion.
GE 2014 FORM 10-K 45
M D & A S E G M E N T O P E R AT I O N S | H E AL T H C AR E
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
SEGMENT REVENUES & PROFIT WALK:
2014 – 2013
COMMENTARY:
2014 – 2013
Revenues
$
18.2
$
0.6
(0.3)
(0.2)
N/A
N/A
N/A
-
$
18.3
$
Revenues
$
18.3
$
0.5
(0.3)
(0.2)
N/A
N/A
N/A
-
$
18.2
$
Profit
3.0
0.1
(0.3)
(0.1)
(0.2)
-
0.5
-
3.0
Profit
2.9
0.1
(0.3)
(0.1)
(0.2)
-
0.6
-
3.0
Segment revenues up $0.1 billion (1%);
Segment profit flat as a result of:
(cid:120)
The increase in revenues was due to higher volume,
driven by the higher sales in Life Sciences. This
increase was partially offset by lower prices mainly at
Healthcare Systems and the effects of a stronger U.S.
dollar.
(cid:120) Profit was flat as higher productivity, driven by SG&A
cost reductions, and higher volume, were offset by
lower prices, mainly at Healthcare Systems, inflation
and effects of a stronger U.S. dollar.
2013 – 2012
Segment revenues down $0.1 billion;
Segment profit up $0.1 billion (4%) as a result of:
(cid:120)
(cid:120)
The decrease in revenues was driven by lower prices
mainly at Healthcare Systems, effects of a stronger
U.S. dollar and lower other income, partially offset by
higher volume.
The increase in profit was mainly driven by higher
productivity resulting from SG&A cost reductions and
higher volume, partially offset by lower prices mainly at
Healthcare Systems, the effects of inflation and the
stronger U.S. dollar.
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
2013 – 2012
2012
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2013
46 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | T R A N S P O R T AT I O N
TRANSPORTATION
BUSINESS OVERVIEW
Leader: Russell Stokes
Headquarters & Operations
(cid:120) President & CEO, GE Transportation
(cid:120) Over 15 years of service with General
Electric
(cid:120) 4% of segment revenues in 2014
(cid:120) 5% of industrial segment revenues
(cid:120) 6% of industrial segment profit
(cid:120) Headquarters: Chicago, IL
(cid:120) Serving customers in 60+ countries
(cid:120) Employees: approximately 13,000
Products & Services
Transportation is a global technology leader and supplier to the railroad, marine, drilling and mining
industries. Products and services offered by Transportation include:
(cid:120)
(cid:120)
Locomotives (cid:177) we provide freight and passenger locomotives, signaling and communications systems as well as rail
services to help solve rail challenges. We manufacture high-horsepower, diesel-electric locomotives including the
Evolution Series TM, which meets or exceeds the U.S. Environmental Protection Agency’s (EPA) Tier 4 requirements for
freight and passenger applications.
Locomotive Services & Solutions – we develop partnerships that support advisory services, parts, integrated software
solutions and data analytics. Our comprehensive offerings include tailored service programs, high-quality parts for GE and
other locomotive platforms, overhaul, repair and upgrade services, and wreck repair. Our portfolio provides the people,
partnerships and leading software to optimize operations and asset utilization.
(cid:120) Mining (cid:177) we provide mining equipment and services. The portfolio includes drive systems for off-highway vehicles, mining
equipment, mining power and productivity.
(cid:120) Marine, Stationary & Drilling (cid:177) we offer motors for land and offshore drilling rigs, marine diesel engines and stationary
power diesel engines.
Competition & Regulation
The competitive environment for locomotives and mining equipment and services consists of large global competitors and a
number of smaller competitors that compete in a limited-size product range, and or geographic region. North America will be of
particular focus for the rail industry in 2015 as the EPA Tier 4 emissions standards are implemented. We are positioned with
the only locomotive currently available that meets the Tier 4 standards.
GE 2014 FORM 10-K 47
M D & A S E G M E N T O P E R AT I O N S | T R AN S P O R T AT I O N
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $5.7 BILLION
ORDERS
2014 SUB-SEGMENT REVENUES
BACKLOG
Equipment
Services
Equipment
Services
EQUIPMENT/SERVICES REVENUES
UNIT SALES
(cid:3)
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) Rail volume, especially in North America, continues to climb and the number of parked locomotives remains low.
(cid:120) North American locomotives competition remains strong, but GE is positioned with the only locomotive currently available
meeting the U.S. EPA’s highest (Tier 4) emission standards. We expect U.S. growth to be driven by early demand for Tier
4 locomotives.
(cid:120) Continued global mining softness has resulted in delayed capital expenditures in the mining industry.
(cid:120) During the fourth quarter of 2014, we signed an agreement to sell our Signaling business to Alstom for approximately $0.8
billion.
48 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | T R A N S P O R T AT I O N
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
COMMENTARY:
2014 – 2013
2013 – 2012
Segment revenues down $0.2 billion (4%) as a result of:
Segment revenues up $0.3 billion (5%) as a result of:
(cid:120)
Lower volume ($0.2 billion), primarily in Mining
reflecting weakness in the industry, partially offset by an
increase in volume in the locomotive services business.
(cid:120) Higher volume ($0.3 billion), due to 2012 acquisitions
(primarily Industrea).
Segment profit down 3% as a result of:
Segment profit up $0.1 billion (13%) as a result of:
(cid:120)
Lower volume, primarily in Mining as discussed above,
was partially offset by deflation and cost productivity.
(cid:120) Material deflation ($0.1 billion), higher volume and
productivity.
GE 2014 FORM 10-K 49
M D & A S E G M E N T O P E R A T I O N S | A P P L I A N C E S & L I G H T I N G
APPLIANCES & LIGHTING
BUSINESS OVERVIEW
Leaders: Chip Blankenship &
Maryrose Sylvester
(cid:120) President & CEO, Appliances
(cid:120) Over 20 years of service with General
Electric
(cid:120) President & CEO, Lighting
(cid:120) Over 25 years of service with General
Electric
Headquarters & Operations
(cid:120) 5% of segment revenues in 2014
(cid:120) 7% of industrial segment revenues
(cid:120) 2% of industrial segment profit
(cid:120) Appliances HQ: Louisville, KY
(cid:120) Lighting HQ: East Cleveland, OH
(cid:120) Serving customers in 100+ countries
(cid:120) Employees: approximately 24,000
Products & Services
Appliances & Lighting products, such as major appliances and a subset of lighting products, are primarily
directed to consumer applications, while other lighting products are directed towards commercial and
industrial applications. We also invest in the development of differentiated, premium products such as
energy efficient solutions for both consumers and businesses.
(cid:120) Appliances – sells and services major home appliances including refrigerators, freezers, electric and gas ranges,
cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, residential water systems
for filtration, softening and heating and hybrid water heaters. Our brands include GE Monogram®, GE Café™, GE
Profile™, GE®, GE Artistry™, and Hotpoint®. We also manufacture certain products and source finished product and
component parts from third-party global manufacturers. A large portion of appliances sales are through a variety of retail
outlets for replacement of installed units. Residential building contractors installing units in new construction is the second
major U.S. channel. We offer one of the largest original equipment manufacturer (OEM) service organizations in the
appliances industry, providing in-home repair and aftermarket parts.
(cid:120)
Lighting (cid:177) manufactures, sources and sells a variety of energy-efficient solutions for commercial, industrial, municipal
and consumer applications across the globe, utilizing light-emitting diode (LED), fluorescent, halogen and high-intensity
discharge (HID) technologies. In addition to growing our LED breadth, the business is focused on building lighting
connected by state-of-the-art software that will unleash a whole new potential for how we light our world. The business
sells products under the reveal® and Energy Smart® consumer brands, and Evolve™, GTx™, Immersion™, Infusion™,
Lumination™, Albeo™, TriGain™, and Tetra® commercial brands. GE Lighting offers a full range of solutions and
services to outfit entire properties with lighting, from ceilings, parking lots, signage, displays, roadways, sports arenas and
other areas.
Competition & Regulation
Cost control, including productivity, is key in the highly competitive marketplace in which Appliances & Lighting competes. GE
Lighting operates in a complex, global marketplace. Energy regulations impacting traditional lighting technologies are moving
demand to energy-saving products that last longer and cost less to operate over time. Evolving these technologies, as well as
cost control, is key in the global arena in which the business operates.
50 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | A P P L I A N C E S & L I G H T I N G
OPERATIONAL OVERVIEW
(Dollar in billions)
2014 GEOGRAPHIC REVENUES: $8.4 BILLION
2014 SUB-SEGMENT REVENUES
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) During the third quarter of 2014, GE signed an agreement to sell its Appliances business to Electrolux for $3.3 billion. The transaction
has been approved by the boards of directors of GE and Electrolux and remains subject to customary closing conditions and
regulatory approvals, and is targeted to close in mid-2015.
(cid:120) While the demand in the professional non-LED market segment is slowing, there is a strong global shift to energy efficient lighting
including continued growth in LED products.
FINANCIAL OVERVIEW
(Dollar in billions)
SEGMENT REVENUES & PROFIT
SEGMENT PROFIT MARGIN
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
COMMENTARY:
2014 – 2013
2013 – 2012
Segment revenues up $0.1 billion (1% ) as a result of:
(cid:120) Higher volume ($0.1 billion) driven by higher sales at
Segment revenues up $0.4 billion (5%) as a result of:
(cid:120) Higher volume ($0.4 billion) driven by higher sales at
Appliances.
Appliances.
Segment profit up $0.1 billion (13%) as a result of:
(cid:120)
Improved productivity ($0.1 billion) including the effects of
classifying Appliances as a business held for sale in the
third quarter of 2014.
Segment profit up $0.1 billion (23%) as a result of:
(cid:120)
Improved productivity ($0.1 billion) and higher prices.
GE 2014 FORM 10-K 51
M D & A S E G M E N T O P E R AT I O N S | G E C AP I T AL
GE CAPITAL
BUSINESS OVERVIEW
Leader: Keith Sherin
Headquarters & Operations
(cid:120) Vice Chairman GE, and Chairman &
CEO, GE Capital
(cid:120) Over 30 years of service with
General Electric
(cid:120) 28% of segment revenues in 2014
(cid:120) Headquarters: Norwalk, CT
(cid:120) Serving customers in 70+ countries
(cid:120) Employees: approximately 47,000
Products & Services
GE Capital businesses offer a broad range of financial services and products worldwide for businesses of all sizes. Services
include commercial loans and leases, fleet management, financial programs, credit cards, personal loans and other financial
services. GE Capital also develops strategic partnerships and joint ventures that utilize GE’s industry-specific expertise in
aviation, energy, infrastructure and healthcare to capitalize on market-specific opportunities. Products and services are
offered through the following businesses:
(cid:120) Commercial Lending and Leasing (CLL) – has particular mid-market expertise, and primarily offers secured commercial
loans, equipment financing and other financial services to companies across a wide range of industries including
construction, retail, manufacturing, transportation, media, communications, technology and healthcare. Equipment
financing activities include industrial, medical, fleet vehicles, construction, office imaging and many other equipment types.
(cid:120) Consumer (cid:177) offers a full range of financial products including private-label credit cards; personal loans; bank cards; auto
loans and leases; mortgages; debt consolidation; home equity loans; deposit and other savings products; and small and
medium enterprise lending on a global basis.
(cid:120) Real Estate – offers a range of capital and investment solutions, including fixed and floating rate mortgages for new
acquisitions or re-capitalizations of commercial real estate worldwide. Our business finances with loan structures; the
acquisition, refinancing and renovation of office buildings, apartment buildings, retail facilities, hotels, warehouses and
industrial properties.
(cid:120) Energy Financial Services – invests in long-lived, capital intensive energy projects and companies by providing
structured equity, debt, leasing, partnership financing, project finance and broad-based commercial finance.
(cid:120) GE Capital Aviation Services (GECAS) (cid:177) our commercial aircraft financing and leasing business, offers a wide range of
aircraft types and financing options, including operating leases and secured debt financing, and also provides productivity
solutions including spare engine leasing, airport and airline consulting services, and spare parts financing and
management.
Competition & Regulation
The businesses in which we engage are subject to competition from various types of financial institutions, including
commercial banks, thrifts, investment banks, broker-dealers, credit unions, leasing companies, consumer loan companies,
independent finance companies, finance companies associated with manufacturers and insurance and reinsurance
companies.
GECC is a regulated savings and loan holding company under U.S. law, subject to Federal Reserve Board (FRB) supervision.
In 2013, the U.S. Financial Stability Oversight Council (FSOC) designated GECC as a nonbank systemically important
financial institution (nonbank SIFI) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (See Regulations
and Supervision for additional information).
52 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | G E C A P I T A L
OPERATIONAL OVERVIEW
(Dollars in billions)
2014 GEOGRAPHIC REVENUES: $42.7 BILLION
NET INTEREST MARGIN
2014 SUB-SEGMENT REVENUES
TIER 1 COMMON RATIO ESTIMATE*
ENDING NET INVESTMENT, EXCLUDING
LIQUIDITY*
DIVIDENDS RETURNED TO PARENT IN 2014
Quarterly Dividends $2.0 billion
Special Dividends $1.0 billion
Total $3.0 billion
* Non-GAAP Financial Measure
GE 2014 FORM 10-K 53
M D & A S E G M E N T O P E R A T I O N S | G E C A P I T A L
SIGNIFICANT TRENDS & DEVELOPMENTS
ENDING NET INVESTMENT
We have communicated our goal of reducing GE Capital’s ENI, excluding liquidity, most recently targeting a balance of less
than $300 billion. ENI is a metric used by us to measure the total capital we have invested in our financial services business.
GE Capital’s ENI (excluding liquidity) was $363 billion at December 31, 2014. To achieve this goal, we are more aggressively
focusing our businesses on selective financial services products where we have deep domain experience, broad distribution,
the ability to earn a consistent return on capital and are competitively advantaged, while managing our overall balance sheet
size and risk. We have a strategy of exiting those businesses that are deemed to be non-strategic or that are underperforming.
We have completed a number of dispositions in our businesses in the past and will continue to evaluate options going forward.
Accordingly, in the short-term, as we reduce our ENI through exiting non-core businesses, the overall level of our net earnings
may be reduced, which potentially could include impairments, restructurings and other non-cash charges. However, over the
long-term, we believe that this strategy will improve our long-term performance through higher returns as we will have a larger
concentration of assets in our core businesses, as opposed to the underperforming or non-strategic assets we will be exiting;
reduce liquidity risk as we pay down outstanding debt and diversify our sources of funding (with less reliance on the global
commercial paper markets and an increase in alternative sources of funding such as deposits); and reduce capital
requirements while strengthening capital ratios. Additional information about our liquidity and how we manage this risk can be
found in the Financial Resources and Liquidity section of this Form 10-K Report.
The actions below are consistent with our strategy of reducing GECC ENI and investing in our core businesses.
OTHER TRENDS & DEVELOPMENTS
(cid:120) Milestone Aviation – On January 30, 2015, GECAS acquired Milestone Aviation Group, a helicopter leasing business,
for approximately $1.8 billion.
(cid:120) Budapest Bank – During the fourth quarter of 2014, we signed an agreement to sell our consumer finance business
Budapest Bank to Hungary’s government.
(cid:120) GEMB – Nordic – During the fourth quarter of 2014, we completed the sale of GE Money Bank AB, our consumer finance
business in Sweden, Denmark and Norway (GEMB – Nordic) to Santander for proceeds of $2.3 billion.
(cid:120) Synchrony Financial – On August 5, 2014, we completed the initial public offering (IPO) of our North American Retail
Finance business, Synchrony Financial, as a first step in a planned, staged exit from that business. Synchrony Financial
closed the IPO of 125 million shares of common stock at a price to the public of $23.00 per share and on September 3,
2014, Synchrony Financial issued an additional 3.5 million shares of common stock pursuant to an option granted to the
underwriters in the IPO (Underwriters’ Option). We received net proceeds from the IPO and the Underwriters’ Option of
$2.8 billion, which remain at Synchrony Financial. Following the closing of the IPO and the Underwriters’ Option, we
currently own approximately 85% of Synchrony Financial and as a result, GECC continues to consolidate the business.
The 15% is presented as noncontrolling interests. In addition, in August 2014, Synchrony Financial completed issuances
of $3.6 billion of senior unsecured debt with maturities up to 10 years and $8.0 billion of unsecured term loans maturing in
2019, and in October 2014 completed issuances of $0.8 billion unsecured term loans maturing in 2019 under the New
Bank Term Loan Facility with third party lenders. Subsequent to December 31, 2014 through February 13, 2015,
Synchrony Financial issued an additional $1.0 billion of senior unsecured debt maturing in 2020.
We are targeting to complete our exit from Synchrony Financial through a split-off transaction, by making a tax-free
distribution of our remaining interest in Synchrony Financial to electing GE stockholders in exchange for shares of GE’s
common stock. The split-off transaction would be subject to obtaining required bank regulatory approvals. We may also
decide to exit by selling or otherwise distributing or disposing of all or a portion of our remaining interest in the Synchrony
Financial shares.
54 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R AT I O N S | G E C AP I T AL
(cid:120) Cembra – During the fourth quarter of 2013, we completed the sale of 68.5% of our Swiss consumer finance bank,
Cembra Money Bank AG (Cembra), through an IPO.
(cid:120) CLL Trailer Services – During the fourth quarter of 2013, we also completed the sale of our CLL trailer services business
in Europe (CLL Trailer Services).
(cid:120) Consumer – During the fourth quarter of 2013, we completed the sale of our remaining equity interest in the Bank of
Ayudhya (Bay Bank). We also committed to sell our consumer banking business in Russia (Consumer Russia) and
completed the transaction in the first quarter of 2014.
(cid:120) MetLife Bank – During the first quarter of 2013, we acquired the deposit business of MetLife Bank, N.A., which is an
online banking platform with approximately $6.4 billion in U.S. retail deposits that is now part of Synchrony Financial.
(cid:120) Real Estate – During 2013 and 2014, in conjunction with our initiative to increase our overall real estate lending portfolio
and reduce our exposure to real estate equity investments, we acquired certain loan portfolios and sold real estate equity
investments when economically advantageous for us to do, including the 2013 sale of real estate comprising certain floors
located at 30 Rockefeller Center, New York.
(cid:120) Business Property – During 2012, we completed the sale of a portion of our Real Estate Business Properties portfolio
(Business Property), including certain commercial loans, the origination and servicing platforms and the servicing rights on
loans previously securitized by GECC. The portion that we retained comprises our owner-occupied/credit tenant portfolio.
(cid:120) Consumer Ireland – During 2012, we completed the sale of our consumer mortgage lending business in Ireland
(Consumer Ireland) and sold our remaining equity interest in Garanti Bank, which was classified as an available-for-sale
security.
(cid:120) U.S. Customer Base – During 2014, GE Capital provided approximately $116 billion of new financings in the U.S. to
various companies, infrastructure projects and municipalities. Additionally, we extended approximately $115 billion of
credit to approximately 64 million U.S. consumers. GE Capital provided credit to approximately 29,700 new commercial
customers and 33,700 new small businesses in the U.S. during 2014, ending the year with outstanding credit to more than
250,000 commercial customers and 220,000 small businesses through retail programs in the U.S.
GE 2014 FORM 10-K 55
M D & A S E G M E N T O P E R A T I O N S | G E C A P I T A L
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES & PROFIT(a)
(cid:132) (cid:132) Revenue (cid:132) (cid:132) Profit
(a)
Interest and other financial charges and income taxes are included in determining segment profit for the GE Capital segment.
COMMENTARY: 2014 – 2013
Revenues decreased 3% as a result of the effects of dispositions, organic revenue declines, primarily due to lower ENI, and
lower gains, partially offset by lower impairments.
(cid:120) CLL 2014 revenues increased by $0.3 billion, or 2%, as a result of lower impairments ($0.8 billion), partially offset by
organic revenue declines ($0.3 billion) and the effects of dispositions ($0.2 billion).
(cid:120) Consumer 2014 revenues decreased by $0.7 billion, or 5%, as a result of lower gains ($0.6 billion) and the effects of
dispositions ($0.3 billion), partially offset by organic revenue growth ($0.2 billion) and lower impairments ($0.1 billion).
(cid:120) Real Estate 2014 revenues decreased by $0.9 billion, or 24%, as a result of decreases in net gains on property sales
($0.6 billion) mainly due to the 2013 sale of real estate comprising certain floors located at 30 Rockefeller Center, New
York, organic revenue declines ($0.2 billion) and higher impairments ($0.1 billion).
(cid:120) Energy Financial Services 2014 revenues increased by $0.2 billion, or 11% as a result of organic revenue growth ($0.4
billion) and higher gains ($0.1 billion), partially offset by the effects of dispositions ($0.2 billion) and higher impairments
($0.2 billion).
(cid:120) GECAS 2014 revenues decreased by $0.1 billion, or 2%, as a result of organic revenue declines ($0.2 billion), partially
offset by higher gains ($0.1 billion).
Segment profit decreased 12% as a result of the effects of dispositions, core decreases and lower gains, partially offset by
lower impairments and lower provisions for losses on financing receivables.
(cid:120) CLL 2014 net earnings increased by $0.3 billion, or 16%, reflecting lower impairments ($0.7 billion) and lower provisions
for losses on financing receivables ($0.2 billion), partially offset by core decreases ($0.4 billion) and the effects of
dispositions ($0.2 billion).
(cid:120) Consumer 2014 net earnings decreased by $1.3 billion, or 30%, as a result of the effects of dispositions ($0.8 billion)
reflecting the 2013 sale of a portion of Cembra and the 2014 sale of GEMB-Nordic, core decreases ($0.5 billion) and
lower gains ($0.4 billion) reflecting the 2013 sale of our remaining equity interest in Bay Bank, partially offset by higher
provisions for losses on financing receivables ($0.3 billion) and lower impairments ($0.1 billion).
(cid:120) Real Estate 2014 net earnings decreased by $0.7 billion, or 42%, as a result of core decreases ($0.7 billion) including
lower tax benefits ($0.4 billion) and lower gains on property sales ($0.3 billion).
56 GE 2014 FORM 10-K
M D & A S E G M E N T O P E R A T I O N S | G E C A P I T A L
(cid:120) Energy Financial Services 2014 net earnings decreased slightly as a result of higher impairments ($0.1 billion) and the
effects of dispositions ($0.1 billion) offset by core increases ($0.1 billion) and higher gains ($0.1 billion).
(cid:120) GECAS 2014 net earnings increased by $0.2 billion, or 17%, as a result of lower equipment leased to others (ELTO)
impairments ($0.2 billion) related to our operating lease portfolio of commercial aircraft, and higher gains, partially offset
by core decreases ($0.1 billion).
COMMENTARY: 2013 – 2012
Revenues decreased 3% as a result of organic revenue declines, primarily due to lower ENI, and higher impairments, partially
offset by higher gains.
(cid:120) CLL 2013 revenues decreased by $2.1 billion, or 13%, as a result of organic revenue declines ($1.2 billion), primarily due
to lower ENI ($0.8 billion), higher impairments ($0.7 billion) and the effects of dispositions ($0.1 billion).
(cid:120) Consumer 2013 revenues increased by $0.4 billion, or 3%, as a result of higher gains ($0.5 billion), the effects of
dispositions ($0.3 billion) and the effects of acquisitions ($0.1 billion), partially offset by organic revenue declines ($0.4
billion).
(cid:120) Real Estate 2013 revenues increased by $0.3 billion, or 7%, as a result of increases in net gains on property sales ($1.1
billion) mainly due to the sale of real estate comprising certain floors located at 30 Rockefeller Center, New York, partially
offset by organic revenue declines ($0.7 billion), primarily due to lower ENI ($0.6 billion).
(cid:120) Energy Financial Services 2013 revenues increased slightly, or 1%, as a result of dispositions ($0.1 billion) and organic
revenue growth ($0.1 billion), partially offset by lower gains ($0.1 billion) and higher impairments.
(cid:120) GECAS 2013 revenues increased by $0.1 billion, or 1%, as a result of lower finance lease impairments and higher gains.
Segment profit increased 10% as a result of dispositions, primarily related to the sale of a portion of Cembra through an IPO
and higher gains primarily related to the sale of our remaining equity interest in Bay Bank, partially offset by higher
impairments and higher provisions for losses on financing receivables.
(cid:120) CLL 2013 net earnings decreased by $0.4 billion, or 18%, reflecting higher impairments ($0.6 billion), partially offset by
the effects of dispositions ($0.1 billion).
(cid:120) Consumer 2013 net earnings increased by $1.1 billion, or 35%, as a result of the sale of a portion of Cembra ($1.2
billion), higher gains ($0.3 billion) related to the sale of Bay Bank and core increases ($0.1 billion). These increases were
partially offset by higher provisions for losses on financing receivables ($0.5 billion) reflecting the use of a more granular
portfolio segmentation approach, by loss type, in determining the incurred loss period and projected net write-offs over the
next 12 months in our installment and revolving credit portfolios.
(cid:120) Real Estate 2013 net earnings increased favorably as a result of core increases ($0.9 billion) including increases in net
gains on property sales ($0.7 billion) and higher tax benefits ($0.3 billion).
(cid:120) Energy Financial Services 2013 net earnings decreased slightly, or 5%, as a result of lower gains ($0.1 billion), partially
offset by core increases and dispositions.
(cid:120) GECAS 2013 net earnings decreased by $0.3 billion, or 27%, as a result of ELTO impairments ($0.3 billion) related to our
operating lease portfolio of commercial aircraft, and core decreases, partially offset by higher gains.
For additional information related to GE Capital segment operations, refer to the General Electric Capital Corporation annual
report on Form 10-K for the year ended December 31, 2014.
GE 2014 FORM 10-K 57
M D & A C O R P O R A T E I T E M S A N D E L I M I N AT I O N S
GE CORPORATE ITEMS AND ELIMINATIONS
GE Corporate Items and Eliminations is a caption used in the segment table on page 31 to reconcile the aggregated results of
our segments to the consolidated results of the Company. As such, it includes corporate activities and the elimination of inter-
segment activities. Specifically, the GE Corporate Items and Eliminations amounts related to revenues and earnings include
the results of disposed businesses (such as NBCU LLC, which we sold in 2013), certain amounts not included in GE industrial
operating segment results because they are excluded from measurement of their operating performance for internal and
external purposes and the elimination of inter-segment activities. In addition, the GE Corporate Items and Eliminations
amounts related to earnings include certain costs of our principal retirement plans, restructuring and other costs reported in
corporate, and the unallocated portion of certain corporate costs (such as research and development spending and costs
related to our Global Growth & Operations organization).
REVENUES AND OPERATING PROFIT (COST)
(In millions)
Revenues
NBCU LLC
Gains (losses) on disposed or held for sale businesses
Eliminations and other
Total Corporate Items and Eliminations
Operating profit (cost)
NBCU LLC
Gains (losses) on disposed or held for sale businesses
Principal retirement plans(a)
Restructuring and other charges
Eliminations and other
Total Corporate Items and Eliminations
CORPORATE COSTS
(In millions)
Total Corporate Items and Eliminations
Less non-operating pension cost
Total Corporate costs (operating)*
Less NBCU LLC, restructuring and other, and gains
Adjusted total Corporate costs (operating)*
2014
-
91
(4,129)
(4,038)
-
91
(2,313)
(1,788)
(2,215)
(6,225)
2014
(6,225)
(2,120)
(4,105)
(1,697)
(2,408)
$
$
$
$
$
$
$
2013
1,528
453
(3,605)
(1,624)
1,528
447
(3,222)
(1,992)
(2,763)
(6,002)
2013
(6,002)
(2,624)
(3,378)
(17)
(3,361)
$
$
$
$
$
$
$
2012
1,615
186
(3,292)
(1,491)
1,615
186
(3,098)
(732)
(2,689)
(4,718)
2012
(4,718)
(2,132)
(2,586)
1,069
(3,655)
$
$
$
$
$
$
$
(a)
Included non-operating pension income (cost) for our principal pension plans (non-GAAP) of $(2.1) billion, $(2.6) billion and $(2.1) billion in 2014, 2013 and 2012,
respectively, which includes expected return on plan assets, interest costs and non-cash amortization of actuarial gains and losses.
.
*Non-GAAP Financial Measure
58 GE 2014 FORM 10-K
M D & A C O R P O R AT E I T E M S AN D E L I M I N AT I O N S
2014 – 2013 COMMENTARY
Revenues and other income decreased $2.4 billion, primarily a result of:
(cid:120)
$1.5 billion lower revenues and other income related to NBCU LLC, which was disposed of in the first quarter of 2013,
(cid:120)
(cid:120)
$0.4 billion of lower gains from disposed businesses, and
$0.5 billion of higher eliminations and other, which was driven by $0.4 billion of higher inter-segment eliminations. Also
contributing to the decrease in revenues and other income was a $0.2 billion impairment related to an investment security
in 2014 compared with a $0.1 billion impairment of an investment in a Brazilian company in 2013.
Operating costs increased $0.2 billion, primarily as a result of:
(cid:120)
$1.5 billion lower NBCU LLC related income, and
(cid:120)
$0.4 billion of lower gains from disposed businesses.
These increases to operating costs were partially offset by the following:
(cid:120)
(cid:120)
(cid:120)
$0.9 billion of lower costs of our principal retirement plans,
$0.2 billion of lower restructuring and other charges. Restructuring and other charges in 2014 included $0.2 billion of
impairment related to an investment security at Power & Water, $0.1 billion of asset write-offs at a consolidated nuclear
joint venture in which we hold a 51% interest at Power & Water and $0.1 billion curtailment loss on the principal retirement
plans resulting from our agreement with Electrolux to sell the Appliances business, and
$0.5 billion of lower eliminations and other, which was driven by $0.4 billion of lower corporate costs, which include
research and development and functional spending in 2014. In 2013, eliminations and other costs included $0.1 billion
impairment of an investment in a Brazilian company.
2013 – 2012 COMMENTARY
Revenues decreased $0.1 billion primarily as a result of:
(cid:120)
$0.1 billion lower revenue and other income related to the operations and disposition of NBCU LLC,
(cid:120)
(cid:120)
$0.3 billion of higher gains from disposed businesses, which reflects the net effect of $0.5 billion of gains from industrial
business dispositions in 2013 compared with a $0.3 billion gain on joint venture formation and a $0.1 billion loss on sale of
a plant in 2012, and
$0.3 billion of higher eliminations and other, which reflects a $0.1 billion pre-tax loss related to the impairment of an
investment in a Brazilian company and $0.2 billion of lower revenues related to a plant that was sold in 2012.
Operating costs increased $1.3 billion primarily as a result of:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$0.1 billion of lower NBCU LLC related income,
$0.1 billion of higher principal retirement plan costs,
$1.3 billion of higher restructuring and other charges, and
$0.1 billion of higher eliminations and other, which reflects the $0.1 billion of impairment referred to above.
These increases to operating costs were partially offset by $0.3 billion of higher gains on disposed businesses.
GE 2014 FORM 10-K 59
M D & A C O R P O R AT E I T E M S AN D E L I M I N AT I O N S
COSTS AND GAINS NOT INCLUDED IN SEGMENT RESULTS
As discussed in the “Segment Operations” section within the MD&A of this Form 10-K Report, certain amounts are not
included in industrial operating segment results because they are excluded from measurement of their operating performance
for internal and external purposes. These amounts are included in GE Corporate Items & Eliminations and may include
matters such as charges for restructuring; rationalization and other similar expenses; acquisition costs and related charges;
technology and product development cost; certain gains and losses from acquisitions or dispositions; and litigation settlements
or other charges, for which responsibility preceded the current management team. The amount of costs and gains not included
in segment results follows.
COSTS
(In billions)
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total
GAINS
(In billions)
Power & Water(a)
Oil & Gas(b)
Energy Management
Aviation(c)
Healthcare(a)
Transportation
Appliances & Lighting
Total
$
$
$
$
2014
0.6
0.3
0.2
0.3
0.5
-
0.1
2.1
2014
-
0.1
-
-
-
-
-
0.1
$
$
$
$
2013
0.4
0.3
0.2
0.6
0.6
0.1
0.2
2.4
2013
0.1
0.1
-
-
0.2
-
-
0.5
$
$
$
$
2012
0.2
0.1
0.2
0.3
0.5
0.1
0.1
1.5
2012
-
-
-
0.3
-
-
-
0.3
(a) Related to business dispositions.
(b) Related to business dispositions including a fuel dispenser business disposition in 2014.
(c) Related to formation of a joint venture.
60 GE 2014 FORM 10-K
M D & A D I S C O N T I N U E D O P E R AT I O N S
DISCONTINUED OPERATIONS
Discontinued operations primarily comprises GE Money Japan (our Japanese personal loan business, Lake, and our
Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage
business (WMC), our CLL trailer services business in Europe (CLL Trailer Services), our Consumer banking business in
Russia (Consumer Russia) and our Consumer mortgage lending business in Ireland (Consumer Ireland). All of these
operations were previously reported in the GE Capital segment.
Associated results of operations, financial position and cash flows are separately reported as discontinued operations for all
periods presented.
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
(In millions)
2014(cid:3)
2013
Earnings (loss) from discontinued operations, net of taxes
$
(112)
$
(2,120)
$
2012
(983)
The 2014 loss from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
$0.2 billion after-tax effect of incremental reserves related to retained representation and warranty obligations to
repurchase previously sold loans on the 2007 sale of WMC.
(cid:120)
2014 losses were partially offset by a $0.1 billion tax benefit related to the extinguishment of our loss-sharing arrangement
for excess interest claims associated with the 2008 sale of GE Money Japan.
The 2013 loss from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
$1.6 billion after-tax effect of incremental reserves, primarily related to an agreement to extinguish our loss-sharing
arrangement for excess interest claims associated with the 2008 sale of GE Money Japan,
(cid:120)
(cid:120)
$0.2 billion after-tax effect of incremental reserves related to retained representation and warranty obligations to
repurchase previously sold loans on the 2007 sale of WMC, and
$0.2 billion after-tax loss on the planned disposal of Consumer Russia.
The 2012 loss from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
$0.6 billion after-tax effect of incremental reserves for excess interest claims related to our loss-sharing arrangement on
the 2008 sale of GE Money Japan,
(cid:120)
(cid:120)
(cid:120)
$0.3 billion after-tax effect of incremental reserves related to retained representation and warranty obligations to
repurchase previously sold loans on the 2007 sale of WMC, and
$0.2 billion loss (including a $0.1 billion loss on disposal) related to Consumer Ireland.
2012 losses were partially offset by a $0.1 billion tax benefit related to the resolution with the Internal Revenue Service
regarding the tax treatment of the 2007 sale of our Plastics business.
For additional information related to discontinued operations, see Note 2 to the consolidated financial statements in this Form
10-K Report.
GE 2014 FORM 10-K 61
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
OTHER CONSOLIDATED INFORMATION
INTEREST AND OTHER FINANCIAL CHARGES
Interest on borrowings and other financial charges amounted to $9.5 billion, $10.1 billion and $12.4 billion in 2014, 2013 and
2012, respectively. Substantially all of our borrowings are in financial services, where interest expense was $8.4 billion, $9.3
billion and $11.6 billion in 2014, 2013 and 2012, respectively. GECC average borrowings declined from 2013 to 2014 and from
2012 to 2013, in line with changes in average GECC assets. Interest rates have decreased over the three-year period
primarily attributable to declining global benchmark interest rates. GECC average borrowings were $364.4 billion, $379.5
billion and $420.0 billion in 2014, 2013 and 2012, respectively. The GECC average composite effective interest rate was 2.3%
in 2014, 2.4% in 2013 and 2.8% in 2012. In 2014, GECC average assets of $507.2 billion were 3.0% lower than in 2013, which
in turn were 7% lower than in 2012. See the “Liquidity and Borrowings” section within the MD&A of this Form 10-K for a
discussion of liquidity, borrowings and interest rate risk management.
POSTRETIREMENT BENEFIT PLANS
Postretirement benefit plans costs were $4.8 billion, $6.0 billion and $5.5 billion in 2014, 2013 and 2012, respectively. Costs
decreased in 2014 primarily due to the effects of higher discount rates (principal pension plans’ discount rate increased from
3.96% at December 31, 2012 to 4.85% at December 31, 2013) and lower loss amortization related to our principal pension
plans, partially offset by lower expected investment return on pension plan assets. Costs increased in 2013 primarily due to
the continued amortization of 2008 investment losses and the effects of lower discount rates (principal pension plans’ discount
rate decreased from 4.21% at December 31, 2011 to 3.96% at December 31, 2012).
Postretirement benefit actuarial assumptions are significant inputs to the actuarial models that measure benefit obligations and
their related effects on operations:
(cid:120) Our discount rate for our principal pension plans at December 31, 2014 was 4.02%, which reflected current interest rates.
(cid:120) The Society of Actuaries recently issued new mortality tables projecting longer life expectancies that will result in higher
postretirement benefit obligations for U.S. companies. We updated our mortality assumptions at December 31, 2014. The
new mortality assumptions increased principal postretirement benefit obligations by approximately $4.6 billion at year end.
(cid:120) Considering the current and target asset allocations, as well as historical and expected returns on various categories of
assets in which our plans are invested, we have assumed that the long-term return on our principal pension plan assets will
be 7.5% for cost recognition in 2015, compared to 7.5% in 2014 and 8.0% in both 2013 and 2012.
GAAP provides for recognition of differences between assumed and actual experience over a period no longer than the
average future service of employees. See the “Critical Accounting Estimates” section within the MD&A of this Form 10-K for
additional information.
We expect the costs of our postretirement benefits to increase in 2015 by approximately $0.6 billion as compared to 2014,
primarily because of the effects of lower discount rates and new mortality assumptions, which are partially offset by lower loss
amortization related to our principal pension plans.
GAAP AND NON-GAAP PENSION COSTS
(In billions)
GAAP principal pension plans' cost
Non-GAAP operating pension costs*
*Non-GAAP Financial Measure
62 GE 2014 FORM 10-K
$
2014
3.6
1.5
$
2013
4.4
1.8
$
2012
3.8
1.7
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
Operating earnings include service cost and prior service cost amortization for our principal pension plans as these costs
represent expenses associated with employee service. Operating earnings exclude non-operating pension costs/income such
as interest cost, expected return on plan assets and non-cash amortization of actuarial gains and losses. We expect operating
pension costs for these plans will be about $1.7 billion in 2015. The expected increase in operating pension costs is
attributable primarily to the effects of lower discount rates and new mortality assumptions.
The GE Pension Plan was underfunded by $15.8 billion at the end of 2014 as compared to $4.7 billion at December 31, 2013.
The GE Supplementary Pension Plan, which is an unfunded plan, had projected benefit obligations (PBO) of $6.6 billion and
$5.2 billion at December 31, 2014 and 2013, respectively. Our underfunding at year-end 2014 was significantly higher
compared to 2013 primarily due to lower discount rates and new mortality assumptions. The decrease in our principal pension
plans’ discount rate increased the PBO at year-end 2014 by approximately $7.7 billion. The new mortality assumptions
increased our PBO by approximately $4.0 billion at December 31, 2014. Our GE Pension Plan assets were $48.3 billion at the
end of both 2014 and 2013 as 2014 investment returns and participant contributions were offset by benefit payments made
during the year. Assets of the GE Pension Plan are held in trust, solely for the benefit of Plan participants, and are not
available for general company operations.
In August 2014, the U.S. Government enacted the “Highway and Transportation Funding Act ”(HATFA), which contained
provisions that changed the interest rate methodology used to calculate Employee Retirement Income Security Act (ERISA)
minimum pension funding requirements in the U.S. This change reduced our near-term annual cash funding requirements for
the GE Pension Plan. We did not contribute to the GE Pension Plan in either 2014 or 2013. On an ERISA basis, our
preliminary estimate is that the GE Pension Plan was approximately 104% funded at January 1, 2015. The ERISA funded
status is higher than the GAAP funded status primarily because the ERISA prescribed interest rate in HATFA is calculated
using an average interest rate. As a result, the ERISA interest rate is higher than the year-end GAAP discount rate. The higher
ERISA interest rate lowers pension liabilities for ERISA funding purposes. Our current estimate projects that we will not be
required to make minimum pension funding contributions to the GE Pension Plan in 2015 or 2016.
At December 31, 2014, the fair value of assets for our other pension plans was $3.2 billion less than the respective projected
benefit obligations. The comparable amount at December 31, 2013, was $2.5 billion. This increase was primarily attributable to
lower discount rates, which were partially offset by investment returns. We expect to contribute $0.5 billion to our other
pension plans in 2015, as compared to $0.7 billion in both 2014 and 2013.
The unfunded liability for our principal retiree health and life plans was $9.9 billion and $9.0 billion at December 31, 2014 and
2013, respectively. This increase was primarily attributable to the effects of lower discount rates (retiree health and life plans’
discount rate decreased from 4.61% at December 31, 2013 to 3.89% at December 31, 2014) and new mortality assumptions,
which were partially offset by an amendment to our post-65 retiree health coverage. We fund our retiree health benefits on a
pay-as-you-go basis. We expect to contribute $0.5 billion to these plans in 2015 compared with actual contributions of $0.5
billion in both 2014 and 2013.
The funded status of our postretirement benefits plans and future effects on operating results depend primarily on economic
conditions and investment performance. For additional information about funded status, components of earnings effects and
actuarial assumptions, see Note 12 to the consolidated financial statements in this Form 10-K Report.
INCOME TAXES
Income taxes have a significant effect on our net earnings. As a global commercial enterprise, our tax rates are affected by
many factors, including our global mix of earnings, the extent to which those global earnings are indefinitely reinvested outside
the United States, legislation, acquisitions, dispositions and tax characteristics of our income. Our tax rates are also affected
by tax incentives introduced in the U.S. and other countries in furtherance of policies to encourage and support certain types of
activity. Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax
provisions.
GE 2014 FORM 10-K 63
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
GE and GECC file a consolidated U.S. federal income tax return. This enables GE to use GECC tax deductions and credits to
reduce the tax that otherwise would have been payable by GE. The GECC effective tax rate for each period reflects the benefit
of these tax reductions in the consolidated return. GE makes cash payments to GECC for these tax reductions at the time
GE’s tax payments are due.
CONSOLIDATED
(Dollars in billions)
(cid:3)
EFFECTIVE TAX RATE (ETR)
PROVISION FOR INCOME TAXES
CASH INCOME TAXES PAID
2014 – 2013 COMMENTARY
(cid:120)
(cid:120)
(cid:120)
The increase in the consolidated provision for income taxes was attributable in part to decreased benefits from lower-
taxed global operations including the absence of the 2013 benefits related to the sale of 68.5% of our Swiss consumer
finance bank, Cembra Money Bank AG (Cembra), through an IPO, partially offset by the benefits from the 2014 tax
efficient disposition of GEMB-Nordic.
The income tax provision also increased due to the non-repeat of the favorable resolution of audit matters in 2013.
The higher income tax provision also reflects an increase in income taxed at rates above the average tax rate.
2013 – 2012 COMMENTARY
(cid:120)
(cid:120)
(cid:120)
The decrease in the consolidated provision for income taxes was primarily attributable to an increase in tax benefits on
lower-taxed global operations, including the tax benefit on the sale of a portion of Cembra.
The income tax provision was also lower due to favorable resolution of audit matters and lower income taxed at rates
above the average tax rate.
These decreases were partially offset by the absence of the 2012 benefit attributable to the high tax basis in the entity
sold in the Business Property disposition.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted and the law extended several provisions,
including a two-year extension of the U.S. tax provision deferring tax on active financial services income and certain U.S.
business credits, retroactive to January 1, 2012. Under accounting rules, a tax law change is taken into account in calculating
the income tax provision in the period enacted. Because the extension was enacted into law in 2013, tax expense in 2013
reflected retroactive extension of the previously expired provisions.
BENEFITS FROM GLOBAL OPERATIONS
Our consolidated income tax rate is lower than the U.S. statutory rate primarily because of benefits from lower-taxed global
operations, including the use of global funding structures. There is a benefit from global operations as non-U.S. income is
subject to local country tax rates that are significantly below the 35% U.S. statutory rate. These non-U.S. earnings have been
64 GE 2014 FORM 10-K
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
indefinitely reinvested outside the U.S. and are not subject to current U.S. income tax. The rate of tax on our indefinitely
reinvested non-U.S. earnings is below the 35% U.S. statutory rate because we have significant business operations subject to
tax in countries where the tax on that income is lower than the U.S. statutory rate and because GE funds the majority of its
non-U.S. operations through foreign companies that are subject to low foreign taxes.
The most significant portion of these benefits depends on the provision of U.S. law deferring the tax on active financial
services income, which, as discussed below, is subject to expiration. A substantial portion of the remaining benefit related to
business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate is derived
from our GECAS aircraft leasing operations located in Ireland. No other operation in any one country accounts for a material
portion of the remaining balance of the benefit.
We expect our ability to benefit from non-U.S. income taxed at less than the U.S. rate to continue, subject to changes in U.S.
or foreign law, including the expiration of the U.S. tax law provision deferring tax on active financial services income, as
discussed in Note 14 to the consolidated financial statements in this Form 10-K Report. In addition, since this benefit depends
on management’s intention to indefinitely reinvest amounts outside the U.S., our tax provision will increase to the extent we no
longer indefinitely reinvest foreign earnings.
BENEFITS FROM LOWER-TAXED GLOBAL OPERATIONS
(In billions)
Benefit of lower foreign tax rate on indefinitely reinvested non-U.S. earnings $
Benefit of audit resolutions
Other
Total
$
2014
2.3
0.1
0.8
3.2
$
$
2013
2.5
0.4
1.1
4.0
$
$
2012
1.3
0.1
0.8
2.2
2014 – 2013 COMMENTARY
Our benefits from lower-taxed global operations decreased in 2014 principally because of the absence of the 2013 benefits,
previously discussed, on the sale of a portion of Cembra, lower benefits from the realization of prior-year losses and from the
resolution of Internal Revenue Service (IRS) audits, partially offset by larger benefits from other indefinitely reinvested
earnings including from the 2014 disposition of GEMB-Nordic.
2013 – 2012 COMMENTARY
Our benefits from lower-taxed global operations increased in 2013 principally because of the realization of benefits related to
the sale of a portion of Cembra, the realization of benefits for prior-year losses, and the resolution of IRS audits.
OTHER INFORMATION
To the extent global interest rates and non-U.S. operating income increase, we would expect tax benefits to increase, subject
to management’s intention to indefinitely reinvest those earnings. Included in 2014 is the benefit from the indefinite
reinvestment of the eligible earnings from the sale of GEMB-Nordic. Included in 2013 is the benefit from the indefinite
reinvestment of the eligible earnings from the sale of a portion of Cembra.
The tax benefit from non-U.S. income taxed at a local country rather than the U.S. statutory tax rate is reported in the caption
“Tax on global activities including exports” in the effective tax rate reconciliation in Note 14 to the consolidated financial
statements in this Form 10-K Report.
A more detailed analysis of differences between the U.S. federal statutory rate and the consolidated effective rate, as well as
other information about our income tax provisions, is provided in the “Critical Accounting Estimates” section within the MD&A
and Note 14 to the consolidated financial statements in this Form 10-K Report. The nature of business activities and
GE 2014 FORM 10-K 65
M D & A O T H E R C O N S O L I D A T E D I N F O R M AT I O N
associated income taxes differ for GE and for GECC; therefore, a separate analysis of each is presented in the paragraphs
that follow.
GE EFFECTIVE TAX RATE (EXCLUDING GECC EARNINGS)*
(Dollars in billions)
We believe that the GE effective tax rate and provision for income taxes are best analyzed in relation to GE earnings before
income taxes excluding the GECC net earnings from continuing operations, as GE tax expense does not include taxes on
GECC earnings. For further information on this calculation, see the “Supplemental Information” section within the MD&A of this
Form 10-K.
GE ETR, EXCLUDING GECC EARNINGS*
GE PROVISION (BENEFIT) FOR INCOME TAXES
2014 – 2013 COMMENTARY
(cid:120)
(cid:120)
The GE provision for income taxes decreased in 2014 primarily because of increased benefits from lower taxed global
operations ($0.8 billion).
That decrease was partially offset by the decrease in the benefit of audit resolutions ($0.3 billion) shown below, an
increase in income taxed at rates above the average tax rate ($0.3 billion), and the non-repeat of the 2013 benefit from
the enactment of the extension of certain U.S. business credits ($0.1 billion), disclosed above.
2013 – 2012 COMMENTARY
(cid:120)
The GE provision for income taxes decreased in 2013 primarily because of the benefit of audit resolutions ($0.2 billion)
shown below.
Resolution of audit matters reduced the GE provision for income taxes by $0.1 billion, $0.4 billion and $0.1 billion in 2014,
2013 and 2012, respectively. The effects of such resolutions are included in the following captions in Note 14 to the
consolidated financial statements in this Form 10-K Report.
AUDIT RESOLUTIONS - EFFECT ON GE TAX RATE, EXCLUDING GECC EARNINGS
Tax on global activities including exports
U.S. business credits
All other - net
Total
*Non-GAAP Financial Measure
66 GE 2014 FORM 10-K
2014
(0.2)%
-
(0.7)
(0.9)%
2013
(2.4) %
(0.6)
(1.0)
(4.0) %
2012
(0.7)%
-
(0.9)
(1.6)%
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
GECC EFFECTIVE TAX RATE
(Dollars in billions)
GECC ETR
2012
2013
2014
GECC PROVISION (BENEFIT) FOR INCOME TAXES
2014
2012
2013
2014 – 2013 COMMENTARY
(cid:120)
(cid:120)
(cid:120)
(cid:120)
The increase in GECC provision for income taxes of $1.1 billion was primarily attributable to the absence of the significant
tax benefit related to the 2013 sale of a portion of Cembra ($1.0 billion).
The income tax provision also increased due to decreased benefits from lower-taxed global operations including the
absence of the 2013 benefits from enactment of the extension of the U.S. tax provision deferring tax on active financial
services income ($0.6 billion).
The increase also reflects higher income taxed at rates above the average rate ($0.1 billion).
The items increasing tax expense were partially offset by the benefits from the tax efficient disposition of GEMB-Nordic
($0.3 billion), which is reported in the caption “Tax on global activities including exports” in the effective tax rate
reconciliation in Note 14 to the consolidated financial statements in this Form 10-K Report.
2013 – 2012 COMMENTARY
(cid:120)
(cid:120)
(cid:120)
The decrease in GECC provision for income taxes of $1.5 billion was primarily attributable to increased benefits from
lower-taxed global operations ($1.7 billion), including the significant tax benefit related to the sale of a portion of Cembra
($1.0 billion), and the 2013 tax benefits related to the extension of the U.S. tax provision deferring tax on active financial
services income ($0.3 billion).
The income tax provision also lower due to benefit from the resolution of the IRS audit of the 2008-2009 tax years and
items for other years ($0.1 billion), which is reported partially in the caption “Tax on global activities including exports” and
partially in the caption “All other-net” in the effective tax rate reconciliation in Note 14 to the consolidated financial
statements in this Form 10-K Report.
The items lowering the expense were partially offset by the absence of the 2012 benefit attributable to the high tax basis
in the entity sold in the Business Property disposition ($0.3 billion).
GE 2014 FORM 10-K 67
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
GEOGRAPHIC DATA
Our global activities span all geographic regions and primarily encompass manufacturing for local and export markets, import
and sale of products produced in other regions, leasing of aircraft, sourcing for our plants domiciled in other global regions and
provision of financial services within these regional economies. Thus, when countries or regions experience currency and/or
economic stress, we often have increased exposure to certain risks, but also often have new opportunities that include, among
other things, expansion of industrial and financial services activities through purchases of companies or assets at reduced
prices and lower U.S. debt financing costs.
Financial results of our non-U.S. activities reported in U.S. dollars are affected by currency exchange. We use a number of
techniques to manage the effects of currency exchange, including selective borrowings in local currencies and selective
hedging of significant cross-currency transactions. Such principal currencies are the euro, the pound sterling, the Canadian
dollar, the Japanese yen, the Australian dollar and the Brazilian real.
REVENUES
Revenues are classified according to the region to which products and services are sold. For purposes of this analysis, the
U.S. is presented separately from the remainder of the Americas.
GEOGRAPHIC REVENUES
(Dollars in billions)
U.S.
Non-U.S.
Europe
Asia
Americas
Middle East and Africa
Total Non-U.S.
Total
Non-U.S. Revenues as a % of Consolidated Revenues
NON-U.S. REVENUES
2014
2013
$
70.6
$
68.6
$
25.3
24.0
13.1
15.6
78.0
148.6
52%
$
$
25.3
25.5
13.1
13.5
77.4
146.0
53%
$
V%
2012
70.5
26.7
24.4
13.2
11.9
76.2
146.7
52%
(Dollars in billions)
GE, excluding GECC
GECC
Total
$
$
2014
61.4
16.6
78.0
$
$
2013
59.0
18.4
77.4
$
$
2012
2014-2013
2013-2012
57.3
19.0
76.2
4 %
(10) %
1 %
3 %
(3) %
2 %
GE, EXCLUDING GECC, NON-U.S. REVENUES
The increase in GE non-U.S. revenues, excluding GECC, in 2014 was primarily due to increases in growth markets of 15% in
Middle East, North Africa and Turkey (MENAT), 29% in sub-Sahara, and 7% in Latin America, partially offset by a decrease of
18% in Australia & New Zealand (ANZ).
The increase in 2013 was primarily due to increases in growth markets of 72% in Algeria, 38% in Sub-Sahara and 7% in China
offset by a decrease of 9% in Europe. These revenues as a percentage of GE total revenues, excluding GECC, were 58% in
both 2014 and 2013, compared with 57% in 2012.
68 GE 2014 FORM 10-K
M D & A O T H E R C O N S O L I D AT E D I N F O R M AT I O N
The effects of currency fluctuations on reported results were as follows:
(cid:120) Decreased revenues by $0.5 billion in 2014, primarily driven by the Brazilian real ($0.2 billion), Canadian dollar ($0.1
billion) and Japanese yen ($0.1 billion).
(cid:120) Decreased revenues by $0.3 billion in 2013, primarily driven by the Japanese yen ($0.3 billion) and Brazilian real ($0.2
billion), partially offset by the euro ($0.4 billion).
(cid:120) Decreased revenues by $1.9 billion in 2012, primarily driven by the euro ($1.4 billion) and Brazilian real ($0.2 billion).
The effects of foreign currency fluctuations on earnings were minimal, with no single currency having a significant impact.
GECC NON-U.S. REVENUES
The decreases in GECC non-U.S. revenues in 2014 and 2013 were primarily a result of decreases in Asia and Europe,
respectively. Non-U.S. revenues as a percentage of total revenues were 39% in 2014, and 42% in both 2013 and 2012.
The effects of currency fluctuations on reported results were as follows:
(cid:120) Decreased revenues by $0.3 billion in 2014, primarily driven by the Australian dollar ($0.1 billion), Japanese yen ($0.1
billion), and Canadian dollar ($0.1 billion).
(cid:120) Decreased revenues by $0.2 billion in 2013, primarily driven by the Japanese yen ($0.2 billion).
(cid:120) Decreased revenues by $0.7 billion in 2012, primarily driven by the euro ($0.3 billion), Polish zloty ($0.1 billion),
Hungarian forint ($0.1 billion) and Czech koruna ($0.1 billion).
The effects of foreign currency fluctuations on earnings were minimal, with no single currency having a significant impact.
ASSETS
We classify certain assets that cannot meaningfully be associated with specific geographic areas as “Other Global” for this
purpose.
TOTAL ASSETS (CONTINUING OPERATIONS)
December 31 (In billions)
U.S.
Non-U.S.
Europe
Asia
Americas
Other Global
Total Non-U.S.
Total
2014
$
344.9
$
180.0
45.7
28.2
48.3
302.2
647.1
$
$
2013
325.4
195.1
51.8
32.9
49.0
328.8
654.2
The decrease in total assets of non-U.S. operations on a continuing basis reflected declines in Europe, Asia and Americas due
to the strengthening of the U.S. dollar against most major currencies, primarily the euro, the pound sterling and the Japanese
yen and dispositions at various businesses.
GE 2014 FORM 10-K 69
M D & A S T AT E M E N T O F F I N AN C I AL P O S I T I O N
STATEMENT OF FINANCIAL POSITION
Because GE and GECC share certain significant elements of their Statements of Financial Position, the following discussion
addresses significant captions in the consolidated statement. Within the following discussions, however, we distinguish
between GE and GECC activities in order to permit meaningful analysis of each individual consolidating statement.
MAJOR CHANGES IN OUR FINANCIAL POSITION DURING 2014
(cid:120) GE Cash increased $2.2 billion driven by the following:
-
-
-
-
-
-
$15.2 billion of GE cash flows from operating activities
$3.0 billion senior unsecured debt issuance
$0.6 billion from business dispositions
$(8.9) billion dividends to shareowners
$(2.2) billion used to buyback treasury stock under our share repurchase program
$(2.1) billion used to acquire businesses
For additional information on GE Cash, see the Statement of Cash Flows section within the MD&A of this Form 10-K.
(cid:120)
Investment securities increased $3.9 billion reflecting purchases of U.S. government and federal agency securities at
Synchrony Financial and higher net unrealized gains in U.S. Corporate and State and Municipal securities driven by lower
interest rates in the U.S. See Note 3 to the consolidated financial statements in this Form 10-K Report.
-
-
Pre-tax, other-than-temporary impairment losses (OTTI) recognized in earnings were $0.4 billion and $0.8 billion in
2014 and 2013, respectively. The 2014 amount primarily relates to other-than temporary impairments on equity
securities, corporate debt securities, commercial and residential mortgage-backed securities (CMBS), residential
mortgage-backed securities (RMBS) and asset-backed securities (ABS). The 2013 amount primarily related to credit
losses on corporate debt securities and other-than-temporary impairment on equity securities.
Pre-tax, OTTI recognized in accumulated other comprehensive income were insignificant amounts in both 2014 and
2013.
(cid:120) GECC Financing receivables-net decreased $16.0 billion. See the following Financing Receivables section for
additional information.
(cid:120) GE All other assets increased $1.0 billion primarily due to an increase in contract costs and estimated earnings at our
Power & Water and Aviation businesses of $1.5 billion, partially offset by the reclassification of Appliances and Signaling
balances to assets of businesses held for sale of $0.5 billion.
(cid:120) GECC All other assets decreased $3.5 billion as a result of sales of certain real estate investments of $3.4 billion, a net
decrease in equity and cost method investments of $1.5 billion and a net decrease in advances to suppliers of $0.9 billion,
partially offset by a net increase in assets held for sale of $2.3 billion.
(cid:120) Deferred income taxes increased $2.3 billion primarily due to an increased deferred tax asset as a result of the
increased postretirement benefit liabilities, partially offset by the impact of the adoption of a new accounting standard,
which reduced our deferred tax asset balance. See Note 1 to the consolidated financial statements in this Form 10-K
Report.
(cid:120) GE borrowings increased $3.0 billion. GE completed issuances of $3.0 billion of senior unsecured debt with maturities
up to 30 years and reclassified $2.0 billion of long-term borrowings to short-term borrowings during the year.
(cid:120) GECC borrowings decreased $31.0 billion. GECC had net repayments on these borrowings of $24.9 billion during the
year, along with a net $9.1 billion reduction in the balances driven by the strengthening of the U.S. dollar against all major
currencies.
(cid:120) Bank deposits increased $9.5 billion primarily due to increases at our banks of $12.6 billion, including Synchrony
Financial of $9.2 billion, partially offset by the reclassification of Budapest Bank deposits to liabilities of businesses held
for sale of $1.9 billion.
70 GE 2014 FORM 10-K
M D & A S T AT E M E N T O F F I N AN C I AL P O S I T I O N
(cid:120) GE All other liabilities increased $13.7 billion primarily due to an increase in the postretirement benefit liabilities of
$13.9 billion primarily due to lower discount rate and new mortality assumptions. The impact of these changes was the
primary driver for the decrease in accumulated other comprehensive income (loss) – benefit plans of $7.3 billion.
See Notes 12 and 15 to the consolidated financial statements in this Form 10-K Report.
(cid:120) Accumulated other comprehensive income (loss) – currency translation adjustments decreased $2.6 billion driven
by the strengthening U.S. dollar against all major currencies at December 31, 2014 compared with December 31, 2013.
This decrease coincides with general decreases in balances of our major asset and liability categories, including:
Financing receivables; Property, plant and equipment; Goodwill; Intangible assets; Short-term borrowings and Long-term
borrowings.
FINANCING RECEIVABLES
Financing receivables is our largest category of assets and represents one of our primary sources of revenues. Our portfolio of
financing receivables is diverse and not directly comparable to major U.S. banks. A discussion of the quality of certain
elements of the financing receivables portfolio follows.
Our commercial portfolio primarily comprises senior secured positions with comparatively low loss history. The secured
receivables in this portfolio are collateralized by a variety of asset classes, which for our CLL business primarily include:
industrial-related facilities and equipment, vehicles, corporate aircraft, and equipment used in many industries, including the
construction, manufacturing, transportation, media, communications, entertainment, and healthcare industries. The portfolios
in our Real Estate, GECAS and Energy Financial Services businesses are collateralized by commercial real estate,
commercial aircraft and operating assets in the global energy and water industries, respectively. We are in a secured position
for substantially all of our commercial portfolio.
Our consumer portfolio is composed primarily of non-U.S. mortgage, sales finance, auto and personal loans in various
European and Asian countries and U.S. consumer credit card and sales finance receivables.
During the first quarter of 2014, we combined our CLL Europe and CLL Asia portfolios into CLL International and we
transferred our CLL Other portfolio to the CLL Americas portfolio. During the fourth quarter of 2014, we combined our
Consumer Non-U.S. auto portfolio into our Consumer Non-U.S. installment and revolving credit portfolio. Prior-period amounts
were reclassified to conform to the current-period presentation.
Our risk management process includes standards and policies for reviewing major risk exposures and concentrations, and
evaluates relevant data either for individual loans or financing leases, or on a portfolio basis, as appropriate.
Loans acquired in a business acquisition are recorded at fair value, which incorporates our estimate at the acquisition date of
the credit losses over the remaining life of the portfolio. As a result, the allowance for losses is not carried over at acquisition.
This may have the effect of causing lower reserve coverage ratios for those portfolios.
For purposes of the discussion that follows, “delinquent” receivables are those that are 30 days or more past due based on
their contractual terms. Loans purchased at a discount are initially recorded at fair value and accrete interest income over the
estimated life of the loan based on reasonably estimable cash flows even if the underlying loans are contractually delinquent at
acquisition. “Nonaccrual” financing receivables are those on which we have stopped accruing interest. We stop accruing
interest at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days past
due, with the exception of consumer credit card accounts, for which we continue to accrue interest until the accounts are
written off in the period that the account becomes 180 days past due. Recently restructured financing receivables are not
considered delinquent when payments are brought current according to the restructured terms, but may remain classified as
nonaccrual until there has been a period of satisfactory payment performance by the borrower and future payments are
reasonably assured of collection.
GE 2014 FORM 10-K 71
M D & A S T AT E M E N T O F F I N AN C I AL P O S I T I O N
Further information on the determination of the allowance for losses on financing receivables and the credit quality and
categorization of our financing receivables is provided in the “Critical Accounting Estimates” section within MD&A section and
Notes 6 and 27 to the consolidated financial statements in this Form 10-K Report.
FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES
December 31 (Dollars in millions)
Financing receivables
Nonaccrual receivables
Allowance for losses
Nonaccrual financing receivables as a percent of financing receivables
Allowance for losses as a percent of nonaccrual financing receivables
Allowance for losses as a percent of total financing receivables
2014
$
242,093
$
5,225 (a)
5,075
2.2 %
97.1
2.1
2013
258,207
7,915
5,178
3.1 %
65.4
2.0
(a) Of our $5.2 billion of nonaccrual loans at December 31, 2014, $2.7 billion are currently paying in accordance with the contractual terms.
Financing receivables, before allowance for losses, decreased $16.1 billion from December 31, 2013, primarily as a result of
the stronger U.S. dollar ($7.7 billion), the reclassification of Budapest Bank to assets of businesses held for sale and the sale
of GEMB-Nordic ($5.3 billion), write-offs ($5.1 billion) and transfers to assets held for sale and equipment leased to others
($3.1 billion), partially offset by originations exceeding collections (which includes sales) ($5.7 billion).
Nonaccrual receivables decreased $2.7 billion from December 31, 2013 primarily due to payoffs, collections and write-offs in
our Real Estate and CLL portfolios and asset sales and resolutions in Consumer, primarily in our U.K. portfolio.
Allowance for losses decreased $0.1 billion from December 31, 2013. Allowance for losses decreased at Commercial and
Real Estate, primarily as a result of write-offs and resolutions. These decreases were offset by increases at Consumer,
primarily as a result of an increase in the projected net write-offs over the next 12 months in the U.S. consistent with the
growth of related financing receivables, partially offset by the reclassification of Budapest Bank to assets of business held for
sale and the sale of GEMB-Nordic. The allowance for losses as a percent of total financing receivables increased from 2.0% at
December 31, 2013 to 2.1% at December 31, 2014 reflecting decreases in both the allowance for losses and the overall
financing receivables balance as discussed above.
For additional information related to the portfolio of financing receivables, refer to the General Electric Capital Corporation
annual report on Form 10-K for the year ended December 31, 2014.
72 GE 2014 FORM 10-K
M D & A F I N AN C I AL R E S O U R C E S AN D L I Q U I D I T Y
FINANCIAL RESOURCES AND LIQUIDITY
LIQUIDITY AND BORROWINGS
We maintain a strong focus on liquidity. At both GE and GECC we manage our liquidity to help provide access to sufficient
funding to meet our business needs and financial obligations throughout business cycles.
Our liquidity and borrowing plans for GE and GECC are established within the context of our annual financial and strategic
planning processes. At GE, our liquidity and funding plans take into account the liquidity necessary to fund our operating
commitments, which include primarily purchase obligations for inventory and equipment, payroll and general expenses
(including pension funding). We also take into account our capital allocation and growth objectives, including paying dividends,
repurchasing shares, investing in research and development and acquiring industrial businesses. At GE, we rely primarily on
cash generated through our operating activities, any dividend payments from GECC, and also have historically maintained a
commercial paper program that we regularly use to fund operations in the U.S., principally within fiscal quarters.
GECC’s liquidity position is targeted to meet its obligations under both normal and stressed conditions. GECC establishes a
funding plan annually that is based on the projected asset size and cash needs of the Company, which, over the past few
years, has incorporated our strategy to reduce our ending net investment in GE Capital. GECC relies on a diversified source of
funding, including the unsecured term debt markets, the global commercial paper markets, deposits, secured funding, retail
funding products, bank borrowings and securitizations to fund its balance sheet. We also rely on cash generated through
collection of principal, interest and other payments on our existing portfolio of loans and leases to fund its operating and
interest expense costs.
Our 2015 GECC funding plan anticipates repayment of principal on outstanding short-term borrowings, including the current
portion of long-term debt ($38.0 billion at December 31, 2014), through issuance of long-term debt and reissuance of
commercial paper, cash on hand, dispositions, asset sales, and deposits and other alternative sources of funding. Long-term
maturities and early redemptions were $41.3 billion in 2014. Interest on borrowings is primarily repaid through interest earned
on existing financing receivables. During 2014, GECC earned interest income on financing receivables of $18.7 billion, which
more than offset interest and other financial charges of $8.4 billion.
We maintain a detailed liquidity policy for GECC that requires GECC to maintain a contingency funding plan. The liquidity
policy defines GECC’s liquidity risk tolerance under different stress scenarios based on its liquidity sources and also
establishes procedures to escalate potential issues. We actively monitor GECC’s access to funding markets and its liquidity
profile through tracking external indicators and testing various stress scenarios. The contingency funding plan provides a
framework for handling market disruptions and establishes escalation procedures in the event that such events or
circumstances arise.
GE 2014 FORM 10-K 73
M D & A
F I N A N C I A L R E S O U R C E S A N D L I Q U I D I T Y
LIQUIDITY SOURCES
We maintain liquidity sources that consist of cash and equivalents of $90.2 billion, committed unused credit lines of $44.9
billion and high-quality, liquid investments of $1.2 billion.
CONSOLIDATED CASH AND EQUIVALENTS
December 31 (In billions)
GE(a)
GECC(b)
Total
2014
15.9
74.3
90.2
$
$
U.S.
Non-U.S.(c)
Total
$
$
2014
29.1
61.1
90.2
(a) At December 31, 2014, $2.8 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 December 31, 2014, GECC cash and equivalents of about $20.0 billion were in regulated banks and insurance entities and were subject to regulatory restrictions.
(c) Of this amount at December 31, 2014, $12.2 billion was considered indefinitely reinvested. Indefinitely reinvested cash held outside of the U.S. 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 indefinitely reinvested cash held outside the U.S., we would be subject to additional U.S.
income taxes and foreign withholding taxes.
COMMITTED UNUSED CREDIT LINES
December 31 (In billions)
Revolving credit agreements (exceeding one year)
Revolving credit agreements (364-day line)(a)
Total(b)
2014
25.1
19.8
44.9
$
$
(a) Included $19.3 billion that contains a term-out feature that allows us to extend borrowings for two years from the date on which such borrowings would otherwise be due.
(b) Total committed unused credit lines were extended to us by 50 financial institutions. GECC can borrow up to $44.4 billion under these credit lines. GE can borrow up to
$14.2 billion under certain of these credit lines.
FUNDING PLAN
We reduced our GE Capital ENI, excluding liquidity, to $363 billion at December 31, 2014.
During 2014, GE completed issuances of $3.0 billion of senior unsecured debt with maturities up to 30 years. GECC
completed issuances of $9.5 billion of senior unsecured debt (excluding securitizations described below) with maturities up to
40 years (and subsequent to December 31, 2014 through February 13, 2015, an additional $8.1 billion). In addition, in August
2014, Synchrony Financial completed issuances of $3.6 billion of senior unsecured debt with maturities up to 10 years and
$8.0 billion of unsecured term loans maturing in 2019, and in October 2014 completed issuances of $0.8 billion unsecured
term loans maturing in 2019 under the New Bank Term Loan Facility with third party lenders. Subsequent to December 31,
2014 through February 13, 2015, Synchrony Financial issued an additional $1.0 billion of senior unsecured debt maturing in
2020.
COMMERCIAL PAPER
(In billions)
Average commercial paper borrowings during the fourth quarter of 2014
Maximum commercial paper borrowings outstanding during the fourth quarter of 2014
$
GE
8.1
10.6
$
GECC
25.0
25.1
74 GE 2014 FORM 10-K
M D & A F I N AN C I AL R E S O U R C E S AN D L I Q U I D I T Y
GECC commercial paper maturities are funded principally through new commercial paper issuances and at GE are
substantially repaid before quarter-end using indefinitely reinvested overseas cash, which as discussed above, is available for
use in the U.S. on a short-term basis without being subject to U.S. tax.
We securitize financial assets as an alternative source of funding. During 2014, we completed $11.1 billion of non-recourse
issuances and $11.3 billion of non-recourse borrowings matured. At December 31, 2014, consolidated non-recourse
securitization borrowings were $29.9 billion.
We have nine deposit-taking banks outside of the U.S. and two deposit-taking banks in the U.S. – Synchrony Bank (formerly
GE Capital Retail Bank), a Federal Savings Bank (FSB), and GE Capital Bank, an industrial bank (IB). The FSB and IB
currently issue certificates of deposit (CDs) in maturity terms up to 10 years.
ALTERNATIVE FUNDING
(In billions)
Total alternative funding at December 31, 2013
Total alternative funding at December 31, 2014
Bank deposits
Non-recourse securitization borrowings
Funding secured by real estate, aircraft and other collateral
GE Interest Plus notes (including $0.1 billion of current long-term debt)
Bank unsecured
$
107.5
117.8
62.8
29.9
6.0
5.6
13.5
As a matter of general practice, we routinely evaluate the economic impact of calling debt instruments where GECC has the
right to exercise a call. In determining whether to call debt, we consider the economic benefit to GECC of calling debt, the
effect of calling debt on GECC’s liquidity profile and other factors. During 2014, we called $0.4 billion of long-term debt.
EXCHANGE RATE AND INTEREST RATE RISKS
Exchange rate and interest rate risks are managed with a variety of techniques, including match funding and selective use of
derivatives. We use derivatives to mitigate or eliminate certain financial and market risks because we conduct business in
diverse markets around the world and local funding is not always efficient. In addition, we use derivatives to adjust the debt we
are issuing to match the fixed or floating nature of the assets we are originating. We apply strict policies to manage each of
these risks, including prohibitions on speculative activities. Following is an analysis of the potential effects of changes in
interest rates and currency exchange rates using so-called “shock” tests that seek to model the effects of shifts in rates. Such
tests are inherently limited based on the assumptions used (described further below) and should not be viewed as a forecast;
actual effects would depend on many variables, including market factors and the composition of the Company’s assets and
liabilities at that time.
(cid:120)
It is our policy to minimize exposure to interest rate changes. We fund our financial investments using debt or a
combination of debt and hedging instruments so that the interest rates of our borrowings match the expected interest rate
profile on our assets. To test the effectiveness of our hedging actions, we assumed that, on January 1, 2015, interest
rates decreased by 100 basis points across the yield curve (a “parallel shift” in that curve) and further assumed that the
decrease remained in place for the next 12 months. Based on the year-end 2014 portfolio and holding all other
assumptions constant, we estimated that our consolidated net earnings for the next 12 months, starting in January 2015,
would decline by less than $0.1 billion as a result of this parallel shift in the yield curve.
GE 2014 FORM 10-K 75
M D & A
F I N AN C I AL R E S O U R C E S AN D L I Q U I D I T Y
(cid:120)
It is our policy to minimize currency exposures and to conduct operations either within functional currencies or using the
protection of hedge strategies. We analyzed year-end 2014 consolidated currency exposures, including derivatives
designated and effective as hedges, to identify assets and liabilities denominated in other than their relevant functional
currencies. For such assets and liabilities, we then evaluated the effects of a 10% shift in exchange rates between those
currencies and the U.S. dollar, holding all other assumptions constant. This analysis indicated that our 2015 consolidated
net earnings would decline by less than $0.1 billion as a result of such a shift in exchange rates. This analysis excludes
any translation impact from changes in exchange rates on our financial results.
DEBT AND DERIVATIVE INSTRUMENTS, GUARANTEES AND COVENANTS
CREDIT RATINGS
As of December 31, 2014, GE’s and GECC’s long-term unsecured debt ratings from Standard and Poor’s Ratings Service
(S&P) were AA+ with a stable outlook and their short-term funding ratings from S&P were A-1+. We are disclosing these
ratings to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of funds. Although we
currently do not expect a downgrade in the credit ratings, our ratings may be subject to a revision or withdrawal at any time by
the assigning rating organization, and each rating should be evaluated independently of any other rating.
PRINCIPAL DEBT AND DERIVATIVE CONDITIONS
Certain of our derivative instruments can be terminated if specified credit ratings are not maintained and certain debt and
derivatives agreements of other consolidated entities have provisions that are affected by these credit ratings.
Fair values of our derivatives can change significantly from period to period based on, among other factors, market
movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not
make payments to us according to the terms of our standard master agreements) on an individual counterparty basis. Where
we have agreed to netting of derivative exposures with a counterparty, we offset our exposures with that counterparty and
apply the value of collateral posted to us to determine the net exposure. We actively monitor these net exposures against
defined limits and take appropriate actions in response, including requiring additional collateral.
Swap, forward and option contracts are executed under standard master agreements that typically contain mutual downgrade
provisions that provide the ability of the counterparty to require termination if the long-term credit ratings of the applicable GE
entity were to fall below A-/A3. In certain of these master agreements, the counterparty also has the ability to require
termination if the short-term ratings of the applicable GE entity were to fall below A-1/P-1. The net derivative liability after
consideration of netting arrangements, outstanding interest payments and collateral posted by us under these master
agreements was estimated to be $0.5 billion at December 31, 2014. See Note 22 to the consolidated financial statements in
this Form 10-K Report.
Other debt and derivative agreements of consolidated entities include Trinity, which comprises two entities that hold
investment securities, the majority of which are investment grade, and were funded by the issuance of guaranteed investment
contracts (GICs). These GICs include conditions under which certain holders could require immediate repayment of their
investment should the long-term credit ratings of GECC fall below AA-/Aa3 or the short-term credit ratings fall below A-1+/P-1,
and are reported in investment contracts, insurance liabilities and insurance annuity benefits. The Trinity assets and liabilities
are disclosed in note (a) on our Statement of Financial Position in the consolidated financial statements of this Form 10-K
Report. Another consolidated entity also had issued GICs where proceeds are loaned to GECC. These GICs included
conditions under which certain holders could require immediate repayment of their investment should the long-term credit
ratings of GECC fall below AA-/Aa3. These obligations are included in the caption “long-term borrowings” on our Statement of
Financial Position in the consolidated financial statements in this Form 10-K Report. These three consolidated entities ceased
issuing GICs in 2010.
76 GE 2014 FORM 10-K
M D & A F I N AN C I AL R E S O U R C E S AN D L I Q U I D I T Y
RATIO OF EARNINGS TO FIXED CHARGES, INCOME MAINTENANCE AGREEMENT AND
SUBORDINATED DEBENTURES
GE provides implicit and explicit support to GECC through commitments, capital contributions and operating support. For
example, and as discussed below, GE has committed to keep GECC’s ratio of earnings to fixed charges above a minimum
level. GECC’s credit rating is higher than it would be on a stand-alone basis as a result of this financial support. GECC
currently does not pay GE for this support.
Under an agreement between GE and GECC, GE will make payments to GECC, constituting additions to pre-tax income
under the agreement (which increases equity), to the extent necessary to cause the ratio of earnings to fixed charges of GECC
and consolidated affiliates (determined on a consolidated basis) to be not less than 1.10:1 for the period, as a single
aggregation, of each GECC fiscal year commencing with fiscal year 1991. GECC’s ratio of earnings to fixed charges was
1.84:1 for 2014. No payment for 2014 was required pursuant to this agreement. On February 24, 2015, GE and GECC
amended this agreement, effective beginning in 2015, to exclude non-cash charges attributable to goodwill and intangibles
(which are excluded from regulatory capital calculations) for purposes of calculating GECC’s ratio of earnings to fixed charges.
The amended agreement is filed as Exhibit 10(y) hereto and is hereby incorporated by reference.
In addition, in connection with certain subordinated debentures of GECC that may be classified as equity (hybrid debt), during
events of default or interest deferral periods under such subordinated debentures, GECC has agreed not to declare or pay any
dividends or distributions or make certain other payments with respect to its capital stock, and GE has agreed to promptly
return any payments made to GE in violation of this agreement. There were $7.1 billion of such debentures outstanding at
December 31, 2014. See Note 10 to the consolidated financial statements in this Form 10-K Report.
GE 2014 FORM 10-K 77
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STATEMENT OF CASH FLOWS – OVERVIEW FROM 2012 THROUGH 2014
CONSOLIDATED CASH FLOWS
We evaluate our cash flow performance by reviewing our industrial (non-financial services) businesses and financial services
businesses separately. Cash from operating activities (CFOA) is the principal source of cash generation for our industrial
businesses. The industrial businesses also have liquidity available via the public capital markets. Our financial services
businesses use a variety of financial resources to meet our capital needs. Cash for financial services businesses is primarily
provided from the issuance of term debt and commercial paper in the public and private markets and deposits, as well as
financing receivables collections, sales and securitizations.
GE CASH FLOWS
OPERATING CASH FLOWS
INVESTING CASH FLOWS
FINANCING CASH FLOWS
2012
2013
2014
2012
2013
2014
2012
2013
2014
With respect to GE CFOA, we believe that it is useful to supplement our GE Statement of Cash Flows and to examine in a
broader context the business activities that provide and require cash.
The most significant source of cash in GE CFOA is customer-related activities, the largest of which is collecting cash resulting
from product or services sales. See the Intercompany Transactions and Eliminations section for information related to
transactions between GE and GECC. The most significant operating use of cash is to pay our suppliers, employees, tax
authorities and others for a wide range of material and services. Dividends from GECC, including special dividends, represent
the distribution of a portion of GECC retained earnings, and are distinct from cash from continuing operations within the
financial services businesses. The amounts included in GE CFOA are the total dividends, including special dividends from
excess capital.
78 GE 2014 FORM 10-K
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2014–2013 COMMENTARY
GE cash from operating activities increased $0.9 billion primarily due to the following:
(cid:120) An increase of operating cash collections of $4.9 billion to $109.7 billion in 2014. This increase is consistent with
comparable GE segment revenue increases from sales of goods and services and higher collections on current
receivables. These increases were partially offset by a decrease in progress collections.
(cid:120)
(cid:120)
This increase is partially offset by an increase of operating cash payments of $1.0 billion to $97.5 billion in 2014 consistent
with cost and expense increases, which was partially offset by the non-recurrence of payments made in 2013, including
NBCU LLC deal-related tax payments, and payouts under our long-term incentive plan.
Further, GECC paid dividends totaling $3.0 billion and $6.0 billion to GE, including special dividends of $1.0 billion and
$4.1 billion in 2014 and 2013, respectively.
GE cash used for investing activities was $5.9 billion in 2014, compared with cash from investing activities of $4.8
billion in 2013, a decrease of $10.7 billion primarily due to the following:
(cid:120)
2013 proceeds of $16.7 billion from the sale of our remaining 49% common equity interest in NBCU LLC to Comcast
Corporation.
(cid:120)
This was partially offset by lower business acquisition activity of $5.9 billion primarily driven by the 2014 acquisitions of
Thermo Fisher for $1.1 billion, Cameron’s Reciprocating Compression Division for $0.6 billion, and API for $0.3 billion
compared with the 2013 acquisitions of Avio for $4.4 billion and Lufkin for $3.3 billion.
GE cash used for financing activities decreased $14.2 billion primarily due to the following:
(cid:120) A decrease in net repurchases of GE shares for treasury in accordance with our share repurchase program of $8.1 billion.
(cid:120)
(cid:120)
The 2013 repayment of $5.0 billion of GE unsecured notes compared with the issuance of $3.0 billion of unsecured notes
in 2014.
These decreases were partially offset by an increase in the dividends paid to shareowners of $1.0 billion.
2013–2012 COMMENTARY
GE cash from operating activities decreased $3.5 billion primarily due to the following:
(cid:120) A decrease of operating cash collections of $0.6 billion to $104.8 billion in 2013. The decrease is consistent with a
decrease in collections on long-term contracts and increases in current receivables, partially offset by increased progress
collections and improved segment revenues.
(cid:120) GE operating cash payments increased by $2.5 billion to $96.5 billion in 2013. The increase is consistent with NBCU deal-
related tax payments and payouts under our long-term incentive plan, partially offset by the non-recurrence of principal
pension plan funding in 2012.
(cid:120) Additionally, GECC paid dividends totaling $6.0 billion and $6.4 billion to GE, including special dividends of $4.1 billion
and $4.5 billion in 2013 and 2012, respectively.
GE cash from investing activities of $4.8 billion in 2013, compared with cash used for investing activities of $5.4
billion in 2012, an increase of $10.2 billion primarily due to the following:
(cid:120)
2013 proceeds of $16.7 billion from the sale of our remaining 49% common equity interest in NBCU LLC to Comcast.
(cid:120)
This was partially offset by the 2013 acquisitions of Avio for $4.4 billion and Lufkin for $3.3 billion.
GE cash used for financing activities increased $15.6 billion primarily due to the following:
(cid:120)
The 2013 repayment of $5.0 billion of GE unsecured notes compared with an issuance of $7.0 billion of unsecured notes
in 2012.
(cid:120) An increase in net repurchases of GE shares for treasury in accordance with our share repurchase program of $5.1
billion.
(cid:120) An increase in dividends paid to shareowners of $0.6 billion in 2013.
GE 2014 FORM 10-K 79
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F I N AN C I AL R E S O U R C E S AN D L I Q U I D I T Y
GECC CASH FLOWS
OPERATING CASH FLOWS
INVESTING CASH FLOWS
FINANCING CASH FLOWS
2012
2013
2014
2012
2013
2014
2012
2013
2014
2014–2013 COMMENTARY
GECC cash from operating activities decreased $2.1 billion primarily due to the following:
(cid:120) A net decrease in tax activity of $3.9 billion driven by net tax payments in 2014 compared with net tax refunds in 2013.
(cid:120) A decrease in cash generated from lower net earnings from continuing operations of $0.9 billion.
(cid:120)
These decreases were partially offset by a $3.0 billion increase in net cash collateral activity with counterparties on
derivative contracts.
GECC cash used for investing activities was $0.8 billion in 2014, compared with cash from investing activities of
$23.4 billion in 2013, a decrease of $24.2 billion primarily due to the following:
(cid:120) A net decrease in financing receivables activity of $9.3 billion driven by net originations of financing receivables in 2014 of
$5.7 billion, compared with net collections (which includes sales) of financing receivables of $3.6 billion in 2013.
(cid:120)
(cid:120)
The 2013 acquisition of MetLife Bank, N.A., resulting in net cash provided of $6.4 billion.
Lower proceeds from sales of real estate properties of $4.8 billion.
(cid:120) A net decrease in investment securities activity of $2.8 billion driven by net purchases of $1.1 billion in 2014, compared
with net sales of $1.7 billion in 2013.
GECC cash used for financing activities decreased $15.8 billion primarily due to the following:
(cid:120) A net increase in deposits at our banks of $11.1 billion.
(cid:120)
(cid:120)
Lower dividends paid to GE driven by dividends totaling $3.0 billion and $6.0 billion, including special dividends of $1.0
billion and $4.1 billion in 2014 and 2013, respectively.
2014 proceeds received from the initial public offering of Synchrony Financial of $2.8 billion.
80 GE 2014 FORM 10-K
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2013–2012 COMMENTARY
GECC cash from operating activities decreased $1.9 billion primarily due to the following:
(cid:120) A decrease in net cash collateral activity with counterparties on derivative contracts of $5.2 billion.
(cid:120)
This decrease was partially offset by an increase in net tax activity of $2.5 billion driven by net tax refunds in 2013,
compared with net tax payments in 2012 and increased cash generated from higher net earnings from continuing
operations of $0.9 billion.
GECC cash from investing activities increased $8.7 billion primarily due to the following:
(cid:120) Higher proceeds from sales of real estate properties of $7.3 billion.
(cid:120)
(cid:120)
(cid:120)
The 2013 acquisition of MetLife Bank, N.A., resulting in net cash provided of $6.4 billion.
Lower net loan repayments from our equity method investments of $4.9 billion.
Lower collections (which includes sales) exceeding originations of financing receivables of $1.9 billion.
GECC cash used for financing activities decreased $23.0 billion primarily due to the following:
(cid:120)
Lower net repayments of borrowings, consisting primarily of net reductions in long-term borrowings and commercial paper
of $24.0 billion.
(cid:120)
Lower redemptions of guaranteed investment contracts of $2.3 billion.
(cid:120) Beginning in the second quarter of 2012, GECC restarted its dividend to GE. GECC paid dividends totaling $6.0 billion
and $6.4 billion to GE, including special dividends of $4.1 billion and $4.5 billion in 2013 and 2012, respectively.
(cid:120)
These decreases were partially offset by lower proceeds from the issuance of preferred stock of $3.0 billion.
INTERCOMPANY TRANSACTIONS AND ELIMINATIONS
Effects of transactions between related companies are made on an arms-length basis, are eliminated and consist primarily of
GECC dividends to GE; GE customer receivables sold to GECC; GECC services for trade receivables management and
material procurement; buildings and equipment (including automobiles) leased between GE and GECC; information
technology (IT) and other services sold to GECC by GE; aircraft engines manufactured by GE that are installed on aircraft
purchased by GECC from third-party producers for lease to others; and various investments, loans and allocations of GE
corporate overhead costs.
GE sells customer receivables to GECC in part to fund the growth of our industrial businesses. These transactions can result
in cash generation or cash use. During any given period, GE receives cash from the sale of receivables to GECC. It also
foregoes collection of cash on receivables sold. The incremental amount of cash received from sales of receivables in excess
of the cash GE would have otherwise collected had those receivables not been sold, represents the cash generated or used in
the period relating to this activity. The incremental cash generated in GE CFOA from selling these receivables to GECC
increased GE’s CFOA by $2.2 billion, $0.1 billion and $1.9 billion in 2014, 2013 and 2012, respectively.
See Note 26 to the consolidated financial statements in this Form 10-K Report for additional information about the eliminations
of intercompany transactions between GE and GECC.
GE 2014 FORM 10-K 81
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CONTRACTUAL OBLIGATIONS
As defined by reporting regulations, our contractual obligations for future payments as of December 31, 2014, follow.
(In billions)
Borrowings and bank deposits (Note 10)
Interest on borrowings and bank deposits
Purchase obligations(a)(b)
Insurance liabilities (Note 11)(c)
Operating lease obligations (Note 19)
Other liabilities(d)
Contractual obligations of discontinued operations(e)
$
Payments due by period
2015
2016-2017
2018-2019
$
$
118.9
8.2
27.6
1.3
0.8
17.1
1.2
$
93.6
13.1
9.5
2.2
1.3
7.8
-
$
51.8
10.6
9.0
1.6
0.9
6.9
-
2020 and
thereafter
100.7
51.7
9.6
7.5
1.1
52.4
-
Total
365.0
83.6
55.7
12.6
4.1
84.2
1.2
(a)
Included all take-or-pay arrangements, capital expenditures, contractual commitments to purchase equipment that will be leased to others, contractual commitments
related to factoring agreements, software acquisition/license commitments, contractual minimum programming commitments and any contractually required cash
payments for acquisitions.
(b) Excluded funding commitments entered into in the ordinary course of business by our financial services businesses. Further information on these commitments and
other guarantees is provided in Note 24 to the consolidated financial statements in this Form 10-K Report.
(c)
(d)
Included contracts with reasonably determinable cash flows such as structured settlements, guaranteed investment contracts, and certain property and casualty
contracts, and excluded long-term care, variable annuity and other life insurance contracts.
Included an estimate of future expected funding requirements related to our postretirement benefit plans and included liabilities for unrecognized tax benefits. Because
their future cash outflows are uncertain, the following non-current liabilities are excluded from the table above: deferred taxes, derivatives, deferred revenue and other
sundry items. For further information on certain of these items, see Notes 14 and 22 to the consolidated financial statements in this Form 10-K Report.
(e)
Included payments for other liabilities.
82 GE 2014 FORM 10-K
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EXPOSURES
GECC SELECTED EUROPEAN EXPOSURES
At December 31, 2014, we had $65.4 billion in financing receivables to consumer and commercial customers in Europe. The
GECC financing receivables portfolio in Europe is well diversified across European geographies and customers.
Approximately 92% of the portfolio is secured by collateral and represents approximately 500,000 commercial customers.
Several European countries, including Spain, Portugal, Ireland, Italy, Greece and Hungary (focus countries), have been
subject to credit deterioration due to weaknesses in their economic and fiscal situations. The carrying value of GECC funded
exposures in these focus countries and in the rest of Europe comprised the following at December 31, 2014.
December 31, 2014 (In millions)
Spain
Portugal
Ireland
Italy
Greece
Hungary
Rest of
Europe
Total
Europe
Financing receivables, before allowance
for losses on financing receivables
Allowance for losses on
financing receivables
Financing receivables, net of allowance
for losses on financing receivables(a)(b)
Investments(c)(d)
Cost and equity method investments(e)
Derivatives, net of collateral(c)(f)
Equipment leased to others (ELTO)(g)
Real estate held for investment(g)
$
1,290 $
206 $
401 $
6,089 $
3 $
491
$ 57,800 $ 66,280
(72)
(16)
(41)
(149)
-
-
(616)
(894)
1,218
3
-
2
493
539
190
-
-
-
210
-
360
-
478
-
62
-
5,940
411
56
49
665
385
3
-
32
-
230
-
491
-
-
-
231
-
57,184
1,707
1,579
220
9,840
3,138
65,386
2,121
2,145
271
11,731
4,062
Total funded exposures(h)(i)(j)
$
2,255 $
400 $
900 $
7,506 $
265 $
722
$ 73,668 $ 85,716
Unfunded commitments(j)(k)
$
19 $
8 $
100 $
234 $
3 $
-
$
4,450 $
4,814
(a) Financing receivable amounts are classified based on the location or nature of the related obligor.
(b) Substantially all relates to non-sovereign obligors. Included residential mortgage loans of approximately $24.7 billion before consideration of purchased credit protection.
We have third-party mortgage insurance for less than 10% of these residential mortgage loans, which were primarily originated in France and the U.K.
(c) Investments and derivatives are classified based on the location of the parent of the obligor or issuer.
(d) Included $0.6 billion related to financial institutions, $0.2 billion related to non-financial institutions and $1.3 billion related to sovereign issuers. Sovereign issuances
totaled $0.1 billion related to Italy. We held no investments issued by sovereign entities in the other focus countries.
(e) Substantially all is non-sovereign.
(f) Net of cash collateral; entire amount is non-sovereign.
(g) These assets are held under long-term investment and operating strategies, and our ELTO strategies contemplate an ability to redeploy assets under lease should
default by the lessee occur. The values of these assets could be subject to decline or impairment in the current environment.
(h) Excluded $33.7 billion of cash and equivalents, which is composed of $25.3 billion of cash on short-term placement with highly rated global financial institutions based in
Europe, sovereign central banks and agencies or supranational entities, of which $1.1 billion is in focus countries, and $8.4 billion of cash and equivalents placed with
highly rated European financial institutions on a short-term basis, secured by U.S. Treasury securities ($4.1 billion) and sovereign bonds of non-focus countries ($4.3
billion), where the value of our collateral exceeds the amount of our cash exposure.
(i) Rest of Europe included $1.9 billion and $0.1 billion of exposure for Russia and Ukraine, respectively, substantially all ELTO and financing receivables related to
commercial aircraft in our GECAS portfolio.
(j) Excludes assets held for sale and unfunded commitments related to Budapest Bank for Hungary.
(k) Includes ordinary course of business lending commitments, commercial and consumer unused revolving credit lines, inventory financing arrangements and investment
commitments.
GE 2014 FORM 10-K 83
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We manage counterparty exposure, including credit risk, on an individual counterparty basis. We place defined risk limits
around each obligor and review our risk exposure on the basis of both the primary and parent obligor, as well as the issuer of
securities held as collateral. These limits are adjusted on an ongoing basis based on our continuing assessment of the credit
risk of the obligor or issuer. In setting our counterparty risk limits, we focus on high-quality credits and diversification through
spread of risk in an effort to actively manage our overall exposure. We actively monitor each exposure against these limits and
take appropriate action when we believe that risk limits have been exceeded or there are excess risk concentrations. Our
collateral position and ability to work out problem accounts have historically mitigated our actual loss experience. Delinquency
experience has been relatively stable in our European commercial and consumer platforms in the aggregate, and we actively
monitor and take action to reduce exposures where appropriate. Uncertainties surrounding European markets could have an
impact on the judgments and estimates used in determining the carrying value of these assets.
(cid:3)
VENEZUELA
Our activities related to Venezuela generated revenues of approximately $0.6 billion in 2014, consisting of both exports to and
operations within the country. Substantially all of these revenues are denominated in U.S. dollars and euro but we also
transact in bolivars for certain businesses.
Determining the appropriate exchange rate for remeasurement of bolivar-denominated monetary assets and liabilities into U.S.
dollars continues to be subject to uncertainty. During 2014, Venezuela operated three different exchange mechanisms:
CENCOEX (the official exchange mechanism), SICAD1 and SICAD2. In 2014, we became eligible to access the SICAD1
exchange mechanism to settle certain future transactions, including the payment of dividends. In light of this development, we
concluded the SICAD1 rate is the most appropriate for measuring a majority of our monetary assets and recorded pre-tax
charges of $66 million during 2014. We continued to access CENCOEX for certain of our qualifying imports and measure the
associated bolivar-denominated net monetary assets at that rate. In February 2015, the Venezuelan government eliminated
SICAD2 and introduced a new open market exchange mechanism (SIMADI). We will reevaluate the determination of the
appropriate exchange rates for remeasurement in light of current developments, including the potential for a devaluation of the
bolivar. Net monetary assets subject to remeasurement were approximately $78 million at December 31, 2014, including
approximately $19 million in bolivar-denominated cash and cash equivalents and approximately $41 million related to a non-
consolidated investment.
We also continue to monitor other effects of the economic and operating environment in Venezuela on our activities, including
the impact on non-bolivar credit exposures and recoverable amounts of bolivar denominated non-monetary assets.
OIL & GAS INDUSTRY
The recent sharp decline in oil prices and the prospect of lower oil prices has mixed implications for the industries and
countries in which we compete. In general, lower oil prices are expected to stimulate growth in oil importing countries while
causing negative economic effects in many energy-exporting countries. Certain parts of our Oil & Gas business will experience
declines in orders and pricing pressures, while we expect that other parts will be largely unaffected. In response to this
uncertain industry outlook, we have implemented cost actions and increased our focus on productivity. We expect that low oil
prices will benefit our other businesses through lower direct material and other variable costs as well as through the expected
stimulus-effect on growth in the U.S. and in other economies that rely on energy imports, including Europe, Japan, and India.
EMPLOYEE MATTERS
Approximately 16,400 GE manufacturing and service employees in the United States are represented for collective bargaining
purposes by one of 11 unions (approximately 82 different locals within such unions). A majority of such employees are
represented by union locals that are affiliated with the IUE-CWA, The Industrial Division of the Communication Workers of
America, AFL-CIO, CLC. During 2011, we negotiated four-year agreements with most of our U.S. unions. Most of these
contracts will terminate in June 2015, and we will be engaged in negotiations to attain new agreements. While results of 2015
union negotiations cannot be predicted, our recent past negotiations have resulted in agreements that increased costs.
84 GE 2014 FORM 10-K
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CRITICAL ACCOUNTING ESTIMATES
Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an
understanding of our financial statements because they involve significant judgments and uncertainties. Many of these
estimates include determining fair value. All of these estimates reflect our best judgment about current, and for some
estimates future, economic and market conditions and their potential effects based on information available as of the date of
these financial statements. If these conditions change from those expected, it is reasonably possible that the judgments and
estimates described below could change, which may result in future impairments of investment securities, goodwill, intangibles
and long-lived assets, incremental losses on financing receivables, increases in reserves for contingencies, establishment of
valuation allowances on deferred tax assets and increased tax liabilities, among other effects. Also see Note 1 to the
consolidated financial statements in this Form 10-K Report, which discusses our most significant accounting policies.
LOSSES ON FINANCING RECEIVABLES
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of
probable losses inherent in the portfolio. The method for calculating the best estimate of losses depends on the size, type and
risk characteristics of the related financing receivable. Such an estimate requires consideration of historical loss experience,
adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present
economic conditions such as delinquency rates, financial health of specific customers and market sectors, collateral values
(including housing price indices, as applicable), and the present and expected future levels of interest rates. The underlying
assumptions, estimates and assessments we use to provide for losses are updated to reflect our view of current conditions
and are subject to the regulatory examination process, which can result in changes to our assumptions. Changes in such
estimates can significantly affect the allowance and provision for losses. It is possible that we will experience credit losses that
are different from our current estimates. Write-offs in both our consumer and commercial portfolios can also reflect both losses
that are incurred subsequent to the beginning of a fiscal year and information becoming available during that fiscal year that
may identify further deterioration on exposures existing prior to the beginning of that fiscal year, and for which reserves could
not have been previously recognized. Our risk management process includes standards and policies for reviewing major risk
exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, or on a portfolio
basis, as appropriate.
Further information is provided in the Global Risk Management section and Statement of Financial Position – Financing
Receivables section within the MD&A of this Form 10-K, the Asset Impairment section that follows and in Notes 1 and 6 to the
consolidated financial statements in this Form 10-K Report.
REVENUE RECOGNITION ON LONG-TERM PRODUCT SERVICES AGREEMENTS
Revenue recognition on long-term product services agreements requires estimates of profits over the multiple-year terms of
such agreements, considering factors such as the frequency and extent of future monitoring, maintenance and overhaul
events; the amount of personnel, spare parts and other resources required to perform the services; and future billing rate, cost
changes and customers’ utilization of assets. We routinely review estimates under product services agreements and regularly
revise them to adjust for changes in outlook.
GE 2014 FORM 10-K 85
M D & A C R I T I C AL A C C O U N T I N G E S T I M AT E S
We also regularly assess customer credit risk inherent in the carrying amounts of receivables and contract costs and
estimated earnings, including the risk that contractual penalties may not be sufficient to offset our accumulated investment in
the event of customer termination. We gain insight into future utilization and cost trends, as well as credit risk, through our
knowledge of the installed base of equipment and the close interaction with our customers that comes with supplying critical
services and parts over extended periods. Revisions may affect a product services agreement’s total estimated profitability
resulting in an adjustment of earnings; such adjustments increased earnings by $1.0 billion, $0.3 billion and $0.4 billion in
2014, 2013 and 2012, respectively. We provide for probable losses when they become evident.
Further information is provided in Notes 1 and 9 to the consolidated financial statements in this Form 10-K Report.
ASSET IMPAIRMENT
Asset impairment assessment involves various estimates and assumptions as follows:
INVESTMENTS
We regularly review investment securities for impairment using both quantitative and qualitative criteria. For debt securities, if
we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery
of our amortized cost, we evaluate other qualitative criteria to determine whether a credit loss exists, such as the financial
health of and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of
the security. Quantitative criteria include determining whether there has been an adverse change in expected future cash
flows. For equity securities, our criteria include the length of time and magnitude of the amount that each security is in an
unrealized loss position. Our other-than-temporary impairment reviews involve our finance, risk and asset management
functions as well as the portfolio management and research capabilities of our internal and third-party asset managers. See
Note 1 to the consolidated financial statements in this Form 10-K Report, which discusses the determination of fair value of
investment securities.
Further information about actual and potential impairment losses is provided in Notes 1, 3 and 9 to the consolidated financial
statements in this Form 10-K Report.
LONG-LIVED ASSETS
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying
amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and
assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the
useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. In turn, measurement of an
impairment loss requires a determination of fair value, which is based on the best information available. We derive the required
undiscounted cash flow estimates from our historical experience and our internal business plans. To determine fair value, we
use quoted market prices when available, our internal cash flow estimates discounted at an appropriate interest rate and
independent appraisals, as appropriate.
Our operating lease portfolio of commercial aircraft is a significant concentration of assets in GE Capital, and is particularly
subject to market fluctuations. Therefore, we test recoverability of each aircraft in our operating lease portfolio at least
annually. Additionally, we perform quarterly evaluations in circumstances such as when aircraft are re-leased, current lease
terms have changed or a specific lessee’s credit standing changes. We consider market conditions, such as global demand for
commercial aircraft. Estimates of future rentals and residual values are based on historical experience and information
received routinely from independent appraisers. Estimated cash flows from future leases are reduced for expected downtime
between leases and for estimated technical costs required to prepare aircraft to be redeployed. Fair value used to measure
impairment is based on management's best estimate. In determining its best estimate, management evaluates average current
86 GE 2014 FORM 10-K
M D & A C R I T I C AL A C C O U N T I N G E S T I M AT E S
market values (obtained from third parties) of similar type and age aircraft, which are adjusted for the attributes of the specific
aircraft under lease.
We recognized impairment losses on our operating lease portfolio of commercial aircraft of $0.4 billion and $0.7 billion in 2014
and 2013, respectively. Impairment losses in 2014 primarily related to regional jets and older technology aircraft. The average
age of aircraft we impaired in 2014 was 17 years compared with 7 years for our total fleet. Provisions for losses on financing
receivables related to commercial aircraft were an insignificant amount for both 2014 and 2013.
Further information on impairment losses and our exposure to the commercial aviation industry is provided in Notes 7 and 24
to the consolidated financial statements in this Form 10-K Report.
REAL ESTATE
We review the estimated value of our commercial real estate investments annually, or more frequently as conditions warrant.
The cash flow estimates used for both estimating value and the recoverability analysis are inherently judgmental, and reflect
current and projected lease profiles, available industry information about expected trends in rental, occupancy and
capitalization rates and expected business plans, which include our estimated holding period for the asset. Our portfolio is
diversified, both geographically and by asset type. However, the global real estate market is subject to periodic cycles that can
cause significant fluctuations in market values. Based on the most recent valuation estimates available, the carrying value of
our Real Estate investments exceeded their estimated value by about $1.2 billion. This amount is subject to variation
dependent on the assumptions described above, changes in economic and market conditions and composition of our portfolio,
including sales. Commercial real estate valuations have shown signs of improved stability and liquidity in certain markets,
primarily in the U.S. and Japan; however, the pace of improvement varies significantly by asset class and market. Accordingly,
there continues to be risk and uncertainty surrounding commercial real estate values. Declines in the estimated value of real
estate below carrying amount result in impairment losses when the aggregate undiscounted cash flow estimates used in the
estimated value measurement are below the carrying amount. As such, estimated losses in the portfolio will not necessarily
result in recognized impairment losses. When we recognize an impairment, the impairment is measured using the estimated
fair value of the underlying asset, which is based upon cash flow estimates that reflect current and projected lease profiles and
available industry information about capitalization rates and expected trends in rents and occupancy and is corroborated by
external appraisals. Real Estate recognized pre-tax impairments of $0.3 billion in its real estate held for investment in both
2014 and 2013. Deterioration in economic conditions or prolonged market illiquidity may result in further impairments being
recognized. Furthermore, significant judgment and uncertainty related to forecasted valuation trends, especially in illiquid
markets, result in inherent imprecision in real estate value estimates.
Further information is provided in the Risk Management section and in Note 9 to the consolidated financial statements in this
Form 10-K Report.
GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS
We test goodwill for impairment annually in the third quarter of each year using data as of July 1 of that year. The impairment
test consists of two steps: in step one, the carrying value of the reporting unit is compared with its fair value; in step two, which
is applied when the carrying value is more than its fair value, the amount of goodwill impairment, if any, is derived by deducting
the fair value of the reporting unit’s assets and liabilities from the fair value of its equity, and comparing that amount with the
carrying amount of goodwill. We determined fair values for each of the reporting units using the market approach, when
available and appropriate, or the income approach, or a combination of both. We assess the valuation methodology based
upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are
used, the results are weighted appropriately.
GE 2014 FORM 10-K 87
M D & A C R I T I C A L A C C O U N T I N G E S T I M AT E S
Valuations using the market approach are derived from metrics of publicly traded companies or historically completed
transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the
reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market
approach is limited to reporting units for which there are publicly traded companies that have the characteristics similar to our
businesses.
Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at
an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-
term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ
from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing
published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that
are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed
forecasts. Discount rates used in our reporting unit valuations ranged from 9.0% to 16.0%.
During the third quarter of 2014, as noted above, we performed our annual impairment test of goodwill for all of our reporting
units. Based on the results of our step one testing, the fair values of each of the GE reporting units exceeded their carrying
values; therefore, the second step of the impairment test was not required to be performed for any of our reporting units and
no goodwill impairment was recognized.
While all of our reporting units passed step one of our annual impairment testing, we identified one reporting unit for which the
fair value was not substantially in excess of its carrying value. Within our Energy Management operating segment, the Power
Conversion reporting unit was determined to have a fair value in excess of its carrying value by approximately 10%. The
goodwill associated with the Power Conversion reporting unit was $1.5 billion at December 31, 2014, representing
approximately 2% of our total goodwill. While the goodwill of the reporting unit is not currently impaired, there could be an
impairment in the future as a result of changes in certain estimates and assumptions. For example, the reporting unit’s fair
value could be adversely affected and result in an impairment of goodwill if actual cash flows are below estimated cash flows,
the estimated cash flows are discounted at a higher risk-adjusted rate or market multiples decrease.
As of December 31, 2014, we believe that the goodwill is recoverable for all of the reporting units; however, there can be no
assurances that the goodwill will not be impaired in future periods.
In 2013, while the Real Estate reporting unit’s book value was within the range of its fair value, we further substantiated our
Real Estate goodwill balance by performing the second step analysis in which the implied fair value of goodwill exceeded its
carrying value by approximately $3.7 billion. In the current year, it was determined that the second step was not required, as
the results of step one indicated that the fair value of the Real Estate reporting unit exceeded its book value.
Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number
of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could
change in future periods.
We review identified intangible assets with defined useful lives and subject to amortization for impairment whenever events or
changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an
impairment loss occurred requires comparing the carrying amount to the sum of undiscounted cash flows expected to be
generated by the asset. We test intangible assets with indefinite lives annually for impairment using a fair value method such
as discounted cash flows. For our insurance activities remaining in continuing operations, we periodically test for impairment
our deferred acquisition costs and present value of future profits.
Further information is provided in Notes 1 and 8 to the consolidated financial statements in this Form 10-K Report.
88 GE 2014 FORM 10-K
M D & A C R I T I C A L A C C O U N T I N G E S T I M AT E S
PENSION ASSUMPTIONS
Pension assumptions are significant inputs to the actuarial models that measure pension benefit obligations and related effects
on operations. Two assumptions – discount rate and expected return on assets – are important elements of plan expense and
asset/liability measurement. We evaluate these critical assumptions at least annually on a plan and country-specific basis. We
periodically evaluate other assumptions involving demographic factors such as retirement age, mortality and turnover, and
update them to reflect our experience and expectations for the future. Actual results in any given year will often differ from
actuarial assumptions because of economic and other factors.
Accumulated and projected benefit obligations are measured as the present value of expected payments. We discount those
cash payments using the weighted average of market-observed yields for high-quality fixed-income securities with maturities
that correspond to the payment of benefits. Lower discount rates increase present values and subsequent-year pension
expense; higher discount rates decrease present values and subsequent-year pension expense.
Our discount rates for principal pension plans at December 31, 2014, 2013 and 2012 were 4.02%, 4.85% and 3.96%,
respectively, reflecting market interest rates.
To determine the expected long-term rate of return on pension plan assets, we consider current and target asset allocations,
as well as historical and expected returns on various categories of plan assets. In developing future long-term return
expectations for our principal benefit plans’ assets, we formulate views on the future economic environment, both in the U.S.
and abroad. We evaluate general market trends and historical relationships among a number of key variables that impact
asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and
external sources. We also take into account expected volatility by asset class and diversification across classes to determine
expected overall portfolio results given current and target allocations. Assets in our principal pension plans earned 5.9% in
2014, and had average annual returns of 9.0%, 5.9%, and 8.4% per year in the 5-, 10- and 25-year periods ended December
31, 2014, respectively. The average historical 10- and 25- returns were significantly affected by investment losses in 2008.
Based on our analysis of future expectations of asset performance, past return results, and our current and target asset
allocations, we have assumed a 7.5% long-term expected return on those assets for cost recognition in 2015 compared to
7.5% in 2014 and 8.0% in 2013 and 2012.
Changes in key assumptions for our principal pension plans would have the following effects.
(cid:120) Discount rate – A 25 basis point increase in discount rate would decrease pension cost in the following year by $0.2 billion
and would decrease the pension benefit obligation at year-end by about $2.3 billion.
(cid:120) Expected return on assets – A 50 basis point decrease in the expected return on assets would increase pension cost in
the following year by $0.2 billion.
Further information on our pension plans is provided in the Other Consolidated Information – Postretirement Benefit Plans
section of the MD&A and in Note 12 to the consolidated financial statements in this Form 10-K Report.
GE 2014 FORM 10-K 89
M D & A C R I T I C A L A C C O U N T I N G E S T I M AT E S
INCOME TAXES
Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various
jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective
governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax
positions, including evaluating uncertainties. We review our tax positions quarterly and adjust the balances as new information
becomes available. Our income tax rate is significantly affected by the tax rate on our global operations. In addition to local
country tax laws and regulations, this rate depends on the extent earnings are indefinitely reinvested outside the United
States. Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future
operations of the Company. At December 31, 2014 and 2013, approximately $119 billion and $110 billion of earnings,
respectively, have been indefinitely reinvested outside the United States. Most of these earnings have been reinvested in
active non-U.S. business operations, and we do not intend to repatriate these earnings to fund U.S. operations. Because of
the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be
payable if such earnings were not reinvested indefinitely.
Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years.
Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as
well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these future tax deductions and
credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary
differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on
estimates. We use our historical experience and our short- and long-range business forecasts to provide insight. Further, our
global and diversified business portfolio gives us the opportunity to employ various prudent and feasible tax planning
strategies to facilitate the recoverability of future deductions. Amounts recorded for deferred tax assets related to non-U.S. net
operating losses, net of valuation allowances, were $5.5 billion at both December 31, 2014 and 2013, including $0.6 billion and
$0.8 billion at December 31, 2014 and 2013, respectively, of deferred tax assets, net of valuation allowances, associated with
losses reported in discontinued operations, primarily related to our loss on the sale of GE Money Japan. Such year-end 2014
amounts are expected to be fully recoverable within the applicable statutory expiration periods. To the extent we do not
consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.
Further information on income taxes is provided in the Other Consolidated Information – Income Taxes section within the
MD&A and in Note 14 to the consolidated financial statements in this Form 10-K Report.
DERIVATIVES AND HEDGING
We use derivatives to manage a variety of risks, including risks related to interest rates, foreign exchange and commodity
prices. Accounting for derivatives as hedges requires that, at inception and over the term of the arrangement, the hedged item
and related derivative meet the requirements for hedge accounting. The rules and interpretations related to derivatives
accounting are complex. Failure to apply this complex guidance correctly will result in all changes in the fair value of the
derivative being reported in earnings, without regard to the offsetting changes in the fair value of the hedged item.
In evaluating whether a particular relationship qualifies for hedge accounting, we test effectiveness at inception and each
reporting period thereafter by determining whether changes in the fair value of the derivative offset, within a specified range,
changes in the fair value of the hedged item. If fair value changes fail this test, we discontinue applying hedge accounting to
that relationship prospectively. Fair values of both the derivative instrument and the hedged item are calculated using internal
valuation models incorporating market-based assumptions, subject to third-party confirmation, as applicable.
Further information about our use of derivatives is provided in Notes 1, 9, 21 and 22 to the consolidated financial statements in
this Form 10-K Report.
90 GE 2014 FORM 10-K
M D & A C R I T I C AL A C C O U N T I N G E S T I M AT E S
FAIR VALUE MEASUREMENTS
Assets and liabilities measured at fair value every reporting period include investments in debt and equity securities and
derivatives. Assets that are not measured at fair value every reporting period but that are subject to fair value measurements
in certain circumstances include loans and long-lived assets that have been reduced to fair value when they are held for sale,
impaired loans that have been reduced based on the fair value of the underlying collateral, cost and equity method
investments and long-lived assets that are written down to fair value when they are impaired and the remeasurement of
retained investments in formerly consolidated subsidiaries upon a change in control that results in deconsolidation of a
subsidiary, if we sell a controlling interest and retain a noncontrolling stake in the entity. Assets that are written down to fair
value when impaired and retained investments are not subsequently adjusted to fair value unless further impairment occurs.
A fair value measurement is determined as the price we would receive to sell an asset or pay to transfer a liability in an orderly
transaction between market participants at the measurement date. In the absence of active markets for the identical assets or
liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such
data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at
the measurement date. The determination of fair value often involves significant judgments about assumptions such as
determining an appropriate discount rate that factors in both risk and liquidity premiums, identifying the similarities and
differences in market transactions, weighting those differences accordingly and then making the appropriate adjustments to
those market transactions to reflect the risks specific to our asset being valued.
Further information on fair value measurements is provided in Notes 1, 21 and 22 to the consolidated financial statements in
this Form 10-K Report.
OTHER LOSS CONTINGENCIES
Other loss contingencies are uncertain and unresolved matters that arise in the ordinary course of business and result from
events or actions by others that have the potential to result in a future loss. Such contingencies include, but are not limited to
environmental obligations, litigation, regulatory proceedings, product quality and losses resulting from other events and
developments.
When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the
ultimate loss. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of
such range. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and
determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and
the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency.
Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and
new information must be continuously evaluated to determine both the likelihood of potential loss and whether it is possible to
reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure
is provided.
Disclosure also is provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the
amount of a loss will exceed the recorded provision. We regularly review all contingencies to determine whether the likelihood
of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. As discussed
above, development of a meaningful estimate of loss or a range of potential loss is complex when the outcome is directly
dependent on negotiations with or decisions by third parties, such as regulatory agencies, the court system and other
interested parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and
boundaries of high and low estimates.
Further information is provided in Notes 2, 13 and 24 to the consolidated financial statements in this Form 10-K Report.
GE 2014 FORM 10-K 91
M D & A O T H E R I T E M S
OTHER ITEMS
NEW ACCOUNTING STANDARDS
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09,
Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to
be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue
recognition guidance in GAAP when it becomes effective. The new standard is effective on January 1, 2017. Early application
is not permitted. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition
method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related
disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing
financial reporting.
In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The ASU amends the
consolidation guidance for VIEs and general partners’ investments in limited partnerships and modifies the evaluation of
whether limited partnerships and similar legal entities are VIEs or voting interest entities. The ASU is effective for interim and
annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the
effect of the ASU on our consolidated financial statements and related disclosures.
ENVIRONMENTAL MATTERS
Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of
substances regulated under environmental protection laws. We are involved in a number of remediation actions to clean up
hazardous wastes as required by federal and state laws. Such statutes require that responsible parties fund remediation
actions regardless of fault, legality of original disposal or ownership of a disposal site. Expenditures for site remediation actions
amounted to approximately $0.4 billion in each of the years 2014, 2013 and 2012. We presently expect that such remediation
actions will require average annual expenditures of about $0.4 billion in 2015 and $0.3 billion in 2016.
In 2006, we entered into a consent decree with the Environmental Protection Agency (EPA) to dredge PCB-containing
sediment from the upper Hudson River. The consent decree provided that the dredging would be performed in two phases.
Phase 1 was completed in May through November of 2009. Between Phase 1 and Phase 2 there was an intervening peer
review by an independent panel of national experts. The panel evaluated the performance of Phase 1 dredging operations with
respect to Phase 1 Engineering Performance Standards and recommended proposed changes to the standards. On
December 17, 2010, EPA issued its decision setting forth the final performance standards for Phase 2 of the Hudson River
dredging project, incorporating aspects of the recommendations from the independent peer review panel and from GE. In
December 2010, we agreed to perform Phase 2 of the project in accordance with the final performance standards set by EPA
and increased our reserve by $0.8 billion in the fourth quarter of 2010 to account for the probable and estimable costs of
completing Phase 2. In 2012, we completed the first year of Phase 2 dredging and commenced work on planned upgrades to
the Hudson River wastewater processing facility. Over the past four years we have dredged 2.2 million cubic yards from the
river and, based upon that result and our best professional engineering judgment, we believe that our current reserve
continues to reflect our probable and estimable costs for the remainder of Phase 2 of the dredging project.
(cid:3)
92 GE 2014 FORM 10-K
M D & A O T H E R I T E M S
RESEARCH AND DEVELOPMENT
(In millions)
Total R&D
Less customer funded R&D (principally the U.S. Government)
Less partner funded R&D
GE funded R&D
$
$
2014
5,273
(721)
(319)
4,233
$
$
2013
5,461
(711)
(107)
4,643
$
$
2012
5,200
(680)
(6)
4,514
Aviation accounts for the largest share of GE’s research and development expenditures with funding from both GE and
external funds. Power & Water and Healthcare also made significant expenditures funded primarily by GE.
OTHER
We own, or hold licenses to use, numerous patents. New patents are continuously being obtained through our research and
development activities as existing patents expire. Patented inventions are used both within the Company and are licensed to
others.
GE is a trademark and service mark of General Electric Company.
Because of the diversity of our products and services, as well as the wide geographic dispersion of our production facilities, we
use numerous sources for the wide variety of raw materials needed for our operations. We have not been adversely affected
by the inability to obtain raw materials.
Sales of goods and services to agencies of the U.S. Government as a percentage of revenues follow.
Total sales to U.S. Government agencies
Aviation segment defense-related sales
2014
3 %
2
2013
3 %
2
2012
3 %
3
GE 2014 FORM 10-K 93
M D & A S U P P L E M E N T AL I N F O R M AT I O N
SUPPLEMENTAL INFORMATION
FINANCIAL MEASURES THAT SUPPLEMENT U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES MEASURES (NON-GAAP FINANCIAL MEASURES)
We sometimes use information derived from consolidated financial information but not presented in our financial statements
prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered
“non-GAAP financial measures” under U.S. Securities and Exchange Commission rules. Specifically, we have referred, in
various sections of this Form 10-K Report, to:
(cid:120) Operating earnings, operating EPS and operating EPS excluding the effects of the 2011 preferred stock redemption, and
(cid:120)
(cid:120)
Industrial operating earnings
Industrial segment organic revenue growth
Industrial cash flows from operating activities (Industrial CFOA) and GE CFOA excluding the effects of NBCU deal-related
taxes
(cid:120) Free cash flow
(cid:120) Operating and non-operating pension costs (income)
(cid:120) Average GE shareowners’ equity, excluding effects of discontinued operations
(cid:120)
Industrial return on total capital (Industrial ROTC)
(cid:120) Ratio of adjusted debt to equity at GECC, net of liquidity
(cid:120) GE pre-tax earnings from continuing operations, excluding GECC earnings from continuing operations and the
corresponding effective tax rates, and the reconciliation of the U.S. federal statutory income tax rate to GE effective tax
rate, excluding GECC earnings
(cid:120) GE Capital ending net investment (ENI), excluding liquidity
(cid:120) GECC Tier 1 Common Ratio Estimate
The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP
financial measures follow.
(cid:3)(cid:3)
94 GE 2014 FORM 10-K
M D & A S U P P L E M E N T AL I N F O R M AT I O N
OPERATING EARNINGS, OPERATING EPS AND OPERATING EPS EXCLUDING THE EFFECTS OF THE
2011 PREFERRED STOCK REDEMPTION
(In millions; except earnings per share)
2014
2013
2012
2011
2010
Earnings from continuing operations attributable to GE
Adjustment (net of tax): non-operating pension costs (income)
Operating earnings
Earnings per share – diluted(a)
Continuing earnings per share
Adjustment (net of tax): non-operating pension costs (income)
Operating earnings per share
Adjustment: effects of the 2011 preferred stock redemption
Operating EPS excluding the effects of the 2011
preferred stock redemption
$
$
$
15,345
1,378
16,723
1.51
0.14
1.65
-
$
$
$
15,177
1,705
16,882
1.47
0.16
1.64
-
$
$
$
14,624
1,386
16,010
1.38
0.13
1.51
-
$
$
$
14,122
688
14,810
1.23
0.06
1.30
0.08
$
$
$
12,577
(204)
12,373
1.15
(0.02)
1.13
-
$
1.65
$
1.64
$
1.51
$
1.37
$
1.13
(a)
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
INDUSTRIAL OPERATING EARNINGS
(Dollars in millions)
Earnings from continuing operations attributable to GE
Adjustments (net of tax): non-operating pension costs (income)
Operating earnings
Less GECC earnings from continuing operations attributable to the Company
Less effect of GECC preferred stock dividends
Operating earnings excluding GECC earnings from continuing operations
and the effect of GECC preferred stock dividends (Industrial operating earnings)
Industrial operating earnings as a percentage of operating earnings
2014
2013
$
15,345
1,378
16,723
$
15,177
1,705
16,882
7,341
(322)
8,258
(298)
$
9,704
$
8,922
58%
53%
Operating earnings excludes non-service-related pension costs of our principal pension plans comprising interest cost,
expected return on plan assets and amortization of actuarial gains/losses. The service cost, prior service cost and curtailment
loss components of our principal pension plans are included in operating earnings. We believe that these components of
pension cost better reflect the ongoing service-related costs of providing pension benefits to our employees. As such, we
believe that our measure of operating earnings provides management and investors with a useful measure of the operational
results of our business. Other components of GAAP pension cost are mainly driven by capital allocation decisions and market
performance, and we manage these separately from the operational performance of our businesses. Neither GAAP nor
operating pension costs are necessarily indicative of the current or future cash flow requirements related to our pension plan.
We also believe that this measure, considered along with the corresponding GAAP measure, provides management and
investors with additional information for comparison of our operating results to the operating results of other companies. We
believe that presenting operating earnings separately for our industrial businesses also provides management and investors
with useful information about the relative size of our industrial and financial services businesses in relation to the total
company. We also believe that operating EPS excluding the effects of the $0.8 billion preferred dividend related to the
redemption of our preferred stock (calculated as the difference between the carrying value and the redemption value of the
preferred stock) is a meaningful measure because it increases the comparability of period-to-period results.
GE 2014 FORM 10-K 95
M D & A S U P P L E M E N T AL I N F O R M AT I O N
INDUSTRIAL SEGMENT ORGANIC REVENUE GROWTH
(Dollars in millions)
2014
2013
V%
6%
7%
V%
1%
Segment revenues:
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Industrial segment revenues
Less the effects of:
Acquisitions, business dispositions (other than dispositions of businesses acquired
for investment) and currency exchange rates
Industrial segment revenues excluding effects of acquisitions, business dispositions
(other than dispositions of businesses acquired for investment) and currency exchange
rates (Industrial segment organic revenues)
$
27,564
18,676
7,319
23,990
18,299
5,650
8,404
109,902
$
24,724
16,975
7,569
21,911
18,200
5,885
8,338
103,602
1,871
2,175
$
108,031
$
101,427
(Dollars in millions)
2013
2012
Segment revenues:
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Industrial segment revenues
Less the effects of:
Acquisitions, business dispositions (other than dispositions of businesses acquired
for investment) and currency exchange rates
Industrial segment revenues excluding effects of acquisitions, business dispositions
(other than dispositions of businesses acquired for investment) and currency exchange
rates (Industrial segment organic revenues)
$
24,724
16,975
7,569
21,911
18,200
5,885
8,338
103,602
$
28,299
15,241
7,412
19,994
18,290
5,608
7,967
102,811
1,566
842
$
102,036
$
101,969
-%
Organic revenue growth measures revenue excluding the effects of acquisitions, business dispositions and currency exchange
rates. We believe that this measure provides management and investors with a more complete understanding of underlying
operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and
currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that
presenting organic revenue growth separately for our industrial businesses provides management and investors with useful
information about the trends of our industrial businesses and enables a more direct comparison to other non-financial
businesses and companies. Management recognizes that the term "organic revenue growth" may be interpreted differently by
other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage
growth from company to company, we believe that these measures are useful in assessing trends of the respective
businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.
96 GE 2014 FORM 10-K
M D & A S U P P L E M E N T AL I N F O R M AT I O N
INDUSTRIAL CASH FLOWS FROM OPERATING ACTIVITIES (INDUSTRIAL CFOA) AND GE CFOA EXCLUDING THE
EFFECTS OF NBCU DEAL-RELATED TAXES
(In millions)
Cash from GE's operating activities, as reported
Less dividends from GECC
Cash from GE's operating activities, excluding dividends
from GECC (Industrial CFOA)
Cash from GE's operating activities, as reported
Adjustment: effects of NBCU deal-related taxes
2014
$
15,171
3,000
$
12,171
$
15,171
-
(cid:3)
$
$
$
2013
2012
2011
2010
14,255
5,985
$
17,826
6,426
$
12,057
-
$
14,746
-
8,270
$
11,400
$
12,057
$
14,746
14,255
3,184
GE CFOA excluding effects of NBCU deal-related taxes
$
15,171
$
17,439
We refer to cash generated by our industrial businesses as "Industrial CFOA," which we define as GE’s cash from continuing
operating activities less the amount of dividends received by GE from GECC. This includes the effects of intercompany
transactions, including GE customer receivables sold to GECC; GECC services for trade receivables management and
material procurement; buildings and equipment (including automobiles) leased between GE and GECC; information
technology (IT) and other services sold to GECC by GE; aircraft engines manufactured by GE that are installed on aircraft
purchased by GECC from third-party producers for lease to others; and various investments, loans and allocations of GE
corporate overhead costs. We believe that investors may find it useful to compare GE’s operating cash flows without the effect
of GECC dividends, since these dividends are not representative of the operating cash flows of our industrial businesses and
can vary from period-to-period based upon the results of the financial services businesses. We also believe that investors may
find it useful to compare Industrial CFOA excluding the effects of taxes paid related to the NBCU transaction. Management
recognizes that these measures may not be comparable to cash flow results of companies that contain both industrial and
financial services businesses, but believes that this comparison is aided by the provision of additional information about the
amounts of dividends paid by our financial services business and the separate presentation in our financial statements of the
Financial Services (GECC) cash flows. We believe that our measures of Industrial CFOA and CFOA excluding NBCU deal-
related taxes provide management and investors with useful measures to compare the capacity of our industrial operations to
generate operating cash flows with the operating cash flows of other non-financial businesses and companies and as such
provide useful measures to supplement the reported GAAP CFOA measure.
FREE CASH FLOW
(Dollars in millions)
Cash from GE's operating activities (continuing operations)
Less GE additions to property, plant and equipment
Free cash flow
2014
2013
$ 15,171 $ 14,255
3,680
10,575
3,970
11,201
V%
6%
6%
We define free cash flow as GE’s cash from operating activities (continuing operations) less GE additions to property, plant
and equipment, which are included in cash flows from investing activities. We believe that free cash flow is a useful financial
metric to assess our ability to pursue opportunities to enhance our growth. We also believe that presenting free cash flow
separately for our industrial businesses provides management and investors with useful information about the trends of our
industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management
recognizes that the term free cash flow may be interpreted differently by other companies and under different circumstances.
Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that
these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool
in assessing period-to-period performance trends.
GE 2014 FORM 10-K 97
M D & A S U P P L E M E N T A L I N F O R M AT I O N
OPERATING AND NON-OPERATING PENSION COSTS (INCOME)
(In millions)
Service cost for benefits earned
Prior service cost amortization
Curtailment loss
Operating pension costs
Expected return on plan assets
Interest cost on benefit obligations
Net actuarial loss amortization
Non-operating pension costs (income)
Total principal pension plans costs
2014
1,205
214
65
1,484
(3,190)
2,745
2,565
2,120
3,604
$
$
2013
1,535
246
-
1,781
(3,500)
2,460
3,664
2,624
4,405
$
$
2012
1,387
279
-
1,666
(3,768)
2,479
3,421
2,132
3,798
$
$
We have provided the operating and non-operating components of cost for our principal pension plans. Operating pension
costs comprise the service cost of benefits earned, prior service cost amortization and curtailment loss for our principal
pension plans. Non-operating pension costs (income) comprise the expected return on plan assets, interest cost on benefit
obligations and net actuarial loss amortization for our principal pension plans. We believe that the operating components of
pension costs better reflects the ongoing service-related costs of providing pension benefits to our employees. We believe that
the operating and non-operating components of cost for our principal pension plans, considered along with the corresponding
GAAP measure, provide management and investors with additional information for comparison of our pension plan costs and
operating results with the pension plan costs and operating results of other companies.
AVERAGE GE SHAREOWNERS' EQUITY, EXCLUDING EFFECTS OF DISCONTINUED OPERATIONS(a)
December 31 (In millions)
2014(cid:3)
2013
2012
2011
2010
Average GE shareowners’ equity(a)
Less the effects of the average net investment
in discontinued operations
Average GE shareowners’ equity, excluding
effects of discontinued operations(b)
$ 131,914
$ 124,501
$ 120,411
$ 122,289
$ 116,179
(167)
(167)
(478)
4,924
13,819
$ 132,081
$ 124,668
$ 120,889
$ 117,365
$ 102,360
(a) On an annual basis, calculated using a five-point average.
(b) Used for computing return on average GE shareowners’ equity and return on average total capital invested (ROTC).
Our ROTC calculation excludes earnings (losses) of discontinued operations from the numerator because GAAP requires us
to display those earnings (losses) in the Statement of Earnings. Our calculation of average GE shareowners’ equity may not
be directly comparable to similarly titled measures reported by other companies. We believe that it is a clearer way to measure
the ongoing trend in return on total capital for the continuing operations of our businesses given the extent that discontinued
operations have affected our reported results. We believe that this results in a more relevant measure for management and
investors to evaluate performance of our continuing operations, on a consistent basis, and to evaluate and compare the
performance of our continuing operations with the ongoing operations of other businesses and companies.
Definitions indicating how the above-named ratios are calculated using average GE shareowners’ equity, excluding effects of
discontinued operations, can be found in the Glossary.
98 GE 2014 FORM 10-K
M D & A S U P P L E M E N T AL I N F O R M AT I O N
INDUSTRIAL RETURN ON TOTAL CAPITAL (INDUSTRIAL ROTC)
December 31 (In millions)
Earnings from continuing operations
Less GECC earnings from continuing operations
Plus GE after-tax interest(a)
Adjusted Industrial return
Average GE shareholders' equity, excluding effects of discontinued operations(b)
Less average GECC shareholders' equity, excluding effects of discontinued operations(b)
Average Industrial shareholders' equity, excluding effects of discontinued operations
Plus average debt (b)
Plus other, net(c)
Adjusted Industrial capital
2014(cid:3)
(cid:3)
2013
$
$
$
$
15,457
7,503
1,026
8,980
132,081
85,403
46,678
15,770
1,743
64,191
$
$
$
$
15,475
8,311
866
8,030
124,668
83,450
41,218
13,665
1,367
56,250
Industrial ROTC
14.0 %
14.3 %
(a) GE interest at a 35% tax rate.
(b) On an annual basis, calculated using a five-point average.
(c) Includes average noncontrolling interests, calculated using a five-point average partially offset by the estimated value of assets held by GE to support GECC.
Our Industrial ROTC calculation excludes earnings (losses) of discontinued operations from the numerator. We believe that
this is a clearer way to measure the ongoing trend in return on Industrial capital for the continuing operations of the business to
the extent that discontinued operations have affected our reported results. Our Industrial shareowners’ equity used in the
denominator is adjusted for debt, noncontrolling interests and the estimated value of assets held by the GE parent to support
GECC. We believe that these adjustments provide a more meaningful denominator in measuring the return on our industrial
businesses. Industrial ROTC was 14.0% in 2014 versus 14.3% in 2013. In 2014, a 12% increase in the adjusted Industrial
return was more than offset by a 14% increase in the adjusted Industrial capital. This increase in capital was principally driven
by an increase in year-end 2013 discount rates, which reduced the pension deficit. Our calculation of the return on Industrial
capital may not be directly comparable to similarly titled measures reported by other companies. We believe that the
adjustments described above result in a more relevant measure for management and investors to evaluate performance of our
Industrial continuing operations, on a consistent basis, and to evaluate and compare the performance of our Industrial
continuing operations with the continuing operations of other businesses and companies.
GE 2014 FORM 10-K 99
M D & A S U P P L E M E N T AL I N F O R M AT I O N
RATIO OF ADJUSTED DEBT TO EQUITY AT GECC, NET OF LIQUIDITY
December 31 (Dollars in millions)
2014(cid:3)
2013
2012
2011
2010
2008
GECC debt
Add debt of businesses held for sale
and discontinued operations
Adjusted GECC debt
Less liquidity(a)
Less cash of businesses held for
sale and discontinued operations
GECC equity
Ratio
$
349,548
$
371,062
$
397,039
$
442,830
$
470,363
$
512,744
2,366
351,914
75,544
316
371,378
74,873
403
397,442
61,853
527
443,357
76,641
575
470,938
60,231
1,859
514,603
37,677
808
275,562
87,499
$
$
236
296,269
82,694
$
$
265
335,324
81,890
$
$
332
366,384
77,110
$
$
222
410,485
68,984
$
$
24
476,902
53,279
$
$
3.15:1
3.58:1
4.09:1
4.75:1
5.95:1
8.95:1
(a) Liquidity includes cash and equivalents and $1.2 billion of debt obligations of the U.S Treasury at December 31, 2014.
We have provided the GECC ratio of debt to equity on a basis that reflects the use of liquidity as a reduction of debt. For
purposes of this ratio, we have also adjusted cash and debt balances to include amounts classified as assets and liabilities of
businesses held for sale and discontinued operations. We believe that this is a useful comparison to a GAAP-based ratio of
debt to equity because liquidity balances may be used to reduce debt. The usefulness of this supplemental measure may be
limited, however, as the total amount of liquidity at any point in time may be different than the amount that could practically be
applied to reduce outstanding debt. Despite this potential limitation, we believe that this measure, considered along with the
corresponding GAAP measure, provides investors with additional information that may be more comparable to other financial
institutions and businesses.
100 GE 2014 FORM 10-K
M D & A S U P P L E M E N T AL I N F O R M AT I O N
GE PRE-TAX EARNINGS FROM CONTINUING OPERATIONS, EXCLUDING GECC EARNINGS FROM CONTINUING
OPERATIONS AND THE CORRESPONDING EFFECTIVE TAX RATES
(Dollars in millions)
2014
2013
2012
GE earnings from continuing operations before income taxes
Less GECC earnings from continuing operations attributable to the Company
Total
GE provision for income taxes
GE effective tax rate, excluding GECC earnings
$
$
$
16,929
7,341
9,588
$
$
17,090
8,258
8,832
1,634
$
17.0 %
1,668
18.9 %
$
$
$
16,797
7,345
9,452
2,013
21.3 %
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO GE EFFECTIVE TAX RATE, EXCLUDING
GECC EARNINGS
U.S. federal statutory income tax rate
Reduction in rate resulting from
Tax on global activities including exports
U.S. business credits
All other – net
GE effective tax rate, excluding GECC earnings
2014
2013
2012
35.0 %
35.0 %
35.0 %
(13.9)
(1.1)
(3.0)
(18.0)
17.0 %
(7.9)
(2.8)
(5.4)
(16.1)
18.9 %
(7.6)
(1.2)
(4.9)
(13.7)
21.3 %
We believe that the GE effective tax rate is best analyzed in relation to GE earnings before income taxes excluding the GECC
net earnings from continuing operations, as GE tax expense does not include taxes on GECC earnings. Management believes
that in addition to the Consolidated and GECC tax rates shown in Note 14 to the consolidated financial statements in this Form
10-K Report, this supplemental measure provides investors with useful information as it presents the GE effective tax rate that
can be used in comparing the GE results to other non-financial services businesses.
GE 2014 FORM 10-K 101
M D & A S U P P L E M E N T AL I N F O R M AT I O N
GE CAPITAL ENDING NET INVESTMENT (ENI), EXCLUDING LIQUIDITY
December 31 (In billions)
Financial Services (GECC) total assets
Adjustment: deferred income taxes
GECC total assets
Less assets of discontinued operations
Less non-interest bearing liabilities
GE Capital ENI
Less liquidity(b)
GE Capital ENI, excluding liquidity
2014
494.0
6.2
500.2
1.2
60.5
438.5
75.5
363.0
$
$
2013
512.0
4.8
516.8
2.3
59.3
455.2
74.9
380.3
$
$
2008(a)
661.0
-
661.0
25.1
85.4
550.5
37.7
512.8
$
$
(a) As of January 1, 2009, as originally reported.
(b) Liquidity includes cash and equivalents and $1.2 billion of debt obligations of the U.S. Treasury at December 31, 2014.
We use ENI to measure the size of our GE Capital segment. We believe that this measure is a useful indicator of the capital
(debt or equity) required to fund a business as it adjusts for non-interest bearing current liabilities generated in the normal
course of business that do not require a capital outlay. We also believe that by excluding liquidity, we provide a meaningful
measure of assets requiring capital to fund our GE Capital segment as a substantial amount of liquidity resulted from debt
issuances to pre-fund future debt maturities and will not be used to fund additional assets. Liquidity consists of cash and
equivalents and certain debt obligations of the U.S. Treasury. As a general matter, investments included in liquidity are
expected to be highly liquid, giving us the ability to readily convert them to cash. Providing this measure will help investors
measure how we are performing against our previously communicated goal to reduce the size of our financial services
segment. We also believe that presenting our 2008 ENI provides investors with information to better understand the progress
we have made toward the goal of making GECC a smaller, more focused finance company.
GECC TIER 1 COMMON RATIO ESTIMATE(a)
December 31 (In billions)
Shareowners' equity(b)
Adjustments:
Preferred equity
Goodwill and other intangible assets
Unrealized gain (loss) on investments and hedges
Other additions (deductions)
GECC Tier 1 common
Estimated risk-weighted assets(c)
GECC Tier 1 common ratio estimate
(a) Includes discontinued operations for all periods.
(b) Total equity excluding noncontrolling interests.
(c) Based on Basel 1 risk-weighted assets estimates.
2014
2013
2008
$
87.5
$
82.7
$
53.3
(4.9)
(26.3)
(0.3)
(0.5)
55.5
438.1
12.7%
(4.9)
(27.4)
-
(0.3)
50.1
447.2
11.2%
-
(29.0)
6.2
(0.8)
29.7
632.9
4.7%
The GECC Tier 1 common ratio estimate is the ratio of Tier 1 common equity to total risk-weighted assets as calculated based
on our interpretation of the U.S. Basel I capital rules. We are not required by regulators to disclose this capital ratio, and
therefore this capital ratio is considered a non-GAAP financial measure. We believe that this capital ratio is a useful measure
to investors because it is widely used by analysts and regulators to assess the capital position of financial services companies.
GECC’s Tier 1 common ratio estimate is not a Basel I defined regulatory capital ratio and may not be comparable to similarly
titled measures reported by other companies.
102 GE 2014 FORM 10-K
O T H E R F I N AN C I AL D AT A
OTHER FINANCIAL DATA
SELECTED FINANCIAL DATA
(Dollars in millions; per-share amounts in dollars)
2014
2013
2012
2011
2010
General Electric Company and Consolidated Affiliates
Revenues and other income
Earnings from continuing operations attributable to the Company
Earnings (loss) from discontinued operations, net of taxes
Net earnings attributable to the Company
Dividends declared(a)
Return on average GE shareowners’ equity(b)
Per common share
Earnings from continuing operations – diluted
Earnings (loss) from discontinued operations – diluted
Net earnings – diluted
Earnings from continuing operations – basic
Earnings (loss) from discontinued operations – basic
Net earnings – basic
Dividends declared
Stock price range
Year-end closing stock price
Cash and equivalents
Total assets of continuing operations
Total assets
Long-term borrowings
Common shares outstanding – average (in thousands)
Common shareowner accounts – average
Employees at year end(c)
United States
Other countries
Total employees(c)
GE data
Short-term borrowings
Long-term borrowings
Noncontrolling interests
GE shareowners’ equity
Total capital invested
Return on average total capital invested(b)*
Borrowings as a percentage of total capital invested(b)
GECC data
Revenues
Earnings from continuing operations attributable to GECC
Earnings (loss) from discontinued operations, net of taxes,
attributable to GECC
Net earnings attributable to GECC
Net earnings attributable to GECC common shareowner
GECC shareowners' equity
Total borrowings and bank deposits
Ratio of debt to equity at GECC(d)*
Total assets(e)
$
148,589 $
146,045 $
146,684 $
146,542 $
15,345
(112)
15,233
8,949
15,177
(2,120)
13,057
8,060
14,624
(983)
13,641
7,372
14,122
29
14,151
7,498
148,875
12,577
(933)
11,644
5,212
11.6 %
12.2 %
12.1 %
12.1 %
12.3 %
$
1.51 $
(0.01)
1.50
1.53
(0.01)
1.51
0.89
1.47 $
(0.21)
1.27
1.48
(0.21)
1.28
0.79
27.94-23.69
28.09-20.68
25.27
90,208
647,114
648,349
200,414
10,044,995
490,000
28.03
88,555
654,221
656,560
221,665
10,222,198
512,000
1.38 $
(0.09)
1.29
1.39
(0.09)
1.29
0.70
23.18-18.02
20.99
77,268
681,684
684,999
236,084
10,522,922
537,000
1.23 $
-
1.23
1.23
-
1.24
0.61
21.65-14.02
17.91
84,440
714,018
718,003
243,459
10,591,146
570,000
136,000
169,000
305,000
135,000
172,000
307,000
134,000
171,000
305,000
131,000
170,000
301,000
3,872 $
12,468
825
128,159
145,324 $
10.6 %
11.2 %
1,841 $
11,515
836
130,566
144,758 $
6,041 $
11,428
777
123,026
141,272 $
2,184 $
9,405
1,006
116,438
129,033 $
11.3 %
9.2 %
11.7 %
12.4 %
11.7 %
9.0 %
1.15
(0.09)
1.06
1.15
(0.09)
1.06
0.46
19.70-13.75
18.29
78,917
729,895
745,426
293,323
10,661,078
588,000
121,000
152,000
273,000
456
9,656
4,098
118,936
133,146
12.0 %
7.6 %
42,725 $
7,341
44,067 $
8,258
45,364 $
7,345
48,324 $
6,480
49,163
3,083
(107)
7,234
6,912
87,499
349,548
3.99:1
(2,054)
6,204
5,906
82,694
371,062
4.49:1
(1,130)
6,215
6,092
81,890
397,039
4.85:1
$
500,216 $
516,829 $
539,351 $
30
6,510
6,510
77,110
442,830
5.74:1
584,643 $
(928)
2,155
2,155
68,984
470,363
6.82:1
605,365
$
$
$
Included $1,031 million of preferred stock dividends ($806 million related to our preferred stock redemption) in 2011 and $300 million in 2010.
Indicates terms are defined in the Glossary.
Transactions between GE and GECC have been eliminated from the consolidated information.
(a)
(b)
(c) Excludes NBC Universal employees of 14,000 in 2010.
(d) Ratios of 3.15:1, 3.58:1, 4.09:1, 4.75:1, and 5.95:1 for 2014, 2013, 2012, 2011 and 2010, respectively, net of liquidity. For purposes of these ratios, cash and debt balances have
been adjusted to include amounts classified as assets and liabilities of businesses held for sale and discontinued operations.
(e) GECC’s total assets excludes deferred income tax liabilities, which are presented as assets for purposes of our consolidating balance sheet presentation.
*Non-GAAP Financial Measure
GE 2014 FORM 10-K 103
O T H E R F I N AN C I AL D AT A
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
Period(a)
(Shares in thousands)
2014
October
November
December
Total
Total number
of shares
purchased(a)(b)
(cid:3)
897
1,900
3,042
5,839
$
$
$
$
Average
price paid
per share
25.21
26.23
25.03
25.45
Total number
of shares
purchased
as part of
our share
repurchase
program(a)(c)
831
1,820
2,972
5,623
Approximate
dollar value
of shares that
may yet be
purchased
under our
share
repurchase
program
$
10.4 billion
(a)
Information is presented on a fiscal calendar basis, consistent with our quarterly financial reporting.
(b) This category included 216 thousand shares repurchased from our various benefit plans.
(c) Shares are repurchased through the 2007 GE Share Repurchase Program (the Program). As of December 31, 2014, we were authorized to repurchase up to $35 billion
of our common stock through 2015 and we had repurchased a total of approximately $24.6 billion under the Program. The Program is flexible and shares are 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.
104 GE 2014 FORM 10-K
R E G U L AT I O N S AN D S U P E R V I S I O N
REGULATIONS AND SUPERVISION
GECC is a regulated savings and loan holding company and in 2011 became subject to Federal Reserve Board (FRB)
supervision under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). In 2013, the U.S. Financial
Stability Oversight Council (FSOC) designated GECC as a nonbank systemically important financial institution (nonbank SIFI)
under the DFA. As a result of this change in supervision and designation, stricter prudential regulatory standards and
supervision apply to GECC. On November 25, 2014 the FRB proposed for comment enhanced prudential standards that
would apply to GECC as a nonbank SIFI. This proposal would, among other items, require GECC to comply with rules on
capital and liquidity adequacy that apply to large bank holding companies, market terms requirements for intercompany
transactions and enhanced risk management and governance requirements. The proposed standards would also apply stress
testing and capital planning requirements to GECC under the FRB’s comprehensive capital analysis and review (CCAR)
regulations. The comment period for the proposed standards closed on February 2, 2015, and the exact application of the
proposed standards will not be known until after the final rule is published.
While the proposed enhanced prudential standards do not subject GECC to the Federal Reserve’s capital plan rule applicable
to large bank holding companies until the capital planning cycle beginning January 1, 2016, GECC does undertake an annual
review of their capital adequacy prior to establishing a plan for dividends to us, the parent. This review is based on a forward-
looking assessment of their material enterprise risks and involves the consideration of a number of factors. This analysis also
includes an assessment of their capital and liquidity levels, as well as incorporating risk management and governance
considerations. The most recent capital adequacy review was approved by the GECC board of directors and the GE Board of
Directors Risk Committee in 2014. While a savings and loan holding company and nonbank SIFI like GECC is currently not
required to obtain FRB approval to pay a dividend, it may not, under FRB regulations, conduct its operations in an unsafe or
unsound manner. The FRB has articulated factors that it expects boards of directors of bank holding companies and savings
and loan holding companies to consider in determining whether to pay a dividend.
In addition to the proposed enhanced prudential standards, as a non-bank SIFI GECC is also required to submit an annual
resolution plan to the FRB and Federal Deposit Insurance Corporation (FDIC). GECC submitted its first resolution plan to the
FRB and FDIC on June 30, 2014. GECC’s resolution plan describes how they could be resolved under existing insolvency
regimes in a manner that mitigates potential disruption to the U.S. financial system and the global financial markets without the
use of government support or taxpayer funds. If the FRB and FDIC determine that their resolution plan is deficient, the Dodd-
Frank Act authorizes the FRB and FDIC to impose more stringent capital, leverage or liquidity requirements on GECC or
restrict their growth or activities until they submit a plan remedying the deficiencies. If the FRB and FDIC ultimately determine
that GECC has not adequately addressed the deficiencies, they could order GECC to divest assets or operations in order to
facilitate their orderly resolution in the event of their failure.
GECC is also subject to the Volcker Rule, which U.S. regulators finalized on December 10, 2013. The rule prohibits
companies that are affiliated with U.S. insured depository institutions from engaging in “proprietary trading” or acquiring or
retaining ownership interest in, or sponsoring or engaging in certain transactions with, a “hedge fund” or a “private equity fund.”
Proprietary trading and fund investing, as prohibited by the rule, are not core activities for GECC, but we are assessing the full
impact of the rule, in anticipation of full conformance with the rule, as required by July 21, 2015.
GE 2014 FORM 10-K 105
R E G U L AT I O N S AN D S U P E R V I S I O N
The company is making the following disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934.
GE Money Bank, Czech Republic (GEMB CZ) is a full-service retail bank in the Czech Republic and a subsidiary of General
Electric Capital Corporation. GEMB CZ maintains a $7.5 million line of credit and three cash accounts for DF
DeutscheForfait s.r.o., a Czech company (DF Sub), which purchases receivables from imports and exports in Central and
Eastern Europe. DF Sub is a subsidiary of DF Deutsche Forfait AG, a German company (DF Parent). On February 6, 2014,
DF Parent was added to the specially designated nationals and blocked persons (SDN List) of the Office of Foreign Assets
Control (OFAC) pursuant to E.O. 13382. The accounts at GEMB CZ for DF Sub pre-date this designation. Following the
designation, GEMB CZ terminated its relationship with DF Sub. We believe that the transactions with DF Sub were permissible
and do not violate U.S. law.
106 GE 2014 FORM 10-K
R I S K M A N A G E M E N T
RISK MANAGEMENT
GE 2014 FORM 10-K 107
R I S K M A N A G E M E N T
A disciplined approach to risk is important in a diversified organization like ours in order to ensure that we are executing
according to our strategic objectives and that we only accept risk for which we are adequately compensated. We evaluate risk
at the individual transaction level, and evaluate aggregated risk at the customer, industry, geographic and collateral-type
levels, where appropriate.
RESPONSIBILITIES
GE BOARD OF DIRECTORS
The GE Board of Directors (Board) has oversight for risk management with a focus on the most significant risks facing the
Company, including strategic, operational, financial and legal and compliance risks. At the end of each year, management and
the Board jointly develop a list of major risks that GE plans to prioritize in the next year. Throughout the year, the Board and
the committees to which it has delegated responsibility dedicate a portion of their meetings to review and discuss specific risk
topics in greater detail. Strategic, operational and reputational risks are presented and discussed in the context of the CEO’s
report on operations to the Board at regularly scheduled Board meetings and at presentations to the Board and its committees
by the vice chairmen, GE and GECC Chief Risk Officers (CROs), general counsel and other employees.
COMMITTEES
The Board has delegated responsibility for the oversight of specific risks to Board committees as follows:
THE AUDIT COMMITTEE oversees GE’s and GE Capital’s policies and processes relating to the financial statements, the
financial reporting process, compliance and auditing. The Audit Committee, in coordination with the GE Risk Committee,
discusses with management the Company’s risk assessment and risk management practices and, when reviewing and
approving the annual audit plan for the internal audit functions, prioritizes audit focus areas based on their potential risk to the
Company. The Audit Committee oversees the Company’s cybersecurity program and related risks, and monitors ongoing
compliance issues and matters. The Audit Committee jointly meets with the GECC Board once a year, which is in addition to
an annual joint meeting of the GE Risk Committee and Audit Committee.
THE GOVERNANCE & PUBLIC AFFAIRS COMMITTEE oversees risk related to the Company’s governance structure
and processes and risks arising from related-person transactions, reviews and discusses with management risks related to
GE’s public policy initiatives and activities, and monitors the Company’s environmental, health and safety compliance and
related risks.
THE MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE oversees the risk management associated
with management resources, structure, succession planning, management development and selection processes, and
includes separate reviews of incentive compensation arrangements at GE and GE Capital to confirm that incentive pay does
not encourage unnecessary and excessive risk taking and to review and discuss, at least annually, the relationship between
risk management policies and practices, corporate strategy and senior executive compensation. The Management
Development and Compensation Committee also incentivizes leaders to improve the Company's competitive position.
THE SCIENCE & TECHNOLOGY COMMITTEE oversees the direction and effectiveness of the company’s R&D
operations. They also review the company’s technology and innovation strategies and approaches, including the impact on the
company’s performance, growth and competitive position. The Science & Technology Committee assist the Board in
overseeing GE’s investments and initiatives in science, technology and software. In addition, they review science and
technology trends that could significantly affect the company and the industries in which it operates.
THE GE RISK COMMITTEE oversees risks related to GE Capital and jointly meets throughout the year with the GECC
Board of Directors (GECC Board). The GE Risk Committee also oversees the Company's most critical enterprise risks and
how management is mitigating these risks. These risks may be discussed during Risk Committee meetings, as well as full
Board updates, Audit Committee updates, and/or during Director business visits.
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SENIOR MANAGEMENT
The GE Board’s risk oversight process builds upon management’s risk assessment and mitigation processes, which include
standardized reviews of long-term strategic and operational planning; executive development and evaluation; code of conduct
compliance under the Company’s The Spirit & The Letter; regulatory compliance; health, safety and environmental
compliance; financial reporting and controllership; and information technology and security.
A vice-chairman of GE and GE’s CRO are responsible for overseeing and coordinating risk assessment and mitigation on an
enterprise-wide basis. They lead the Corporate Risk Function and are responsible for the identification of key business risks,
providing for appropriate management of these risks within GE Board guidelines, and enforcement through policies and
procedures.
OPERATING REVIEWS
CORPORATE AUDIT STAFF & GE CAPITAL AUDIT are responsible for reviewing the governance, processes, controls
and accuracy of GE’s and GE Capital’s financial and compliance reporting.
POLICY COMPLIANCE REVIEW BOARD is a management-level committee that further assists in assessing and
mitigating risk. The Policy Compliance Review Board, which conducted 9 compliance operating reviews and met 3 times in
2014, is chaired by the Company’s general counsel and includes the Chief Financial Officer and other senior-level functional
leaders. It has principal responsibility for monitoring compliance matters across the Company.
GE BLUEPRINT REVIEWS are integrated business planning reviews across GE that evaluate strategic objectives,
operating and organizational performance, and enterprise risks. Blueprint reviews are held at least 4 times per year and
include the most senior GE business leaders.
GE CAPITAL ENTERPRISE RISK MANAGEMENT COMMITTEE oversees the implementation of GE Capital’s risk
appetite, and senior management’s establishment of appropriate systems to ensure enterprise risks are effectively identified,
measured, monitored, and controlled. Additional information on GE Capital’s Enterprise Risk Management Committee can be
found in the GE Capital Risk Management and Mitigation section below.
RISK MANAGERS
Risk assessment and risk management are the responsibility of management and are carried out through risk managers who
are operationally integrated into each of our businesses. These risk managers have acquired deep domain expertise through
their long careers and proximity to the business’ operations and core processes. Both risk managers and the business
leadership teams have specific, enterprise risk focused goals and objectives that are aligned with our overall risk framework.
RISK MITIGATION & COMMUNICATION
Risks identified through our risk management processes are prioritized and, depending on the probability and severity of the
risk, escalated to the CRO. These risks are discussed and responsibility for them is assigned to the business or functional
leader most suited to manage the risk in connection with the quarterly operating reviews. Assigned owners are required to
continually monitor, evaluate and report on risks for which they bear responsibility. Enterprise risk leaders within each
business and corporate function are responsible to present to the CRO risk assessments and key risks at least annually. We
have general response strategies for managing risks, which categorize risks according to whether the Company will avoid,
transfer, reduce or accept the risk. These response strategies are tailored to ensure that risks are within acceptable GE Board
general guidelines.
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Depending on the nature of the risk involved and the particular business or function affected, we use a wide variety of risk
mitigation strategies, including delegation of authorities, standardized processes and strategic planning reviews, operating
reviews, insurance, and hedging. As a matter of policy, we generally hedge the risk of fluctuations in foreign currency
exchange rates, interest rates and commodity prices. Our service businesses employ a comprehensive tollgate process
leading up to and through the execution of a contractual service agreement to mitigate legal, financial and operational risks.
Furthermore, we centrally manage some risks by purchasing insurance, the amount of which is determined by balancing the
level of risk retained or assumed with the cost of transferring risk to others. We manage the risk of fluctuations in economic
activity and customer demand by monitoring industry dynamics and responding accordingly, including by adjusting capacity,
implementing cost reductions and engaging in mergers, acquisitions and dispositions.
GE CAPITAL RISK MANAGEMENT & MITIGATION
GE Capital acknowledges risk-taking as a fundamental characteristic of providing financial services. It is inherent to its
business and arises in lending, leasing and investment transactions undertaken by GE Capital.
GE Capital’s philosophy is to have a strong culture of risk management, combined with a sound risk framework that effectively
supports appropriate risk awareness, behaviors and sound risk-based decision making. GE Capital recognizes that effective
and comprehensive risk management must include three distinct lines of defense including Business Units, Corporate Risk
Management and Internal Audit.
Business Units own and manage risk as a first line of defense with deep risk expertise. The GECC Corporate Risk
Management function provides independent oversight and challenge as a second line of defense. Those responsible for risk
management activities across GECC, including staff in both the first and second lines of defense, are referred to collectively as
“global risk management.” The senior risk professionals have, on average, over 30 years of experience. Internal Audit provides
the third line of defense.
Corporate Risk Management leverages the risk infrastructure in each of our Business Units, which have adopted an approach
that corresponds to GE Capital’s overall risk policies, guidelines and review mechanisms. GE Capital’s risk infrastructure is
designed to manage all risks relevant to its business environment, which if materialized, could prevent GE Capital from
achieving its risk objectives and/or result in losses. These risks are defined as GE Capital’s Enterprise Risk Universe, which
includes the following risks: strategic, liquidity, credit and investment, market, compliance and operational (including financial,
information technology, human resources and legal). Reputational risk is considered and managed across each of the
categories.
GE Capital continues to make significant investments to enhance its risk management infrastructure and processes consistent
with heightened supervisory expectation befitting a nonbank SIFI. As a result, GE Capital is executing on strategic programs
and an extensive number of deliverables to improve data and reporting systems, risk and governance processes, and other
large scale, critical initiatives including capital planning, models, valuations and regulatory reporting. During 2014, GE Capital
increased the number of risk professionals by 12%.
The GE Risk Committee and GECC Board oversee GE Capital’s risk appetite, risk assessment and management processes.
The GE Risk Committee and the GECC Board oversee the GE Capital risk management framework, with the GECC Board
approving all significant acquisitions and dispositions as well as significant borrowings and investments. The GE Risk
Committee and the GECC Board exercise oversight of investment activities in the Business Units through delegations of
authority. All participants in the GE Capital risk management process must comply with approval limits established by the GE
Risk Committee and the GECC Board.
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The Enterprise Risk Management Committee (ERMC), which comprises the most senior leaders in GE Capital as well as the
GE CRO, oversees the implementation of GE Capital’s risk appetite, and senior management’s establishment of appropriate
systems (including policies, procedures, and management committees) to ensure enterprise risks are effectively identified,
measured, monitored, and controlled. The ERMC has delegated management of specific risks to various sub-committees,
including the Operational Risk Management Committee, Asset-Liability Committee, Capital Planning Committee, Allowance
and Valuation Risk Committee, Credit Risk Committee and Compliance Committee. A similar committee structure, where
appropriate, is replicated at the Business Unit level.
Key risk management policies are approved by the GECC Board and the GE Risk Committee at least annually. GE Capital
senior management meets with the GE Risk Committee and the GECC Board throughout the year. At these meetings, GE
Capital senior management focuses on the risk issues, strategy and governance of the business.
GE Capital’s Corporate Risk function, in consultation with the ERMC, updates the Enterprise Risk Appetite Statement
annually. This document articulates the enterprise risk objectives, its key universe of risks and the supporting limit structure.
GE Capital’s risk appetite is determined relative to its desired risk objectives, including, but not limited to, credit ratings, capital
levels, liquidity management, regulatory assessments, earnings, dividends and compliance. GE Capital determines its risk
appetite through consideration of portfolio analytics, including stress testing and economic capital measurement, experience
and judgment of senior risk officers, current portfolio levels, strategic planning, and regulatory and rating agency expectations.
The Enterprise Risk Appetite Statement is presented to the GECC Board and the GE Risk Committee for review and approval
at least annually. On a quarterly basis, the status of GE Capital’s performance against these limits is reviewed by the GE Risk
Committee and GECC Board.
GE Capital monitors its capital adequacy including through economic capital, regulatory capital and enterprise stress testing
methodologies. GE Capital’s economic capital methodology uses internal models to estimate potential unexpected losses
across different portfolios with a confidence level equivalent to an AA agency rating. Although GE Capital is not currently
subject to consolidated risk-based capital standards, GE Capital estimates capital adequacy based on the Basel 1 and Basel 3
U.S. frameworks. GE Capital uses stress testing for risk, liquidity and capital adequacy assessment and management
purposes, and as an integral part of GE Capital’s overall planning processes. Stress testing results inform key strategic
portfolio decisions such as the amount of capital required to maintain minimum expected regulatory capital levels in severe but
plausible stresses, capital allocation, assist in developing the risk appetite and limits, and help in assessing product specific
risk to guide the development and modification of product structures. The GE Risk Committee and the GECC Board review
stress test results and their expected impact on capital levels and metrics. The GE Risk Committee and the GECC Board are
responsible for overseeing overall capital adequacy, and the capital adequacy process, as well as approving GE Capital’s
annual capital plan and capital actions. Under enhanced prudential standards for GE Capital as a nonbank SIFI that the
Federal Reserve Board proposed in November 2014, GE Capital would also be subject to regulatory capital, liquidity, stress
testing, capital planning, risk management and other requirements.
For additional information about our risks, see the “Risk Factors,” “Regulations and Supervision” and “Critical Accounting
Estimates” sections within the MD&A of this Form 10-K report.
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RISK FACTORS
The following discussion of risk factors contains “forward-looking statements,” as discussed in the Forward-Looking
Statements section of this Form 10-K Report. These risk factors may be important to understanding any statement in this
Annual Report on Form 10-K or elsewhere. The following information should be read in conjunction with the Management’s
Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section and the consolidated financial
statements and related notes of this Form 10-K Report.
GE's Corporate Risk Function leverages the risk framework in each of our businesses, which have adopted an approach that
corresponds to the Company’s overall risk policies, guidelines and review mechanisms. Our risk framework operates at the
business and functional levels and is designed to identify, evaluate and mitigate risks within each of the risk categories below.
Our businesses routinely encounter and address risks, some of which will cause our future results to be different – sometimes
materially different – than we presently anticipate. Below, we describe certain important strategic, operational, financial, and
legal and compliance risks. Our reactions to material future developments as well as our competitors’ reactions to those
developments will affect our future results.
STRATEGIC RISKS
Strategic risk relates to the Company’s future business plans and strategies, including the risks associated with: the global
macro-environment in which we operate; mergers and acquisitions and restructuring activity; intellectual property; and other
risks, including the demand for our products and services, competitive threats, technology and product innovation, and public
policy.
Global macro-environment - Our growth is subject to global economic and political risks.
We operate in virtually every part of the world and serve customers in approximately 175 countries. In 2014, approximately
50% of our revenue was attributable to activities outside the United States. Our operations are subject to the effects of global
competition and geopolitical risks. They are also affected by local economic environments, including inflation, recession,
currency volatility, currency controls and actual or anticipated default on sovereign debt. Political changes, some of which may
be disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location. While some of
these global economic and political risks can be hedged using derivatives or other financial instruments and some are
insurable, such attempts to mitigate these risks are costly and not always successful, and our ability to engage in such
mitigation may decrease or become even more costly as a result of more volatile market conditions.
M&A/restructuring - The success of our business depends on achieving our strategic objectives, including through
acquisitions, joint ventures, dispositions and restructurings.
With respect to acquisitions, joint ventures and restructuring actions, we may not achieve expected returns and other benefits
as a result of various factors, including integration and collaboration challenges, such as personnel and technology. In
addition, we may not achieve anticipated cost savings from restructuring actions, which could result in lower margin rates. We
also participate in a number of joint ventures with other companies or government enterprises in various markets around the
world, including joint ventures where we may have a lesser degree of control over the business operations, which may expose
us to additional operational, financial, legal or compliance risks. We also continue to evaluate the potential disposition of
assets and businesses that may no longer help us meet our objectives. When we decide to sell assets or a business, we may
encounter difficulty in finding buyers or executing alternative exit strategies on acceptable terms in a timely manner, which
could delay the accomplishment of our strategic objectives. For example, delays in obtaining tax rulings and regulatory
approvals or clearances, and disruptions or volatility in the capital markets may impact our ability to complete the staged exit
from our North American Retail Finance business, Synchrony Financial, as planned. Alternatively, we may dispose of a
business at a price or on terms that are less than we had anticipated. After reaching an agreement with a buyer or seller for
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the acquisition or disposition of a business, such as the proposed transactions and alliances with Alstom or the proposed sale
of Appliances to Electrolux, we are subject to necessary regulatory and governmental approvals on acceptable terms as well
as satisfaction of pre-closing conditions, which may prevent us from completing the transaction. Dispositions may also involve
continued financial involvement in the divested business, such as through continuing equity ownership, guarantees,
indemnities or other financial obligations. Under these arrangements, performance by the divested businesses or other
conditions outside our control could affect our future financial results.
Intellectual property - Our intellectual property portfolio may not prevent competitors from independently developing
products and services similar to or duplicative to ours.
Our patents and other intellectual property may not prevent competitors from independently developing or selling products and
services similar to or duplicative of ours, and there can be no assurance that the resources invested by us to protect our
intellectual property will be sufficient or that our intellectual property portfolio will adequately deter misappropriation or
improper use of our technology. We could also face competition in some countries where we have not invested in an
intellectual property portfolio. We also face attempts to gain unauthorized access to our IT systems or products for the purpose
of improperly acquiring our trade secrets or confidential business information. The theft or unauthorized use or publication of
our trade secrets and other confidential business information as a result of such an incident could adversely affect our
competitive position and the value of our investment in research and development. We may be unable to secure or retain
ownership or rights to use data in certain software analytics or services offerings. In addition, we may be the target of
aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities. Regardless of the merit
of such claims, responding to infringement claims can be expensive and time-consuming. If GE is found to infringe any third-
party rights, we could be required to pay substantial damages or we could be enjoined from offering some of our products and
services. Also, there can be no assurances that we will be able to obtain or renew from third parties the licenses we need in
the future, and there is no assurance that such licenses can be obtained on reasonable terms.
OPERATIONAL RISKS
Operational risk relates to risks arising from systems, processes, people and external events that affect the operation of our
businesses. It includes product life cycle and execution; product safety and performance; information management and data
protection and security, including cyber security; supply chain and business disruption; and other risks, including human
resources and reputation.
Operations - We may face operational challenges that could have a material adverse effect on our business,
reputation, financial position and results of operations, and we are dependent on maintenance of existing product
lines, market acceptance of new product and service introductions and product and service innovations for
continued revenue and earnings growth.
We produce highly sophisticated products and provide specialized services for both our and third-party products that
incorporate or use leading-edge technology, including both hardware and software. While we have built extensive operational
processes to ensure that the design, manufacture and servicing of such products meet the most rigorous quality standards,
there can be no assurance that we or our customers or other third parties will not experience operational process failures or
other problems, including through cyber attacks and other intentional acts, that could result in potential product, safety,
regulatory or environmental risks. Despite the existence of crisis management or business continuity plans, operational failures
or quality issues, including as a result of organizational changes or labor relations, could have a material adverse effect on our
business, reputation, financial position and results of operations. In addition, the markets in which we operate are subject to
technological change and require skilled talent. Our long-term operating results depend substantially upon our ability to
continually develop, introduce, and market new and innovative products and services, to modify existing products and
services, to customize products and services, to respond to technological change and to execute our product and service
development in line with our projected performance and/or cost estimates.
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Cybersecurity - Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted
computer crime could pose a risk to our systems, networks, products, solutions, services and data.
Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk to
the security of GE’s and its customers’, partners’, suppliers’ and third-party service providers’ products, systems and networks
and the confidentiality, availability and integrity of GE’s and its customers’ data. While we attempt to mitigate these risks by
employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems
and contingency plans, we remain potentially vulnerable to additional known or unknown threats. We also may have access to
sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws,
regulations and customer-imposed controls. Despite our efforts to protect sensitive, confidential or personal data or
information, we may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee
errors and/or malfeasance that could potentially lead to the compromising of sensitive, confidential or personal data or
information, improper use of our systems, software solutions or networks, unauthorized access, use, disclosure, modification
or destruction of information, defective products, production downtimes and operational disruptions. In addition, a cyber-
related attack could result in other negative consequences, including damage to our reputation or competitiveness,
remediation or increased protection costs, litigation or regulatory action.
Supply chain - Significant raw material shortages, supplier capacity constraints, supplier production disruptions,
supplier quality and sourcing issues or price increases could increase our operating costs and adversely impact the
competitive positions of our products.
Our reliance on third-party suppliers, contract manufacturers and service providers, and commodity markets to secure raw
materials, parts, components and sub-systems used in our products exposes us to volatility in the prices and availability of
these materials, parts, components, systems and services. Some of these suppliers or their sub-suppliers are limited- or sole-
source suppliers. A disruption in deliveries from our third-party suppliers, contract manufacturers or service providers, capacity
constraints, production disruptions, price increases, or decreased availability of raw materials or commodities, including as a
result of catastrophic events, could have an adverse effect on our ability to meet our commitments to customers or increase
our operating costs. Quality and sourcing issues experienced by third-party providers can also adversely affect the quality and
effectiveness of our products and services and result in liability and reputational harm.
FINANCIAL RISKS
Financial risk relates to our ability to meet financial obligations and mitigate exposure to broad market risks, including volatility
in foreign currency exchange rates and interest rates and commodity prices; credit risk; and liquidity risk, including risk related
to our credit ratings and our availability and cost of funding. Credit risk is the risk of financial loss arising from a customer or
counterparty failure to meet its contractual obligations. We face credit risk in our industrial businesses, as well as in our GE
Capital investing, lending and leasing activities and derivative financial instruments activities. Liquidity risk refers to the
potential inability to meet contractual or contingent financial obligations (whether on- or off-balance sheet) as they arise, and
could potentially impact an institution’s financial condition or overall safety and soundness.
Economy/counter-parties - A deterioration of conditions in the global economy, the major industries we serve or the
financial markets, or the soundness of financial institutions and governments we deal with, may adversely affect our
business and results of operations.
The business and operating results of our industrial businesses have been, and will continue to be, affected by worldwide
economic conditions, including conditions in the air and rail transportation, power generation, oil and gas, healthcare, home
building and other major industries we serve. Existing or potential customers may delay or cancel plans to purchase our
products and services, including large infrastructure projects, and may not be able to fulfill their obligations to us in a timely
fashion as a result of business deterioration, cash flow shortages, and difficulty obtaining financing due to slower global
economic growth and other challenges affecting the global economy. In particular, the airline industry is highly cyclical, and the
level of demand for air travel is correlated to the strength of the U.S. and international economies. An extended period of slow
growth in the U.S. or internationally that results in the loss of business and leisure traffic could have a material adverse effect
on our airline customers and the viability of their business. Service contract cancellations or customer dynamics such as early
aircraft retirements or reduced electricity demand in our Power & Water business could affect our ability to fully recover our
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contract costs and estimated earnings. Further, our vendors may be experiencing similar conditions, which may impact their
ability to fulfill their obligations to us. If slower growth in the global economy continues for a significant period or there is
significant deterioration in the global economy, our results of operations, financial position and cash flows could be materially
adversely affected.
If conditions in the financial markets deteriorate, there can be no assurance that we will be able to recover fully the value of
certain assets, including real estate, goodwill, intangibles and tax assets. Deterioration in the economy and in default and
recovery rates could require us to increase allowances for loan losses, impairments or write-offs, which, depending on the
amount of the increase, could have a material adverse effect on our business, financial position and results of operations.
In addition, GE Capital has exposure to many different industries and counterparties, including sovereign governments, and
routinely executes transactions with counterparties in the financial services industry, including brokers and dealers,
commercial banks, investment banks and other institutional clients. Many of these transactions expose GE Capital to credit
risk in the event of default of its counterparty or client. In addition, GE Capital’s credit risk may be increased when the value of
collateral held cannot be realized through sale or is liquidated at prices insufficient to recover the full amount of the loan or
derivative exposure due to it. GE Capital also has exposure to these financial institutions in the form of cash on deposit and
unsecured debt instruments held in its investment portfolios. GE Capital has policies relating to credit rating requirements and
to exposure limits to counterparties (as described in Note 22 to the consolidated financial statements in this Form 10-K
Report), which are designed to limit credit and liquidity risk. There can be no assurance, however, that any losses or
impairments to the carrying value of financial assets would not materially and adversely affect GE’s or GE Capital’s business,
financial position and results of operations.
Credit ratings - Failure to maintain our credit ratings could adversely affect our cost of funds and related margins,
liquidity, competitive position and access to capital markets.
The major debt rating agencies routinely evaluate our debt. This evaluation is based on a number of factors, which include
financial strength as well as transparency with rating agencies and timeliness of financial reporting. As of December 31, 2014,
GE and GECC’s long-term unsecured debt credit rating from Standard and Poor’s Ratings Service (S&P) was AA+ (the
second highest of 22 rating categories) with a stable outlook. The long-term unsecured debt credit rating from Moody’s
Investors Service (Moody’s) for GE was Aa3 (the fourth highest of 21 rating categories) and for GECC was A1 (the fifth highest
of 21 credit ratings), both with stable outlooks. As of December 31, 2014, GE and GECC’s short-term credit rating from S&P
was A-1+ (the highest rating category of six categories) and from Moody’s was P-1 (the highest rating category of four
categories). There can be no assurance that we will be able to maintain our credit ratings and failure to do so could adversely
affect our cost of funds and related margins, liquidity, competitive position and access to capital markets. Various debt and
derivative instruments, guarantees and covenants would require posting additional capital or collateral in the event of a ratings
downgrade, which, depending on the extent of the downgrade, could have a material adverse effect on our liquidity and capital
position.
Funding access/costs - Conditions in the financial and credit markets may affect the availability and cost of funding.
As disclosed in more detail in the Liquidity and Borrowings section of this Form 10-K Report, a portion of our borrowings is in
the form of commercial paper and long-term debt. We continue to rely on the availability of the unsecured debt markets to
access funding for term and commercial paper maturities for 2014 and beyond and to fund our operations without incurring
additional U.S. tax. In addition, we rely on the availability of the commercial paper markets to refinance maturing commercial
paper debt throughout the year. In order to further diversify our funding sources, GE Capital continues to expand its reliance
on alternative sources of funding, including bank deposits, securitizations and other asset-based funding. There can be no
assurance that we will succeed in increasing the diversification of our funding sources or that the short and long-term credit
markets will be available or, if available, that the cost of funding will not substantially increase and affect our overall
profitability. Factors that may affect the availability of funding or cause an increase in our funding costs include: a decreased
reliance on short-term funding, such as commercial paper, in favor of longer-term funding arrangements; decreased capacity
and increased competition among debt issuers; increased competition for deposits in our affiliate banks’ markets; and potential
market disruptions or other impacts arising in the United States or Europe from developments in sovereign debt situations. If
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GE Capital’s cost of funding were to increase, it may adversely affect its competitive position and result in lower net interest
margins, earnings and cash flows as well as lower returns on its shareowners’ equity and invested capital.
Social costs - Sustained increases in pension and healthcare benefits costs may reduce our profitability.
Our results of operations may be positively or negatively affected by the amount of income or expense we record for our
defined benefit pension plans. GAAP requires that we calculate income or expense for the plans using actuarial valuations.
These valuations reflect assumptions about financial market and other economic conditions, which may change based on
changes in key economic indicators. The most significant year-end assumptions we use to estimate pension expense for 2015
are the discount rate and the expected long-term rate of return on the plan assets. In addition, we are required to make an
annual measurement of plan assets and liabilities, which may result in a significant reduction or increase to equity. At the end
of 2014, the GE Pension Plan was underfunded, on a GAAP basis, by $15.8 billion, and the GE Supplementary Pension Plan,
an unfunded plan, had a projected benefit obligation of $6.6 billion. Although GAAP expense and pension funding
contributions are not directly related, key economic factors that affect GAAP expense would also likely affect the amount of
cash we would contribute to pension plans as required under the Employee Retirement Income Security Act (ERISA). Failure
to achieve expected returns on plan assets driven by various factors, which could include a continued environment of low
interest rates or sustained market volatility, could also result in an increase to the amount of cash we would be required to
contribute to pension plans. In addition, upward pressure on the cost of providing healthcare benefits to current employees
and retirees may increase future funding obligations. Although we have actively sought to control increases in these costs,
there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce our
profitability. For a discussion regarding how our financial statements can be affected by our pension and healthcare benefit
obligations, see the Other Consolidated Information – Postretirement Benefit Plans section and Note 12 to the consolidated
financial statements in this Form 10-K Report. See also the Critical Accounting Estimates – Pension Assumptions section of
this Form 10-K Report for a discussion regarding how our financial statements can be affected by our pension plan accounting
policies.
LEGAL & COMPLIANCE RISKS
Legal and compliance risk relates to risks arising from the government and regulatory environment and action, including
resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA); and legal proceedings and compliance
with integrity policies and procedures, including those relating to financial reporting, environmental health and safety.
Government and regulatory risk includes the risk that the government or regulatory actions will impose additional cost on us or
cause us to have to change our business models or practices.
Regulatory - We are subject to a wide variety of laws, regulations and government policies that may change in
significant ways.
Our businesses are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and
policies. There can be no assurance that laws, regulations and policies will not be changed in ways that will require us to
modify our business models and objectives or affect our returns on investments by restricting existing activities and products,
subjecting them to escalating costs or prohibiting them outright. In particular, substantial revisions that U.S. and non-U.S.
governments are undertaking or considering in areas such as the regulation and supervision of bank and non-bank financial
institutions, consumer lending, foreign exchange intervention in response to currency volatility, trade controls, the over-the-
counter derivatives market and tax laws and regulations may have an effect on GE’s and GE Capital’s structure, operations,
sales, liquidity, capital requirements, effective tax rate and performance. For example, GE’s effective tax rate is reduced
because active business income earned and indefinitely reinvested outside the United States is taxed at less than the U.S.
rate. A significant portion of this reduction depends upon a provision of U.S. tax law that defers the imposition of U.S. tax on
certain active financial services income until that income is repatriated to the United States as a dividend. This provision is
consistent with international tax norms and permits U.S. financial services companies to compete more effectively with non-
U.S. financial institutions in global markets. This provision, which had expired at the end of 2013, was reinstated in December
2014 retroactively for one year through the end of 2014. This provision also had been scheduled to expire and had been
extended by Congress on seven previous occasions, but there can be no assurance that it will continue to be extended. In the
116 GE 2014 FORM 10-K
R I S K F AC T O R S
event the provision is not extended after 2014, the current U.S. tax imposed on active financial services income earned
outside the United States would increase, making it more difficult for U.S. financial services companies to compete in global
markets. If this provision is not extended, we expect our effective tax rate to increase significantly after 2015. In addition,
efforts by public and private sectors to control the growth of healthcare costs may lead to lower reimbursements and increased
utilization controls related to the use of our products by healthcare providers. Continued government scrutiny, including
reviews of the U.S. Food and Drug Administration (U.S. FDA) medical device pre-market authorization and post-market
surveillance processes, may impact the requirements for marketing our products and slow our ability to introduce new
products, resulting in an adverse impact on our business. Furthermore, we have been, and expect to continue, participating in
U.S. and international governmental programs, which require us to comply with strict governmental regulations. Inability to
comply with these regulations could adversely affect our status in these projects and adversely affect our results of operations,
financial position and cash flows.
Dodd-Frank - Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are subject to prudential
oversight by the Federal Reserve, including as a result of GECC’s designation as a nonbank systemically important
financial institution (nonbank SIFI), which subjects us to increased and evolving regulatory requirements.
GECC is a regulated savings and loan holding company and in 2011 became subject to Federal Reserve Board (FRB)
supervision under the DFA. In 2013, the U.S. Financial Stability Oversight Council (FSOC) designated GECC as a nonbank
SIFI under the DFA. As a result of this change in supervision and designation, stricter prudential regulatory standards and
supervision apply to GECC. On November 25, 2014 the FRB proposed for comment enhanced prudential standards that
would apply to GECC as a nonbank SIFI. This proposal would, among other items, require GECC to comply with rules on
capital and liquidity adequacy that apply to large bank holding companies, market terms requirements for intercompany
transactions and enhanced risk management and governance requirements. In addition, while GECC’s capital adequacy as a
savings and loan holding company, including planned capital distributions such as dividend payments, is currently subject to
review by the FRB, the proposed standards would apply stress testing and capital planning requirements to GECC under the
FRB’s more formal comprehensive capital analysis and review (CCAR) regulations. The comment period for the proposed
standards closed on February 2, 2015, and the exact application of the proposed standards will not be known until after the
final rule is published. For additional information, see the Regulations and Supervision and Liquidity and Borrowings sections
of this Form 10-K Report.
Legal proceedings - We are subject to legal proceedings and legal compliance risks.
We are subject to a variety of legal proceedings and legal compliance risks in virtually every part of the world. We, our
representatives, and the industries in which we operate are subject to continuing scrutiny by regulators and other
governmental authorities, which may, in certain circumstances, lead to enforcement actions, fines and penalties or the
assertion of private litigation claims and damages. Additionally, we and our subsidiaries are involved in a number of
remediation actions to clean up hazardous wastes as required by federal and state laws. These include the dredging of
polychlorinated biphenyls from a 40-mile stretch of the upper Hudson River in New York State, as described in the
Environmental Matters section of this Form 10-K Report. We are also subject to certain other legal proceedings described in
the Legal Proceedings section of this Form 10-K Report. While we believe that we have adopted appropriate risk management
and compliance programs, the global and diverse nature of our operations, including operations of businesses we have
recently acquired, means that legal and compliance risks will continue to exist and additional legal proceedings and other
contingencies, the outcome of which cannot be predicted with certainty, will arise from time to time.
GE 2014 FORM 10-K 117
L E G A L P R O C E E D I N G S
LEGAL PROCEEDINGS
There are 15 lawsuits relating to pending mortgage loan repurchase claims in which WMC, our U.S. mortgage business that
we sold in 2007, is a party. The adverse parties in these cases are securitization trustees or parties claiming to act on their
behalf. While the alleged claims for relief vary from case to case, the complaints and counterclaims in these actions generally
assert claims for breach of contract, indemnification, and/or declaratory judgment, and seek specific performance (repurchase)
and/or monetary damages. Beginning in the fourth quarter 2013, WMC entered into settlements that reduced its exposure on
claims asserted in certain securitizations, and the claim amounts reported herein reflect the effect of these settlements.
Five WMC cases are pending in the United States District Court for the District of Connecticut. Four of these cases were
initiated in 2012, and one was initiated in the third quarter 2013. Deutsche Bank National Trust Company (Deutsche Bank) is
the adverse party in four cases, and Law Debenture Trust Company of New York (Law Debenture) is the adverse party in one
case. The Deutsche Bank complaints assert claims on approximately $4,300 million of mortgage loans and seek to recover
damages in excess of approximately $1,800 million. The Law Debenture complaint asserts claims on approximately $800
million of mortgage loans, and alleges losses on these loans in excess of approximately $425 million. On March 31, 2014, the
District Court denied WMC’s motions to dismiss these cases.
Four WMC cases are pending in the United States District Court for the District of Minnesota against US Bank National
Association (US Bank), one of which was initiated by WMC seeking declaratory judgment. Three of these cases were filed in
2012, and one was filed in 2011. The Minnesota cases involve claims on approximately $800 million of mortgage loans and do
not specify the amount of damages sought. In September 2013, the District Court granted in part and denied in part WMC’s
motions to dismiss or for summary judgment in these cases. On September 8, 2014, US Bank filed a petition for instructions
in the administration of trusts in Minnesota state court seeking authorization and instruction for US Bank to implement the
terms of a settlement agreement reached with WMC to compromise, settle, and release all claims arising out of the
securitizations at issue in these four lawsuits. In February 2015, two bondholders filed objections to the proposed settlement,
and in response the court has scheduled an evidentiary hearing for June 2015. In light of the state court action seeking
approval of the proposed settlement, the District Court has entered orders on September 18, 2014 staying further proceedings
in the four cases until April 15, 2015.
Four cases are pending against WMC in New York State Supreme Court, all of which were initiated by securitization trustees
or securities administrators. These cases involve, in the aggregate, claims involving approximately $4,559 million of mortgage
loans. One of these lawsuits was initiated by Deutsche Bank in the second quarter 2013 and names as defendants WMC and
Barclays Bank PLC. It involves claims against WMC on approximately $1,000 million of mortgage loans and does not specify
the amount of damages sought. The second case, in which the plaintiff is The Bank of New York Mellon (BNY), was initiated in
the fourth quarter 2012 and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase
Bank, N.A. BNY asserts claims on approximately $1,300 million of mortgage loans, and seeks to recover damages in excess
of $650 million. The third case was initiated by BNY in November 2013 and names as defendants WMC, J.P. Morgan
Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. In this case, BNY asserts claims on approximately $1,300
million of mortgage loans, and seeks to recover damages in excess of $600 million. The fourth case was filed in October 2014
and names as defendants WMC, J.P. Morgan Mortgage Acquisition Corporation and JPMorgan Chase Bank, N.A. The
plaintiff, BNY, asserts claims on approximately $959 million of mortgage loans and seeks to recover damages in excess of
$475 million.
Two cases are pending against WMC in the United States District Court for the Southern District of New York. One case, in
which the plaintiff is BNY, was filed in the third quarter 2012. In the second quarter 2013, BNY filed an amended complaint in
which it asserts claims on approximately $900 million of mortgage loans, and seeks to recover damages in excess of $378
million. In September 2013, the District Court denied WMC’s motion to dismiss. On September 18, 2014, the District Court
issued an order directing the parties to participate in settlement discussions before a private mediator or the assigned
118 GE 2014 FORM 10-K
L E G A L P R O C E E D I N G S
magistrate judge. Following this mediation, the parties reached a settlement in principle on the claims arising from a portion of
the loans held in the trust (the “Group 1” loans) , and, as a result, on February 9, 2015 the District Court stayed the case as to
these claims. The second case was initiated by the Federal Housing Finance Agency (FHFA), which filed a summons with
notice in the fourth quarter 2012. In the second quarter 2013, Deutsche Bank, in its role as securitization trustee of the trust at
issue in the case, intervened as a plaintiff and filed a complaint relating to approximately $1,300 million of loans and alleging
losses in excess of approximately $100 million. In December 2013, the District Court issued an order denying WMC’s motion
to dismiss. In February 2015, the District Court on its own motion requested that the parties re-brief several issues raised by
WMC’s motion to dismiss.
The amounts of the claims at issue in these cases (discussed above) reflect the purchase price or unpaid principal balances of
the mortgage loans at issue at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential
recoveries based upon the underlying collateral. All of the mortgage loans involved in these lawsuits are included in WMC’s
reported claims at December 31, 2014. See Note 2 to the consolidated financial statements in this Form 10-K Report for
additional information.
The company is reporting the following matter in compliance with SEC requirements to disclose environmental proceedings
where the government is a party potentially involving monetary sanctions of $100,000 or greater. In October 2014, the U.S.
Federal Government informed the company that it was seeking penalties under the Clean Air and Resource and Conservation
Recovery Acts in connection with a facility sold to Momentive Performance Materials, Inc. in 2006. The allegations relate to
improper operation of pollution control monitoring equipment by incinerator operators.
GE 2014 FORM 10-K 119
G L O S S AR Y
GLOSSARY
Backlog Unfilled customer orders for products and product services (expected life of contract sales for product services).
Borrowing Financial liability (short or long-term) that obligates us to repay cash or another financial asset to another entity.
Borrowings as a percentage of total capital invested For GE, the sum of borrowings and mandatorily redeemable preferred
stock, divided by the sum of borrowings, mandatorily redeemable preferred stock, noncontrolling interests and total
shareowners’ equity.
Cash equivalents Highly liquid debt instruments with original maturities of three months or less, such as commercial paper.
Typically included with cash for reporting purposes, unless designated as available-for-sale and included with investment
securities.
Cash flow hedges Qualifying derivative instruments that we use to protect ourselves against exposure to variability in future
cash flows. The exposure may be associated with an existing asset or liability, or with a forecasted transaction. See “Hedge.”
Commercial paper Unsecured, unregistered promise to repay borrowed funds in a specified period ranging from overnight to
270 days.
Comprehensive income The sum of Net Income and Other Comprehensive Income. See “Other Comprehensive Income.”
Derivative instrument A financial instrument or contract with another party (counterparty) that is designed to meet any of a
variety of risk management objectives, including those related to fluctuations in interest rates, currency exchange rates or
commodity prices. Options, forwards and swaps are the most common derivative instruments we employ. See “Hedge.”
Discontinued operations Certain businesses we have sold or committed to sell within the next year and therefore will no
longer be part of our ongoing operations. The net earnings, assets and liabilities, and cash flows of such businesses are
separately classified on our Statement of Earnings, Statement of Financial Position and Statement of Cash Flows,
respectively, for all periods presented. In the second quarter of 2014, we adopted a new standard for accounting for
discontinued operations as described in Note 1 to the consolidated financial statements. There were no disposals that qualified
as discontinued operations under the revised definition in 2014.
Effective tax rate Provision for income taxes as a percentage of earnings from continuing operations before income taxes and
accounting changes. Does not represent cash paid for income taxes in the current accounting period. Also referred to as
“actual tax rate” or “tax rate.”
Ending Net Investment (ENI) The total capital we have invested in the financial services business. It is the sum of short-term
borrowings, long-term borrowings and equity (excluding noncontrolling interests) adjusted for unrealized gains and losses on
investment securities and hedging instruments. Alternatively, it is the amount of assets of continuing operations less the
amount of non-interest-bearing liabilities.
Equipment leased to others (ELTO) Rental equipment we own that is available to rent and is stated at cost less accumulated
depreciation.
120 GE 2014 FORM 10-K
G L O S S AR Y
Fair value hedge Qualifying derivative instruments that we use to reduce the risk of changes in the fair value of assets,
liabilities or certain types of firm commitments. Changes in the fair values of derivative instruments that are designated and
effective as fair value hedges are recorded in earnings, but are offset by corresponding changes in the fair values of the
hedged items. See “Hedge.”
Financing receivables Investment in contractual loans and leases due from customers (not investment securities).
Forward contract Fixed price contract for purchase or sale of a specified quantity of a commodity, security, currency or other
financial instrument with delivery and settlement at a specified future date. Commonly used as a hedging tool. See “Hedge.”
Goodwill The premium paid for acquisition of a business. Calculated as the purchase price less the fair value of net assets
acquired (net assets are identified tangible and intangible assets, less liabilities assumed).
Guaranteed investment contracts (GICs) Deposit-type products that guarantee a minimum rate of return, which may be
fixed or floating.
Hedge A technique designed to eliminate risk. Often refers to the use of derivative financial instruments to offset changes in
interest rates, currency exchange rates or commodity prices, although many business positions are “naturally hedged” – for
example, funding a U.S. fixed-rate investment with U.S. fixed-rate borrowings is a natural interest rate hedge.
Intangible asset A non-financial asset lacking physical substance, such as goodwill, patents, licenses, trademarks and
customer relationships.
Interest rate swap Agreement under which two counterparties agree to exchange one type of interest rate cash flow for
another. In a typical arrangement, one party periodically will pay a fixed amount of interest, in exchange for which that party
will receive variable payments computed using a published index. See “Hedge.”
Investment securities Generally, an instrument that provides an ownership position in a corporation (a stock), a creditor
relationship with a corporation or governmental body (a bond), rights to contractual cash flows backed by pools of financial
assets or rights to ownership such as those represented by options, subscription rights and subscription warrants.
Match funding A risk control policy that provides funding for a particular financial asset having the same currency, maturity
and interest rate characteristics as that asset. Match funding is executed directly, by issuing debt, or synthetically, through a
combination of debt and derivative financial instruments. For example, when we lend at a fixed interest rate in the U.S., we can
borrow those U.S. dollars either at a fixed rate of interest or at a floating rate executed concurrently with a pay-fixed interest
rate swap. See “Hedge.”
Monetization Sale of financial assets to a third party for cash. For example, we sell certain loans, credit card receivables and
trade receivables to third-party financial buyers, typically providing at least some credit protection and often agreeing to
provide collection and processing services for a fee. Monetization normally results in gains on interest-bearing assets and
losses on non-interest-bearing assets. See “Securitization” and “Variable interest entity.”
Net Interest Margin A measure of the yield on interest earning assets relative to total interest expense. It is the amount of
interest income less interest expense, divided by average interest earning assets.
Noncontrolling interest Portion of shareowner’s equity in a subsidiary that is not attributable to GE.
Operating profit GE earnings from continuing operations before interest and other financial charges, income taxes and
effects of accounting changes.
GE 2014 FORM 10-K 121
G L O S S AR Y
Option The right, not the obligation, to execute a transaction at a designated price, generally involving equity interests, interest
rates, currencies or commodities. See “Hedge.”
Other Comprehensive Income Changes in assets and liabilities that do not result from transactions with shareowners and
are not included in net income but are recognized in a separate component of shareowners’ equity. Other Comprehensive
Income includes the following components:
Investment securities – Unrealized gains and losses on securities classified as available-for-sale.
-
- Currency translation adjustments – The result of translating into U.S. dollars those amounts denominated or
measured in a different currency.
- Cash flow hedges – The effective portion of the fair value of cash flow hedges. Such hedges relate to an exposure
to variability in the cash flows of recognized assets, liabilities or forecasted transactions that are attributable to a
specific risk.
- Benefit plans – Unamortized prior service costs and net actuarial losses (gains) related to pension and retiree health
and life benefits.
- Reclassification adjustments – Amounts previously recognized in Other Comprehensive Income that are included
in net income in the current period.
Product services For purposes of the financial statement display of sales and costs of sales in our Statement of Earnings,
“goods” is required by U.S. Securities and Exchange Commission regulations to include all sales of tangible products, and
“services” must include all other sales, including other services activities. In our Management’s Discussion and Analysis of
Operations section of this Form 10-K, 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.
Product services agreements Contractual commitments, with multiple-year terms, to provide specified services for products
in our Power & Water, 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.
Productivity The rate of increased output for a given level of input, with both output and input measured in constant currency.
Progress collections Billings and payments received on customer contracts before the related revenue is recognized.
Retained interest A portion of a transferred financial asset retained by the transferor that provides rights to receive portions of
the cash inflows from that asset.
Return on average GE shareowners’ equity Earnings from continuing operations before accounting changes divided by
average GE shareowners’ equity, excluding effects of discontinued operations (on an annual basis, calculated using a five-
point average). Average GE shareowners’ equity, excluding effects of discontinued operations, as of the end of each of the
years in the five-year period ended December 31 of the year for which the ratio is calculated is described in the Supplemental
Information section.
Return on average total capital invested For GE, earnings from continuing operations before accounting changes plus the
sum of after-tax interest and other financial charges and noncontrolling interests, divided by the sum of the averages of total
shareowners’ equity (excluding effects of discontinued operations), borrowings, mandatorily redeemable preferred stock and
noncontrolling interests (on an annual basis, calculated using a five-point average). Average total shareowners’ equity,
excluding effects of discontinued operations as of the end of each of the years in the five-year period ended December 31 of
the year for which the ratio is calculated is described in the Supplemental Information section.
122 GE 2014 FORM 10-K
G L O S S AR Y
Securitization A process whereby loans or other receivables are packaged, underwritten and sold to investors. In a typical
transaction, assets are sold to a special purpose entity, which purchases the assets with cash raised through issuance of
beneficial interests (usually debt instruments) to third-party investors. Whether or not credit risk associated with the securitized
assets is retained by the seller depends on the structure of the securitization. See “Monetization” and “Variable interest entity.”
Subprime For purposes of Consumer-related discussion, subprime includes consumer finance products like mortgage, auto,
cards, sales finance and personal loans to U.S. and global borrowers whose credit score implies a higher probability of default
based upon GECC's proprietary scoring models and definitions, which add various qualitative and quantitative factors to a
base credit score such as a FICO score or global bureau score. Although FICO and global bureau credit scores are a widely
accepted rating of individual consumer creditworthiness, the internally modeled scores are more reflective of the behavior and
default risks in the portfolio compared with stand-alone generic bureau scores.
Variable interest entity An entity that must be consolidated by its primary beneficiary, the party that holds a controlling
financial interest. A variable interest entity has one or both of the following characteristics: (1) its equity at risk is not sufficient
to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) as a
group, the equity investors lack one or more of the following characteristics: (a) the power to direct the activities that most
significantly affect the economic performance of the entity, (b) obligation to absorb expected losses, or (c) right to receive
expected residual returns.
GE 2014 FORM 10-K 123
R E P O R T S
MANAGEMENT AND AUDITOR’S REPORTS
MANAGEMENT’S DISCUSSION OF FINANCIAL RESPONSIBILITY
We believe that great companies are built on a foundation of reliable financial information and compliance with the spirit and
letter of the law. For General Electric Company, that foundation includes rigorous management oversight of, and an unyielding
dedication to, controllership. The financial disclosures in this report are one product of our commitment to high-quality financial
reporting. In addition, we make every effort to adopt appropriate accounting policies, we devote our full resources to ensuring
that those policies are applied properly and consistently and we do our best to fairly present our financial results in a manner
that is complete and understandable.
Members of our corporate leadership team review each of our businesses routinely on matters that range from overall strategy
and financial performance to staffing and compliance. Our business leaders monitor financial and operating systems, enabling
us to identify potential opportunities and concerns at an early stage and positioning us to respond rapidly. Our Board of
Directors oversees management’s business conduct, and our Audit Committee, which consists entirely of independent
directors, oversees our internal control over financial reporting. We continually examine our governance practices in an effort
to enhance investor trust and improve the Board’s overall effectiveness. The Board and its committees annually conduct a
performance self-evaluation and recommend improvements. Our lead director chaired three meetings of our independent
directors this year, helping us sharpen our full Board meetings to better cover significant topics. Compensation policies for our
executives are aligned with the long-term interests of GE investors.
We strive to maintain a dynamic system of internal controls and procedures—including internal control over financial
reporting—designed to ensure reliable financial recordkeeping, transparent financial reporting and disclosure, and protection
of physical and intellectual property. We recruit, develop and retain a world-class financial team. Our internal audit function,
including members of our Corporate Audit Staff, conducts thousands of financial, compliance and process improvement audits
each year. Our Audit Committee oversees the scope and evaluates the overall results of these audits, and members of that
Committee regularly attend GE Capital Board of Directors, Corporate Audit Staff and Controllership Council meetings. Our
global integrity policies—“The Spirit & The Letter”—require compliance with law and policy, and pertain to such vital issues as
upholding financial integrity and avoiding conflicts of interest. These integrity policies are available in 31 languages, and are
provided to all of our employees, holding each of them accountable for compliance. Our strong compliance culture reinforces
these efforts by requiring employees to raise any compliance concerns and by prohibiting retribution for doing so. To facilitate
open and candid communication, we have designated ombudspersons throughout the Company to act as independent
resources for reporting integrity or compliance concerns. We hold our directors, consultants, agents and independent
contractors to the same integrity standards.
We are keenly aware of the importance of full and open presentation of our financial position and operating results, and rely for
this purpose on our disclosure controls and procedures, including our Disclosure Committee, which comprises senior
executives with detailed knowledge of our businesses and the related needs of our investors. We ask this committee to review
our compliance with accounting and disclosure requirements, to evaluate the fairness of our financial and non-financial
disclosures, and to report their findings to us. In 2014, we further ensured strong disclosure by holding approximately 70
analyst and investor meetings with GE leadership present.
We welcome the strong oversight of our financial reporting activities by our independent registered public accounting firm,
KPMG LLP, engaged by and reporting directly to the Audit Committee. U.S. legislation requires management to report on
internal control over financial reporting and for auditors to render an opinion on such controls. Our report and the KPMG LLP
report for 2014 follow.
124 GE 2014 FORM 10-K
R E P O R T S
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company. With our participation, an evaluation of the effectiveness of our internal control over financial reporting was
conducted as of December 31, 2014, based on the framework and criteria established in Internal Control (cid:177) Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of
December 31, 2014.
Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting.
Their report follows.
/s/ Jeffrey R. Immelt(cid:3)
Jeffrey R. Immelt(cid:3)
Chairman of the Board and
Chief Executive Officer
February 27, 2015(cid:3)
DISCLOSURE CONTROLS
(cid:3)
(cid:3)
(cid:3)
/s/ Jeffrey S. Bornstein(cid:3)
Jeffrey S. Bornstein(cid:3)
Senior Vice President and
Chief Financial Officer
Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and
procedures and internal control over financial reporting and concluded that (i) our disclosure controls and procedures were
effective as of December 31, 2014, and (ii) no change in internal control over financial reporting occurred during the quarter
ended December 31, 2014, that has materially affected, or is reasonably likely to materially affect, such internal control over
financial reporting.
GE 2014 FORM 10-K 125
R E P O R T S
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To Shareowners and Board of Directors
of General Electric Company:
We have audited the accompanying statement of financial position of General Electric Company and consolidated affiliates (the
“Company”) as of December 31, 2014 and 2013, and the related statements of earnings, comprehensive income, changes in
shareowners’ equity and cash flows for each of the years in the three-year period ended December 31, 2014. We also have audited
the Company’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control (cid:177)
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The
Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to
express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial
reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of General Electric
Company and consolidated affiliates as of December 31, 2014 and 2013, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2014, in conformity with U.S. generally accepted accounting
principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control (cid:177) Integrated Framework (2013) issued by COSO.
Our audits of the consolidated financial statements were made for the purpose of forming an opinion on the consolidated financial
statements taken as a whole. The accompanying consolidating information appearing on pages 129, 133 and 135 is presented for
purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of
operations and cash flows of the individual entities. The consolidating information has been subjected to the auditing procedures
applied in the audits of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to
the consolidated financial statements taken as a whole.
/s/ KPMG LLP
KPMG LLP
Stamford, Connecticut
February 27, 2015
126 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
AUDITED FINANCIAL STATEMENTS AND
NOTES
Statement of Earnings
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Shareowners’ Equity
Statement of Financial Position
Statement of Cash Flows
Notes to Consolidated Financial Statements
1 Basis of Presentation and Summary of Significant Accounting Policies
2 Assets and Liabilities of Businesses Held for Sale and Discontinued Operations
3
Investment Securities
4 Current Receivables
5
Inventories
6 GECC Financing Receivables and Allowance for Losses on Financing Receivables
7 Property, Plant and Equipment
8 Acquisitions, Goodwill and Other Intangible Assets
9 All Other Assets
10 Borrowings and Bank Deposits
11
Investment Contracts, Insurance Liabilities and Insurance Annuity Benefits
12 Postretirement Benefit Plans
13 All Other Liabilities
14
Income Taxes
15 Shareowners’ Equity
16 Other Stock-related Information
17 Other Income
18 GECC Revenues from Services
19 Supplemental Cost Information
20 Earnings Per Share Information
21 Fair Value Measurements
22 Financial Instruments
23 Variable Interest Entities
24 Commitments, Product Warranties and Guarantees
25 Supplemental Cash Flows Information
26
Intercompany Transactions
27 Supplemental Information About the Credit Quality of Financing Receivables and
Allowance for Losses on Financing Receivables
28 Operating Segments
29 Quarterly Information (unaudited)
128
130
131
132
134
136
149
154
158
158
159
163
164
168
169
170
171
181
182
186
191
193
194
194
196
196
201
206
209
211
212
213
221
224
GE 2014 FORM 10-K 127
F I N A N C I A L S T AT E M E N T S
FINANCIAL STATEMENTS
STATEMENT OF EARNINGS
For the years ended December 31 (In millions; per-share amounts in dollars)
Revenues and other income
Sales of goods
Sales of services
Other income (Note 17)
GECC earnings from continuing operations
GECC revenues from services (Note 18)
Total revenues and other income
Costs and expenses (Note 19)
Cost of goods sold
Cost of services sold
Interest and other financial charges
Investment contracts, insurance losses and
insurance annuity benefits
Provision for losses on financing receivables (Note 6)
Other costs and expenses
Total costs and expenses
Earnings from continuing operations
before income taxes
Benefit (provision) for income taxes (Note 14)
Earnings from continuing operations
Earnings (loss) from discontinued operations,
net of taxes (Note 2)
Net earnings
Less net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to the Company
Preferred stock dividends declared
Net earnings attributable to GE common shareowners
Amounts attributable to GE common shareowners
Earnings from continuing operations
Less net earnings (loss) attributable to
noncontrolling interests
Earnings from continuing operations attributable
to the Company
GECC preferred stock dividends declared
Earnings from continuing operations attributable
to GE common shareowners
Earnings (loss) from discontinued operations, net of taxes
Net earnings attributable to GE common shareowners
Per-share amounts (Note 20)
Earnings from continuing operations
Diluted earnings per share
Basic earnings per share
Net earnings
Diluted earnings per share
Basic earnings per share
Dividends declared per common share
See Note 3 for other-than-temporary impairment amounts.
See accompanying notes.
128 GE 2014 FORM 10-K
General Electric Company
and consolidated affiliates
2013
$
$
71,873
28,669
3,108
-
42,395
146,045
57,867
19,274
10,116
2,676
4,818
35,143
129,894
16,151
(676)
15,475
(2,120)
13,355
298
13,057
-
13,057
$
$
2014
76,568
30,190
778
-
41,053
148,589
61,257
20,054
9,482
2,548
3,993
34,026
131,360
17,229
(1,772)
15,457
(112)
15,345
112
15,233
-
15,233
2012
72,991
27,158
2,563
-
43,972
146,684
56,785
17,525
12,407
2,857
3,832
35,897
129,303
17,381
(2,534)
14,847
(983)
13,864
223
13,641
-
13,641
15,457
$
15,475
$
14,847
112
15,345
-
15,345
(112)
15,233
1.51
1.53
1.50
1.51
0.89
$
$
$
$
$
$
298
15,177
-
15,177
(2,120)
13,057
1.47
1.48
1.27
1.28
0.79
$
$
$
$
$
$
223
14,624
-
14,624
(983)
13,641
1.38
1.39
1.29
1.29
0.70
$
$
$
$
$
$
$
$
$
F I N AN C I AL S T AT E M E N T S
STATEMENT OF EARNINGS (CONTINUED)
For the years ended December 31
(In millions; per-share amounts in dollars)
Revenues and other income
Sales of goods
Sales of services
Other income (Note 17)
GECC earnings from continuing operations
GECC revenues from services (Note 18)
Total revenues and other income
Costs and expenses (Note 19)
Cost of goods sold
Cost of services sold
Interest and other financial charges
Investment contracts, insurance losses and
insurance annuity benefits
Provision for losses on financing receivables (Note 6)
Other costs and expenses
Total costs and expenses
Earnings from continuing operations
before income taxes
Benefit (provision) for income taxes (Note 14)
Earnings from continuing operations
Earnings (loss) from discontinued operations,
net of taxes (Note 2)
Net earnings
Less net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to the Company
Preferred stock dividends declared
Net earnings attributable to GE common shareowners
$
2014
GE(a)
2013
2012
2014
2013
2012
Financial Services (GECC)
$
76,714 $
30,594
707
7,341
-
115,356
71,951 $
29,063
2,886
8,258
-
112,158
73,304 $
27,571
2,657
7,345
-
110,877
121 $
-
-
-
42,604
42,725
126 $
-
-
-
43,941
44,067
119
-
-
-
45,245
45,364
61,420
20,457
1,579
-
-
14,971
98,427
16,929
(1,634)
15,295
(112)
15,183
(50)
15,233
-
57,962
19,668
1,333
-
-
16,105
95,068
17,090
(1,668)
15,422
(2,120)
13,302
245
13,057
-
57,118
17,938
1,353
-
-
17,671
94,080
16,797
(2,013)
14,784
(983)
13,801
160
13,641
-
104
-
8,397
2,678
3,993
19,912
35,084
7,641
(138)
7,503
(107)
7,396
162
7,234
(322)
108
-
9,267
99
-
11,596
2,779
4,818
19,776
36,748
2,984
3,832
18,924
37,435
7,319
992
8,311
(2,054)
6,257
53
6,204
(298)
7,929
(521)
7,408
(1,130)
6,278
63
6,215
(123)
6,092
15,233 $
13,057 $
13,641 $
6,912 $
5,906 $
Amounts attributable to GE common shareowners:
Earnings from continuing operations
Less net earnings (loss) attributable to
noncontrolling interests
Earnings from continuing operations attributable
to the Company
GECC preferred stock dividends declared
Earnings from continuing operations attributable
to GE common shareowners
Earnings (loss) from discontinued operations, net of taxes
Net earnings attributable to GE common shareowners
$
15,295 $
15,422 $
14,784 $
7,503 $
8,311 $
7,408
(50)
245
160
162
53
63
15,345
-
15,177
-
14,624
-
15,345
(112)
15,233 $
15,177
(2,120)
13,057 $
14,624
(983)
13,641 $
$
7,341
(322)
7,019
(107)
6,912 $
8,258
(298)
7,345
(123)
7,960
(2,054)
5,906 $
7,222
(1,130)
6,092
(a) Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-
line basis. See Note 1.
In the consolidating data on this page, “GE” means the basis of consolidation as described in Note 1 to the consolidated financial statements; “GECC” means General
Electric Capital Corporation and all of its affiliates and associated companies. Separate information is shown for “GE” and “GECC.” Transactions between GE and GECC
have been eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.
GE 2014 FORM 10-K 129
F I N AN C I AL S T AT E M E N T S
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the years ended December 31 (In millions)
Net earnings
Less net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to the Company
Other comprehensive income (loss)
Investment securities
Currency translation adjustments
Cash flow hedges
Benefit plans
Other comprehensive income (loss)
Less other comprehensive income (loss) attributable to noncontrolling interests
Other comprehensive income (loss) attributable to the Company
Comprehensive income
Less comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to the Company
2014
2013
15,345 $
112
15,233 $
13,355 $
298
13,057 $
708 $
(2,729)
234
(7,279)
(9,066)
(14)
(9,052) $
6,279 $
98
6,181 $
(374) $
(308)
467
11,300
11,085
(25)
11,110 $
24,440 $
273
24,167 $
$
$
$
$
$
$
2012
13,864
223
13,641
705
300
453
2,299
3,757
13
3,744
17,621
236
17,385
Amounts presented net of taxes. See Note 15 for further information about other comprehensive income and noncontrolling interests.
See accompanying notes.
130 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY
(In millions)
GE shareowners' equity balance at January 1
Increases from net earnings attributable to the Company
Dividends and other transactions with shareowners
Other comprehensive income (loss) attributable to the Company
Net sales (purchases) of shares for treasury
Changes in other capital
Ending balance at December 31
Noncontrolling interests
Total equity balance at December 31
See Note 15 for further information about changes in shareowners’ equity.
See accompanying notes.
2014
2013
2012
$
$
130,566 $
15,233
(8,951)
(9,052)
(32)
395
128,159
8,674
136,833 $
123,026 $
13,057
(8,061)
11,110
(7,990)
(576)
130,566
6,217
136,783 $
116,438
13,641
(7,372)
3,744
(2,802)
(623)
123,026
5,444
128,470
GE 2014 FORM 10-K 131
F I N AN C I AL S T AT E M E N T S
STATEMENT OF FINANCIAL POSITION
At December 31 (In millions, except share amounts)
Assets
Cash and equivalents
Investment securities (Note 3)
Current receivables (Note 4)
Inventories (Note 5)
Financing receivables – net (Note 6 and 27)
Other GECC receivables
Property, plant and equipment – net (Note 7)
Investment in GECC
Goodwill (Note 8)
Other intangible assets – net (Note 8)
All other assets (Note 9)
Deferred income taxes (Note 14)
Assets of businesses held for sale (Note 2)
Assets of discontinued operations (Note 2)
Total assets(a)
Liabilities and equity
Short-term borrowings (Note 10)
Accounts payable, principally trade accounts
Progress collections and price adjustments accrued
Dividends payable
Other GE current liabilities
Non-recourse borrowings of consolidated securitization entities (Note 10)
Bank deposits (Note 10)
Long-term borrowings (Note 10)
Investment contracts, insurance liabilities and insurance annuity benefits (Note 11)
All other liabilities (Note 13)
Liabilities of businesses held for sale (Note 2)
Liabilities of discontinued operations (Note 2)
Total liabilities(a)
GECC preferred stock (50,000 shares outstanding at both year-end 2014 and 2013)
Common stock (10,057,380,000 and 10,060,881,000 shares outstanding at year-end 2014 and 2013, respectively)
Accumulated other comprehensive income (loss) – net attributable to GE(b)
Investment securities
Currency translation adjustments
Cash flow hedges
Benefit plans
Other capital
Retained earnings
Less common stock held in treasury
Total GE shareowners’ equity
Noncontrolling interests(c)
Total equity (Note 15 and 16)
Total liabilities and equity
General Electric Company
and consolidated affiliates
2014
2013
$
$
$
$
90,208 $
47,907
23,237
17,689
224,816
9,095
66,387
-
76,553
14,156
68,225
2,541
6,300
1,235
648,349 $
71,789 $
16,338
12,537
2,317
12,682
29,938
62,839
200,414
27,578
70,484
3,375
1,225
511,516
-
702
1,013
(2,427)
(180)
(16,578)
32,889
155,333
(42,593)
128,159
8,674
136,833
648,349 $
88,555
43,981
21,388
17,325
241,940
9,114
68,827
-
77,648
14,310
70,808
275
50
2,339
656,560
77,890
16,471
13,125
2,220
13,381
30,124
53,361
221,665
26,544
61,057
6
3,933
519,777
-
702
307
126
(257)
(9,296)
32,494
149,051
(42,561)
130,566
6,217
136,783
656,560
(a) Our consolidated assets at December 31, 2014 included total assets of $50,453 million of certain variable interest entities (VIEs) that can only be used to settle the
liabilities of those VIEs. These assets included net financing receivables of $43,620 million and investment securities of $3,374 million. Our consolidated liabilities at
December 31, 2014 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 $28,664 million. See Note 23.
(b) The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was $(18,172) million and $(9,120) million at December 31, 2014 and
2013, respectively.
(c)
Included AOCI attributable to noncontrolling interests of $(194) million and $(180) million at December 31, 2014 and 2013, respectively.
See accompanying notes.
132 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
STATEMENT OF FINANCIAL POSITION (CONTINUED)
At December 31 (In millions, except share amounts)
GE(a)
2014
Financial Services (GECC)
2013
2014
2013
Assets
Cash and equivalents
Investment securities (Note 3)
Current receivables (Note 4)
Inventories (Note 5)
Financing receivables – net (Note 6 and 27)
Other GECC receivables
Property, plant and equipment – net (Note 7)
Investment in GECC
Goodwill (Note 8)
Other intangible assets – net (Note 8)
All other assets (Note 9)
Deferred income taxes
Assets of businesses held for sale (Note 2)
Assets of discontinued operations (Note 2)
Total assets
Liabilities and equity
Short-term borrowings (Note 10)
Accounts payable, principally trade accounts
Progress collections and price adjustments accrued
Dividends payable
Other GE current liabilities
Non-recourse borrowings of consolidated securitization entities (Note 10)
Bank deposits (Note 10)
Long-term borrowings (Note 10)
Investment contracts, insurance liabilities and insurance annuity benefits (Note 11)
All other liabilities (Note 13)
Liabilities of businesses held for sale (Note 2)
Liabilities of discontinued operations (Note 2)
Total liabilities
GECC preferred stock (50,000 shares outstanding at year-end both 2014 and 2013)
Common stock (10,057,380,000 and 10,060,881,000
shares outstanding at year-end both 2014 and 2013, respectively)
Accumulated other comprehensive income (loss) - net attributable to GE
Investment securities
Currency translation adjustments
Cash flow hedges
Benefit plans
Other capital
Retained earnings
Less common stock held in treasury
Total GE shareowners’ equity
Noncontrolling interests
Total equity (Note 15 and 16)
Total liabilities and equity
$
$
$
$
15,916 $
84
11,513
17,639
-
-
17,207
82,549
51,527
12,984
24,680
8,772
2,805
10
245,686 $
13,682 $
323
10,970
17,257
-
-
17,574
77,745
51,453
13,180
23,708
5,061
-
9
230,962 $
3,872 $
1,841 $
16,511
12,550
2,317
12,681
-
-
12,468
-
54,662
1,504
137
116,702
-
702
16,353
13,152
2,220
13,381
-
-
11,515
-
40,955
-
143
99,560
-
702
1,013
(2,427)
(180)
(16,578)
32,889
155,333
(42,593)
128,159
825
128,984
245,686 $
307
126
(257)
(9,296)
32,494
149,051
(42,561)
130,566
836
131,402
230,962 $
74,292 $
47,827
-
50
237,018
16,683
49,570
-
25,026
1,176
43,875
(6,231)
3,474
1,225
493,985 $
68,780 $
6,177
-
-
-
29,938
62,839
187,991
28,027
16,313
2,434
1,088
403,587
-
-
1,010
(838)
(172)
(577)
32,999
55,077
-
87,499
2,899
90,398
493,985 $
74,873
43,662
-
68
253,029
16,513
51,607
-
26,195
1,136
47,366
(4,786)
50
2,330
512,043
77,298
6,549
-
-
-
30,124
53,361
210,279
26,979
20,531
6
3,790
428,917
-
-
309
(687)
(293)
(363)
32,563
51,165
-
82,694
432
83,126
512,043
(a) Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-line
basis. See Note 1.
In the consolidating data on this page, "GE" means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GECC" means General Electric
Capital Corporation and all of its affiliates and associated companies. Separate information is shown for “GE” and “GECC.” Transactions between GE and GECC have been
eliminated from the “General Electric Company and consolidated affiliates” columns on the prior page.
GE 2014 FORM 10-K 133
F I N AN C I AL S T AT E M E N T S
STATEMENT OF CASH FLOWS
For the years ended December 31 (In millions)
Cash flows – operating activities
Net earnings
Less net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to the Company
(Earnings) loss from discontinued operations
Adjustments to reconcile net earnings attributable to the
Company to cash provided from operating activities
Depreciation and amortization of property,
plant and equipment
Earnings from continuing operations retained by GECC
Deferred income taxes
Decrease (increase) in GE current receivables
Decrease (increase) in inventories
Increase (decrease) in accounts payable
Increase (decrease) in GE progress collections
Provision for losses on GECC financing receivables
All other operating activities
Cash from (used for) operating activities – continuing operations
Cash from (used for) operating activities – discontinued operations
Cash from (used for) operating activities
Cash flows – investing activities
Additions to property, plant and equipment
Dispositions of property, plant and equipment
Net decrease (increase) in GECC financing receivables
Proceeds from sale of discontinued operations
Proceeds from principal business dispositions
Proceeds from sale of equity interest in NBCU LLC
Net cash from (payments for) principal businesses purchased
All other investing activities
Cash from (used for) investing activities – continuing operations
Cash from (used for) investing activities – discontinued operations
Cash from (used for) investing activities
Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)
Net increase (decrease) in bank deposits
Newly issued debt (maturities longer than 90 days)
Repayments and other reductions (maturities longer than 90 days)
Proceeds from issuance of GECC preferred stock
Net dispositions (purchases) of GE shares for treasury
Dividends paid to shareowners
Proceeds from initial public offering of Synchrony Financial
All other financing activities
Cash from (used for) financing activities – continuing operations
Cash from (used for) financing activities – discontinued operations
Cash from (used for) financing activities
Effect of currency exchange rate changes on cash and equivalents
Increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year
Cash and equivalents at end of year
Less cash and equivalents of discontinued operations
at end of year
Cash and equivalents of continuing operations at end of year
Supplemental disclosure of cash flows information
Cash paid during the year for interest
Cash recovered (paid) during the year for income taxes
See accompanying notes.
134 GE 2014 FORM 10-K
General Electric Company
and consolidated affiliates
2013 (cid:3)
2014
$
15,345 $
112
15,233
112
13,355 $
298
13,057
2,120
9,283
-
(1,186)
(1,913)
(872)
305
(515)
3,993
3,075
27,515
195
27,710
(13,727)
6,262
(4,267)
232
2,950
-
(2,639)
6,447
(4,742)
(288)
(5,030)
(6,112)
13,286
37,548
(53,380)
-
(1,218)
(8,851)
2,842
(1,067)
(16,952)
(6)
(16,958)
(3,492)
2,230
88,787
91,017
9,762
-
(3,295)
(485)
(1,368)
360
1,893
4,818
2,175
29,037
(458)
28,579
(13,458)
5,883
2,715
528
3,324
16,699
(1,642)
14,625
28,674
443
29,117
(14,230)
2,197
45,392
(61,461)
990
(9,278)
(7,821)
-
(1,418)
(45,629)
56
(45,573)
(795)
11,328
77,459
88,787
2012
13,864
223
13,641
983
9,192
-
(1,152)
(879)
(1,274)
(437)
(920)
3,832
8,029
31,015
316
31,331
(15,119)
6,184
6,979
227
3,618
-
(1,456)
11,157
11,590
(288)
11,302
(2,231)
2,450
63,019
(103,942)
3,960
(4,164)
(7,189)
-
(2,958)
(51,055)
(19)
(51,074)
1,278
(7,163)
84,622
77,459
$
$
133
90,884 $
232
88,555 $
191
77,268
(9,560) $
(2,955)
(8,988) $
(2,487)
(12,717)
(3,237)
F I N A N C I A L S T AT E M E N T S
STATEMENT OF CASH FLOWS (CONTINUED)
For the years ended December 31 (In millions)
$
Cash flows – operating activities
Net earnings
Less net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to the Company
(Earnings) loss from discontinued operations
Adjustments to reconcile net earnings attributable to the
Company to cash provided from operating activities
Depreciation and amortization of property,
plant and equipment
Earnings from continuing operations retained by GECC(b)
Deferred income taxes
Decrease (increase) in GE current receivables
Decrease (increase) in inventories
Increase (decrease) in accounts payable
Increase (decrease) in GE progress collections
Provision for losses on GECC financing receivables
All other operating activities
Cash from (used for) operating activities – continuing operations
Cash from (used for) operating activities – discontinued operations
Cash from (used for) operating activities
Cash flows – investing activities
Additions to property, plant and equipment
Dispositions of property, plant and equipment
Net decrease (increase) in GECC financing receivables
Proceeds from sale of discontinued operations
Proceeds from principal business dispositions
Proceeds from sale of equity interest in NBCU LLC
Net cash from (payments for) principal businesses purchased
All other investing activities
Cash from (used for) investing activities – continuing operations
Cash from (used for) investing activities – discontinued operations
Cash from (used for) investing activities
Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)
Net increase (decrease) in bank deposits
Newly issued debt (maturities longer than 90 days)
Repayments and other reductions (maturities longer than 90 days)
Proceeds from issuance of GECC preferred stock
Net dispositions (purchases) of GE shares for treasury
Dividends paid to shareowners
Proceeds from initial public offering of Synchrony Financial
All other financing activities
Cash from (used for) financing activities – continuing operations
Cash from (used for) financing activities – discontinued operations
Cash from (used for) financing activities
Effect of currency exchange rate changes on cash and equivalents
Increase (decrease) in cash and equivalents
Cash and equivalents at beginning of year
Cash and equivalents at end of year
Less cash and equivalents of discontinued operations
at end of year
Cash and equivalents of continuing operations at end of year
Supplemental disclosure of cash flows information
Cash paid during the year for interest
Cash recovered (paid) during the year for income taxes
$
$
2014
GE(a)
2013
2012
2014
2013
2012
Financial Services (GECC)
15,183 $
(50)
15,233
112
13,302 $
245
13,057
2,120
13,801 $
160
13,641
983
7,396 $
162
7,234
107
6,257 $
53
6,204
2,054
6,278
63
6,215
1,130
2,508
(4,341)
(476)
(473)
(877)
884
(528)
-
3,129
15,171
(2)
15,169
(3,970)
-
-
-
602
-
(2,091)
(447)
(5,906)
2
(5,904)
243
-
3,084
(323)
-
(1,218)
(8,851)
-
346
(6,719)
-
(6,719)
(312)
2,234
13,682
15,916
2,449
(2,273)
(2,571)
(1,432)
(1,351)
809
1,919
-
1,528
14,255
(2)
14,253
(3,680)
-
-
-
1,316
16,699
(8,026)
(1,488)
4,821
2
4,823
949
-
512
(5,032)
-
(9,278)
(7,821)
-
(211)
(20,881)
-
(20,881)
(22)
(1,827)
15,509
13,682
2,291
(919)
(294)
1,105
(1,204)
158
(920)
-
2,985
17,826
-
17,826
(3,937)
-
-
-
540
-
(1,456)
(564)
(5,417)
-
(5,417)
(890)
-
6,961
(34)
-
(4,164)
(7,189)
-
32
(5,284)
-
(5,284)
2
7,127
8,382
15,509
6,859
-
(710)
-
27
(2)
-
3,993
240
17,748
197
17,945
(10,410)
6,284
(5,689)
232
2,320
-
(548)
6,997
(814)
(290)
(1,104)
(6,781)
13,286
34,464
(53,057)
-
-
(3,322)
2,842
(1,091)
(13,659)
(6)
(13,665)
(3,180)
(4)
75,105
75,101
7,313
-
(724)
-
33
73
-
4,818
99
19,870
(456)
19,414
(9,978)
5,883
3,589
528
1,983
-
6,384
14,972
23,361
441
23,802
(13,892)
2,197
44,888
(56,429)
990
-
(6,283)
-
(909)
(29,438)
56
(29,382)
(773)
13,061
62,044
75,105
6,901
-
(858)
-
(27)
(880)
-
3,832
5,418
21,731
316
22,047
(11,879)
6,184
5,490
227
2,863
-
-
11,794
14,679
(288)
14,391
(1,401)
2,450
55,841
(103,908)
3,960
-
(6,549)
-
(2,867)
(52,474)
(19)
(52,493)
1,276
(14,779)
76,823
62,044
-
-
-
15,916 $
13,682 $
15,509 $
133
74,968 $
232
74,873 $
191
61,853
(1,215) $
(1,337)
(1,132) $
(4,753)
(1,182) $
(2,987)
(8,910) $
(1,618)
(8,146) $
2,266
(12,172)
(250)
(a) Represents the adding together of all affiliated companies except General Electric Capital Corporation (GECC or Financial Services), which is presented on a one-line basis.
(b) Represents GECC earnings from continuing operations attributable to the Company, net of GECC dividends paid to GE.
In the consolidating data on this page, "GE" means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GECC" means General Electric Capital Corporation and
all of its affiliates and associated companies. Separate information is shown for “GE” and “GECC.” Transactions between GE and GECC have been eliminated from the “General Electric Company
and consolidated affiliates” columns on the prior page and are discussed in Note 26.
See Note 25 for supplemental information regarding the Statement of Cash Flows
GE 2014 FORM 10-K 135
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
ACCOUNTING PRINCIPLES
Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP).
CONSOLIDATION
Our financial statements consolidate all of our affiliates – entities in which we have a controlling financial interest, most often
because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate
if we are required to apply the variable interest entity (VIE) model to the entity, otherwise the entity is evaluated under the
voting interest model.
Where we hold current or potential rights that give us the power to direct the activities of a VIE that most significantly impact
the VIE’s economic performance combined with a variable interest that gives us the right to receive potentially significant
benefits or the obligation to absorb potentially significant losses, we have a controlling financial interest in that VIE. Rights held
by others to remove the party with power over the VIE are not considered unless one party can exercise those rights
unilaterally. When changes occur to the design of an entity, we reconsider whether it is subject to the VIE model. We
continuously evaluate whether we have a controlling financial interest in a VIE.
We hold a controlling financial interest in other entities where we currently hold, directly or indirectly, more than 50% of the
voting rights or where we exercise control through substantive participating rights or as a general partner. Where we are a
general partner, we consider substantive removal rights held by other partners in determining if we hold a controlling financial
interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive
participating rights change.
Associated companies are unconsolidated VIEs and other entities in which we do not have a controlling financial interest, but
over which we have significant influence, most often because we hold a voting interest of 20% to 50%. Associated companies
are accounted for as equity method investments. Results of associated companies are presented on a one-line basis.
Investments in, and advances to, associated companies are presented on a one-line basis in the caption “All other assets” in
our Statement of Financial Position, net of allowance for losses, which represents our best estimate of probable losses
inherent in such assets.
SYNCHRONY FINANCIAL INITIAL PUBLIC OFFERING
On August 5, 2014, we completed the initial public offering (IPO) of our North American Retail Finance business, Synchrony
Financial, as a first step in a planned, staged exit from that business. Synchrony Financial closed the IPO of 125 million shares
of common stock at a price to the public of $23.00 per share and on September 3, 2014, Synchrony Financial issued an
additional 3.5 million shares of common stock pursuant to an option granted to the underwriters in the IPO (Underwriters’
Option). We received net proceeds from the IPO and the Underwriters’ Option of $2,842 million, which remain at Synchrony
Financial. Following the closing of the IPO and the Underwriters’ Option, we currently own approximately 85% of Synchrony
Financial and as a result, GECC continues to consolidate the business. The 15% is presented as noncontrolling interests. In
addition, in August 2014, Synchrony Financial completed issuances of $3,593 million of senior unsecured debt with maturities
up to 10 years and $8,000 million of unsecured term loans maturing in 2019, and in October 2014 completed issuances of
$750 million of unsecured term loans maturing in 2019 under the New Bank Term Loan Facility with third party lenders.
Subsequent to December 31, 2014 through February 13, 2015, Synchrony Financial issued an additional $1,000 million of
senior unsecured debt maturing in 2020.
136 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
FINANCIAL STATEMENT PRESENTATION
We have reclassified certain prior-year amounts to conform to the current-year’s presentation.
Financial data and related measurements are presented in the following categories:
GE. This represents the adding together of all affiliates other than General Electric Capital Corporation (GECC), whose
continuing operations are presented on a one-line basis, giving effect to the elimination of transactions among such affiliates.
GECC. This represents the adding together of all affiliates of GECC, giving effect to the elimination of transactions among
such affiliates.
Consolidated. This represents the adding together of GE and GECC, giving effect to the elimination of transactions between
GE and GECC.
Operating Segments. These comprise our eight businesses, focused on the broad markets they serve: Power & Water, Oil &
Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital.
Unless otherwise indicated, information in these notes to consolidated financial statements relates to continuing operations.
Certain of our operations have been presented as discontinued. See Note 2.
The effects of translating to U.S. dollars the financial statements of non-U.S. affiliates whose functional currency is the local
currency are included in shareowners’ equity. Asset and liability accounts are translated at year-end exchange rates, while
revenues and expenses are translated at average rates for the respective periods.
Preparing financial statements in conformity with GAAP requires us to make estimates based on assumptions about current,
and for some estimates future, economic and market conditions (for example, unemployment, market liquidity, the real estate
market, etc.), which affect reported amounts and related disclosures in our financial statements. Although our current
estimates contemplate current conditions and how we expect them to change in the future, as appropriate, it is reasonably
possible that in 2015 actual conditions could be worse than anticipated in those estimates, which could materially affect our
results of operations and financial position. Among other effects, such changes could result in future impairments of
investment securities, goodwill, intangibles and long-lived assets, incremental losses on financing receivables, establishment
of valuation allowances on deferred tax assets and increased tax liabilities.
SALES OF GOODS AND SERVICES
We record all sales of goods and services only when a firm sales agreement is in place, delivery has occurred or services
have been rendered and collectability of the fixed or determinable sales price is reasonably assured.
Arrangements for the sale of goods and services sometimes include multiple components. Most of our multiple component
arrangements involve the sale of goods and services in the Healthcare segment. Our arrangements with multiple components
usually involve an upfront deliverable of large machinery or equipment and future service deliverables such as installation,
commissioning, training or the future delivery of ancillary products. In most cases, the relative values of the undelivered
components are not significant to the overall arrangement and are typically delivered within three to six months after the core
product has been delivered. In such agreements, selling price is determined for each component and any difference between
the total of the separate selling prices and total contract consideration (i.e., discount) is allocated pro rata across each of the
components in the arrangement. The value assigned to each component is objectively determined and obtained primarily from
sources such as the separate selling price for that or a similar item or from competitor prices for similar items. If such evidence
is not available, we use our best estimate of selling price, which is established consistent with the pricing strategy of the
business and considers product configuration, geography, customer type, and other market specific factors.
GE 2014 FORM 10-K 137
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
Except for goods sold under long-term agreements, we recognize sales of goods under the provisions of U.S. Securities and
Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104, Revenue Recognition. We often sell consumer products
and computer hardware and software products with a right of return. We use our accumulated experience to estimate and
provide for such returns when we record the sale. In situations where arrangements include customer acceptance provisions
based on seller or customer-specified objective criteria, we recognize revenue when we have reliably demonstrated that all
specified acceptance criteria have been met or when formal acceptance occurs, respectively. In arrangements where we
provide goods for trial and evaluation purposes, we only recognize revenue after customer acceptance occurs. Unless
otherwise noted, we do not provide for anticipated losses before we record sales.
We recognize revenue on agreements for sales of goods and services under power generation unit and uprate contracts,
nuclear fuel assemblies, larger oil drilling equipment projects, aeroderivative unit contracts, military development contracts,
locomotive production contracts, and long-term construction projects, using long-term construction and production contract
accounting. We estimate total long-term contract revenue net of price concessions as well as total contract costs. For goods
sold under power generation unit and uprate contracts, nuclear fuel assemblies, aeroderivative unit contracts, military
development contracts and locomotive production contracts, we recognize sales as we complete major contract-specified
deliverables, most often when customers receive title to the goods or accept the services as performed. For larger oil drilling
equipment projects and long-term construction projects, we recognize sales based on our progress toward contract completion
measured by actual costs incurred in relation to our estimate of total expected costs. We measure long-term contract revenues
by applying our contract-specific estimated margin rates to incurred costs. We routinely update our estimates of future costs
for agreements in process and report any cumulative effects of such adjustments in current operations. We provide for any
loss that we expect to incur on these agreements when that loss is probable.
We recognize revenue upon delivery for sales of aircraft engines, military propulsion equipment and related spare parts not
sold under long-term product services agreements. Delivery of commercial engines, non-U.S. military equipment and all
related spare parts occurs on shipment; delivery of military propulsion equipment sold to the U.S. government or agencies
thereof occurs upon receipt of a Material Inspection and Receiving Report, DD Form 250 or Memorandum of Shipment.
Commercial aircraft engines are complex equipment manufactured to customer order under a variety of sometimes complex,
long-term agreements. We measure sales of commercial aircraft engines by applying our contract-specific estimated margin
rates to incurred costs. We routinely update our estimates of future revenues and costs for commercial aircraft engine
agreements in process and report any cumulative effects of such adjustments in current operations. Significant components of
our revenue and cost estimates include price concessions and performance-related guarantees as well as material, labor and
overhead costs. We measure revenue for military propulsion equipment and spare parts not subject to long-term product
services agreements based on the specific contract on a specifically measured output basis. We provide for any loss that we
expect to incur on these agreements when that loss is probable; consistent with industry practice, for commercial aircraft
engines, we make such provision only if such losses are not recoverable from future highly probable sales of spare parts and
services for those engines.
We sell product services under long-term product maintenance or extended warranty agreements in our Aviation, Power &
Water, Oil & Gas and Transportation segments, where costs of performing services are incurred on other than a straight-line
basis. We also sell product services in our Healthcare segment, where such costs generally are expected to be on a straight-
line basis. For the Aviation, Power & Water, Oil & Gas and Transportation agreements, we recognize related sales based on
the extent of our progress toward completion measured by actual costs incurred in relation to total expected costs. We
routinely update our estimates of future costs for agreements in process and report any cumulative effects of such adjustments
in current operations. For the Healthcare agreements, we recognize revenues on a straight-line basis and expense related
costs as incurred. We provide for any loss that we expect to incur on any of these agreements when that loss is probable.
138 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
GECC REVENUES FROM SERVICES (EARNED INCOME)
We use the interest method to recognize income on loans. Interest on loans includes origination, commitment and other non-
refundable fees related to funding (recorded in earned income on the interest method). We stop accruing interest at the earlier
of the time at which collection of an account becomes doubtful or the account becomes 90 days past due, with the exception
of consumer credit card accounts. Beginning in the fourth quarter of 2013, we continue to accrue interest on consumer credit
cards until the accounts are written off in the period the account becomes 180 days past due. Previously, we stopped accruing
interest on consumer credit cards when the account became 90 days past due. Previously recognized interest income that
was accrued but not collected from the borrower is reversed, unless the terms of the loan agreement permit capitalization of
accrued interest to the principal balance. Although we stop accruing interest in advance of payments, we recognize interest
income as cash is collected when appropriate, provided the amount does not exceed that which would have been earned at
the historical effective interest rate; otherwise, payments received are applied to reduce the principal balance of the loan.
We resume accruing interest on nonaccrual, non-restructured commercial loans only when (a) payments are brought current
according to the loan’s original terms and (b) future payments are reasonably assured. When we agree to restructured terms
with the borrower, we resume accruing interest only when it is reasonably assured that we will recover full contractual
payments, and such loans pass underwriting reviews equivalent to those applied to new loans. We resume accruing interest
on nonaccrual consumer loans when the customer’s account is less than 90 days past due and collection of such amounts is
probable. Interest accruals on modified consumer loans that are not considered to be troubled debt restructurings (TDRs) may
return to current status (re-aged) only after receipt of at least three consecutive minimum monthly payments or the equivalent
cumulative amount, subject to a re-aging limitation of once a year, or twice in a five-year period.
We recognize financing lease income on the interest method to produce a level yield on funds not yet recovered. Estimated
unguaranteed residual values are based upon management's best estimates of the value of the leased asset at the end of the
lease term. We use various sources of data in determining this estimate, including information obtained from third parties,
which is adjusted for the attributes of the specific asset under lease. Guarantees of residual values by unrelated third parties
are considered part of minimum lease payments. Significant assumptions we use in estimating residual values include
estimated net cash flows over the remaining lease term, anticipated results of future remarketing, and estimated future
component part and scrap metal prices, discounted at an appropriate rate.
We recognize operating lease income on a straight-line basis over the terms of underlying leases.
Fees include commitment fees related to loans that we do not expect to fund and line-of-credit fees. We record these fees in
earned income on a straight-line basis over the period to which they relate. We record syndication fees in earned income at
the time related services are performed, unless significant contingencies exist.
DEPRECIATION AND AMORTIZATION
The cost of GE manufacturing plant and equipment is depreciated over its estimated economic life. U.S. assets are
depreciated using an accelerated method based on a sum-of-the-years digits formula; non-U.S. assets are generally
depreciated on a straight-line basis.
The cost of GECC equipment leased to others on operating leases is depreciated on a straight-line basis to estimated residual
value over the lease term or over the estimated economic life of the equipment.
The cost of GECC acquired real estate investments is depreciated on a straight-line basis to the estimated salvage value over
the expected useful life or the estimated proceeds upon sale of the investment at the end of the expected holding period if that
approach produces a higher measure of depreciation expense.
GE 2014 FORM 10-K 139
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
The cost of individually significant customer relationships is amortized in proportion to estimated total related sales; cost of
other intangible assets is generally amortized on a straight-line basis over the asset’s estimated economic life. We review
long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may
not be recoverable. See Notes 7 and 8.
LOSSES ON FINANCING RECEIVABLES
Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of
probable losses inherent in the portfolio. The method for calculating the best estimate of losses depends on the size, type and
risk characteristics of the related financing receivable. Such an estimate requires consideration of historical loss experience,
adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present
economic conditions such as delinquency rates, financial health of specific customers and market sectors, collateral values
(including housing price indices as applicable), and the present and expected future levels of interest rates. The underlying
assumptions, estimates and assessments we use to provide for losses are updated periodically to reflect our view of current
conditions and are subject to the regulatory examination process, which can result in changes to our assumptions. Changes in
such estimates can significantly affect the allowance and provision for losses. It is possible that we will experience credit
losses that are different from our current estimates. Write-offs are deducted from the allowance for losses when we judge the
principal to be uncollectible and subsequent recoveries are added to the allowance at the time cash is received on a written-off
account.
"Impaired" loans are defined as larger-balance or restructured loans for which it is probable that the lender will be unable to
collect all amounts due according to the original contractual terms of the loan agreement.
The vast majority of our Consumer and a portion of our Commercial Lending and Leasing (CLL) nonaccrual receivables are
excluded from this definition, as they represent smaller-balance homogeneous loans that we evaluate collectively by portfolio
for impairment.
Impaired loans include nonaccrual receivables on larger-balance or restructured loans, loans that are currently paying interest
under the cash basis and loans paying currently that had been previously restructured.
Specific reserves are recorded for individually impaired loans to the extent we have determined that it is probable that we will
be unable to collect all amounts due according to original contractual terms of the loan agreement. Certain loans classified as
impaired may not require a reserve because we believe that we will ultimately collect the unpaid balance (through collection or
collateral repossession).
“Troubled debt restructurings” (TDRs) are those loans for which we have granted a concession to a borrower experiencing
financial difficulties where we do not receive adequate compensation. Such loans are classified as impaired, and are
individually reviewed for specific reserves.
“Nonaccrual financing receivables” are those on which we have stopped accruing interest. We stop accruing interest at the
earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days past due, with the
exception of consumer credit card accounts, for which we continue to accrue interest until the accounts are written off in the
period that the account becomes 180 days past due. Although we stop accruing interest in advance of payments, we
recognize interest income as cash is collected when appropriate provided the amount does not exceed that which would have
been earned at the historical effective interest rate. Recently restructured financing receivables are not considered delinquent
when payments are brought current according to the restructured terms, but may remain classified as nonaccrual until there
has been a period of satisfactory payment performance by the borrower and future payments are reasonably assured of
collection.
“Delinquent” receivables are those that are 30 days or more past due based on their contractual terms.
140 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
The same financing receivable may meet more than one of the definitions above. Accordingly, these categories are not
mutually exclusive and it is possible for a particular loan to meet the definitions of a TDR, impaired loan and nonaccrual loan
and be included in each of these categories. The categorization of a particular loan also may not be indicative of the potential
for loss.
Our consumer loan portfolio consists of smaller-balance, homogeneous loans, including credit card receivables, installment
loans, auto loans and leases and residential mortgages. We collectively evaluate each portfolio for impairment quarterly. The
allowance for losses on these receivables is established through a process that estimates the probable losses inherent in the
portfolio based upon statistical analyses of portfolio data. These analyses include migration analysis, in which historical
delinquency and credit loss experience is applied to the current aging of the portfolio, together with other analyses that reflect
current trends and conditions. We also consider our historical loss experience to date based on actual defaulted loans and
overall portfolio indicators including nonaccrual loans, trends in loan volume and lending terms, credit policies and other
observable environmental factors such as unemployment rates and home price indices.
Our commercial loan and lease portfolio consists of a variety of loans and leases, including both larger-balance, non-
homogeneous loans and leases and smaller-balance homogeneous loans and leases. Losses on such loans and leases are
recorded when probable and estimable. We routinely evaluate our entire portfolio for potential specific credit or collection
issues that might indicate an impairment.
For larger-balance, non-homogeneous loans and leases, we consider the financial status, payment history, collateral value,
industry conditions and guarantor support related to specific customers. Any delinquencies or bankruptcies are indications of
potential impairment requiring further assessment of collectability. We routinely receive financial as well as rating agency
reports on our customers, and we elevate for further attention those customers whose operations we judge to be marginal or
deteriorating. We also elevate customers for further attention when we observe a decline in collateral values for asset-based
loans. While collateral values are not always available, when we observe such a decline, we evaluate relevant markets to
assess recovery alternatives – for example, for real estate loans, relevant markets are local; for commercial aircraft loans,
relevant markets are global.
Measurement of the loss on our impaired commercial loans is based on the present value of expected future cash flows
discounted at the loan’s effective interest rate or the fair value of collateral, net of expected selling costs, if the loan is
determined to be collateral dependent. We determine whether a loan is collateral dependent if the repayment of the loan is
expected to be provided solely by the underlying collateral. Our review process can often result in reserves being established
in advance of a modification of terms or designation as a TDR. After providing for specific incurred losses, we then determine
an allowance for losses that have been incurred in the balance of the portfolio but cannot yet be identified to a specific loan or
lease. This estimate is based upon various statistical analyses considering historical and projected default rates and loss
severity and aging, as well as our view on current market and economic conditions. It is prepared by each respective line of
business. For Real Estate, this includes assessing the probability of default and the loss given default based on loss history of
our portfolio for loans with similar loan metrics and attributes.
We consider multiple factors in evaluating the adequacy of our allowance for losses on Real Estate financing receivables,
including loan-to-value ratios, collateral values at the individual loan level, debt service coverage ratios, delinquency status,
and economic factors including interest rate and real estate market forecasts. In addition to these factors, we evaluate a Real
Estate loan for impairment classification if its projected loan-to-value ratio at maturity is in excess of 100%, even if the loan is
currently paying in accordance with its contractual terms. Substantially all of the loans in the Real Estate portfolio are
considered collateral dependent and are measured for impairment based on the fair value of collateral. If foreclosure is
deemed probable or if repayment is dependent solely on the sale of collateral, we also include estimated selling costs in our
reserve. Collateral values for our Real Estate loans are determined based upon internal cash flow estimates discounted at an
appropriate rate and corroborated by external appraisals, as appropriate. Collateral valuations are routinely monitored and
updated annually, or more frequently for changes in collateral, market and economic conditions. Further discussion on
determination of fair value is in the Fair Value Measurements section below.
GE 2014 FORM 10-K 141
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
Experience is not available for new products; therefore, while we are developing that experience, we set loss allowances
based on our experience with the most closely analogous products in our portfolio.
Our loss mitigation strategy intends to minimize economic loss and, at times, can result in rate reductions, principal
forgiveness, extensions, forbearance or other actions, which may cause the related loan to be classified as a TDR.
We utilize certain loan modification programs for borrowers experiencing temporary financial difficulties in our Consumer loan
portfolio. These loan modification programs are primarily concentrated in our non-U.S. residential mortgage and non-U.S.
installment and revolving portfolios and include short-term (three months or less) interest rate reductions and payment
deferrals, which were not part of the terms of the original contract. We sold our U.S. residential mortgage business in 2007
and, as such, do not participate in the U.S. government-sponsored mortgage modification programs.
Our allowance for losses on financing receivables on these modified consumer loans is determined based upon a formulaic
approach that estimates the probable losses inherent in the portfolio based upon statistical analyses of the portfolio. Data
related to redefault experience is also considered in our overall reserve adequacy review. Once the loan has been modified, it
returns to current status (re-aged) only after receipt of at least three consecutive minimum monthly payments or the equivalent
cumulative amount, subject to a re-aging limitation of once a year, or twice in a five-year period in accordance with the Federal
Financial Institutions Examination Council guidelines on Uniform Retail Credit Classification and Account Management policy
issued in June 2000. We believe that the allowance for losses would not be materially different had we not re-aged these
accounts.
For commercial loans, we evaluate changes in terms and conditions to determine whether those changes meet the criteria for
classification as a TDR on a loan-by-loan basis. In CLL, these changes primarily include: changes to covenants, short-term
payment deferrals and maturity extensions. For these changes, we receive economic consideration, including additional fees
and/or increased interest rates, and evaluate them under our normal underwriting standards and criteria. Changes to Real
Estate(cid:495)s loans primarily include maturity extensions, principal payment acceleration, changes to collateral terms, and cash
sweeps, which are in addition to, or sometimes in lieu of, fees and rate increases. The determination of whether these
changes to the terms and conditions of our commercial loans meet the TDR criteria includes our consideration of all of the
relevant facts and circumstances. When the borrower is experiencing financial difficulty, we carefully evaluate these changes
to determine whether they meet the form of a concession. In these circumstances, if the change is deemed to be a
concession, we classify the loan as a TDR.
When we repossess collateral in satisfaction of a loan, we write down the receivable against the allowance for losses.
Repossessed collateral is included in the caption “All other assets” in the Statement of Financial Position and carried at the
lower of cost or estimated fair value less costs to sell.
For Consumer loans, we write off unsecured closed-end installment loans when they are 120 days contractually past due and
unsecured open-ended revolving loans at 180 days contractually past due. We write down consumer loans secured by
collateral other than residential real estate when such loans are 120 days past due. Consumer loans secured by residential
real estate (both revolving and closed-end loans) are written down to the fair value of collateral, less costs to sell, no later than
when they become 180 days past due. Unsecured consumer loans in bankruptcy are written off within 60 days of notification
of filing by the bankruptcy court or within contractual write-off periods, whichever occurs earlier.
(cid:3)
142 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
Write-offs on larger-balance impaired commercial loans are based on amounts deemed uncollectible and are reviewed
quarterly. Write-offs are determined based on the consideration of many factors, such as expectations of the workout plan or
restructuring of the loan, valuation of the collateral and the prioritization of our claim in bankruptcy. Write-offs are recognized
against the allowance for losses at the earlier of transaction confirmation (for example, discounted pay-off, restructuring,
foreclosure, etc.) or not later than 360 days after initial recognition of a specific reserve for a collateral dependent loan. If
foreclosure is probable, the write-off is determined based on the fair value of the collateral less costs to sell. Smaller-balance,
homogeneous commercial loans are written off at the earlier of when deemed uncollectible or at 180 days past due.
PARTIAL SALES OF BUSINESS INTERESTS
Gains or losses on sales of affiliate shares where we retain a controlling financial interest are recorded in equity. Gains or
losses on sales that result in our loss of a controlling financial interest are recorded in earnings along with remeasurement
gains or losses on any investments in the entity that we retained.
CASH AND EQUIVALENTS
Debt securities and money market instruments with original maturities of three months or less are included in cash equivalents
unless designated as available-for-sale and classified as investment securities.
INVESTMENT SECURITIES
We report investments in debt and marketable equity securities, and certain other equity securities, at fair value. See Note 21
for further information on fair value. Unrealized gains and losses on available-for-sale investment securities are included in
shareowners(cid:495) equity, net of applicable taxes and other adjustments. We regularly review investment securities for impairment
using both quantitative and qualitative criteria.
For debt securities, if we do not intend to sell the security or it is not more likely than not that we will be required to sell the
security before recovery of our amortized cost, we evaluate other qualitative criteria to determine whether we do not expect to
recover the amortized cost basis of the security, such as the financial health of and specific prospects for the issuer, including
whether the issuer is in compliance with the terms and covenants of the security. We also evaluate quantitative criteria
including determining whether there has been an adverse change in expected future cash flows. If we do not expect to recover
the entire amortized cost basis of the security, we consider the security to be other-than-temporarily impaired, and we record
the difference between the security(cid:495)s amortized cost basis and its recoverable amount in earnings and the difference between
the security(cid:495)s recoverable amount and fair value in other comprehensive income. If we intend to sell the security or it is more
likely than not we will be required to sell the security before recovery of its amortized cost basis, the security is also considered
other-than-temporarily impaired and we recognize the entire difference between the security(cid:495)s amortized cost basis and its fair
value in earnings. For equity securities, we consider the length of time and magnitude of the amount that each security is in an
unrealized loss position. If we do not expect to recover the entire amortized cost basis of the security, we consider the security
to be other-than-temporarily impaired, and we record the difference between the security’s amortized cost basis and its fair
value in earnings.
Realized gains and losses are accounted for on the specific identification method. Unrealized gains and losses on investment
securities classified as trading and certain retained interests are included in earnings.
INVENTORIES
All inventories are stated at the lower of cost or realizable values. Cost for a significant portion of GE U.S. inventories is
determined on a last-in, first-out (LIFO) basis. Cost of other GE inventories is determined on a first-in, first-out (FIFO) basis.
LIFO was used for 40% and 39% of GE inventories at 2014 and 2013, respectively.
(cid:3)
GE 2014 FORM 10-K 143
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
GOODWILL AND OTHER INTANGIBLE ASSETS
We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. A reporting unit is the
operating segment, or one level below that operating segment (the component level) if discrete financial information is
prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if
they have similar economic characteristics. We recognize an impairment charge if the carrying amount of a reporting unit
exceeds its fair value and the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill.
We use a market approach, when available and appropriate, or the income approach, or a combination of both to establish fair
values. When a portion of a reporting unit is disposed, goodwill is allocated to the gain or loss on disposition based on the
relative fair values of the business or businesses disposed and the portion of the reporting unit that will be retained.
We amortize the cost of other intangibles over their estimated useful lives unless such lives are deemed indefinite. The cost of
intangible assets is generally amortized on a straight-line basis over the asset’s estimated economic life, except that
individually significant customer-related intangible assets are amortized in relation to total related sales. Amortizable intangible
assets are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amounts
may not be recoverable. In these circumstances, they are tested for impairment based on undiscounted cash flows and, if
impaired, written down to fair value based on either discounted cash flows or appraised values. Intangible assets with
indefinite lives are tested annually for impairment and written down to fair value as required.
GECC INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE ANNUITY
BENEFITS
Certain entities that we consolidate provide guaranteed investment contracts, primarily to states, municipalities and municipal
authorities.
Our insurance activities include providing insurance and reinsurance for life and health risks and providing certain annuity
products. Two primary product groups are provided: traditional insurance contracts and investment contracts. Insurance
contracts are contracts with significant mortality and/or morbidity risks, while investment contracts are contracts without such
risks.
For short-duration insurance contracts, including accident and health insurance, we report premiums as earned income over
the terms of the related agreements, generally on a pro-rata basis. For traditional long-duration insurance contracts including
long-term care, term, whole life and annuities payable for the life of the annuitant, we report premiums as earned income when
due.
Premiums received on investment contracts (including annuities without significant mortality risk) are not reported as revenues
but rather as deposit liabilities. We recognize revenues for charges and assessments on these contracts, mostly for mortality,
contract initiation, administration and surrender. Amounts credited to policyholder accounts are charged to expense.
Liabilities for traditional long-duration insurance contracts represent the present value of such benefits less the present value
of future net premiums based on mortality, morbidity, interest and other assumptions at the time the policies were issued or
acquired. Liabilities for investment contracts equal the account value, that is, the amount that accrues to the benefit of the
contract or policyholder including credited interest and assessments through the financial statement date. For guaranteed
investment contracts, the liability is also adjusted as a result of fair value hedging activity.
Liabilities for unpaid claims and estimated claim settlement expenses represent our best estimate of the ultimate obligations
for reported and incurred-but-not-reported claims and the related estimated claim settlement expenses. Liabilities for unpaid
claims and estimated claim settlement expenses are continually reviewed and adjusted through current operations.
144 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
FAIR VALUE MEASUREMENTS
For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price we would receive to sell an
asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence
of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market
observable data and, in the absence of such data, internal information that is consistent with what market participants would
use in a hypothetical transaction that occurs at the measurement date.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market
assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are
observable.
Level 3 – Significant inputs to the valuation model are unobservable.
We maintain policies and procedures to value instruments using the best and most relevant data available. In addition, we
have risk management teams that review valuation, including independent price validation for certain instruments. With regard
to Level 3 valuations (including instruments valued by third parties), we perform a variety of procedures to assess the
reasonableness of the valuations. Such reviews, which may be performed quarterly, monthly or weekly, include an evaluation
of instruments whose fair value change exceeds predefined thresholds (and/or does not change) and consider the current
interest rate, currency and credit environment, as well as other published data, such as rating agency market reports and
current appraisals. These reviews are performed within each business by the asset and risk managers, pricing committees
and valuation committees. A detailed review of methodologies and assumptions is performed by individuals independent of the
business for individual measurements with a fair value exceeding predefined thresholds. This detailed review may include the
use of a third-party valuation firm.
RECURRING FAIR VALUE MEASUREMENTS
The following sections describe the valuation methodologies we use to measure different financial instruments at fair value on
a recurring basis.
Investments in Debt and Equity Securities. When available, we use quoted market prices to determine the fair value of
investment securities, and they are included in Level 1. Level 1 securities primarily include publicly traded equity securities.
For large numbers of investment securities for which market prices are observable for identical or similar investment securities
but not readily accessible for each of those investments individually (that is, it is difficult to obtain pricing information for each
individual investment security at the measurement date), we obtain pricing information from an independent pricing vendor.
The pricing vendor uses various pricing models for each asset class that are consistent with what other market participants
would use. The inputs and assumptions to the model of the pricing vendor are derived from market observable sources
including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and
other market-related data. Since many fixed income securities do not trade on a daily basis, the methodology of the pricing
vendor uses available information as applicable such as benchmark curves, benchmarking of like securities, sector groupings,
and matrix pricing. The pricing vendor considers available market observable inputs in determining the evaluation for a
security. Thus, certain securities may not be priced using quoted prices, but rather determined from market observable
information. These investments are included in Level 2 and primarily comprise our portfolio of corporate fixed income, and
government, mortgage and asset-backed securities. In infrequent circumstances, our pricing vendors may provide us with
valuations that are based on significant unobservable inputs, and in those circumstances we classify the investment securities
in Level 3.
GE 2014 FORM 10-K 145
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
Annually, we conduct reviews of our primary pricing vendor to validate that the inputs used in that vendor’s pricing process are
deemed to be market observable as defined in the standard. While we are not provided access to proprietary models of the
vendor, our reviews have included on-site walk-throughs of the pricing process, methodologies and control procedures for
each asset class and level for which prices are provided. Our reviews also include an examination of the underlying inputs and
assumptions for a sample of individual securities across asset classes, credit rating levels and various durations, a process we
perform each reporting period. In addition, the pricing vendor has an established challenge process in place for all security
valuations, which facilitates identification and resolution of potentially erroneous prices. We believe that the prices received
from our pricing vendor are representative of prices that would be received to sell the assets at the measurement date (exit
prices) and are classified appropriately in the hierarchy.
We use non-binding broker quotes and other third-party pricing services as our primary basis for valuation when there is
limited, or no, relevant market activity for a specific instrument or for other instruments that share similar characteristics. We
have not adjusted the prices we have obtained. Investment securities priced using non-binding broker quotes and other third-
party pricing services are included in Level 3. As is the case with our primary pricing vendor, third-party brokers and other
third-party pricing services do not provide access to their proprietary valuation models, inputs and assumptions. Accordingly,
our risk management personnel conduct reviews of vendors, as applicable, similar to the reviews performed of our primary
pricing vendor. In addition, we conduct internal reviews of pricing for all such investment securities quarterly to ensure
reasonableness of valuations used in our financial statements. These reviews are designed to identify prices that appear stale,
those that have changed significantly from prior valuations, and other anomalies that may indicate that a price may not be
accurate. Based on the information available, we believe that the fair values provided by the brokers and other third-party
pricing services are representative of prices that would be received to sell the assets at the measurement date (exit prices).
Derivatives. We use closing prices for derivatives included in Level 1, which are traded either on exchanges or liquid over-the-
counter markets.
The majority of our derivatives are valued using internal models. The models maximize the use of market observable inputs
including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities
included in Level 2 primarily represent interest rate swaps, cross-currency swaps and foreign currency and commodity forward
and option contracts.
Derivative assets and liabilities included in Level 3 primarily represent equity derivatives and interest rate products that contain
embedded optionality or prepayment features.
NON-RECURRING FAIR VALUE MEASUREMENTS
Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an
ongoing basis, but are subject to fair value adjustments only in certain circumstances. These assets can include loans and
long-lived assets that have been reduced to fair value when they are held for sale, impaired loans that have been reduced
based on the fair value of the underlying collateral, cost and equity method investments and long-lived assets that are written
down to fair value when they are impaired and the remeasurement of retained investments in formerly consolidated
subsidiaries upon a change in control that results in deconsolidation of a subsidiary, if we sell a controlling interest and retain a
noncontrolling stake in the entity. Assets that are written down to fair value when impaired and retained investments are not
subsequently adjusted to fair value unless further impairment occurs.
The following sections describe the valuation methodologies we use to measure financial and non-financial instruments
accounted for at fair value on a non-recurring basis and for certain assets within our pension plans and retiree benefit plans at
each reporting period, as applicable.
146 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
Financing Receivables and Loans Held for Sale. When available, we use observable market data, including pricing on
recent closed market transactions, to value loans that are included in Level 2. When this data is unobservable, we use
valuation methodologies using current market interest rate data adjusted for inherent credit risk, and such loans are included in
Level 3. When appropriate, loans may be valued using collateral values (see Long-Lived Assets below).
Cost and Equity Method Investments. Cost and equity method investments are valued using market observable data such
as quoted prices when available. When market observable data is unavailable, investments are valued using a discounted
cash flow model, comparative market multiples or a combination of both approaches as appropriate and other third-party
pricing sources. These investments are generally included in Level 3.
Investments in private equity, real estate and collective funds are valued using net asset values. The net asset values are
determined based on the fair values of the underlying investments in the funds. Investments in private equity and real estate
funds are generally included in Level 3 because they are not redeemable at the measurement date. Investments in collective
funds are included in Level 2.
Long-lived Assets, including Real Estate. Fair values of long-lived assets, including aircraft and real estate, are primarily
derived internally and are based on observed sales transactions for similar assets. In other instances, for example, collateral
types for which we do not have comparable observed sales transaction data, collateral values are developed internally and
corroborated by external appraisal information. Adjustments to third-party valuations may be performed in circumstances
where market comparables are not specific to the attributes of the specific collateral or appraisal information may not be
reflective of current market conditions due to the passage of time and the occurrence of market events since receipt of the
information. For real estate, fair values are based on discounted cash flow estimates that reflect current and projected lease
profiles and available industry information about capitalization rates and expected trends in rents and occupancy and are
corroborated by external appraisals. These investments are generally included in Level 2 or Level 3.
Retained Investments in Formerly Consolidated Subsidiaries. Upon a change in control that results in deconsolidation of a
subsidiary, the fair value measurement of our retained noncontrolling stake is valued using market observable data such as
quoted prices when available, or if not available, an income approach, a market approach, or a combination of both
approaches as appropriate. In applying these methodologies, we rely on a number of factors, including actual operating
results, future business plans, economic projections, market observable pricing multiples of similar businesses and
comparable transactions, and possible control premium. These investments are generally included in Level 1 or Level 3, as
appropriate, determined at the time of the transaction.
ACCOUNTING CHANGES
In the second quarter of 2014, the Company elected to early adopt Accounting Standards Update (ASU) 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued
Operations and Disclosures of Disposals of Components of an Entity. This ASU changes the criteria for reporting discontinued
operations. To be classified as a discontinued operation, the disposal of a component or group of components must represent
a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The ASU also expands the
disclosure requirements for those transactions that meet the new criteria to be classified as discontinued operations. The
revised accounting guidance applies prospectively to all disposals (or classifications as held for sale) of components of an
entity and for businesses that, upon acquisition, are classified as held for sale on or after adoption. Early adoption is permitted
for disposals (or classifications as held for sale) that have not been previously reported in financial statements. The effects of
applying the revised guidance will vary based upon the nature and size of future disposal transactions. It is expected that
fewer disposal transactions will meet the new criteria to be reported as discontinued operations.
(cid:3)
GE 2014 FORM 10-K 147
F I N AN C I AL S T AT E M E N T S P R E S E N T AT I O N & P O L I C I E S
On January 1, 2014, we adopted ASU 2013-05, Foreign Currency Matters (Topic 830): (cid:51)(cid:68)(cid:85)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) Accounting for the Cumulative
Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an
Investment in a Foreign Entity. Under the revised guidance, the entire amount of the cumulative translation adjustment
associated with the foreign entity will be released into earnings in the following circumstances: (a) the sale of a subsidiary or
group of net assets within a foreign entity that represents a complete or substantially complete liquidation of that entity, (b) the
loss of a controlling financial interest in an investment in a foreign entity, or (c) when the accounting for an investment in a
foreign entity changes from the equity method to full consolidation. The revised guidance applies prospectively to transactions
or events occurring on or after January 1, 2014.
On January 1, 2014, we adopted ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Under the new guidance, an unrecognized tax benefit is
required to be presented as a reduction to a deferred tax asset if the disallowance of the tax position would reduce the
available tax loss or tax credit carryforward instead of resulting in a cash tax liability. The ASU applies prospectively to all
unrecognized tax benefits that exist as of the adoption date and reduced both deferred tax assets and income tax liabilities by
$1,224 million as of January 1, 2014.
On January 1, 2012, we adopted ASU 2011-05, an amendment to Accounting Standards Codification (ASC) 220,
Comprehensive Income. ASU 2011-05 introduced a new statement, the Consolidated Statement of Comprehensive Income.
The amendments affect only the display of those components of equity categorized as other comprehensive income and do
not change existing recognition and measurement requirements that determine net earnings.
On January 1, 2012, we adopted ASU 2011-04, an amendment to ASC 820, Fair Value Measurements. ASU 2011-04 clarifies
or changes the application of existing fair value measurements, including: that the highest and best use valuation premise in a
fair value measurement is relevant only when measuring the fair value of nonfinancial assets; that a reporting entity should
measure the fair value of its own equity instrument from the perspective of a market participant that holds that instrument as
an asset; to permit an entity to measure the fair value of certain financial instruments on a net basis rather than based on its
gross exposure when the reporting entity manages its financial instruments on the basis of such net exposure; that in the
absence of a Level 1 input, a reporting entity should apply premiums and discounts when market participants would do so
when pricing the asset or liability consistent with the unit of account; and that premiums and discounts related to size as a
characteristic of the reporting entity’s holding are not permitted in a fair value measurement. Adopting these amendments had
no effect on the financial statements.
148 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S H E L D F O R S AL E & D I S C O N T I N U E D O P E R AT I O N S
NOTE 2. ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE AND
DISCONTINUED OPERATIONS
ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
In the fourth quarter of 2014, we signed an agreement to sell our Signaling business at Transportation, with assets of $267
million and liabilities of $148 million to Alstom for approximately $800 million, and our consumer finance business Budapest
Bank, with assets of $3,474 million and liabilities of $2,434 million to Hungary’s government. The transactions remain subject
to customary closing conditions and regulatory approvals, and are targeted to close in 2015.
In the third quarter of 2014, we signed an agreement to sell our Appliances business with assets of $2,538 million and
liabilities of $1,356 million to Electrolux for approximately $3,300 million. The transaction remains subject to customary closing
conditions and regulatory approvals, and is targeted to close in 2015.
In the second quarter of 2014, we committed to sell GE Money Bank AB, our consumer finance business in Sweden, Denmark
and Norway (GEMB-Nordic). We completed the sale on November 6, 2014 for proceeds of $2,320 million.
In the first quarter of 2013, we committed to sell certain of our machining & fabrication businesses at Aviation and our
Consumer auto and personal loan business in Portugal. We completed the sale of our machining & fabrication business on
December 2, 2013 for proceeds of $108 million. We completed the sale of our Consumer auto and personal loan business in
Portugal on July 15, 2013 for proceeds of $83 million.
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
December 31 (In millions)
Assets
Cash and equivalents
Investment securities
Current receivables(a)
Inventories
Financing receivables – net
Property, plant, and equipment – net
Goodwill
Intangible assets – net
Other
Assets of businesses held for sale
Liabilities
Accounts payable(a)
Other current liabilities
Bank deposits
Other
Liabilities of businesses held for sale
2014
676 $
448
180
588
2,144
1,015
539
170
540
6,300 $
510
348
1,931
586
3,375
$
$
$
$
$
$
2013
5
7
-
-
-
-
24
2
12
50
1
-
-
5
6
(a) Certain transactions at our Appliances and Signaling businesses are made on an arms-length basis with GECC, consisting primarily of GE customer receivables sold to
GECC and GECC services for material procurement. These intercompany balances included within our held for sale businesses are reported in the GE and GECC
columns of our financial statements, but are eliminated in deriving our consolidated financial statements.
GE 2014 FORM 10-K 149
F I N A N C I A L S T AT E M E N T S H E L D F O R S AL E & D I S C O N T I N U E D O P E R A T I O N S
NBCU
On March 19, 2013, we closed a transaction to sell our remaining 49% common equity interest in NBCUniversal LLC (NBCU
LLC) to Comcast Corporation (Comcast) for total consideration of $16,722 million, consisting of $11,997 million in cash,
$4,000 million in Comcast guaranteed debt and $725 million in preferred stock. The $4,000 million of debt and the $725 million
of preferred shares were both issued by a wholly-owned subsidiary of Comcast. During the three months ended March 31,
2013, both of these instruments were sold at approximately par value. In addition, Comcast is obligated to share with us
potential tax savings associated with Comcast’s purchase of our NBCU LLC interest, if realized. We did not recognize these
potential future payments as consideration for the sale, but are recording such payments in income as they are received.
GECC also sold real estate comprising certain floors located at 30 Rockefeller Center, New York and the CNBC property
located in Englewood Cliffs, New Jersey to affiliates of NBCU LLC for $1,430 million in cash.
In the first quarter of 2013, as a result of the transactions, we recognized pre-tax gains of $1,096 million ($825 million after tax)
on the sale of our 49% common equity interest in NBCU LLC and $921 million ($564 million after tax) on the sale of GECC’s
real estate properties.
DISCONTINUED OPERATIONS
Discontinued operations primarily comprised GE Money Japan (our Japanese personal loan business, Lake, and our
Japanese mortgage and card businesses, excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage
business (WMC), our Commercial Lending and Leasing (CLL) trailer services business in Europe (CLL Trailer Services), our
Consumer banking business in Russia (Consumer Russia) and our Consumer mortgage lending business in Ireland
(Consumer Ireland). Results of operations, financial position and cash flows for these businesses are separately reported as
discontinued operations for all periods presented.
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
(In millions)
Operations
Total revenues and other income (loss)
Earnings (loss) from discontinued operations before income taxes
Benefit (provision) for income taxes
Earnings (loss) from discontinued operations, net of taxes
Disposal
Gain (loss) on disposal before income taxes
Benefit (provision) for income taxes
Gain (loss) on disposal, net of taxes
Earnings (loss) from discontinued operations, net of taxes(a)
$
$
$
$
$
$
2014
(268)
(351)
224
(127)
14
1
15
(112)
$
$
$
$
$
$
2013
186
(494)
155
(339)
(2,027)
246
(1,781)
(2,120)
$
$
$
$
$
$
2012
191
(586)
198
(388)
(792)
197
(595)
(983)
(a) The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GECC earnings (loss) from discontinued operations, net of taxes, is reported as
GE industrial earnings (loss) from discontinued operations, net of taxes, on the Consolidated Statement of Earnings.
150 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S H E L D F O R S AL E & D I S C O N T I N U E D O P E R AT I O N S
December 31 (In millions)
Assets
Cash and equivalents
Financing receivables – net
Other
Assets of discontinued operations
Liabilities
Deferred income taxes
Other
Liabilities of discontinued operations
2014
2013
133
-
1,102
1,235
237
988
1,225
$
$
$
$
232
711
1,396
2,339
248
3,685
3,933
$
$
$
$
Other assets at December 31, 2014 and 2013 primarily comprised a deferred tax asset for a loss carryforward, which expires
principally in 2017 and in part in 2019, related to the sale of our GE Money Japan business.
GE MONEY JAPAN
During the third quarter of 2008, we completed the sale of GE Money Japan, which included our Japanese personal loan
business. Under the terms of the sale, we reduced the proceeds from the sale for estimated refund claims in excess of the
statutory interest rate. Proceeds from the sale were to be increased or decreased based on the actual claims experienced in
accordance with loss-sharing terms specified in the sale agreement, with all claims in excess of 258 billion Japanese yen
(approximately $3,000 million) remaining our responsibility. On February 26, 2014, we reached an agreement with the buyer to
pay 175 billion Japanese yen (approximately $1,700 million) to extinguish this obligation. We have no remaining amount
payable under the February 26, 2014 agreement as our reserve for refund claims of $1,836 million at December 31, 2013 was
fully paid in the six months ended June 30, 2014.
FINANCIAL INFORMATION FOR GE MONEY JAPAN
(In millions)
2014
2013
Earnings (loss) from discontinued operations, net of taxes
$
59
$
(1,636)
$
2012
(649)
WMC
During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially
discontinued all new loan originations by the second quarter of 2007, and is not a loan servicer. In connection with the sale,
WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the
business and contractual obligations to repurchase previously sold loans that had an early payment default. All claims
received by WMC for early payment default have either been resolved or are no longer being pursued.
The remaining active claims have been brought by securitization trustees or administrators seeking recovery from WMC for
alleged breaches of representations and warranties on mortgage loans that serve as collateral for residential mortgage-backed
securities (RMBS). At December 31, 2014, such claims consisted of $3,694 million of individual claims generally submitted
before the filing of a lawsuit (compared to $5,643 million at December 31, 2013) and $9,225 million of additional claims
asserted against WMC in litigation without making a prior claim (Litigation Claims) (compared to $6,780 million at December
31, 2013). The total amount of these claims, $12,919 million, reflects the purchase price or unpaid principal balances of the
loans at the time of purchase and does not give effect to pay downs or potential recoveries based upon the underlying
collateral, which in many cases are substantial, nor to accrued interest or fees. As of December 31, 2014, these amounts do
not include approximately $1,070 million of repurchase claims relating to alleged breaches of representations that are not in
litigation and that are beyond the applicable statute of limitations. WMC believes that repurchase claims brought based upon
representations and warranties made more than six years before WMC was notified of the claim would be disallowed in legal
proceedings under applicable statutes of limitations.
GE 2014 FORM 10-K 151
F I N AN C I AL S T AT E M E N T S H E L D F O R S AL E & D I S C O N T I N U E D O P E R AT I O N S
Reserves related to repurchase claims made against WMC were $809 million at December 31, 2014, reflecting a net increase
to reserves in the twelve months ended December 31, 2014 of $9 million due to incremental provisions offset by settlement
activity. The reserve estimate takes into account recent settlement activity and is based upon WMC’s evaluation of the
remaining exposures as a percentage of estimated lifetime mortgage loan losses within the pool of loans supporting each
securitization. Settlements in prior periods reduced WMC’s exposure on claims asserted in certain securitizations and the
claim amounts reported above give effect to these settlements.
ROLLFORWARD OF THE RESERVE
December 31 (In millions)
(cid:3)(cid:3)
Balance, beginning of period
Provision
Claim resolutions / rescissions
Balance, end of period
2014
800
365
(356)
809
$
$
2013
633
354
(187)
800
$
$
Given the significant litigation activity and WMC’s continuing efforts to resolve the lawsuits involving claims made against
WMC, it is difficult to assess whether future losses will be consistent with WMC’s past experience. Adverse changes to WMC’s
assumptions supporting the reserve may result in an increase to these reserves. Taking into account both recent settlement
activity and the potential variability of settlements, WMC estimates a range of reasonably possible loss from $0 to
approximately $500 million over its recorded reserve at December 31, 2014. This estimate excludes any possible loss
associated with an adverse court decision on the applicable statute of limitations, as WMC is unable at this time to develop
such a meaningful estimate.
At December 31, 2014, there were 15 lawsuits involving claims made against WMC arising from alleged breaches of
representations and warranties on mortgage loans included in 14 securitizations. The adverse parties in these cases are
securitization trustees or parties claiming to act on their behalf. Although the alleged claims for relief vary from case to case,
the complaints and counterclaims in these actions generally assert claims for breach of contract, indemnification, and/or
declaratory judgment, and seek specific performance (repurchase of defective mortgage loan) and/or money damages.
Adverse court decisions, including in cases not involving WMC (such as the New York Court of Appeals’ decision on statute of
limitations, expected in 2015), could result in new claims and lawsuits on additional loans. However, WMC continues to believe
that it has defenses to the claims asserted in litigation, including, for example, based on causation and materiality
requirements and applicable statutes of limitations. It is not possible to predict the outcome or impact of these defenses and
other factors, any of which could materially affect the amount of any loss ultimately incurred by WMC on these claims.
WMC has also received indemnification demands, nearly all of which are unspecified, from depositors/underwriters/sponsors
of RMBS in connection with lawsuits brought by RMBS investors concerning alleged misrepresentations in the securitization
offering documents to which WMC is not a party or, in two cases, involving mortgage loan repurchase claims made against
RMBS sponsors. WMC believes that it has defenses to these demands.
To the extent WMC is required to repurchase loans, WMC’s loss also would be affected by several factors, including pay
downs, accrued interest and fees, and the value of the underlying collateral. The reserve and estimate of possible loss reflect
judgment, based on currently available information, and a number of assumptions, including economic conditions, claim and
settlement activity, pending and threatened litigation, court decisions regarding WMC’s legal defenses, indemnification
demands, government activity, and other variables in the mortgage industry. Actual losses arising from claims against WMC
could exceed these amounts and additional claims and lawsuits could result if actual claim rates, governmental actions,
litigation and indemnification activity, adverse court decisions, actual settlement rates or losses WMC incurs on repurchased
loans differ from its assumptions.
FINANCIAL INFORMATION FOR WMC
(In millions)
Total revenues and other income (loss)
Earnings (loss) from discontinued operations, net of taxes
152 GE 2014 FORM 10-K
$
$
2014
(291)
(199)
$
$
2013
(346)
(232)
$
$
2012
(500)
(337)
F I N AN C I AL S T AT E M E N T S H E L D F O R S AL E & D I S C O N T I N U E D O P E R AT I O N S
OTHER FINANCIAL SERVICES
During the fourth quarter of 2013, we announced the planned disposition of Consumer Russia and classified the business as
discontinued operations. We completed the sale in the first quarter of 2014 for proceeds of $232 million.
FINANCIAL INFORMATION FOR CONSUMER RUSSIA
(In millions)
Total revenues and other income (loss)
Gain (loss) on disposal, net of taxes
Earnings (loss) from discontinued operations, net of taxes
$
$
$
2014
24
4
(2)
$
$
$
2013
260
(170)
(193)
$
$
$
2012
276
-
33
During the first quarter of 2013, we announced the planned disposition of CLL Trailer Services and classified the business as
discontinued operations. We completed the sale in the fourth quarter of 2013 for proceeds of $528 million.
FINANCIAL INFORMATION FOR CLL TRAILER SERVICES
(In millions)
Total revenues and other income (loss)
Gain (loss) on disposal, net of taxes
Earnings (loss) from discontinued operations, net of taxes
$
$
$
2014
1
12
37
$
$
$
2013
271
18
(2)
$
$
$
2012
399
-
22
During the first quarter of 2012, we announced the planned disposition of Consumer Ireland and classified the business as
discontinued operations. We completed the sale in the third quarter of 2012 for proceeds of $227 million.
FINANCIAL INFORMATION FOR CONSUMER IRELAND
(In millions)
Total revenues and other income (loss)
Gain (loss) on disposal, net of taxes
Earnings (loss) from discontinued operations, net of taxes
$
$
$
2014
-
1
1
$
$
$
2013
-
6
6
$
$
$
2012
7
(121)
(195)
GE INDUSTRIAL
During the fourth quarter of 2013, we recorded an increase to our tax reserve related to Spanish taxes for the years prior to
our 2007 disposition of our Plastics business. During the third quarter of 2012, we resolved with the Internal Revenue Service
the tax treatment of the 2007 disposition of our Plastics business, resulting in a tax benefit of $148 million. The sum of GE
industrial earnings (loss) from discontinued operations, net of taxes, and GECC earnings (loss) from discontinued operations,
net of taxes, is reported as GE industrial earnings (loss) from discontinued operations, net of taxes, on the Statement of
Earnings.
FINANCIAL INFORMATION FOR GE INDUSTRIAL
(In millions)
2014
2013
Earnings (loss) from discontinued operations, net of taxes
$
(5)
$
(66)
$
2012
147
GE 2014 FORM 10-K 153
F I N AN C I AL S T AT E M E N T S
I N V E S T M E N T S E C U R I T I E S
NOTE 3. INVESTMENT SECURITIES
Substantially all of our investment securities are classified as available-for-sale. These comprise mainly investment-grade debt
securities supporting obligations to annuitants, policyholders in our run-off insurance operations and supporting obligations to
holders of guaranteed investment contracts (GICs) in Trinity and investments held in our CLL business collateralized by senior
secured loans of high-quality, middle-market companies in a variety of industries. We do not have any securities classified as
held-to-maturity.
December 31 (In millions)
GE
Debt
U.S. corporate
Corporate – non-U.S.
Equity
Available-for-sale
Trading
2014
Amortized
cost
Gross
Gross
unrealized unrealized
losses
gains
Estimated
fair value
Amortized
cost
2013
Gross
unrealized
gains
Gross
unrealized
losses
Estimated
fair value
$
12 $
1
- $
-
- $
-
12 $
1
21 $
13
14 $
-
- $
(1)
69
-
82
4
-
4
(2)
-
(2)
71
-
84
302
6
342
9
-
23
(41)
-
(42)
35
12
270
6
323
GECC
Debt
U.S. corporate
State and municipal
Residential mortgage-backed(a)
Commercial mortgage-backed
Asset-backed
Corporate – non-U.S.
Government – non-U.S.
U.S. government and federal
agency
Retained interests
Equity
Available-for-sale
Trading
19,889
5,181
1,578
2,903
8,084
1,380
1,646
3,967
624
153
170
9
126
152
(69)
(56)
(6)
(10)
(175)
(30)
(2)
23,787
5,749
1,725
3,063
7,918
1,476
1,796
19,600
4,245
1,819
2,929
7,373
1,741
2,336
2,323
235
139
188
60
103
81
(217)
(191)
(48)
(82)
(46)
(86)
(7)
21,706
4,289
1,910
3,035
7,387
1,758
2,410
1,957
20
56
4
-
-
2,013
24
752
64
45
8
(27)
-
770
72
197
22
42,857
58
-
5,319
(1)
-
(349)
254
22
47,827
203
74
41,136
51
-
3,233
(3)
-
(707)
251
74
43,662
(4)
43,981
Eliminations
Total
(4)
-
-
(4)
(4)
-
-
$
42,935 $
5,323 $
(351) $
47,907 $
41,474 $
3,256 $
(749) $
(a) Substantially collateralized by U.S. mortgages. At December 31, 2014, $1,191 million related to securities issued by government-sponsored entities and $534 million
related to securities of private-label issuers. Securities issued by private-label issuers are collateralized primarily by pools of individual direct mortgage loans of financial
institutions.
The fair value of investment securities increased to $47,907 million at December 31, 2014, from $43,981 million at December
31, 2013, primarily due to purchases of U.S. government and federal agency securities at Synchrony Financial, and higher net
unrealized gains in U.S. corporate and State and municipal securities driven by lower interest rates in the U.S.
154 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
I N V E S T M E N T S E C U R I T I E S
ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE INVESTMENT
SECURITIES
December 31 (In millions)
2014
Debt
U.S. corporate
State and municipal
Residential mortgage-backed
Commercial mortgage-backed
Asset-backed
Corporate – non-U.S.
Government – non-U.S.
U.S. government and federal agency
Equity
Total
2013
Debt
U.S. corporate
State and municipal
Residential mortgage-backed
Commercial mortgage-backed
Asset-backed
Corporate – non-U.S.
Government – non-U.S.
U.S. government and federal agency
Retained interests
Equity
Total
In loss position for
Less than 12 months
12 months or more
Estimated
fair value(a)
Gross
unrealized
losses(a)(b)
Estimated
fair value
Gross
unrealized
losses(b)
$
$
$
$
554
81
30
165
7,493
42
677
705
18
9,765
2,170
1,076
232
396
112
108
1,479
229
2
253
6,057
$
$
$
$
(16)
(1)
-
(1)
(158)
(1)
(2)
-
(3)
(182)
(122)
(82)
(11)
(24)
(2)
(4)
(6)
(27)
-
(44)
(322)
$
$
$
$
836
348
159
204
77
237
14
1
-
1,876
598
367
430
780
359
454
42
254
-
-
3,284
$
$
$
$
(53)
(55)
(6)
(9)
(17)
(29)
-
-
-
(169) (c)
(95)
(109)
(37)
(58)
(44)
(83)
(1)
-
-
-
(427)
(a)
Includes the estimated fair value of and gross unrealized losses on Corporate-non-U.S. and Equity securities held by GE. At December 31, 2014, there were no
Corporate-non-U.S. securities held by GE in a loss position. At December 31, 2014, the estimated fair value of and gross unrealized losses on Equity securities were $4
million and $(2) million, respectively. At December 31, 2013, the estimated fair value of and gross unrealized losses on Corporate-non-U.S. securities were $12 million
and $(1) million, respectively. At December 31, 2013 the estimated fair value of and gross unrealized losses on Equity securities were $222 million and $(41) million,
respectively.
(b)
Included gross unrealized losses related to securities that had other-than-temporary impairments previously recognized of $29 million at December 31, 2014.
(c) The majority relate to debt securities held to support obligations to holders of GICs and more than 70% are debt securities that were considered to be investment-grade
by the major rating agencies at December 31, 2014.
We regularly review investment securities for other-than-temporary impairment (OTTI) using both qualitative and quantitative
criteria. For debt securities, our qualitative review considers our ability and intent to hold the security and the financial
condition of and near-term prospects for the issuer, including whether the issuer is in compliance with the terms and covenants
of the security. Our quantitative review considers whether there has been an adverse change in expected future cash flows.
Unrealized losses are not indicative of the amount of credit loss that would be recognized and at December 31, 2014 are
primarily due to increases in market yields subsequent to our purchase of the securities. We presently do not intend to sell the
vast majority of our debt securities that are in an unrealized loss position and believe that it is not more likely than not that we
will be required to sell the vast majority of these securities before anticipated recovery of our amortized cost. The
methodologies and significant inputs used to measure the amount of credit loss for our investment securities during 2014 have
not changed. For equity securities, we consider the duration and the severity of the unrealized loss. We believe that the
unrealized loss associated with our equity securities will be recovered within the foreseeable future.
Our corporate debt portfolio comprises securities issued by public and private corporations in various industries, primarily in
the U.S. Substantially all of our corporate debt securities are rated investment grade by the major rating agencies.
GE 2014 FORM 10-K 155
F I N AN C I AL S T AT E M E N T S
I N V E S T M E N T S E C U R I T I E S
Our RMBS portfolio is collateralized primarily by pools of individual, direct mortgage loans, of which substantially all are in a
senior position in the capital structure of the deals, not other structured products such as collateralized debt obligations. Of the
total RMBS held at December 31, 2014, $1,191 million and $534 million related to agency and non-agency securities,
respectively. Additionally, $287 million was related to residential subprime credit securities, primarily supporting our
guaranteed investment contracts. Substantially all of the subprime exposure is related to securities backed by mortgage loans
originated in 2006 and prior. A majority of subprime RMBS have been downgraded to below investment grade and are insured
by Monoline insurers (Monolines). We continue to place partial reliance on Monolines with adequate capital and claims paying
resources depending on the extent of the Monoline’s anticipated ability to cover expected credit losses.
Our commercial mortgage-backed securities (CMBS) portfolio is collateralized by both diversified pools of mortgages that were
originated for securitization (conduit CMBS) and pools of large loans backed by high-quality properties (large loan CMBS), a
majority of which were originated in 2007 and prior. The vast majority of the securities in our CMBS portfolio have investment-
grade credit ratings.
Our asset-backed securities (ABS) portfolio is collateralized by senior secured loans of high-quality, middle-market companies
in a variety of industries, as well as a variety of diversified pools of assets such as student loans and credit cards. The vast
majority of the securities in our ABS portfolio are in a senior position in the capital structure of the deals.
PRE-TAX, OTHER-THAN-TEMPORARY IMPAIRMENTS ON INVESTMENT SECURITIES
(In millions)
Total pre-tax, OTTI recognized
Pre-tax, OTTI recognized in AOCI
Pre-tax, OTTI recognized in earnings(a)
$
$
2014
407 $
(16)
391 $
2013
798 $
(31)
767 $
2012
193
(52)
141
(a)
Included pre-tax, other-than-temporary impairments recorded in earnings related to equity securities of $221 million, $15 million and $39 million in 2014, 2013, and 2012,
respectively.
CHANGES IN CUMULATIVE CREDIT LOSS IMPAIRMENTS RECOGNIZED ON DEBT SECURITIES STILL HELD
(In millions)
Cumulative credit loss impairments recognized, beginning of period
Credit loss impairments recognized on securities not previously impaired
Incremental credit loss impairments recognized
on securities previously impaired
Less credit loss impairments previously recognized on securities sold
during the period or that we intend to sell
Cumulative credit loss impairments recognized, end of period
$
$
2014
1,193 $
4
2013
588 $
389
77
336
304
970 $
120
1,193 $
2012
747
27
40
226
588
156 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
I N V E S T M E N T S E C U R I T I E S
CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES
(EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)
(cid:3)
(In millions)
Due
Within one year
After one year through five years
After five years through ten years
After ten years
$
Amortized
cost
$
2,478
3,521
5,285
18,782
Estimated
fair value
2,492
3,768
5,686
22,888
We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain
obligations.
GROSS REALIZED GAINS AND LOSSES ON AVAILABLE-FOR-SALE INVESTMENT SECURITIES
(In millions)
GE
Gains
Losses, including impairments
Net
GECC
Gains
Losses, including impairments
Net
Total
2014
2013
$
3 $
(218)
(215)
169
(186)
(17)
$
(232) $
1 $
(20)
(19)
239
(762)
(523)
(542) $
2012
-
(1)
(1)
177
(211)
(34)
(35)
Although we generally do not have the intent to sell any specific securities at the end of the period, in the ordinary course of
managing our investment securities portfolio, we may sell securities prior to their maturities for a variety of reasons, including
diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders. In
some of our bank subsidiaries, we maintain a certain level of purchases and sales volume principally of non-U.S. government
debt securities. In these situations, fair value approximates carrying value for these securities.
Proceeds from investment securities sales and early redemptions by issuers totaled $6,549 million, $19,276 million and
$12,745 million in 2014, 2013 and 2012 respectively, principally from sales of short-term government securities in our bank
subsidiaries and redemptions of non-U.S. corporate and asset-backed securities in our CLL business. The 2013 amount also
included proceeds from the sale of Comcast guaranteed debt and short-term securities in our Treasury operations.
We recognized pre-tax gains (losses) on trading securities of $10 million, $48 million and $20 million in 2014, 2013 and 2012,
respectively.
GE 2014 FORM 10-K 157
F I N AN C I AL S T AT E M E N T S C U R R E N T R E C E I V AB L E S & I N V E N T O R I E S
NOTE 4. CURRENT RECEIVABLES
December 31 (In millions)
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Corporate items and eliminations
Less Allowance for Losses
Total
Consolidated(a)
2014
2013
$
$
4,984 $
5,775
1,655
4,656
4,350
454
1,468
390
23,732
(495)
23,237 $
3,895 $
5,444
1,540
4,307
4,398
526
1,337
388
21,835
(447)
21,388 $
GE(b)
2014
2,783 $
3,215
731
1,997
2,241
351
216
464
11,998
(485)
11,513 $
2013
2,335
3,134
686
2,260
2,029
318
273
377
11,412
(442)
10,970
(a) Includes GE industrial customer receivables factored through a GECC affiliate and reported as financing receivables by GECC. See Note 26.
(b) GE current receivables of $254 million and $127 million at December 31, 2014 and 2013, respectively, arose from sales, principally of Aviation goods and services, on
open account to various agencies of the U.S. government. As a percentage of GE revenues, approximately 3% of GE sales of goods and services were to the U.S.
government in 2014, compared with 4% in 2013 and 2012.
GE current receivables balances at December 31, 2014 and 2013, before allowance for losses, included $7,808 million and
$7,441 million, respectively, from sales of goods and services to customers, and $22 million and $37 million at December 31,
2014 and 2013, respectively, from transactions with associated companies. The remainder of the balances primarily relate to
revenue sharing programs and other non-income taxes.
2014
2013
9,820 $
7,126
755
17,701
(62)
17,639
9,760
7,161
609
17,530
(273)
17,257
50
17,689 $
68
17,325
$
$
NOTE 5. INVENTORIES
December 31 (In millions)
GE
Raw materials and work in process
Finished goods
Unbilled shipments
Less revaluation to LIFO
Total GE
GECC
Finished goods
Total consolidated
158 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S
NOTE 6. GECC FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON
FINANCING RECEIVABLES
FINANCING RECEIVABLES, NET
December 31 (In millions)
Loans, net of deferred income
Investment in financing leases, net of deferred income
Allowance for losses
Financing receivables – net(a)
2014
217,614
24,479
242,093
(5,075)
237,018
$
$
2013
231,268
26,939
258,207
(5,178)
253,029
$
$
(a) Financing receivables at December 31, 2014 and 2013 included $264 million and $544 million, respectively, relating to loans that had been acquired in a transfer but
have been subject to credit deterioration since origination.
GECC financing receivables include both loans and financing leases. Loans represent transactions in a variety of forms,
including revolving charge and credit, mortgages, installment loans, intermediate-term loans and revolving loans secured by
business assets. The portfolio includes loans carried at the principal amount on which finance charges are billed periodically,
and loans carried at gross book value, which includes finance charges.
Investment in financing leases consists of direct financing and leveraged leases of aircraft, railroad rolling stock, autos, other
transportation equipment, data processing equipment, medical equipment, commercial real estate and other manufacturing,
power generation, and commercial equipment and facilities.
For federal income tax purposes, the leveraged leases and the majority of the direct financing leases are leases in which
GECC depreciates the leased assets and is taxed upon the accrual of rental income. Certain direct financing leases are loans
for federal income tax purposes. For these transactions, GECC is taxed only on the portion of each payment that constitutes
interest, unless the interest is tax-exempt (e.g., certain obligations of state governments).
Investment in direct financing and leveraged leases represents net unpaid rentals and estimated unguaranteed residual values
of leased equipment, less related deferred income. GECC has no general obligation for principal and interest on notes and
other instruments representing third-party participation related to leveraged leases; such notes and other instruments have not
been included in liabilities but have been offset against the related rentals receivable. The GECC share of rentals receivable
on leveraged leases is subordinate to the share of other participants who also have security interests in the leased equipment.
For federal income tax purposes, GECC is entitled to deduct the interest expense accruing on non-recourse financing related
to leveraged leases.
NET INVESTMENT IN FINANCING LEASES
December 31 (In millions)
Total minimum lease payments receivable
Less principal and interest on third-party
non-recourse debt
Net rentals receivables
Estimated unguaranteed residual value
of leased assets
Less deferred income
Investment in financing leases, net of
deferred income
Less amounts to arrive at net investment
Allowance for losses
Deferred taxes
Net investment in financing leases
Total financing leases
Direct financing leases(a)
Leveraged leases(b)
2014
2013(cid:3)
2014
2013
2014
2013
$
26,701 $
29,970 $
22,133 $
24,571 $
4,568 $
5,399
(2,812)
23,889
(3,480)
26,490
-
22,133
-
24,571
(2,812)
1,756
4,268
(3,678)
5,073
(4,624)
2,529
(2,759)
3,067
(3,560)
1,739
(919)
(3,480)
1,919
2,006
(1,064)
24,479
26,939
21,903
24,078
2,576
2,861
(181)
(4,046)
20,252 $
(202)
(4,075)
22,662 $
(166)
(2,250)
19,487 $
(192)
(1,783)
22,103 $
(15)
(1,796)
765 $
(10)
(2,292)
559
$
(a) Included $284 million and $317 million of initial direct costs on direct financing leases at December 31, 2014 and 2013, respectively.
(b) Included pre-tax income of $112 million and $31 million and income tax of $43 million and $11 million during 2014 and 2013, respectively. Net investment credits
recognized on leveraged leases during 2014 and 2013 were insignificant.
GE 2014 FORM 10-K 159
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S
CONTRACTUAL MATURITIES
(In millions)
Due in
2015
2016
2017
2018
2019
2020 and later
Consumer revolving loans
Total
Total
loans
Net rentals
receivable
$
$
52,175
18,663
19,712
14,034
13,097
35,069
152,750
64,864
217,614
$
$
8,012
5,440
3,752
2,564
1,513
2,608
23,889
-
23,889
We expect actual maturities to differ from contractual maturities.
FINANCING RECEIVABLES BY PORTFOLIO AND ALLOWANCE FOR LOSSES
During the first quarter of 2014, we combined our CLL Europe and CLL Asia portfolios into CLL International and we
transferred our CLL Other portfolio to the CLL Americas portfolio. During the fourth quarter of 2014, we combined our
Consumer Non-U.S. auto portfolio into our Consumer Non-U.S. installment and revolving credit portfolio. Prior-period amounts
were reclassified to conform to the current-period presentation.
2014
2013
$
$
67,096
43,407
110,503
2,580
8,263
130
121,476
19,797
24,893
10,400
59,863
5,664
100,820
242,093
(5,075)
237,018
$
$
69,036
47,431
116,467
3,107
9,377
318
129,269
19,899
30,501
15,731
55,854
6,953
109,039
258,207
(5,178)
253,029
FINANCING RECEIVABLES
(In millions)
Commercial
CLL
Americas
International
Total CLL
Energy Financial Services
GE Capital Aviation Services (GECAS)
Other
Total Commercial
Real Estate
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Other
Total Consumer
Total financing receivables
Allowance for losses
Total financing receivables – net
160 GE 2014 FORM 10-K
F I N A N C I A L S T AT E M E N T S F I N A N C I N G R E C E I V A B L E S
ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
(In millions)
2014
Commercial
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial
Real Estate
$
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Other
Total Consumer
Total
$
2013
Commercial
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial
Real Estate
$
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Other
Total Consumer
Total
$
Balance at
January 1
Provision
charged to
operations
Other (a)
Gross
write-offs(b)
Balance at
Recoveries(b) December 31
473 $
505
978
8
17
2
1,005
192
358
650
2,823
150
3,981
5,178 $
496 $
525
1,021
9
8
3
1,041
320
480
649
2,282
172
3,583
4,944 $
$
307
159
466
30
39
-
535
(86)
256
338
2,875
75
3,544
3,993 $
$
289
445
734
(1)
9
(1)
741
28
269
647
3,006
127
4,049
4,818 $
$
(3)
(37)
(40)
(1)
-
(2)
(43)
(1)
$
(422)
(351)
(773)
(17)
(10)
-
(800)
(59)
100 $
100
200
6
-
-
206
115
(151)
(260)
19
(33)
(425)
(469) $
(207)
(787)
(3,138)
(151)
(4,283)
(5,142) $
69
458
607
60
1,194
1,515 $
(1) $
1
-
-
-
-
-
(4)
(425) $
(556)
(981)
-
-
(2)
(983)
(163)
114 $
90
204
-
-
2
206
11
10
(106)
(51)
11
(136)
(140) $
(458)
(1,093)
(2,954)
(236)
(4,741)
(5,887) $
57
553
540
76
1,226
1,443 $
455
376
831
26
46
-
903
161
325
399
3,186
101
4,011
5,075
473
505
978
8
17
2
1,005
192
358
650
2,823
150
3,981
5,178
(a) Other primarily included the 2014 reclassifications of Budapest Bank and GEMB-Nordic to held for sale, dispositions and the effects of currency exchange. GEMB-
Nordic was subsequently sold in the fourth quarter of 2014.
(b) Net write-offs (gross write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as a result of losses that are incurred subsequent to
the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.
GE 2014 FORM 10-K 161
Balance at
January 1
Provision
charged to
operations
Other(a)
Gross
write-offs (b)
Recoveries(b)
Balance at
December 31
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S
ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
(In millions)
2012
Commercial
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial
$
893 $
557
1,450
26
17
37
1,530
122 $
411
533
4
4
1
542
Real Estate
1,089
72
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Other
Total Consumer
Total
$
545
791
2,008
199
3,543
6,162 $
112
308
2,666
132
3,218
3,832 $
(a) Other primarily included transfers to held for sale and the effects of currency exchange.
(52)
(6)
(58)
-
-
(20)
(78)
(44)
8
20
(24)
18
22
(100)
$
$
(578)
(524)
(1,102)
(24)
(13)
(17)
(1,156)
(810)
(261)
(1,120)
(2,906)
(257)
(4,544)
(6,510)
$
$
$
111
87
198
3
-
2
203
13
76
650
538
80
1,344
1,560
$
496
525
1,021
9
8
3
1,041
320
480
649
2,282
172
3,583
4,944
(b) Net write-offs (gross write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as a result of losses that are incurred subsequent to
the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.
162 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P R O P E R T Y , P L AN T AN D E Q U I P M E N T
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
December 31 (Dollars in millions)
GE
Land and improvements
Buildings, structures and related equipment
Machinery and equipment
Leasehold costs and manufacturing plant under construction
GECC(b)
Land and improvements, buildings, structures and related
equipment
Equipment leased to others
Aircraft(c)
Vehicles
Railroad rolling stock
Construction and manufacturing
All other
Eliminations
Total
Depreciable
lives-new
(in years)
Original Cost
2014
Net Carrying Value
2013
2014
2013
8 (a) $
8-40
4-20
1-10
700 $
7,683
23,437
4,731
36,551
707 $
8,910
25,323
3,309
38,249
689 $
3,048
9,085
4,385
17,207
671
4,205
9,701
2,997
17,574
1-35 (a)
2,233
2,504
952
1,025
20
1-20
4-50
1-20
6-25
49,280
14,251
4,379
3,411
3,678
77,232
(462)
113,321 $
50,337
14,656
4,636
2,916
3,518
78,567
(419)
116,397 $
32,795
8,144
2,998
2,321
2,360
49,570
(390)
66,387 $
34,938
8,312
3,129
1,955
2,248
51,607
(354)
68,827
$
(a) Depreciable lives exclude land.
(b) Included $1,845 million and $1,353 million of original cost of assets leased to GE with accumulated amortization of $560 million and $342 million at December 31, 2014
and 2013, respectively.
(c) The GECAS business of GE Capital recognized impairment losses of $445 million and $732 million in 2014 and 2013, respectively. These losses are recorded in the
caption “Other costs and expenses” in the Statement of Earnings to reflect adjustments to fair value based on an evaluation of average current market values (obtained
from third parties) of similar type and age aircraft, which are adjusted for the attributes of the specific aircraft under lease.
Consolidated depreciation and amortization related to property, plant and equipment was $9,283 million, $9,762 million and
$9,192 million in 2014, 2013 and 2012, respectively. Amortization of GECC equipment leased to others was $6,245 million,
$6,696 million and $6,097 million in 2014, 2013 and 2012, respectively.
Noncancellable future rentals due from customers for equipment on operating leases at December 31, 2014, are as follows:
(In millions)
Due in
2015
2016
2017
2018
2019
2020 and later
Total
$
6,953
5,731
4,658
3,652
2,886
7,375
$ 31,255
GE 2014 FORM 10-K 163
F I N AN C I AL S T AT E M E N T S AC Q U I S I T I O N S & I N T AN G I B L E AS S E T S
NOTE 8. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
ACQUISITIONS
Upon closing an acquisition, we estimate the fair values of assets and liabilities acquired and consolidate the acquisition as
quickly as possible. Given the time it takes to obtain pertinent information to finalize the acquired company’s balance sheet,
then to adjust the acquired company’s accounting policies, procedures, and books and records to our standards, it is often
several quarters before we are able to finalize those initial fair value estimates. Accordingly, it is not uncommon for our initial
estimates to be subsequently revised.
On June 20, 2014, GE’s offer to acquire the Thermal, Renewables and Grid businesses of Alstom for approximately € 12,350
million (to be adjusted for the assumed net cash or liability at closing) was positively recommended by Alstom’s board of
directors. In addition, GE, Alstom and the French Government signed a memorandum of understanding for the formation of
three joint ventures in grid technology, renewable energy, and global nuclear and French steam power and Alstom will invest
approximately € 2,600 million in these joint ventures. In the fourth quarter of 2014, Alstom completed its review of the proposed
transaction with the works council and obtained approval from its shareholders. Also in the fourth quarter of 2014, GE and
Alstom entered into an amendment to the original agreement where GE has agreed to pay Alstom a net amount of
approximately €260 million of additional consideration at closing. In exchange for this funding, Alstom has agreed to extend
the trademark licensing of the Alstom name from 5 years to 25 years as well as other contractual amendments. The proposed
transaction continues to be subject to regulatory approvals. The transaction is targeted to close in 2015.
On June 2, 2014, we acquired Cameron’s Reciprocating Compression division for $550 million. The division provides
reciprocating compression equipment and aftermarket services for oil and gas production, gas processing, gas distribution and
independent power industries. The division is included in our Oil & Gas segment. The preliminary purchase price allocation
resulted in goodwill of approximately $250 million and amortizable intangible assets of approximately $100 million. The
allocation of the purchase price will be finalized upon completion of post-closing procedures.
In the first quarter of 2014, we acquired several businesses in our Healthcare segment. On February 12, 2014, we acquired
API Healthcare (API) for $340 million in cash. API is a healthcare workforce management software and analytics solutions
provider. The preliminary purchase price allocation resulted in goodwill of approximately $280 million and amortizable
intangible assets of approximately $125 million. On March 21, 2014, we acquired certain Thermo Fisher Scientific Inc. life-
science businesses for $1,065 million in cash. The primary business acquired, Hyclone, is a leading manufacturer of products
used to support biopharmaceutical research and production. The preliminary purchase price allocation resulted in goodwill of
approximately $700 million and amortizable intangible assets of approximately $320 million. The allocation of purchase prices
will be finalized upon completion of post-closing procedures.
In August 2013, we acquired the aviation business of Avio S.p.A. (Avio) for $4,449 million in cash. We recorded a pre-tax
acquisition-related charge of $96 million related to the effective settlement of Avio’s pre-existing contractual relationships with
GE. Avio is a manufacturer of aviation propulsion components and systems and is included in our Aviation segment. The
purchase price allocation resulted in goodwill of $3,230 million and amortizable intangible assets of $1,817 million.
In July 2013, we acquired Lufkin Industries, Inc. (Lufkin) for $3,309 million in cash. Lufkin is a leading provider of artificial lift
technologies for the oil and gas industry and a manufacturer of industrial gears and is included in our Oil & Gas segment. The
purchase price allocation resulted in goodwill of $2,120 million and amortizable intangible assets of $997 million.
164 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S AC Q U I S I T I O N S & I N T AN G I B L E AS S E T S
GOODWILL
CHANGES IN GOODWILL BALANCES
(cid:3)
(cid:3)
(cid:3)
(In millions)
2014
Balance at
January 1
Acquisitions
Dispositions,
currency
exchange
and other
Balance at
December 31
Balance at
January 1
Acquisitions
$
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
GE Capital
Corporate
Total
$
8,822 $
10,516
4,748
9,103
16,643
1,012
606
26,195
3
77,648 $
21 $
276
-
-
1,004
2
-
-
31
1,334 $
(89) $
8,754 $
(220)
(178)
(151)
(115)
(127)
(380)
(1,169)
-
10,572
4,570
8,952
17,532
887
226
25,026
34
8,821 $
8,365
4,610
5,975
16,762
999
611
26,971
-
(2,429) $
76,553 $
73,114 $
-
2,217
7
3,043
45
-
-
17
4
5,333
$
$
2013
Dispositions,
currency
exchange
and other
Balance at
December 31
1
(66)
131
85
(164)
13
(5)
(793)
(1)
(799)
$
$
8,822
10,516
4,748
9,103
16,643
1,012
606
26,195
3
77,648
Goodwill balances decreased by $(1,095) million in 2014, primarily as a result of currency exchange effects of a stronger U.S.
dollar, the reclassification of goodwill associated with Appliances and Budapest Bank to assets of businesses held for sale,
and the sale of GEMB-Nordic and other dispositions, partially offset by acquisitions at Healthcare and Oil & Gas.
Goodwill balances increased $4,534 million in 2013, primarily as a result of the acquisitions of Avio and Lufkin, partially offset
by dispositions.
We test goodwill for impairment annually in the third quarter of each year using data as of July 1 of that year. The impairment
test consists of two steps: in step one, the carrying value of the reporting unit is compared with its fair value; in step two, which
is applied when the carrying value is more than its fair value, the amount of goodwill impairment, if any, is derived by deducting
the fair value of the reporting unit’s assets and liabilities from the fair value of its equity, and comparing that amount with the
carrying amount of goodwill. We determined fair values for each of the reporting units using the market approach, when
available and appropriate, or the income approach, or a combination of both. We assess the valuation methodology based
upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are
used, the results are weighted appropriately.
Valuations using the market approach are derived from metrics of publicly traded companies or historically completed
transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the
reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market
approach is limited to reporting units for which there are publicly traded companies that have the characteristics similar to our
businesses.
Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at
an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-
term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ
from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing
published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that
are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed
forecasts. Discount rates used in our reporting unit valuations ranged from 9.0% to 16.0%.
GE 2014 FORM 10-K 165
F I N AN C I AL S T AT E M E N T S AC Q U I S I T I O N S & I N T AN G I B L E AS S E T S
During the third quarter of 2014, we performed our annual impairment test of goodwill for all of our reporting units. Based on
the results of our step one testing, the fair values of each of the GE reporting units exceeded their carrying values; therefore,
the second step of the impairment test was not required to be performed for any of our reporting units and no goodwill
impairment was recognized.
While all of our reporting units passed step one of our annual impairment testing, we identified one reporting unit for which the
fair value was not substantially in excess of its carrying value. Within our Energy Management operating segment, the Power
Conversion reporting unit was determined to have a fair value in excess of its carrying value by approximately 10%. The
goodwill associated with the Power Conversion reporting unit was $1.5 billion at December 31, 2014, representing
approximately 2% of our total goodwill. While the goodwill of the reporting unit is not currently impaired, there could be an
impairment in the future as a result of changes in certain estimates and assumptions. For example, the reporting unit’s fair
value could be adversely affected and result in an impairment of goodwill if actual cash flows are below estimated cash flows,
the estimated cash flows are discounted at a higher risk-adjusted rate or market multiples decrease.
As of December 31, 2014, we believe that the goodwill is recoverable for all of the reporting units; however, there can be no
assurances that the goodwill will not be impaired in future periods.
In 2013, while the Real Estate reporting unit’s book value was within the range of its fair value, we further substantiated our
Real Estate goodwill balance by performing the second step analysis in which the implied fair value of goodwill exceeded its
carrying value by approximately $3.7 billion. In the current year, it was determined that the second step was not required, as
the results of step one indicated that the fair value of the Real Estate reporting unit exceeded its book value.
Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number
of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could
change in future periods.
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS - NET
(In millions)
Intangible assets subject to amortization
Indefinite-lived intangible assets(a)
Total
(a)
Indefinite-lived intangible assets principally comprise trademarks and in-process research and development.
2014
$
$
14,026 $
130
14,156 $
2013
14,150
160
14,310
166 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S AC Q U I S I T I O N S & I N T AN G I B L E AS S E T S
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION
(cid:3)
(cid:3)
December 31 (In millions)
Customer-related
Patents and technology
Capitalized software
Trademarks
Lease valuations
Present value of future profits(a)
All other
Total
Gross
carrying
amount
8,484 $
6,772
8,269
1,159
485
614
503
26,286 $
2014
Accumulated
amortization
(2,617) $
(2,977)
(4,973)
(271)
(377)
(614)
(431)
(12,260) $
$
$
Gross
carrying
amount
7,938 $
6,602
8,256
1,356
703
574
632
26,061 $
2013
Accumulated
amortization
(2,312) $
(2,621)
(5,252)
(295)
(498)
(574)
(359)
(11,911) $
Net
5,626
3,981
3,004
1,061
205
-
273
14,150
Net
5,867 $
3,795
3,296
888
108
-
72
14,026 $
(a) Balances at December 31, 2014 and 2013 reflect adjustments of $293 million and $322 million, respectively, to the present value of future profits in our run-off insurance
operation to reflect the effects that would have been recognized had the related unrealized investment securities holding gains and losses actually been realized.
During 2014, we recorded additions to intangible assets subject to amortization of $2,090 million. The components of finite-
lived intangible assets acquired during 2014 and their respective weighted average amortizable period follow.
COMPONENTS OF FINITE-LIVED INTANGIBLE ASSETS ACQUIRED DURING 2014
(cid:3)
(cid:3)
(In millions)
Customer-related
Patents and technology
Capitalized software
Trademarks
Lease valuations
All other
Gross
carrying value
Weighted-average
amortizable period
(in years)
$
731
178
1,123
52
1
6
14.1
10.8
5.7
17.2
7.0
2.5
Consolidated amortization expense related to intangible assets subject to amortization was $1,789 million, $1,711 million and
$1,612 million in 2014, 2013 and 2012, respectively. Estimated annual pre-tax amortization for intangible assets over the next
five calendar years follows.
ESTIMATED 5 YEAR CONSOLIDATED AMORTIZATION
(In millions)
2015
2016
2017
2018
2019
Estimated annual pre-tax amortization
$
1,725 $
1,566 $
1,414 $
1,249 $
1,077
GE 2014 FORM 10-K 167
F I N AN C I AL S T AT E M E N T S AL L O T H E R AS S E T S
NOTE 9. ALL OTHER ASSETS
December 31 (in millions)
GE
Investments
Associated companies
Other
Contract costs and estimated earnings(a)
Long-term receivables, including notes
Derivative instruments
Other
GECC
Investments
Associated companies
Real estate(b)(c)
Assets held for sale(d)
Cost method(c)
Other
Derivative instruments
Advances to suppliers
Deferred borrowing costs
Deferred acquisition costs(e)
Other
Eliminations
Total
2014
2013
3,384
613
3,997
13,990
766
783
5,144
24,680
16,747
10,891
5,549
566
1,621
35,374
1,794
1,406
849
17
4,435
43,875
(330)
68,225
$
$
3,937
626
4,563
12,522
993
623
5,007
23,708
17,348
16,163
2,571
1,462
930
38,474
1,117
2,328
867
29
4,551
47,366
(266)
70,808
$
$
(a) Contract costs and estimated earnings reflect revenues earned in excess of billings on our long-term contracts to construct technically complex equipment (such as
power generation, aircraft engines and aeroderivative units) and long-term product maintenance or extended warranty arrangements. These amounts are presented net
of related billings in excess of revenues relating to long-term product maintenance or extended warranty arrangements of $2,329 million and $1,842 million at December
31, 2014 and 2013, respectively.
(b) GECC investments in real estate consisted principally of two categories: real estate held for investment and equity method investments. Both categories contained a
wide range of properties including the following at December 31, 2014: office buildings (57%), retail facilities (9%), apartment buildings (5%), industrial properties (3%),
franchise properties (3%) and other (23%). At December 31, 2014, investments were located in the Americas (46%), Europe (37%) and Asia (17%).
(c) The fair value of and unrealized loss on cost method investments in a continuous loss position for less than 12 months at December 31, 2014, were $5 million and $1
million, respectively. The fair value of and unrealized loss on cost method investments in a continuous loss position for 12 months or more at December 31, 2014, were
an insignificant amount and $1 million, respectively. The fair value of and unrealized loss on cost method investments in a continuous loss position for less than 12
months at December 31, 2013, were $17 million and an insignificant amount, respectively. There were no cost method investments in a continuous loss position for 12
months or more at December 31, 2013.
(d) Assets were classified as held for sale on the date a decision was made to dispose of them through sale or other means. At December 31, 2014 and 2013, such assets
consisted primarily of loans, aircraft, equipment and real estate properties, and were accounted for at the lower of carrying amount or estimated fair value less costs to
sell. These amounts are net of valuation allowances of $142 million and $127 million at December 31, 2014 and 2013, respectively. Assets held for sale increased
$2,978 million from December 31, 2013 as a result of net increases in held for sale loans and aircraft, partially offset by net decreases in held for sale real estate,
primarily due to sales.
(e) Balances at December 31, 2014 and 2013 reflect adjustments of $624 million and $700 million, respectively, to deferred acquisition costs in our run-off insurance
operations to reflect the effects that would have been recognized had the related unrealized investment securities holding gains and losses actually been realized.
168 GE 2014 FORM 10-K
F I N A N C I A L S T AT E M E N T S B O R R O W I N G S A N D B A N K D E P O S I T S
NOTE 10. BORROWINGS AND BANK DEPOSITS
December 31 (Dollars in millions)
2014
2013
Short-term borrowings
GE
Commercial paper
Payable to banks
Current portion of long-term borrowings
Other
Total GE short-term borrowings
GECC
Commercial paper
U.S.
Non-U.S.
Current portion of long-term borrowings(b)(c)(f)
GE Interest Plus notes(d)
Other(c)
Total GECC short-term borrowings
Eliminations
Total short-term borrowings
Long-term borrowings
GE
Senior notes
Payable to banks
Other
Total GE long-term borrowings
GECC
Senior unsecured notes(b)(e)
Subordinated notes(f)
Subordinated debentures(g)
Other(c)(h)
Total GECC long-term borrowings
Eliminations
Total long-term borrowings
Non-recourse borrowings of
consolidated securitization entities(i)
Bank deposits(j)
Total borrowings and bank deposits
$
Amount
500
343
2,068
961
3,872
22,019
2,993
37,989
5,467
312
68,780
(863)
71,789
$
Maturities
Amount
2017-2044 $
2016-2019
2016-2055
2021-2037
2066-2067
11,945
5
518
12,468
162,629
4,804
7,085
13,473
187,991
(45)
200,414
$
Average
Rate(a)
$
0.10 %
1.32
1.05
0.19
0.25
2.54
1.01
Average
Rate(a)
4.25 %
0.89
2.72
3.36
5.88
Average
Rate(a)
- %
3.38
5.65
0.18
0.33
2.70
1.11
Average
Rate(a)
3.63 %
1.10
2.97
3.93
5.64
1.05 %
Amount
-
346
70
1,425
1,841
24,877
4,168
39,215
8,699
339
77,298
(1,249)
77,890
Amount
10,968
10
537
11,515
186,433
4,821
7,462
11,563
210,279
(129)
221,665
30,124
53,361
383,040
$
$
$
$
$
$
2015-2019 $
$
$
29,938
62,839
364,980
1.04 %
(a) Based on year-end balances and year-end local currency effective interest rates, including the effects from hedging.
(b) Included $439 million and $481 million of obligations to holders of GICs at December 31, 2014 and 2013, respectively. These obligations included conditions under
which certain GIC holders could require immediate repayment of their investment should the long-term credit ratings of GECC fall below AA-/Aa3. The remaining
outstanding GICs will continue to be subject to their scheduled maturities and individual terms, which may include provisions permitting redemption upon a downgrade of
one or more of GECC’s ratings, among other things.
(c) Included $6,017 million and $9,468 million of funding secured by real estate, aircraft and other collateral at December 31, 2014 and 2013, respectively, of which $2,312
million and $2,868 million is non-recourse to GECC at December 31, 2014 and 2013, respectively.
(d) Entirely variable denomination floating-rate demand notes.
(e) Included $700 million of debt at both December 31, 2014 and 2013 raised by a funding entity related to Penske Truck Leasing Co., L.P. (PTL). GECC, as co-issuer and
co-guarantor of the debt, reports this amount as borrowings in its financial statements. GECC has been indemnified by the other limited partners of PTL for their
proportionate share of the debt obligation. Also included $3,593 million related to Synchrony Financial. See Note 1.
Included $300 million of subordinated notes guaranteed by GE at both December 31, 2014 and 2013.
(f)
(g) Subordinated debentures receive rating agency equity credit.
(h) Included $8,245 million related to Synchrony Financial. See Note 1.
(i)
(j)
Included $7,442 million and $9,047 million of current portion of long-term borrowings at December 31, 2014 and 2013, respectively. See Note 23.
Included $10,258 million and $13,614 million of deposits in non-U.S. banks at December 31, 2014 and 2013, respectively, and $22,848 million and $18,275 million of
certificates of deposits with maturities greater than one year at December 31, 2014 and 2013, respectively.
GE 2014 FORM 10-K 169
F I N A N C I A L S T AT E M E N T S
I N V E S T M E N T C O N T R A C T S & I N S U R A N C E
In the first quarter of 2014, GE issued $3,000 million senior unsecured debt, composed of $750 million aggregate principal
amount of 3.375% Notes due 2024 and $2,250 million aggregate principal amount of 4.500% Notes due 2044.
Additional information about borrowings and associated swaps can be found in Note 22.
Liquidity is affected by debt maturities and our ability to repay or refinance such debt. Long-term debt maturities over the next
five years follow.
(In millions)
GE
GECC
2015
2016
2017
2018
2019
$
2,068
37,989 (a)
$
194
31,707
$
4,052
27,041
$
28
19,011
$
29
21,956
(a) Fixed and floating rate notes of $474 million contain put options with exercise dates in 2015, and which have final maturity beyond 2019.
Committed credit lines totaling $44.9 billion had been extended to us by 50 banks at year-end 2014. GECC can borrow up to
$44.4 billion under these credit lines. GE can borrow up to $14.2 billion under certain of these credit lines. The GECC lines
include $25.1 billion of revolving credit agreements under which we can borrow funds for periods exceeding one year.
Additionally, $19.3 billion are 364-day lines that contain a term-out feature that allows us to extend the borrowings for two
years from the date on which such borrowings would otherwise be due.
NOTE 11. INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE
ANNUITY BENEFITS
Investment contracts, insurance liabilities and insurance annuity benefits comprise mainly obligations to annuitants and
policyholders in our run-off insurance operations and holders of guaranteed investment contracts.
December 31 (In millions)
Investment contracts
Guaranteed investment contracts
Total investment contracts
Life insurance benefits(a)
Other(b)
Eliminations
Total
2014
2,970
1,000
3,970
20,688
3,369
28,027
(449)
27,578
$
$
2013
3,144
1,471
4,615
18,959
3,405
26,979
(435)
26,544
$
$
(a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 3.0% to 8.5% in both 2014 and 2013.
(b) Substantially all unpaid claims and claims adjustment expenses and unearned premiums.
When insurance affiliates cede insurance risk to third parties, such as reinsurers, they are not relieved of their primary
obligation to policyholders. When losses on ceded risks give rise to claims for recovery, we establish allowances for probable
losses on such receivables from reinsurers as required. Reinsurance recoverables are included in the caption “Other GECC
receivables" on our Statement of Financial Position, and amounted to $1,759 million and $1,685 million at December 31, 2014
and 2013, respectively.
We recognize reinsurance recoveries as a reduction of the Statement of Earnings caption “Investment contracts, insurance
losses and insurance annuity benefits.” Reinsurance recoveries were $240 million, $250 million and $234 million in December
31, 2014, 2013 and 2012, respectively.
170 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
NOTE 12. POSTRETIREMENT BENEFIT PLANS
PENSION BENEFITS
We sponsor a number of pension plans. Principal pension plans, together with affiliate and certain other pension plans (other
pension plans) detailed in this note, represent about 99% of our total pension assets. We use a December 31 measurement
date for our plans.
Principal Pension Plans are the GE Pension Plan and the GE Supplementary Pension Plan.
The GE Pension Plan provides benefits to certain U.S. employees based on the greater of a formula recognizing career
earnings or a formula recognizing length of service and final average earnings. Certain benefit provisions are subject to
collective bargaining. Salaried employees who commence service on or after January 1, 2011 and any employee who
commences service on or after January 1, 2012 will not be eligible to participate in the GE Pension Plan, but will participate in
a defined contribution retirement program.
The GE Supplementary Pension Plan is an unfunded plan providing supplementary retirement benefits primarily to higher-
level, longer-service U.S. employees.
Other Pension Plans in 2014 included 40 U.S. and non-U.S. pension plans with pension assets or obligations greater than
$50 million. These defined benefit plans generally provide benefits to employees based on formulas recognizing length of
service and earnings.
PENSION PLAN PARTICIPANTS
(cid:3)
(cid:3)
December 31, 2014
Active employees
Vested former employees
Retirees and beneficiaries
Total
COST OF PENSION PLANS
Total
117,000
225,000
267,000
609,000
Principal(cid:3)
pension(cid:3)
plans(cid:3)
86,000
179,000
232,000
497,000
Other
pension
plans
31,000
46,000
35,000
112,000
(In millions)
2014
2013
2012
2014
2013
2012
2014
2013
2012
Total
Principal pension plans
Other pension plans
Service cost for benefits earned
Prior service cost amortization
Expected return on plan assets
Interest cost on benefit obligations
Net actuarial loss amortization
Curtailment loss
Pension plans cost
$ 1,608 $ 1,970 $ 1,779 $ 1,205
214
(3,190)
2,745
2,565
253
(4,163)
2,983
4,007
-
$ 4,016 $ 5,050 $ 4,366 $ 3,604
287
(4,394)
2,993
3,701
-
220
(3,979)
3,332
2,770
65
$ 1,535 $ 1,387 $
279
(3,768)
2,479
3,421
-
246
(3,500)
2,460
3,664
-
$ 4,405 $ 3,798 $
65 (a)
(a) Loss resulting from our agreement with Electrolux to sell the GE Appliances business.
(cid:3)
403 $
6
(789)
587
205
-
412 $
435 $
7
(663)
523
343
-
645 $
392
8
(626)
514
280
-
568
GE 2014 FORM 10-K 171
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
ACTUARIAL ASSUMPTIONS
The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the pension costs for the
subsequent year.
December 31
Discount rate
Compensation increases
Expected return on assets
Principal pension plans
2012
2013
4.85 %
4.00
7.50
3.96 %
3.90
8.00
2014
4.02 %
4.10
7.50
2011
4.21 %
3.75
8.00
Other pension plans (weighted average)
2014
2012
2013
2011
3.53 %
3.60
6.95
4.39 %
3.76
6.92
3.92 %
3.30
6.82
4.42 %
4.31
7.09
(cid:3)
To determine the expected long-term rate of return on pension plan assets, we consider current and target asset allocations,
as well as historical and expected returns on various categories of plan assets. In developing future return expectations for our
principal pension plans' assets, we formulate views on the future economic environment, both in the U.S. and abroad. We
evaluate general market trends and historical relationships among a number of key variables that impact asset class returns
such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also
take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio
results given current and target allocations. Based on our analysis of future expectations of asset performance, past return
results, and our current and target asset allocations, we have assumed a 7.5% long-term expected return on those assets for
cost recognition in 2015. For the principal pension plans, we apply our expected rate of return to a market-related value of
assets, which stabilizes variability in the amounts to which we apply that expected return.
The Society of Actuaries recently issued new mortality tables projecting longer life expectancies that will result in higher
postretirement benefit obligations for U.S. companies. We updated our mortality assumptions at December 31, 2014. The new
mortality assumptions increased our principal pension plans’ benefit obligations by $3,953 million at December 31, 2014.
We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over
a period no longer than the average future service of employees.
FUNDING POLICY
The funding policy for the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements as set
forth in employee benefit and tax laws plus such additional amounts as we may determine to be appropriate. We did not make
contributions to the GE Pension Plan in 2014 and 2013. The ERISA minimum funding requirements do not require a
contribution in 2015. We expect to pay approximately $265 million for benefit payments under our GE Supplementary Pension
Plan and administrative expenses of our principal pension plans and expect to contribute approximately $540 million to other
pension plans in 2015. In 2014, comparative amounts were $236 million and $726 million, respectively.
BENEFIT OBLIGATIONS
Benefit obligations are described in the following tables. Accumulated and projected benefit obligations (ABO and PBO)
represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits
earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected
future compensation.
172 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
PROJECTED BENEFIT OBLIGATION
(In millions)
Balance at January 1
Service cost for benefits earned
Interest cost on benefit obligations
Participant contributions
Plan amendments
Actuarial loss (gain)
Benefits paid
Acquisitions (dispositions) / other - net
Exchange rate adjustments
Balance at December 31(c)
Principal pension plans
Other pension plans
2014
2013
2014
2013
$
$
58,113
1,205
2,745
153
-
11,718 (a)
(3,199)
-
-
70,735
$
$
63,502
1,535
2,460
156
-
(6,406)(b)
(3,134)
-
-
58,113
$
$
13,535
403
587
9
(29)
2,170 (b)
(493)
48
(641)
15,589
$
$
13,584
435
523
14
11
(575)(b)
(477)
46
(26)
13,535
(a)
(b)
(c)
Principally associated with discount rate and mortality assumption changes.
Principally associated with discount rate changes.
The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was $6,632 million and $5,162 million at year-end 2014 and 2013, respectively.
ACCUMULATED BENEFIT OBLIGATION
December 31 (In millions)
GE Pension Plan
GE Supplementary Pension Plan
Other pension plans
PLANS WITH ASSETS LESS THAN ABO
December 31 (In millions)
Funded plans with assets less than ABO
Plan assets
Accumulated benefit obligations
Projected benefit obligations
Unfunded plans(a)
Accumulated benefit obligations
Projected benefit obligations
(a) Primarily related to the GE Supplementary Pension Plan.
(cid:3)
$
$
$
$
2014
61,631
5,070
14,790
2014
53,126
67,676
70,354
6,719
8,342
2013
50,967
3,946
12,629
2013
57,430
60,715
63,532
5,243
6,512
GE 2014 FORM 10-K 173
F I N A N C I A L S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L A N S
PLAN ASSETS
The fair value of the classes of the pension plans' investments is presented below. The inputs and valuation techniques used
to measure the fair value of the assets are consistently applied and described in Note 1.
FAIR VALUE OF PLAN ASSETS
(In millions)
Balance at January 1
Actual gain on plan assets
Employer contributions
Participant contributions
Benefits paid
Acquisitions (dispositions) / other - net
Exchange rate adjustments
Balance at December 31
ASSET ALLOCATION
Equity securities(a)
Debt securities (including cash equivalents)
Private equities
Real estate
Other investments(d)
Principal pension plans
Other pension plans
2014
2013
2014
2013
$
$
48,297
2,793
236
153
(3,199)
-
-
48,280
$
$
44,738
6,312
225
156
(3,134)
-
-
48,297
$
$
11,059
1,537
726
9
(493)
-
(452)
12,386
$
$
9,702
1,212
673
14
(477)
(31)
(34)
11,059
Principal pension plans
2014
Target
allocation
17 - 57% (b)
13 - 53
8 - 18
2 - 12
3 - 13
2014
Actual
allocation
45% (c)
31
11
7
6
Other pension plans
(weighted average)
2014
Target
allocation
2014
Actual
allocation
39%
35
7
9
10
48%
38
2
6
6
(a) Includes investment funds that primarily hold this type of asset.
(b) Target equally divided between U.S. equity securities and non-U.S. equity securities.
(c) Actual allocations were 25% for U.S. equity securities and 20% for non-U.S. equity securities.
(d) Substantially all represented hedge fund investments.
Plan fiduciaries of the GE Pension Plan set investment policies and strategies for the GE Pension Trust and oversee its
investment allocation, which includes selecting investment managers, commissioning periodic asset-liability studies and
setting long-term strategic targets. Long-term strategic investment objectives take into consideration a number of factors,
including the funded status of the plan, a balance between risk and return and the plan’s liquidity needs. Target allocation
percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations,
and occasionally plan fiduciaries will approve allocations above or below a target range.
Plan fiduciaries monitor the GE Pension Plan’s liquidity position in order to meet the near-term benefit payment and other cash
needs. The GE Pension Plan holds short-term debt securities to meet its liquidity needs.
GE Pension Trust assets are invested subject to the following additional guidelines:
(cid:120) Short-term securities purchased must generally be rated A-1/P-1 or better, except for 15% of such securities that may be
rated A-2/P-2 and other short-term securities as may be approved by the plan fiduciaries.
(cid:120) Real estate investments may not exceed 25% of total assets.
(cid:120)
Investments in restricted securities (excluding real estate investments) that are not freely tradable may not exceed 30% of
total assets (actual was 17% of trust assets at December 31, 2014).
174 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
According to statute, the aggregate holdings of all qualifying employer securities (e.g., GE common stock) and qualifying
employer real property may not exceed 10% of the fair value of trust assets at the time of purchase. GE securities represented
3.8% and 4.5% of trust assets at year-end 2014 and 2013, respectively.
The GE Pension Plan has a broadly diversified portfolio of investments in equities, fixed income, private equities, real estate
and hedge funds; these investments are both U.S. and non-U.S. in nature. As of December 31, 2014, U.S. government direct
and indirect obligations represented 16% of total GE Pension Plan assets. No other sector concentration of assets exceeded
15% of total GE Pension Plan assets.
The following tables present GE Pension Plan investments measured at fair value.
(In millions)
December 31, 2014
Equity securities
U.S. equity securities(a)
Non-U.S. equity securities(a)
Debt securities
Fixed income and cash investment funds
U.S. corporate(b)
Residential mortgage-backed
Non-U.S. Corporate
U.S. government and federal agency
Other debt securities(c)
Private equities(a)
Real estate(a)
Other investments(d)
Total investments
Other(e)
Total assets
December 31, 2013
Equity securities
U.S. equity securities(a)
Non-U.S. equity securities(a)
Debt securities
Fixed income and cash investment funds
U.S. corporate(b)
Residential mortgage-backed
Non-U.S. Corporate
U.S. government and federal agency
Other debt securities(c)
Private equities(a)
Real estate(a)
Other investments(d)
Total investments
Other(e)
Total assets
Level 1
Level 2
Level 3
Total
11,493
7,021
245
-
-
-
-
-
-
-
-
18,759
11,067
7,832
-
-
-
-
-
-
-
-
-
18,899
$
1,463
2,132
$
$
-
-
4,255
5,153
1,118
1,097
2,468
1,042
32
-
70
18,830
1,568
1,292
2,078
4,555
1,093
1,269
5,253
1,048
-
-
169
18,325
$
$
$
-
2
1
3
-
-
5,217
3,129
2,248
10,600
-
-
-
-
-
-
-
-
6,269
3,354
1,622
11,245
$
$
$
$
$
$
$
$
12,956
9,153
4,500
5,155
1,119
1,100
2,468
1,042
5,249
3,129
2,318
48,189
91
48,280
12,635
9,124
2,078
4,555
1,093
1,269
5,253
1,048
6,269
3,354
1,791
48,469
(172)
48,297
$
$
$
$
Included direct investments and investment funds.
(a)
(b) Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
(c) Primarily represented investments in state and municipal debt, non-U.S. government bonds and commercial mortgage-backed securities.
(d) Substantially all represented hedge fund investments.
(e) Primarily represented net unsettled transactions related investment activity and cash balances.
GE 2014 FORM 10-K 175
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
The following tables present the changes in Level 3 investments for the GE Pension Plan.
CHANGES IN LEVEL 3 INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2014
(cid:3)
(cid:3)
(cid:3)
(In millions)
Debt securities
Private equities
Real estate
Other investments
January 1,
2014
Net realized
gains (losses)(a)
Net unrealized
gains (losses) (a)
$
$
- $
6,269
3,354
1,622
11,245 $
(9)
592
36
47
666
$
$
11
(54)
334
86
377
$
$
Purchases,
issuances
and
settlements
4 $
(1,565)
(595)
194
(1,962) $
Transfers
in and/or
out of
Level 3(b)
December 31,
2014
-
(25)
-
299
274
$
$
6
5,217
3,129
2,248
10,600
(a) The realized/unrealized gains (losses) include $899 million related to assets still held and $144 million for assets no longer held.
(b) Transfers in and out of Level 3 are considered to occur at the beginning of the period.
CHANGES IN LEVEL 3 INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
(cid:3)
(cid:3)
(cid:3)
(In millions)
Debt securities
Private equities
Real estate
Other investments
January 1,
2013
Net realized
gains (losses)(a)
Net unrealized
gains (losses) (a)
Purchases,
issuances
and
settlements
Transfers
in and/or
out of
Level 3 (b)
December 31,
2013
$
$
75 $
6,878
3,356
1,694
12,003 $
(7)
525
23
(1)
540
$
$
-
588
330
200
1,118
$
$
(65) $
(1,675)
(355)
(77)
(2,172) $
(3)
(47)
-
(194)
(244)
$
$
-
6,269
3,354
1,622
11,245
(a) The realized/unrealized gains (losses) include $1,616 million related to assets still held and $42 million for assets no longer held.
(b) Transfers in and out of Level 3 are considered to occur at the beginning of the period.
Other pension plans’ assets were $12,386 million and $11,059 million at December 31, 2014 and 2013, respectively. Public
equity and debt securities amounting to $10,578 million and $9,781 million represented approximately 86% and 89% of total
investments at December 31, 2014 and 2013, respectively. The plans’ investments were classified as 9% Level 1, 77% Level
2 and 14% Level 3 at December 31, 2014. The plans’ investments were classified as 11% Level 1, 78% Level 2 and 11%
Level 3 at December 31, 2013. The changes in Level 3 investments between the years ended December 31, 2014 and 2013
were primarily due to investments in hedge funds and real estate. Other changes in Level 3 investments were insignificant for
the years ended December 31, 2014 and 2013.
176 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
PENSION ASSET (LIABILITY)
December 31 (In millions)
Funded status(a)(b)
Pension asset (liability) recorded in the
Statement of Financial Position
Pension asset
Pension liabilities
Due within one year(c)
Due after one year
Net amount recognized
Amounts recorded in shareowners’
equity (unamortized)
Prior service cost (credit)
Net actuarial loss
Total
Principal pension plans
Other pension plans
2014
(22,455)
-
(190)
(22,265)
(22,455)
881
21,105
21,986
$
$
$
$
$
$
$
$
$
$
2013
(9,816)
-
(170)
(9,646)
(9,816)
1,160
11,555
12,715
$
$
$
$
$
2014
(3,203)
295
(72)
(3,426)
(3,203)
(23)
3,533
3,510
$
$
$
$
$
2013
(2,476)
325
(67)
(2,734)
(2,476)
9
2,459
2,468
(a) Fair value of assets less PBO, as shown in the preceding tables.
(b) The GE Pension Plan was underfunded by $15.8 billion and $4.7 billion at December 31, 2014 and 2013, respectively.
(c) For principal pension plans, represents the GE Supplementary Pension Plan liability.
In 2015, we estimate that we will amortize $210 million of prior service cost and $3,300 million of net actuarial loss for the
principal pension plans from shareowners’ equity into pension cost. For other pension plans, the estimated prior service cost
and net actuarial loss to be amortized in 2015 will be $5 million and $305 million, respectively. Comparable amortized amounts
in 2014, respectively, were $214 million and $2,565 million for the principal pension plans and $6 million and $205 million for
other pension plans.
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions)
2015
2016
2017
2018
2019
Principal pension plans
Other pension plans
$
$
3,225 $
505 $
3,300 $
510 $
3,380 $
520 $
3,465 $
530 $
3,560 $
540 $
2020 -
2024
19,430
2,925
RETIREE HEALTH AND LIFE BENEFITS
We sponsor a number of retiree health and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans
are discussed below; other such plans are not significant individually or in the aggregate. We use a December 31
measurement date for our plans.
Principal Retiree Benefit Plans provide health and life insurance benefits to eligible participants and these participants share
in the cost of healthcare benefits. These plans cover approximately 193,000 retirees and dependents. In 2012, we amended
our principal retiree benefit plans such that, effective January 1, 2015, our post-65 retiree health plans will be closed to certain
salaried and retired salaried employees who are not enrolled in the plans as of that date, and we will no longer offer company-
provided life insurance in retirement for certain salaried employees who retire after that date. In 2014, we amended our post-
65 retiree health plans for certain former salaried employees and eligible dependents. Effective January 1, 2015, the Company
will provide eligible participants with a Retiree Reimbursement Account to help pay for coverage purchased through a private
exchange instead of offering our current post-65 retiree health plans.
GE 2014 FORM 10-K 177
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
COST OF PRINCIPAL RETIREE BENEFIT PLANS
(In millions)
Service cost for benefits earned
Prior service cost amortization
Expected return on plan assets
Interest cost on benefit obligations
Net actuarial loss (gain) amortization
Net curtailment/settlement loss (gain)
Retiree benefit plans cost
(a) Loss resulting from our agreement with Electrolux to sell the GE Appliances business.
ACTUARIAL ASSUMPTIONS
$
2014
164
353
(50)
424
(150)
48 (a)
789
$
$
$
2013
229
393
(60)
410
(45)
-
927
$
$
2012
219
518
(73)
491
32
(101)
1,086
The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the retiree benefit plan
costs for the subsequent year.
December 31
Discount rate
Compensation increases
Expected return on assets
Initial healthcare trend rate(b)
2014
3.89 %
4.10
7.00
6.00
2013
4.61 %(a)
4.00
7.00
6.00
2012
3.74 %(a)
3.90
7.00
6.50
2011
4.09 %(a)
3.75
7.00
7.00
(a) Weighted average discount rates of 4.47%, 3.77%, and 3.94% were used for determination of costs in 2014, 2013 and 2012, respectively.
(b) For 2014, ultimately declining to 5% for 2030 and thereafter.
To determine the expected long-term rate of return on retiree life plan assets, we consider current and target asset allocations,
historical and expected returns on various categories of plan assets, as well as expected benefit payments and resulting asset
levels. In developing future return expectations for retiree benefit plan assets, we formulate views on the future economic
environment, both in the U.S. and abroad. We evaluate general market trends and historical relationships among a number of
key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using
both internal and external sources. We also take into account expected volatility by asset class and diversification across
classes to determine expected overall portfolio results given current and target allocations. Based on our analysis of future
expectations of asset performance, past return results, our current and target asset allocations as well as a shorter time
horizon for retiree life plan assets, we have assumed a 7.0% long-term expected return on those assets for cost recognition in
2015. We apply our expected rate of return to a market-related value of assets, which stabilizes variability in the amounts to
which we apply that expected return.
The Society of Actuaries recently issued new mortality tables projecting longer life expectancies that will result in higher
postretirement obligations for U.S. companies. We updated our mortality assumptions at December 31, 2014. The new
mortality assumptions increased our principal retiree benefit plans’ benefit obligations by $612 million at December 31, 2014.
We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over
a period no longer than the average future service of employees.
FUNDING POLICY
We fund retiree health benefits on a pay-as-you-go basis. We expect to contribute approximately $540 million in 2015 to fund
such benefits. We fund the retiree life insurance trust at our discretion.
178 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
Changes in the accumulated postretirement benefit obligation for retiree benefit plans follow.
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION (APBO)
(In millions)
Balance at January 1
Service cost for benefits earned
Interest cost on benefit obligations
Participant contributions
Plan amendments
Actuarial loss (gain)
Benefits paid
Balance at December 31(c)
2014
9,913
164
424
52
(586)
1,440 (a)
(704)
10,703
$
$
2013
11,804
229
410
52
-
(1,836)(b)
(746)
9,913
$
$
(a) Primarily associated with discount rate and mortality assumption changes.
(b) Primarily associated with discount rate change and lower costs from new healthcare supplier contracts.
(c) The APBO for the retiree health plans was $8,445 million and $7,626 million at year-end 2014 and 2013, respectively.
A one percentage point change in the assumed healthcare cost trend rate would have the following effects.
(cid:3)
(In millions)
APBO at December 31, 2014
Service and interest cost in 2014
(cid:3)
PLAN ASSETS
$
1%
Increase
977
56
$
1%
Decrease
(810)
(47)
The fair value of the classes of retiree benefit plans' investments is presented below. The inputs and valuation techniques
used to measure the fair value of assets are consistently applied and described in Note 1.
FAIR VALUE OF PLAN ASSETS
(In millions)
Balance at January 1
Actual gain on plan assets
Employer contributions
Participant contributions
Benefits paid
Balance at December 31
ASSET ALLOCATION
December 31
Equity securities(a)
Debt securities (including cash equivalents)
Private equities
Real estate
Other investments(d)
$
$
2014
903
44
518
52
(704)
813
$
$
2014
Target
allocation
35 - 75 %(b)
11 - 46
0 - 25
0 - 12
0 - 10
2013
946
118
533
52
(746)
903
2014
Actual
allocation
50%(c)
26
13
9
2
(a) Includes investment funds that primarily hold this type of asset.
(b) Target allocations were 18-38% for U.S. equity securities and 17-37% for non-U.S. equity securities.
(c) Actual allocations were 29% for U.S. equity securities and 21% for non-U.S. equity securities.
(d) Substantially all represented hedge fund investments.
GE 2014 FORM 10-K 179
F I N AN C I AL S T AT E M E N T S P O S T R E T I R E M E N T B E N E F I T P L AN S
Plan fiduciaries set investment policies and strategies for the trust and oversee its investment allocation, which includes
selecting investment managers and setting long-term strategic targets. The primary strategic investment objectives are
balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment
and other cash needs. Target allocation percentages are established at an asset class level by plan fiduciaries. Target
allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a
target range.
Short-term securities purchased must generally be rated A-1/P-1 or better, except for 15% of such securities that may be rated
A-2/P-2 and other short-term securities as may be approved by the plan fiduciaries. According to statute, the aggregate
holdings of all qualifying employer securities (e.g., GE common stock) and qualifying employer real property may not exceed
10% of the fair value of trust assets at the time of purchase. GE securities represented 3.9% and 4.0% of trust assets at year-
end 2014 and 2013, respectively.
Retiree life plan assets were $813 million and $903 million at December 31, 2014 and 2013, respectively. Public equity and
debt securities amounting to $615 million and $727 million represented approximately 78% and 77% of total investments at
December 31, 2014 and 2013, respectively. The plans’ investments were classified as 37% Level 1, 41% Level 2 and 22%
Level 3 at December 31, 2014. The plans’ investments were classified as 33% Level 1, 43% Level 2 and 24% Level 3 at
December 31, 2013. The changes in Level 3 investments were insignificant for the years ended December 31, 2014 and 2013.(cid:3)
RETIREE BENEFIT ASSET(LIABILITY)
December 31 (In millions)
Funded status(a)
Liability recorded in the Statement of Financial Position
Retiree health plans
Due within one year
Due after one year
Retiree life plans
Net liability recognized
Amounts recorded in shareowners' equity (unamortized)
Prior service cost (credit)
Net actuarial gain
Total
(a) Fair value of assets less APBO, as shown in the preceding tables.
2014
(9,890)
(518)
(7,927)
(1,445)
(9,890)
(24)
(71)
(95)
$
$
$
$
$
2013
(9,010)
(531)
(7,095)
(1,384)
(9,010)
963
(1,667)
(704)
$
$
$
$
$
In 2015, we estimate that we will amortize $125 million of prior service cost and $5 million of net actuarial loss from
shareowners’ equity into retiree benefit plans cost. Comparable amortized amounts in 2014 were $353 million of prior service
cost and $150 million of net actuarial gain.
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions)
2015
680 $
2016
665 $
2017
670 $
2018
675 $
$
2019
2020 -
2024
685 $
3,285
180 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S AL L O T H E R L I AB I L I T I E S
POSTRETIREMENT BENEFIT PLANS
2014 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
(cid:3)
(cid:3)
(In millions)
Cost of postretirement benefit plans
Changes in other comprehensive income
Prior service cost – current year
Net actuarial loss – current year(a)
Net curtailment/settlement
Prior service cost amortization
Net actuarial gain (loss) amortization
Total changes in other comprehensive income
Cost of postretirement benefit plans and
changes in other comprehensive income
Total
postretirement
benefit plans
Principal
pension
plans
Other
pension
plans
Retiree
benefit
plans
$
4,805
$
3,604
$
412
$
789
(615)
14,843
(113)
(573)
(2,620)
10,922
-
12,115
(65)
(214)
(2,565)
9,271
(29)
1,282
-
(6)
(205)
1,042
(586)
1,446
(48)
(353)
150
609
$
15,727
$
12,875
$
1,454
$
1,398
(a) Principally associated with discount rate and mortality assumption changes.
NOTE 13. ALL OTHER LIABILITIES
This caption includes liabilities for various items including non-current compensation and benefits, deferred income, interest on
tax liabilities, unrecognized tax benefits, environmental remediation, asset retirement obligations, derivative instruments,
product warranties and a variety of sundry items.
Accruals for non-current compensation and benefits amounted to $42,354 million and $27,853 million at December 31, 2014
and 2013, respectively. These amounts include compensation and benefit liabilities, such as postretirement benefits and
deferred incentive compensation. See Note 12.
We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws.
Liabilities for remediation costs exclude possible insurance recoveries and, when dates and amounts of such costs are not
known, are not discounted. When there appears to be a range of possible costs with equal likelihood, liabilities are based on
the low end of such range. It is reasonably possible that our environmental remediation exposure will exceed amounts
accrued. However, due to uncertainties about the status of laws, regulations, technology and information related to individual
sites, such amounts are not reasonably estimable. Total reserves related to environmental remediation and asbestos claims,
were $2,182 million at December 31, 2014.
GE 2014 FORM 10-K 181
F I N AN C I AL S T AT E M E N T S
I N C O M E T AX E S
NOTE 14. INCOME TAXES
GE and GECC file a consolidated U.S. federal income tax return. This enables GE to use GECC tax deductions and credits to
reduce the tax that otherwise would have been payable by GE. The GECC effective tax rate for each period reflects the benefit
of these tax reductions in the consolidated return. GE makes cash payments to GECC for these tax reductions at the time
GE’s tax payments are due.
(BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
2014
2013
2012
GE
Current tax expense
Deferred tax expense (benefit) from temporary differences
GECC
Current tax expense (benefit)
Deferred tax expense (benefit) from temporary differences
Consolidated
Current tax expense
Deferred tax expense (benefit) from temporary differences
Total
$
$
2,110
(476)
1,634
848
(710)
138
2,958
(1,186)
1,772
$
$
CONSOLIDATED EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(In millions)
U.S. earnings
Non-U.S. earnings
Total
CONSOLIDATED (BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
U.S. Federal
Current(a)
Deferred
Non - U.S.
Current
Deferred
Other
Total
2014
5,421
11,808
17,229
2014
51
(177)
2,978
(849)
(231)
1,772
$
$
$
$
$
$
$
$
(a) Includes the benefit from GECC deductions and credits applied against GE’s current U.S. tax expense.
4,239
(2,571)
1,668
(268)
(724)
(992)
3,971
(3,295)
676
2013
6,099
10,052
16,151
2013
85
(2,315)
3,659
(1,038)
285
676
$
$
$
$
$
$
2,307
(294)
2,013
1,379
(858)
521
3,686
(1,152)
2,534
2012
8,309
9,072
17,381
2012
685
(414)
2,871
(773)
165
2,534
182 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
I N C O M E T AX E S
Our businesses are subject to regulation under a wide variety of U.S. federal, state and foreign tax laws, regulations and
policies. Changes to these laws or regulations may affect our tax liability, return on investments and business operations. For
example, GE’s effective tax rate is reduced because active business income earned and indefinitely reinvested outside the
United States is taxed at less than the U.S. rate. A significant portion of this reduction depends upon a provision of U.S. tax
law that defers the imposition of U.S. tax on certain active financial services income until that income is repatriated to the
United States as a dividend. This provision is consistent with international tax norms and permits U.S. financial services
companies to compete more effectively with non-U.S. financial institutions in global markets. This provision, which had expired
at the end of 2013, was reinstated in December 2014 retroactively for one year through the end of 2014. The provision also
had been scheduled to expire and had been extended by Congress on seven previous occasions, but there can be no
assurance that it will continue to be extended. In the event the provision is not extended after 2014, the current U.S. tax
imposed on active financial services income earned outside the United States would increase, making it more difficult for U.S.
financial services companies to compete in global markets. If this provision is not extended, we expect our effective tax rate to
increase significantly after 2015.
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE
(cid:3)
Consolidated
2014
2013
2012
2014
GE
2013
2012
2014
GECC
2013
2012
U.S. federal statutory income tax rate
Increase (reduction) in rate resulting from
inclusion of after-tax earnings of GECC in
before-tax earnings of GE
Tax on global activities including exports(a)
U.S. business credits(b)
Business Property disposition
All other – net
Actual income tax rate
35.0 %
35.0 %
35.0 %
35.0 %
35.0 %
35.0 %
35.0 %
35.0 %
35.0 %
-
(18.4)
(2.6)
-
(3.7)
(24.7)
10.3 %
-
(24.7)
(3.6)
-
(2.5)
(30.8)
4.2 %
-
(12.5)
(2.6)
(1.9)
(3.4)
(20.4)
14.6 %
(15.2)
(7.9)
(0.6)
-
(1.6)
(25.3)
(16.9)
(4.1)
(1.5)
-
(2.7)
(25.2)
9.7 %
9.8 %
(15.3)
(4.3)
(0.7)
-
(2.7)
(23.0)
12.0 %
-
(24.1)
(4.6)
-
(4.5)
(33.2)
-
(45.0)
(4.6)
-
1.0
(48.6)
-
(18.4)
(4.3)
(4.2)
(1.5)
(28.4)
1.8 % (13.6)%
6.6 %
(a) Included (1.7)% and (3.8)% in consolidated and GECC, respectively, related to the sale of GEMB-Nordic in 2014 and (6.0)% and (13.3)% in consolidated and GECC,
respectively, related to the sale of 68.5% of our Swiss consumer finance bank, Cembra Money Bank AG (Cembra), through an initial public offering in 2013.
(b) U.S. general business credits, primarily the credit for manufacture of energy efficient appliances, the credit for energy produced from renewable sources, the advanced
energy project credit, the low-income housing credit and the credit for research performed in the U.S.
UNRECOGNIZED TAX POSITIONS
Annually, we file over 5,500 income tax returns in over 250 global taxing jurisdictions. We are under examination or engaged
in tax litigation in many of these jurisdictions. During 2013, the Internal Revenue Service (IRS) completed the audit of our
consolidated U.S. income tax returns for 2008-2009, except for certain issues that remain under examination. At December
31, 2014, the IRS was auditing our consolidated U.S. income tax returns for 2010-2011. In addition, certain other U.S. tax
deficiency issues and refund claims for previous years were unresolved. The IRS has disallowed the tax loss on our 2003
disposition of ERC Life Reinsurance Corporation. We have contested the disallowance of this loss. It is reasonably possible
that the unresolved items could be resolved during the next 12 months, which could result in a decrease in our balance of
“unrecognized tax benefits” – that is, the aggregate tax effect of differences between tax return positions and the benefits
recognized in our financial statements. We believe that there are no other jurisdictions in which the outcome of unresolved
issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we
have made adequate provision for all income tax uncertainties. Resolution of audit matters, including the IRS audit of our
consolidated U.S. income tax returns for 2008-2009, reduced our 2013 consolidated income tax rate by 2.8 percentage points.
GE 2014 FORM 10-K 183
F I N AN C I AL S T AT E M E N T S
I N C O M E T AX E S
The balance of unrecognized tax benefits, the amount of related interest and penalties we have provided and what we believe
to be the range of reasonably possible changes in the next 12 months were:
UNRECOGNIZED TAX BENEFITS
December 31 (In millions)
Unrecognized tax benefits
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
Accrued interest on unrecognized tax benefits
Accrued penalties on unrecognized tax benefits
Reasonably possible reduction to the balance of unrecognized tax benefits in succeeding 12 months
Portion that, if recognized, would reduce tax expense and effective tax rate(a)
(a) Some portion of such reduction may be reported as discontinued operations.
UNRECOGNIZED TAX BENEFITS RECONCILIATION
(In millions)
Balance at January 1,
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements with tax authorities
Expiration of the statute of limitations
Balance at December 31
2014
5,619
4,059
807
103
0-900
0-300
2014
5,816
234
673
(761)
(305)
(38)
5,619
$
$
$
2013
5,816
4,307
975
164
0-900
0-350
2013
5,445
771
872
(1,140)
(98)
(34)
5,816
$
$
$
We classify interest on tax deficiencies as interest expense; we classify income tax penalties as provision for income taxes.
For the years ended December 31, 2014, 2013 and 2012, $(68) million, $22 million and $(45) million of interest expense
(income), respectively, and $(45) million, an insignificant amount and $33 million of tax expense (income) related to penalties,
respectively, were recognized in the Statement of Earnings.
DEFERRED INCOME TAXES
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and
liabilities and their tax bases, as well as from net operating loss and tax credit carryforwards, and are stated at enacted tax
rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts
available to reduce income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax
deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of
taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent we do not
consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.
We have not provided U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have
been reinvested indefinitely. These earnings relate to ongoing operations and, at December 31, 2014 and 2013, were
approximately $119 billion and $110 billion, respectively. Most of these earnings have been reinvested in active non-U.S.
business operations and we do not intend to repatriate these earnings to fund U.S. operations. Because of the availability of
U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such
earnings were not reinvested indefinitely. Deferred taxes are provided for earnings of non-U.S. affiliates and associated
companies when we plan to remit those earnings.
184 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S
I N C O M E T AX E S
Aggregated deferred income tax amounts are summarized below.
December 31 (In millions)
2014
2013
Assets
GE
GECC
Liabilities
GE
GECC
Net deferred income tax asset (liability)
COMPONENTS OF THE NET DEFERRED INCOME TAX ASSET (LIABILITY)
December 31 (In millions)
GE
Principal pension plans
Provision for expenses(a)
Retiree insurance plans
Non-U.S. loss carryforwards(b)
Contract costs and estimated earnings
Intangible assets
Depreciation
Investment in global subsidiaries
Other – net
GECC
Operating leases
Financing leases
Intangible assets
Net unrealized gains (losses) on securities
Cash flow hedges
Non-U.S. loss carryforwards(b)
Allowance for losses
Investment in global subsidiaries
Other – net
Net deferred income tax asset (liability)
$
$
$
$
19,942
12,546
32,488
(11,170)
(18,777)
(29,947)
2,541
2014
7,859
6,192
3,462
738
(3,996)
(2,364)
(1,226)
(979)
(914)
8,772
(6,351)
(4,046)
(1,963)
(507)
(162)
4,094
2,186
1,935
(1,417)
(6,231)
2,541
$
$
$
$
15,284
13,224
28,508
(10,223)
(18,010)
(28,233)
275
2013
3,436
5,934
3,154
874
(3,550)
(2,268)
(1,079)
(1,077)
(363)
5,061
(6,284)
(4,075)
(1,943)
(145)
(163)
3,791
2,640
1,883
(490)
(4,786)
275
(a) Represented the tax effects of temporary differences related to expense accruals for a wide variety of items, such as employee compensation and benefits, other
pension plan liabilities, interest on tax liabilities, product warranties and other sundry items that are not currently deductible.
(b) Net of valuation allowances of $2,015 million and $2,089 million for GE and $880 million and $862 million for GECC, for 2014 and 2013, respectively. Of the net deferred
tax asset as of December 31, 2014, of $4,832 million, $47 million relates to net operating loss carryforwards that expire in various years ending from December 31, 2015
through December 31, 2017; $166 million relates to net operating losses that expire in various years ending from December 31, 2018 through December 31, 2034 and
$4,619 million relates to net operating loss carryforwards that may be carried forward indefinitely.
GE 2014 FORM 10-K 185
F I N AN C I AL S T AT E M E N T S S H AR E O W N E R S ' E Q U I T Y
NOTE 15. SHAREOWNERS’ EQUITY
(In millions)
Preferred stock issued
Common stock issued
Accumulated other comprehensive income
Balance at January 1
Other comprehensive income before reclassifications
Reclassifications from other comprehensive income
Other comprehensive income, net, attributable to GE
Balance at December 31
Other capital
Balance at January 1
Gains (losses) on treasury stock dispositions and other(a)
Balance at December 31
Retained earnings
Balance at January 1
Net earnings attributable to the Company
Dividends and other transactions with shareowners
Balance at December 31
Common stock held in treasury
Balance at January 1
Purchases
Dispositions
Balance at December 31
Total equity
GE shareowners' equity balance at December 31
Noncontrolling interests balance at December 31
Total equity balance at December 31
2014
-
702
(9,120)
(12,087)
3,035
(9,052)
(18,172)
32,494
395
32,889
149,051
15,233
(8,951)
155,333
(42,561)
(1,950)
1,918
(42,593)
128,159
8,674
136,833
$
$
$
$
$
$
$
$
$
$
$
$
2013
-
702
(20,230)
8,844
2,266
11,110
(9,120)
33,070
(576)
32,494
144,055
13,057
(8,061)
149,051
(34,571)
(10,466)
2,476
(42,561)
130,566
6,217
136,783
$
$
$
$
$
$
$
$
$
$
$
$
2012
-
702
(23,974)
841
2,903
3,744
(20,230)
33,693
(623)
33,070
137,786
13,641
(7,372)
144,055
(31,769)
(5,295)
2,493
(34,571)
123,026
5,444
128,470
$
$
$
$
$
$
$
$
$
$
$
$
(a) 2014 included $440 million related to the excess of the net proceeds from the Synchrony Financial IPO over the carrying value of the interest sold.
SHARES OF GE PREFERRED STOCK
On October 16, 2008, we issued 30,000 shares of 10% cumulative perpetual preferred stock (par value $1.00 per share)
having an aggregate liquidation value of $3,000 million, and warrants to purchase 134,831,460 shares of common stock (par
value $0.06 per share) to Berkshire Hathaway Inc. (Berkshire Hathaway) for net proceeds of $2,965 million in cash. The
proceeds were allocated to the preferred shares ($2,494 million) and the warrants ($471 million) on a relative fair value basis
and recorded in other capital. The warrants were exercisable through October 16, 2013, at an exercise price of $22.25 per
share of common stock and were to be settled through physical share issuance. The terms of the warrants were amended in
January 2013 to allow for net share settlement where the total number of issued shares is based on the amount by which the
average market price of GE common stock over the 20 trading days preceding the date of exercise exceeds the exercise price
of $22.25. On October 16, 2013, Berkshire Hathaway Inc. (Berkshire Hathaway) exercised in full their warrants to purchase
shares of GE common stock and on October 17, 2013, GE delivered 10.7 million shares to Berkshire Hathaway. The
transaction had equal and offsetting effects on other capital and common stock held in treasury.
The preferred stock was redeemable at our option three years after issuance at a price of 110% of liquidation value plus
accrued and unpaid dividends. On September 13, 2011, we provided notice to Berkshire Hathaway that we would redeem the
shares for the stated redemption price of $3,300 million, plus accrued and unpaid dividends. In connection with this notice, we
recognized a preferred dividend of $806 million (calculated as the difference between the carrying value and redemption value
of the preferred stock), which was recorded as a reduction to earnings attributable to common shareowners and common
shareowners’ equity. The preferred shares were redeemed on October 17, 2011.
GE has 50 million authorized shares of preferred stock ($1.00 par value). No shares were issued and outstanding as of
December 31, 2014 and 2013.
186 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S S H AR E O W N E R S ' E Q U I T Y
SHARES OF GE COMMON STOCK
On December 14, 2012, we increased the existing authorization by $10 billion to $25 billion for our share repurchase program
and extended the program (which would have otherwise expired on December 31, 2013) through 2015. On February 12, 2013,
we increased the existing authorization by an additional $10 billion resulting in authorization to repurchase up to a total of $35
billion of our common stock through 2015. Under this program, on a book basis, we repurchased shares of 73.6 million, 432.6
million and 248.6 million for a total of $1,901 million, $10,375 million and $5,185 million for the years ended 2014, 2013 and
2012 respectively.
GE’s authorized common stock consists of 13,200,000,000 shares having a par value of $0.06 each.
Common shares issued and outstanding are summarized in the following table.
December 31 (In thousands)
(cid:3)
2014
2013
2012
Issued
In treasury
Outstanding
11,693,841
(1,636,461)
10,057,380
11,693,841
(1,632,960)
10,060,881
11,693,841
(1,288,216)
10,405,625
GE 2014 FORM 10-K 187
F I N AN C I AL S T AT E M E N T S S H AR E O W N E R S ' E Q U I T Y
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(In millions)
2014
2013
2012
Investment securities
Balance at January 1
Other comprehensive income (loss) (OCI) before reclassifications –
net of deferred taxes of $353, $(407) and $387 (a)
Reclassifications from OCI – net of deferred taxes
of $84, $222 and $13
Other comprehensive income (loss)(b)
Less OCI attributable to noncontrolling interests
Balance at December 31
Currency translation adjustments (CTA)
Balance at January 1(c)
OCI before reclassifications – net of deferred taxes
of $(129), $(613) and $(266)
Reclassifications from OCI – net of deferred taxes
of $213, $793 and $54
Other comprehensive income (loss)(b)
Less OCI attributable to noncontrolling interests
Balance at December 31
Cash flow hedges
Balance at January 1(c)
OCI before reclassifications – net of deferred taxes
of $23, $250 and $392
Reclassifications from OCI – net of deferred taxes
of $34, $(177) and $(245)
Other comprehensive income (loss)(b)
Less OCI attributable to noncontrolling interests
Balance at December 31
Benefit plans
Balance at January 1
Prior service credit (costs) - net of deferred taxes
of $219, $(5) and $304
Net actuarial gain (loss) – net of deferred taxes
of $(5,332), $4,506 and $(574)
Net curtailment/settlement - net of deferred taxes
of $41, $0 and $123
Prior service cost amortization – net of deferred taxes
of $241, $267 and $326
Net actuarial loss amortization – net of deferred taxes
of $859, $1,343 and $1,278
Other comprehensive income (loss)(b)
Less OCI attributable to noncontrolling interests
Balance at December 31
Accumulated other comprehensive income (loss) at December 31
$
307 $
677 $
(30)
562
(692)
146
708
2
1,013 $
318
(374)
(4)
307 $
283 $
(2,600)
412 $
510
(129)
(2,729)
(19)
(2,427) $
(818)
(308)
(22)
126 $
683
22
705
(2)
677
133
474
(174)
300
21
412
(414) $
(610)
(722) $
738
(1,176)
385
844
234
-
(180) $
(271)
467
2
(257) $
68
453
(1)
(722)
(9,296) $
(20,597) $
(22,901)
396
(6)
534
(9,849)
8,269
(1,396)
72
349
-
397
174
497
1,753
(7,279)
3
(16,578) $
2,640
11,300
(1)
(9,296) $
2,490
2,299
(5)
(20,597)
(18,172) $
(9,120) $
(20,230)
$
$
$
$
$
$
$
$
(a)
Includes adjustments of $960 million, $(1,171) million and $527 million in 2014, 2013 and 2012, respectively, to deferred acquisition costs, present value of future profits,
and investment contracts, insurance liabilities and insurance annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized
had the related unrealized investment securities holding gains and losses actually been realized.
(b) Total other comprehensive income (loss) was $(9,066) million, $11,085 million and $3,757 million in 2014, 2013 and 2012, respectively.
(c)
Includes a $157 million reclassification between 2014 opening balances in Currency Translation Adjustments and Cash Flow Hedges.
188 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S S H AR E O W N E R S ' E Q U I T Y
RECLASSIFICATION OUT OF AOCI
(In millions)
2014
2013
2012
Statement of Earnings Caption
Available-for-sale securities
Realized gains (losses) on
sale/impairment of securities
Currency translation adjustments
Gains (losses) on dispositions
Cash flow hedges
Gains (losses) on interest rate
derivatives
Foreign exchange contracts
Other
Benefit plan items
Curtailment loss
Amortization of prior service costs
Amortization of actuarial gains (losses)
Total reclassification adjustments
$
$
$
$
$
$
$
$
$
(230) $
84
(146) $
(540) $
222
(318) $
(35) Other income
13 Benefit (provision) for income taxes
(22) Net of tax
(84) $
213
129 $
25 $
793
818 $
120 Costs and expenses
54 Benefit (provision) for income taxes
174 Net of tax
(234) $
(666)
22
(878)
34
(844) $
(364) $
564
248
448
(177)
271 $
(499) Interest and other financial charges
792 (a)
(116) (b)
177 Total before tax
(245) Benefit (provision) for income taxes
(68) Net of tax
(113) $
(590)
(2,612)
(3,315)
1,141
(2,174) $
- $
(664)
(3,983)
(4,647)
1,610
(3,037) $
- (c)
(823) (c)
(3,768) (c)
(4,591) Total before tax
1,604 Benefit (provision) for income taxes
(2,987) Net of tax
(3,035) $
(2,266) $
(2,903) Net of tax
(a) Included $(607) million, $608 million and $894 million in GECC revenues from services and $(59) million, $(44) million and $(102) million in interest and other financial
charges in 2014, 2013 and 2012, respectively.
(b) Primarily recorded in costs and expenses.
(c) Curtailment 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.
NONCONTROLLING INTERESTS
Noncontrolling interests in equity of consolidated affiliates includes common shares in consolidated affiliates and preferred
stock issued by our affiliates.
GECC preferred stock is presented as noncontrolling interests in the GE consolidated Statement of Financial Position. GECC
preferred stock dividends are presented as noncontrolling interests in the GE consolidated Statement of Earnings. The
balance is summarized as follows.
December 31 (In millions)
GECC preferred stock
Synchrony Financial
Other noncontrolling interests in consolidated affiliates(a)
Total
(a) Consisted of a number of individually insignificant noncontrolling interests in partnerships and consolidated affiliates.
2014
$
$
4,950
2,531
1,193
8,674
$
$
2013
4,950
-
1,267
6,217
GE 2014 FORM 10-K 189
F I N AN C I AL S T AT E M E N T S S H AR E O W N E R S ' E Q U I T Y
CHANGES TO NONCONTROLLING INTERESTS
(In millions)
Beginning balance
Net earnings
GECC issuance of preferred stock
GECC preferred stock dividend
Dividends
Dispositions
Synchrony Financial IPO
Other (including AOCI) (a)
Ending balance
2014
6,217
183
-
(322)
(74)
(81)
2,393
358
8,674
$
$
2013
5,444
298
990
(298)
(80)
(175)
-
38
6,217
$
$
2012
1,696
223
3,960
(123)
(42)
-
-
(270)
5,444
$
$
(a) Includes research & development partner funding arrangements, acquisitions and eliminations.
OTHER
During the second quarter of 2013, GECC issued 10,000 shares of non-cumulative perpetual preferred stock with a $0.01 par
value for proceeds of $990 million. The preferred shares bear an initial fixed interest rate of 5.25% through June 15, 2023,
bear a floating rate equal to three-month LIBOR plus 2.967% thereafter and are callable on June 15, 2023. Dividends on the
GECC preferred stock are payable semiannually, in June and December, with the first payment on this issuance made in
December 2013.
During 2012, GECC issued 40,000 shares of non-cumulative perpetual preferred stock with a $0.01 par value for proceeds of
$3,960 million. Of these shares, 22,500 bear an initial fixed interest rate of 7.125% through June 15, 2022, bear a floating rate
equal to three-month LIBOR plus 5.296% thereafter and are callable on June 15, 2022, and 17,500 shares bear an initial fixed
interest rate of 6.25% through December 15, 2022, bear a floating rate equal to three-month LIBOR plus 4.704% thereafter
and are callable on December 15, 2022. Dividends on the GECC preferred stock are payable semi-annually, in June and
December, with the first payment made in December 2012.
GECC paid quarterly dividends of $2,000 million, $1,930 million and $1,926 million and special dividends of $1,000 million,
$4,055 million and $4,500 million to GE for the years ended 2014, 2013 and 2012, respectively.
190 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S O T H E R S T O C K - R E L AT E D I N F O R M AT I O N
NOTE 16. OTHER STOCK-RELATED INFORMATION
We grant stock options, restricted stock units (RSUs) and performance share units (PSUs) to employees under the 2007 Long-
Term Incentive Plan. This plan replaced the 1990 Long-Term Incentive Plan. In addition, we grant options and RSUs in limited
circumstances to consultants, advisors and independent contractors under a plan approved by our Board of Directors in 1997
(the Consultants’ Plan). Share requirements for all plans may be met from either unissued or treasury shares. Stock options
expire 10 years from the date they are granted and vest over service periods that range from one to five years. RSUs give the
recipients the right to receive shares of our stock upon the vesting of their related restrictions. Restrictions on RSUs vest in
various increments and at various dates, beginning after one year from date of grant through grantee retirement. Although the
plan permits us to issue RSUs settleable in cash, we have only issued RSUs settleable in shares of our stock. PSUs give
recipients the right to receive shares of our stock upon the achievement of certain performance targets.
All grants of GE options under all plans must be approved by the Management Development and Compensation Committee,
which consists entirely of independent directors.
STOCK COMPENSATION PLANS
December 31, 2014 (Shares in thousands)
Approved by shareowners
Options
RSUs
PSUs
Not approved by shareowners (Consultants’ Plan)
Options
RSUs
Total
Securities
to be
issued
upon
exercise
500,948
14,896
1,000
338
-
517,182
$
$
Weighted
average
exercise
price
20.92
(b)
(b)
25.32
(b)
20.92
Securities
available
for future
issuance
(a)
(a)
(a)
(c)
(c)
327,525
(a)
In 2007, the Board of Directors approved the 2007 Long-Term Incentive Plan (the Plan), which replaced the 1990 Long-Term Incentive Plan. During 2012, an
amendment was approved to increase the number of shares authorized for issuance under the Plan from 500 million shares to 925 million shares. No more than 230
million of the total number of authorized shares may be available for awards granted in any form provided under the Plan other than options or stock appreciation rights.
Total shares available for future issuance under the Plan amounted to 299.3 million shares at December 31, 2014.
(b) Not applicable.
(c) Total shares available for future issuance under the Consultants’ Plan amount to 28.2 million shares.
Outstanding options expire on various dates through December 12, 2024.
GE 2014 FORM 10-K 191
F I N AN C I AL S T AT E M E N T S O T H E R S T O C K - R E L AT E D I N F O R M AT I O N
The following table summarizes information about stock options outstanding at December 31, 2014.
STOCK OPTIONS OUTSTANDING
(cid:3)
Exercise price range
Under $10.00
10.01-15.00
15.01-20.00
20.01-25.00
25.01-30.00
30.01-35.00
Over $35.00
Total
Outstanding
Exercisable
Shares
(In thousands)
Average
life(a)
28,484
46,905
158,534
132,295
100,668
21,712
12,688
501,286
3.9
4.2
5.7
7.9
8.5
1.2
2.4
6.3
$
$
Average
exercise
price
9.57
11.98
17.46
22.55
26.51
34.10
38.67
20.92
Shares
(In thousands)
28,484
46,905
113,286
50,587
19,039
21,712
12,688
292,701
$
$
Average
exercise
price
9.57
11.98
17.32
22.25
28.22
34.10
38.57
19.44
(a) Weighted average contractual life remaining in years.
At year-end 2013, options with a weighted average exercise price of $20.15 were exercisable on 254 million shares.
STOCK OPTION ACTIVITY
Outstanding at January 1, 2014
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2014
Exercisable at December 31, 2014
Options expected to vest
Shares
(In thousands)
473,611
82,142
(30,433)
(7,414)
(16,620)
501,286
292,701
189,186
$
$
$
$
Weighted
average
exercise
price
20.02
26.11
14.42
21.89
32.40
20.92
19.44
22.97
Weighted
average
remaining
contractual
term (In years)
Aggregate
intrinsic
value
(In millions)
6.3
4.9
8.3
$
$
$
2,668
2,124
496
We measure the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The
weighted average grant-date fair value of options granted during 2014, 2013 and 2012 was $5.26, $4.52 and $3.80,
respectively. The following assumptions were used in arriving at the fair value of options granted during 2014, 2013 and 2012,
respectively: risk-free interest rates of 2.3%, 2.5% and 1.3%; dividend yields of 3.1%, 4.0% and 4.0%; expected volatility of
26%, 28% and 29%; and expected lives of 7.3 years, 7.5 years and 7.8 years. Risk-free interest rates reflect the yield on zero-
coupon U.S. Treasury securities. Expected dividend yields presume a set dividend rate and we used a historical five-year
average for the dividend yield. Expected volatilities are based on implied volatilities from traded options and historical volatility
of our stock. The expected option lives are based on our historical experience of employee exercise behavior.
The total intrinsic value of options exercised during 2014, 2013 and 2012 amounted to $360 million, $392 million and $265
million, respectively. As of December 31, 2014, there was $739 million of total unrecognized compensation cost related to non-
vested options. That cost is expected to be recognized over a weighted average period of 2 years, of which approximately
$185 million after tax is expected to be recognized in 2015.
Stock option expense recognized in net earnings during 2014, 2013 and 2012 amounted to $215 million, $231 million and
$220 million, respectively. Cash received from option exercises during 2014, 2013 and 2012 was $439 million, $490 million
and $355 million, respectively. The tax benefit realized from stock options exercised during 2014, 2013 and 2012 was $118
million, $128 million and $88 million, respectively.
192 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S O T H E R I N C O M E
OTHER STOCK-BASED COMPENSATION
RSUs outstanding at January 1, 2014
Granted
Vested
Forfeited
RSUs outstanding at December 31, 2014
RSUs expected to vest
Shares
(In thousands)
13,572
5,016
(3,305)
(387)
14,896
13,667
$
$
$
Weighted
average
grant date
fair value
22.58
26.08
21.70
22.31
24.00
21.94
Weighted
average
remaining
contractual
term (In years)
Aggregate
intrinsic
value
(In millions)
2.5
2.2
$
$
376
345
The fair value of each restricted stock unit is the market price of our stock on the date of grant. The weighted average grant
date fair value of RSUs granted during 2014, 2013 and 2012 was $26.08, $24.54 and $20.79, respectively. The total intrinsic
value of RSUs vested during 2014, 2013 and 2012 amounted to $86 million, $109 million and $116 million, respectively. As of
December 31, 2014, there was $233 million of total unrecognized compensation cost related to non-vested RSUs. That cost is
expected to be recognized over a weighted average period of 2 years, of which approximately $54 million after tax is expected
to be recognized in 2015. As of December 31, 2014, 1 million PSUs with a weighted average remaining contractual term of 1.5
years, an aggregate intrinsic value of $25 million and $9 million of unrecognized compensation cost were outstanding. Other
share-based compensation expense for RSUs and PSUs recognized in net earnings amounted to $56 million, $62 million and
$79 million in 2014, 2013 and 2012, respectively.
The income tax benefit recognized in earnings based on the compensation expense recognized for all share-based
compensation arrangements amounted to $147 million, $145 million and $153 million in 2014, 2013 and 2012, respectively.
The excess of actual tax deductions over amounts assumed, which are recognized in shareowners’ equity, were $86 million
$86 million and $53 million in 2014, 2013 and 2012, respectively.
When stock options are exercised and restricted stock vests, the difference between the assumed tax benefit and the actual
tax benefit must be recognized in our financial statements. In circumstances in which the actual tax benefit is lower than the
estimated tax benefit, that difference is recorded in equity, to the extent there are sufficient accumulated excess tax benefits.
At December 31, 2014, our accumulated excess tax benefits are sufficient to absorb any future differences between actual and
estimated tax benefits for all of our outstanding option and restricted stock grants.
(cid:3)
(cid:3)
NOTE 17. OTHER INCOME
(In millions)
GE
Licensing and royalty income
Purchases and sales of business interests(a)
Associated companies(b)
Net interest and investment income(c)
Other items(d)
Eliminations
Total
2014
2013
2012
288 $
188
176
(77)
132
707
71
778 $
320 $
1,750
40
116
660
2,886
222
3,108 $
290
574
1,545
196
52
2,657
(94)
2,563
$
$
(a)
(b)
(c)
(d)
Included a pre-tax gain of $1,096 million on the sale of our 49% common equity interest in NBCU LLC in 2013. See Note 2.
Included income of $1,416 million from our former equity method investment in NBCU LLC in 2012.
Included other-than-temporary impairments on investment securities of $217 million in 2014.
Included net gains on asset sales of $127 million in 2014 and $357 million in 2013.
GE 2014 FORM 10-K 193
F I N A N C I A L S T AT E M E N T S G E C C R E V E N U E S & S U P P L E M E N T A L C O S T I N F O R M A T I O N
F I N AN C I AL S T AT E M E N T S
NOTE 18. GECC REVENUES FROM SERVICES
(In millions)
Interest on loans
Equipment leased to others
Fees
Investment income(a)
Financing leases
Associated companies(b)
Premiums earned by insurance activities
Real estate investments(c)
Other items(a)(d)
Eliminations
Total
2014
17,324
9,940
4,618
2,271
1,416
1,182
1,509
1,727
2,617
42,604
(1,551)
41,053
$
$
2013
17,951
9,804
4,720
1,809
1,667
1,809
1,573
2,528
2,080
43,941
(1,546)
42,395
$
$
2012
18,843
10,456
4,709
2,630
1,888
1,538
1,715
1,709
1,757
45,245
(1,273)
43,972
$
$
(a)
Included net other-than-temporary impairments on investment securities of $(173) million, $(747) million and $(140) million in 2014, 2013 and 2012, respectively, of
which $96 million related to the impairment of an investment in a Brazilian company that was fully offset by the benefit of a guarantee provided by GE reflected as a
component in other items for 2013. See Note 3.
(b) During 2013, we sold our remaining equity interest in the Bank of Ayudhya (Bay Bank) and recorded a pre-tax gain of $641 million. During 2012, we sold our remaining
equity interest in Garanti Bank, which was classified as an available-for-sale security.
(c) During 2013, we sold real estate comprising certain floors located at 30 Rockefeller Center, New York for a pre-tax gain of $902 million.
(d) During 2014, we sold GEMB-Nordic and recorded a pre-tax gain of $473 million. During 2013, we sold a portion of Cembra through an initial public offering and recorded
a pre-tax gain of $351 million.
NOTE 19. SUPPLEMENTAL COST INFORMATION
RESEARCH & DEVELOPMENT
We conduct research and development (R&D) activities to continually enhance our existing products and services, develop
new product and services to meet our customer’s changing needs and requirements, and address new market opportunities.
Research and development expenses are classified in cost of goods sold in the Statement of Earnings. In addition, research
and development funding from customers, principally the U.S. government, is recorded as an offset to cost of goods sold. We
also enter into research and development arrangements with unrelated investors, which are generally formed through
partnerships. Research and development funded by investors is classified within net earnings/loss attributable to
noncontrolling interests.
(cid:11)(cid:44)(cid:81)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:86)(cid:12)(cid:3)
Total R&D
Less customer funded R&D (principally the U.S. Government)
Less partner funded R&D
GE funded R&D
$
$
2014
5,273
(721)
(319)
4,233
$
$
2013
5,461
(711)
(107)
4,643
$
$
2012
5,200
(680)
(6)
4,514
194 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S S U P P L E M E N T AL C O S T I N F O R M AT I O N
CONSOLIDATED OTHER COSTS AND EXPENSES
Consolidated other costs and expenses consists of selling, general and administrative costs (SG&A), depreciation and
amortization and other operating costs.
CONSOLIDATED OTHER COSTS AND EXPENSES
(In millions)
GE SG&A
GECC operating and administrative costs
GECC depreciation and amortization
Eliminations
Total
COLLABORATIVE ARRANGEMENTS
2014
14,971
13,053
6,859
34,883
(857)
34,026
$
$
2013
16,105
12,463
7,313
35,881
(738)
35,143
$
$
2012
17,671
12,023
6,901
36,595
(698)
35,897
$
$
Our businesses enter into collaborative arrangements primarily with manufacturers and suppliers of components used to build
and maintain certain engines, under which GE and these participants share in risks and rewards of these product programs.
GE’s payments to participants are recorded as cost of services sold ($873 million, $820 million and $594 million for the years
2014, 2013 and 2012, respectively) or as cost of goods sold ($2,660 million, $2,613 million and $2,507 million for the years
2014, 2013 and 2012, respectively).
RENTAL EXPENSE
Rental expense under operating leases is shown below.
(In millions)
GE
GECC
Eliminations
Total
$
$
2014
1,186
382
1,568
(149)
1,419
$
$
2013
1,220
428
1,648
(135)
1,513
$
$
2012
1,134
539
1,673
(142)
1,531
At December 31, 2014, minimum rental commitments under noncancellable operating leases aggregated $2,870 million and
$1,420 million for GE and GECC, respectively. Amounts payable over the next five years follow.
(In millions)
GE
GECC
Eliminations
Total
2015
634
238
872
(73)
799
$
$
2016
528
203
731
(44)
687
$
$
2017
432
177
609
(28)
581
$
$
2018
371
141
512
(20)
492
$
$
2019
337
120
457
(18)
439
$
$
GE 2014 FORM 10-K 195
F I N A N C I A L S T AT E M E N T S E AR N I N G S P E R S H A R E & F A I R V AL U E M E AS U R E M E N T S
NOTE 20. EARNINGS PER SHARE INFORMATION
(In millions; per-share amounts in dollars)
Amounts attributable to the Company:
Consolidated
Earnings from continuing operations attributable to
common shareowners for per-share calculation(a)(b)
Earnings (loss) from discontinued operations
for per-share calculation(a)(b)
Net earnings attributable to GE common
shareowners for per-share calculation(a)(b)
Average equivalent shares
Shares of GE common stock outstanding
Employee compensation-related shares (including
stock options) and warrants
Total average equivalent shares
Per-share amounts
Earnings from continuing operations
Earnings (loss) from discontinued operations
Net earnings
2014
Diluted
Basic
Diluted
Basic
Diluted
Basic
2013
2012
$ 15,325
$ 15,324
$ 15,145
$ 15,157
$ 14,604
$ 14,603
(111)
(111)
(2,128)
(2,116)
(980)
(980)
$ 15,213
$ 15,212
$ 13,028
$ 13,040
$ 13,622
$ 13,622
10,045
10,045
10,222
10,222
10,523
10,523
78
10,123
-
10,045
67
10,289
-
10,222
41
10,564
-
10,523
$
$
1.51
(0.01)
1.50
$
1.53
(0.01)
1.51
$
1.47
(0.21)
1.27
1.48
(0.21)
1.28
$
$
1.38
(0.09)
1.29
1.39
(0.09)
1.29
Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and, therefore, are
included in the computation of earnings per share pursuant to the two-class method. Application of this treatment has an insignificant effect.
(a) Included an insignificant amount of dividend equivalents in each of the three years presented.
(b) Included in 2013 is a dilutive adjustment for the change in income for forward purchase contracts that may be settled in stock.
For the years ended December 31, 2014, 2013 and 2012, there were approximately 98 million, 121 million and 292 million,
respectively, of outstanding stock awards that were not included in the computation of diluted earnings per share because their
effect was antidilutive.
Earnings-per-share amounts are computed independently for earnings from continuing operations, earnings (loss) from
discontinued operations and net earnings. As a result, the sum of per-share amounts from continuing operations and
discontinued operations may not equal the total per-share amounts for net earnings.
NOTE 21. FAIR VALUE MEASUREMENTS
RECURRING FAIR VALUE MEASUREMENTS
Our assets and liabilities measured at fair value on a recurring basis include investment securities primarily supporting
obligations to annuitants and policyholders in our run-off insurance operations and supporting obligations to holders of GICs in
Trinity and investment securities held in our CLL business collateralized by senior secured loans of high-quality, middle-market
companies in a variety of industries.
196 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F AI R V AL U E M E AS U R E M E N T S
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
(In millions)
December 31, 2014
Assets
Investment securities
Debt
U.S. corporate
State and municipal
Residential mortgage-backed
Commercial mortgage-backed
Asset-backed(c)
Corporate – non-U.S.
Government – non-U.S.
U.S. government and federal agency
Retained interests
Equity
Available-for-sale
Trading
Derivatives(d)
Other(e)
Total
Liabilities
Derivatives
Other(f)
Total
December 31, 2013
Assets
Investment securities
Debt
U.S. corporate
State and municipal
Residential mortgage-backed
Commercial mortgage-backed
Asset-backed(c)
Corporate – non-U.S.
Government – non-U.S.
U.S. government and federal agency
Retained interests
Equity
Available-for-sale
Trading
Derivatives(d)
Other(e)
Total
Liabilities
Derivatives
Other(f)
Total
$
$
$
$
$
$
$
$
Level 1(a)
Level 2(a)
Level 3
Netting
adjustment(b)
Net balance
-
-
-
-
-
-
56
-
-
293
20
-
-
369
-
-
-
-
-
-
-
-
61
1,590
-
-
475
78
-
-
2,204
-
-
-
$
$
$
$
$
$
$
$
20,659
5,171
1,709
3,054
343
681
1,738
1,747
-
19
2
10,038
-
45,161
4,971
1,180
6,151
18,788
4,193
1,824
3,025
489
645
789
545
-
31
2
8,304
-
38,635
5,409
1,170
6,579
$
$
$
$
$
$
$
$
3,140
578
16
9
7,575
796
2
266
24
9
-
144
324
12,883
18
-
18
2,953
96
86
10
6,898
1,064
31
225
72
11
-
175
494
12,115
20
-
20
$
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
(7,605)
-
(7,605)
(4,407)
-
(4,407)
-
-
-
-
-
-
-
-
-
-
-
(6,739)
-
(6,739)
(4,355)
-
(4,355)
$
$
$
$
$
$
$
$
23,799
5,749
1,725
3,063
7,918
1,477
1,796
2,013
24
321
22
2,577
324
50,808
582
1,180
1,762
21,741
4,289
1,910
3,035
7,387
1,770
2,410
770
72
517
80
1,740
494
46,215
1,074
1,170
2,244
(a)
Included $487 million of Government – non-U.S. and $13 million of Corporate – non-U.S. available-for-sale debt securities transferred from Level 1 to Level 2 primarily
attributable to changes in market observable data during 2014. The fair value of securities transferred between Level 1 and Level 2 was $2 million during 2013.
(b) The netting of derivative receivables and payables (including the effects of any collateral posted or received) is permitted when a legally enforceable master netting
(c)
agreement exists.
Includes investments in our CLL business in asset-backed securities collateralized by senior secured loans of high-quality, middle-market companies in a variety of
industries.
(d) The fair value of derivatives includes an adjustment for non-performance risk. The cumulative adjustment was a gain (loss) of $9 million and $(7) million at December 31,
2014 and 2013, respectively. See Note 22 for additional information on the composition of our derivative portfolio.
Includes private equity investments and loans designated under the fair value option.
(e)
(f) Primarily represented the liability associated with certain of our deferred incentive compensation plans.
GE 2014 FORM 10-K 197
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(In millions)
2014
Investment securities
Debt
U.S. corporate
State and municipal
RMBS
CMBS
ABS
Corporate – non-U.S.
Government – non-U.S.
U.S. government and
federal agency
Retained interests
Equity
Available-for-sale
Derivatives(d)(e)
Other
Total
2013
Investment securities
Debt
U.S. corporate
State and municipal
RMBS
CMBS
ABS
Corporate – non-U.S.
Government – non-U.S.
U.S. government and
federal agency
Retained interests
Equity
Available-for-sale
Derivatives(d)(e)
Other
Total
F I N AN C I AL S T AT E M E N T S F AI R V AL U E M E AS U R E M E N T S
LEVEL 3 INSTRUMENTS
The majority of our Level 3 balances consist of investment securities classified as available-for-sale with changes in fair value
recorded in shareowners’ equity.
CHANGES IN LEVEL 3 INSTRUMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
Net
realized/
unrealized
gains
(losses)
Included in
earnings(a)
Net
realized/
unrealized
gains
(losses)
included
in AOCI
Balance at
January 1
Purchases
Sales
Settlements
Transfers
into
Level 3(b)
Transfers
out of
Level 3(b)
Balance at
December 31
Net
change in
unrealized
gains
(losses)
relating to
instruments
still held at
December 31(c)
$
2,953 $
96
86
10
6,898
1,064
31
225
72
11
164
494
22 $
-
-
-
3
30
-
-
29
$
121 $
38
2
-
(206)
3
-
550
18
-
-
2,249
1,019
-
$
(234) $
(36)
(16)
-
-
(269)
-
(284) $
(10)
(9)
(3)
(1,359)
(1,033)
-
175
472
-
2
-
1
2
(163) $
-
(47)
-
(10)
(19)
(31)
3,140 $
578
16
9
7,575
796
2
34
(4)
-
3
-
(66)
-
(10)
9
-
(2)
-
266
24
-
60
86
230 $
-
1
-
2
5
646
(11) $ 4,492
$ 12,104 $
$
3,591 $
77
100
6
5,023
1,218
42
(497) $
-
-
-
5
(103)
1
135 $
(7)
(5)
-
32
49
(12)
380
21
-
-
2,632
5,814
-
$
$
(2)
-
(617)
(1,240) $
-
(93)
(6)
(2,807) $
-
2
-
663
$
(2)
(1)
(279)
(554) $ 12,877 $
9
138
324
(424) $
-
(2)
-
(4)
(3)
-
(231) $
(5)
(7)
(6)
(795)
(5,874)
-
108 $
10
-
10
12
21
-
(109) $
-
-
-
(7)
(58)
-
2,953 $
96
86
10
6,898
1,064
31
-
-
-
-
-
-
-
-
-
-
(26)
73
47
-
-
-
-
-
-
-
-
-
277
83
13
416
799
$ 11,645 $
-
3
(52)
1
-
6
-
-
-
(21)
-
-
-
-
225
72
-
43
(68)
(616) $
-
(2)
-
2
12
538
155 $ 9,389
$
-
-
(779)
(1,212) $
-
(335)
-
(7,274) $
-
37
4
202 $
(2)
3
(12)
(185) $ 12,104 $
11
164
494
-
(30)
(102)
(132)
(a) Earnings effects are primarily included in the “GECC revenues from services” and “Interest and other financial charges” captions in the Statement of Earnings.
(b) Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers out of Level 3 were primarily a result of increased use of quotes from
independent pricing vendors based on recent trading activity.
(c) Represents the amount of unrealized gains or losses for the period included in earnings.
(d) Represents derivative assets net of derivative liabilities and included cash accruals of $12 million and $9 million not reflected in the fair value hierarchy table during 2014
and 2013, respectively.
(e) Gains (losses) included in net realized/unrealized gains (losses) included in earnings were offset by the earnings effects from the underlying items that were
economically hedged. See Note 22.
198 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F AI R V AL U E M E AS U R E M E N T S
NON-RECURRING FAIR VALUE MEASUREMENTS
The following table represents non-recurring fair value amounts (as measured at the time of the adjustment) for those assets
remeasured to fair value on a non-recurring basis during the fiscal year and still held at December 31, 2014 and 2013.
(In millions)
Level 2
Level 3
Level 2
Level 3
Financing receivables and loans held for sale
Cost and equity method investments(a)
Long-lived assets, including real estate
Total
$
$
49
11
364
424
$
$
1,430
404
1,253
3,087
$
$
210
-
2,050
2,260
$
$
2,986
690
1,088
4,764
Remeasured during the years ended December 31
2014
2013
The following table represents the fair value adjustments to assets measured at fair value on a non-recurring basis and still
held at December 31, 2014 and 2013.
(In millions)
Financing receivables and loans held for sale
Cost and equity method investments
Long-lived assets, including real estate
Total
Years ended December 31
2014
(317)
(388)
(794)
(1,499)
$
$
2013
(361)
(484)
(1,188)
(2,033)
$
$
GE 2014 FORM 10-K 199
F I N AN C I AL S T AT E M E N T S F AI R V AL U E M E AS U R E M E N T S
LEVEL 3 MEASUREMENTS - SIGNIFICANT UNOBSERVABLE INPUTS
Fair value Valuation technique
Unobservable inputs
Range
(weighted average)
(Dollars in millions)
(cid:3)
December 31, 2014
Recurring fair value measurements
Investment securities – Debt
U.S. corporate
State and municipal
Asset-backed
Corporate – non-U.S.
Other financial assets
$
980 Income approach
481 Income approach
7,554 Income approach
724 Income approach
165 Income approach,
Market comparables
Discount rate(a)
Discount rate(a)
Discount rate(a)
Discount rate(a)
EBITDA multiple
Discount rate(a)
Capitalization rate(b)
1.5%-14.8% (6.6%)
1.9%-5.9% (2.8%)
2.2%-12.4% (5.0%)
0.4%-14.7% (7.6%)
5.4X-9.1X (7.7X)
4.2%-4.7% (4.3%)
6.5%-7.8% (7.7%)
Capitalization rate(b)
EBITDA multiple
6.9%-11.0% (7.8%)
4.3X-6.5X (6.2X)
Non-recurring fair value measurements
Financing receivables and
loans held for sale
$
666 Income approach,
Business enterprise
value
Cost and equity method investments
346 Income approach,
Business enterprise
value, Market comparables EBITDA multiple
Discount rate(a)
Capitalization rate(b)
Long-lived assets, including real estate
932 Income approach
December 31, 2013
Recurring fair value measurements
Investment securities – Debt
U.S. corporate
Asset-backed
Corporate – non-U.S.
Other financial assets
$
898 Income approach
6,854 Income approach
819 Income approach
381 Income approach,
Market comparables
Non-recurring fair value measurements
Financing receivables and
loans held for sale
$
Cost and equity method investments
1,937 Income approach,
Business enterprise
value
102 Income approach,
Market comparables
Long-lived assets, including real estate
694 Income approach
Capitalization rate(b)
Discount rate(a)
Discount rate(a)
Discount rate(a)
Discount rate(a)
WACC(c)
EBITDA multiple
Discount rate(a)
Capitalization rate(b)
Capitalization rate(b)
EBITDA multiple
Discount rate(a)
Discount rate(a)
Capitalization rate(b)
WACC(c)
EBITDA multiple
Revenue multiple
Capitalization rate(b)
Discount rate(a)
8.0%-10.0% (9.4%)
6.4%-6.4% (6.4%)
1.8X-10.5X (7.0X)
6.3%-15.3% (6.8%)
2.0%-19.0% (6.8%)
1.5%-13.3% (6.5%)
1.2%-10.5%(3.7%)
1.4%-46.0%(15.1%)
9.3%-9.3% (9.3%)
5.4X-12.5X(9.5X)
5.2%-8.8%(5.3%)
6.3%-7.5%(7.2%)
5.5%-16.7%(8.0%)
4.3X-5.5X(4.8X)
6.6%-6.6% (6.6%)
5.7%-5.9%(5.8%)
8.5%-10.6% (10.0%)
9.3%-9.6%(9.4%)
7.1X-14.5X(11.3X)
2.2X-12.6X(9.4X)
5.4%-14.5%(7.8%)
4.0%-23.0%(9.0%)
(a) Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the
discount rate would result in a decrease in the fair value.
(b) Represents the rate of return on net operating income that is considered acceptable for an investor and is used to determine a property’s capitalized value. An increase
in the capitalization rate would result in a decrease in the fair value.
(c) Weighted average cost of capital (WACC).
At December 31, 2014 and 2013, other Level 3 recurring fair value measurements of $2,694 million and $2,816 million,
respectively, and non-recurring measurements of $1,035 million and $1,460 million, respectively, are valued using non-binding
broker quotes or other third-party sources. At December 31, 2014 and 2013, other recurring fair value measurements of $267
million and $327 million, respectively, and non-recurring fair value measurements of $108 million and $571 million,
respectively, were individually insignificant and utilize a number of different unobservable inputs not subject to meaningful
aggregation.
200 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I AL I N S T R U M E N T S
NOTE 22. FINANCIAL INSTRUMENTS
The following table provides information about assets and liabilities not carried at fair value. The table excludes finance leases
and non-financial assets and liabilities. Substantially all of the assets discussed below are considered to be Level 3. The vast
majority of our liabilities’ fair value can be determined based on significant observable inputs and thus considered Level 2. Few
of the instruments are actively traded and their fair values must often be determined using financial models. Realization of the
fair value of these instruments depends upon market forces beyond our control, including marketplace liquidity.
(cid:3)
(cid:3)
December 31 (In millions)
GE
Assets
Investments and notes
receivable
Liabilities
Borrowings(b)
GECC
Assets
Loans
Other commercial mortgages
Loans held for sale
Other financial instruments(c)
Liabilities
Borrowings and bank
deposits(b)(d)
Investment contract benefits
Guaranteed investment contracts
Insurance – credit life(e)
2014
Assets (liabilities)
Carrying
amount
(net)
Estimated
fair value
Notional
amount
2013
Assets (liabilities)
Carrying
amount
(net)
Estimated
fair value
Notional
amount
$
(a)
$
502 $
551 $
(a)
$
488 $
512
(a)
(a)
(a)
(a)
(a)
(16,340)
(17,503)
(a)
(13,356)
(13,707)
212,719
3,520
1,801
691
217,662
3,600
1,826
1,015
(a)
(a)
(a)
(a)
226,293
2,270
512
1,622
230,792
2,281
512
2,203
(a)
(a)
(a)
1,843
(349,548)
(2,970)
(1,000)
(90)
(366,256)
(3,565)
(1,031)
(77)
(a)
(a)
(a)
2,149
(371,062)
(3,144)
(1,471)
(108)
(386,823)
(3,644)
(1,459)
(94)
(a) These financial instruments do not have notional amounts.
(b) See Note 10.
(c) Principally comprises cost method investments.
(d) Fair values exclude interest rate and currency derivatives designated as hedges of borrowings. Had they been included, the fair value of borrowings at December 31,
2014 and 2013 would have been reduced by $5,020 million and $2,284 million, respectively.
(e) Net of reinsurance of $964 million and $1,250 million at December 31, 2014 and 2013, respectively.
A description of how we estimate fair values follows:
Loans. Based on a discounted future cash flows methodology, using current market interest rate data adjusted for inherent
credit risk or quoted market prices and recent transactions, if available.
Borrowings and bank deposits. Based on valuation methodologies using current market interest rate data that are
comparable to market quotes adjusted for our non-performance risk.
Investment contract benefits. Based on expected future cash flows, discounted at currently offered rates for immediate
annuity contracts or the income approach for single premium deferred annuities.
Guaranteed investment contracts. Based on valuation methodologies using current market interest rate data, adjusted for
our non-performance risk.
Insurance – credit life. Certain insurance affiliates, primarily in Consumer, issue credit life insurance designed to pay the
balance due on a loan if the borrower dies before the loan is repaid. As part of our overall risk management process, we cede
to third parties a portion of this associated risk, but are not relieved of our primary obligation to the policy holders.
GE 2014 FORM 10-K 201
F I N AN C I AL S T AT E M E N T S F I N AN C I AL I N S T R U M E N T S
All other instruments. Based on observable market transaction and/or valuation methodologies using current market interest
rate data adjusted for inherent credit risk.
Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above
disclosures; such items include cash and equivalents, investment securities and derivative financial instruments.
Additional information about Notional Amounts of Loan Commitments follows.
NOTIONAL AMOUNTS OF LOAN COMMITMENTS
December 31 (In millions)
Ordinary course of business lending commitments(a)
Unused revolving credit lines(b)
Commercial(c)
Consumer – principally credit cards
2014
2013
$
4,282
$
4,756
14,681
306,188
16,570
290,662
(a) Excluded investment commitments of $980 million and $1,395 million at December 31, 2014 and 2013, respectively.
(b) Excluded amounts related to inventory financing arrangements, which may be withdrawn at our option, of $15,041 million and $13,502 million at December 31, 2014 and
2013, respectively.
(c) Included amounts related to commitments of $10,509 million and $11,629 million at December 31, 2014 and 2013, respectively, associated with secured financing
arrangements that could have increased to a maximum of $12,353 million and $14,590 million at December 31, 2014 and 2013, respectively, based on asset volume
under the arrangement.
SECURITIES REPURCHASE AND REVERSE REPURCHASE ARRANGEMENTS
Our issuances of securities repurchase agreements are insignificant and are limited to activities at certain of our foreign banks
primarily for purposes of liquidity management. At December 31, 2014, we were party to repurchase agreements totaling $169
million, which were reported in short-term borrowings on the financial statements. No repurchase agreements were accounted
for as off-book financing and we do not engage in securities lending transactions.
We also enter into reverse securities repurchase agreements, primarily for short-term investment with maturities of 90 days or
less. At December 31, 2014, we were party to reverse repurchase agreements totaling $11.5 billion, which were reported in
cash and equivalents on the financial statements. Under these reverse securities repurchase agreements, we typically lend
available cash at a specified rate of interest and hold U.S. or highly-rated European government securities as collateral during
the term of the agreement. Collateral value is in excess of amounts loaned under the agreements.
DERIVATIVES AND HEDGING
As a matter of policy, we use derivatives for risk management purposes and we do not use derivatives for speculative
purposes. A key risk management objective for our financial services businesses is to mitigate interest rate and currency risk
by seeking to ensure that the characteristics of the debt match the assets they are funding. If the form (fixed versus floating)
and currency denomination of the debt we issue do not match the related assets, we typically execute derivatives to adjust the
nature and tenor of funding to meet this objective within pre-defined limits. The determination of whether we enter into a
derivative transaction or issue debt directly to achieve this objective depends on a number of factors, including market related
factors that affect the type of debt we can issue.
202 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I AL I N S T R U M E N T S
The notional amounts of derivative contracts represent the basis upon which interest and other payments are calculated and
are reported gross, except for offsetting foreign currency forward contracts that are executed in order to manage our currency
risk of net investment in foreign subsidiaries. Of the outstanding notional amount of $297,000 million, approximately 87% or
$258,000 million, is associated with reducing or eliminating the interest rate, currency or market risk between financial assets
and liabilities in our financial services businesses. The remaining derivative activities primarily relate to hedging against
adverse changes in currency exchange rates and commodity prices related to anticipated sales and purchases and contracts
containing certain clauses that meet the accounting definition of a derivative. The instruments used in these activities are
designated as hedges when practicable. When we are not able to apply hedge accounting, or when the derivative and the
hedged item are both recorded in earnings concurrently, the derivatives are deemed economic hedges and hedge accounting
is not applied. This most frequently occurs when we hedge a recognized foreign currency transaction (e.g., a receivable or
payable) with a derivative. Since the effects of changes in exchange rates are reflected concurrently in earnings for both the
derivative and the transaction, the economic hedge does not require hedge accounting.
FAIR VALUE OF DERIVATIVES
December 31 (In millions)
Derivatives accounted for as hedges
Interest rate contracts
Currency exchange contracts
Other contracts
$
Derivatives not accounted for as hedges
Interest rate contracts
Currency exchange contracts
Other contracts
Gross derivatives recognized in statement of
financial position
Gross derivatives
Gross accrued interest
Amounts offset in statement of financial position
Netting adjustments(a)
Cash collateral(b)
Net derivatives recognized in statement of
financial position
Net derivatives
Amounts not offset in statement of
financial position
Securities held as collateral(c)
2014
Assets
Liabilities
2013
Assets
Liabilities
$
5,859
2,579
-
8,438
276
1,212
256
1,744
10,182
1,401
11,583
(3,896)
(3,709)
(7,605)
$
461
884
2
1,347
137
3,450
55
3,642
4,989
(18)
4,971
(3,905)
(502)
(4,407)
$
3,837
1,830
1
5,668
270
2,257
284
2,811
8,479
1,227
9,706
(4,120)
(2,619)
(6,739)
1,989
984
-
2,973
169
2,245
42
2,456
5,429
241
5,670
(4,113)
(242)
(4,355)
3,978
564
2,967
1,315
(3,361)
-
(1,962)
-
Net amount
$
617
$
564
$
1,005
$
1,315
Derivatives are classified in the captions “All other assets” and “All other liabilities” and the related accrued interest is classified in “Other GECC receivables” and “All other
liabilities” in our financial statements.
(a) The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments
related to our own and counterparty non-performance risk. At December 31, 2014 and 2013, the cumulative adjustment for non-performance risk was a gain (loss) of $9
million and $(7) million, respectively.
(b) Excluded excess cash collateral received and posted of $63 million and $211 million, and $160 million and $37 million at December 31, 2014 and 2013, respectively.
(c) Excluded excess securities collateral received of $224 million and $363 million at December 31, 2014 and 2013, respectively.
GE 2014 FORM 10-K 203
F I N AN C I AL S T AT E M E N T S F I N AN C I AL I N S T R U M E N T S
FAIR VALUE HEDGES
We use interest rate and currency exchange derivatives to hedge the fair value effects of interest rate and currency exchange
rate changes on local and non-functional currency denominated fixed-rate debt. For relationships designated as fair value
hedges, changes in fair value of the derivatives are recorded in earnings within interest and other financial charges, along with
offsetting adjustments to the carrying amount of the hedged debt.
EARNINGS EFFECTS OF FAIR VALUE HEDGING RELATIONSHIPS
(In millions)
Interest rate contracts
Currency exchange contracts
2014
Gain (loss)
on hedging
derivatives
Gain (loss)
on hedged
items
2013
Gain (loss)
on hedging
derivatives
$
3,898
(19)
$
(3,973)
17
$
(5,258)
(7)
$
Gain (loss)
on hedged
items
5,180
6
Fair value hedges resulted in $(77) million and $(79) million of ineffectiveness in 2014 and 2013, respectively. In both 2014
and 2013, there were insignificant amounts excluded from the assessment of effectiveness.
CASH FLOW HEDGES
We use interest rate, currency exchange and commodity derivatives to reduce the variability of expected future cash flows
associated with variable rate borrowings and commercial purchase and sale transactions, including commodities. For
derivatives that are designated in a cash flow hedging relationship, the effective portion of the change in fair value of the
derivative is reported as a component of AOCI and reclassified into earnings contemporaneously and in the same caption with
the earnings effects of the hedged transaction.
(cid:3)
(In millions)
Interest rate contracts
Currency exchange contracts
Commodity contracts
Total(a)
Gain (loss) recognized in AOCI
$
$
2014
(1)
(541)
(4)
(546)
$
$
2013
(26)
941
(6)
909
$
$
Gain (loss) reclassified
from AOCI into earnings
2014
(234)
(641)
(3)
(878)
$
$
2013
(364)
817
(5)
448
(a) Gain (loss) is recorded in GECC revenues from services, interest and other financial charges, and other costs and expenses when reclassified to earnings.
The total pre-tax amount in AOCI related to cash flow hedges of forecasted transactions was a $213 million loss at December
31, 2014. We expect to transfer $212 million to earnings as an expense in the next 12 months contemporaneously with the
earnings effects of the related forecasted transactions. In both 2014 and 2013, we recognized insignificant gains and losses
related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period.
At December 31, 2014 and 2013, the maximum term of derivative instruments that hedge forecasted transactions was 18
years and 19 years, respectively. See Note15 for additional information about reclassifications out of AOCI.
For cash flow hedges, the amount of ineffectiveness in the hedging relationship and amount of the changes in fair value of the
derivatives that are not included in the measurement of ineffectiveness were insignificant for each reporting period.
204 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I AL I N S T R U M E N T S
NET INVESTMENT HEDGES IN FOREIGN OPERATIONS
We use currency exchange derivatives to protect our net investments in global operations conducted in non-U.S. dollar
currencies. For derivatives that are designated as hedges of net investment in a foreign operation, we assess effectiveness
based on changes in spot currency exchange rates. Changes in spot rates on the derivative are recorded as a component of
AOCI until such time as the foreign entity is substantially liquidated or sold, or upon the loss of a controlling interest in a foreign
entity. The change in fair value of the forward points, which reflects the interest rate differential between the two countries on
the derivative, is excluded from the effectiveness assessment.
GAINS (LOSSES) RECOGNIZED THROUGH CTA
(In millions)
Gain (loss) recognized in CTA
Gain (loss) reclassified from CTA
2014
2013
2014
2013
Currency exchange contracts(a)
$
5,741
$
2,322
$
88
$
(1,525)
(a) Gain (loss) is recorded in GECC revenues from services when reclassified out of AOCI.
The amounts related to the change in the fair value of the forward points that are excluded from the measure of effectiveness
were $(549) million and $(678) million for the years ended December 31, 2014 and 2013, respectively, and were recorded in
interest and other financial charges.
FREE-STANDING DERIVATIVES
Changes in the fair value of derivatives that are not designated as hedges are recorded in earnings each period. As discussed
above, these derivatives are typically entered into as economic hedges of changes in interest rates, currency exchange rates,
commodity prices and other risks. Gains or losses related to the derivative are typically recorded in GECC revenues from
services or other income, based on our accounting policy. In general, the earnings effects of the item that represent the
economic risk exposure are recorded in the same caption as the derivative. Gains (losses) for the year ended December 31,
2014 on derivatives not designated as hedges were $(2,045) million composed of amounts related to interest rate contracts of
$(58) million, currency exchange contracts of $(2,034) million, and other derivatives of $47 million. These losses were more
than offset by the earnings effects from the underlying items that were economically hedged. Gains (losses) for the year ended
December 31, 2013 on derivatives not designated as hedges were $(449) million composed of amounts related to interest rate
contracts of $(111) million, currency exchange contracts of $(595) million, and other derivatives of $257 million. These losses
were more than offset by the earnings effects from the underlying items that were economically hedged.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors, market
movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not
make payments to us according to the terms of our agreements) on an individual counterparty basis. Where we have agreed
to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of
collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take
appropriate actions in response, including requiring additional collateral.
As discussed above, we have provisions in certain of our master agreements that require counterparties to post collateral
(typically, cash or U.S. Treasury securities) when our receivable due from the counterparty, measured at current market value,
exceeds a specified limit. The fair value of such collateral was $7,070 million at December 31, 2014, of which $3,709 million
was cash and $3,361 million was in the form of securities held by a custodian for our benefit. Under certain of these same
agreements, we post collateral to our counterparties for our derivative obligations, the fair value of which was $502 million at
December 31, 2014. At December 31, 2014, our exposure to counterparties (including accrued interest), net of collateral we
hold, was $487 million. This excludes exposure related to embedded derivatives.
GE 2014 FORM 10-K 205
F I N AN C I AL S T AT E M E N T S V AR I AB L E I N T E R E S T E N T I T I E S
Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to
require termination if the long-term credit rating of the counterparty were to fall below A-/A3. In certain of these master
agreements, each party also has the ability to require termination if the short-term rating of the counterparty were to fall below
A-1/P-1. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain
other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of
these circumstances, the termination amount payable would be determined on a net basis and could also take into account
any collateral posted. The net amount of our derivative liability, after consideration of collateral posted by us and outstanding
interest payments was $514 million at December 31, 2014. This excludes embedded derivatives.
NOTE 23. VARIABLE INTEREST ENTITIES
We use variable interest entities primarily to securitize financial assets and arrange other forms of asset-backed financing in
the ordinary course of business. Except as noted below, investors in these entities only have recourse to the assets owned by
the entity and not to our general credit. We do not have implicit support arrangements with any VIE. We did not provide non-
contractual support for previously transferred financing receivables to any VIE in 2014 or 2013.
In evaluating whether we have the power to direct the activities of a VIE that most significantly impact its economic
performance, we consider the purpose for which the VIE was created, the importance of each of the activities in which it is
engaged and our decision-making role, if any, in those activities that significantly determine the entity’s economic performance
as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant
to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which
decision-making rights are most important.
In determining whether we have the right to receive benefits or the obligation to absorb losses that could potentially be
significant to the VIE, we evaluate all of our economic interests in the entity, regardless of form (debt, equity, management and
servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design,
including: the entity’s capital structure, contractual rights to earnings (losses), subordination of our interests relative to those of
other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically
significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of our economic
interests is a matter that requires the exercise of professional judgment.
206 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S V AR I AB L E I N T E R E S T E N T I T I E S
CONSOLIDATED VARIABLE INTEREST ENTITIES
We consolidate VIEs because we have the power to direct the activities that significantly affect the VIE’s economic
performance, typically because of our role as either servicer or manager for the VIE. Our consolidated VIEs fall into three main
groups, which are further described below:
(cid:120)
Trinity comprises two consolidated entities that hold investment securities, the majority of which are investment-grade,
and were funded by the issuance of GICs. The GICs include conditions under which certain holders could require
immediate repayment of their investment should the long-term credit ratings of GECC fall below AA-/Aa3 or the short-term
credit ratings fall below A-1+/P-1. The outstanding GICs are subject to their scheduled maturities and individual terms,
which may include provisions permitting redemption upon a downgrade of one or more of GECC’s ratings, among other
things, and are reported in investment contracts, insurance liabilities and insurance annuity benefits.
(cid:120) Consolidated Securitization Entities (CSEs) were created to facilitate securitization of financial assets and other forms of
asset-backed financing that serve as an alternative funding source by providing access to variable funding notes and term
markets. The securitization transactions executed with these entities are similar to those used by many financial
institutions and all are non-recourse. We provide servicing for substantially all of the assets in these entities.
The financing receivables in these entities have similar risks and characteristics to our other financing receivables and
were underwritten to the same standard. Accordingly, the performance of these assets has been similar to our other
financing receivables; however, the blended performance of the pools of receivables in these entities reflects the eligibility
criteria that we apply to determine which receivables are selected for transfer. Contractually the cash flows from these
financing receivables must first be used to pay third-party debt holders as well as other expenses of the entity. Excess
cash flows are available to GE. The creditors of these entities have no claim on other assets of GE.
(cid:120) Other remaining assets and liabilities of consolidated VIEs relate primarily to three categories of entities: (1) joint ventures
that lease equipment with $1,598 million of assets and $686 million of liabilities; (2) other entities that are involved in
power generating and leasing activities with $667 million of assets and no liabilities; and (3) insurance entities that, among
other lines of business, provide property and casualty and workers’ compensation coverage for GE with $1,162 million of
assets and $541 million of liabilities.
GE 2014 FORM 10-K 207
F I N AN C I AL S T AT E M E N T S V AR I AB L E I N T E R E S T E N T I T I E S
ASSETS AND LIABILITIES OF CONSOLIDATED VIEs
(cid:3)
(cid:3)
(In millions)
December 31, 2014
Assets(c)
Financing receivables, net
Current receivables
Investment securities
Other assets
Total
Liabilities(c)
Borrowings
Non-recourse borrowings
Other liabilities
Total
December 31, 2013
Assets(c)
Financing receivables, net
Current receivables
Investment securities
Other assets
Total
Liabilities(c)
Borrowings
Non-recourse borrowings
Other liabilities
Total
Consolidated Securitization Entities
Trinity(a)
Credit cards (b)
Equipment (b)
Trade
receivables
Other
Total
$
$
$
$
$
$
$
$
-
-
2,369
17
2,386
-
-
1,022
1,022
-
-
2,786
213
2,999
-
-
1,482
1,482
$
$
$
$
$
$
$
$
25,645
-
-
1,059
26,704
-
14,967
332
15,299
24,766
-
-
20
24,786
-
15,363
228
15,591
$
$
$
$
$
$
$
$
12,843
-
-
766
13,609
-
10,359
593
10,952
12,928
-
-
557
13,485
-
10,982
248
11,230
$
$
$
$
$
$
$
$
$
-
3,028 (d)
-
2
3,030
$
-
2,692
26
2,718
-
2,509
-
-
2,509
-
2,180
25
2,205
$
$
$
$
$
$
3,064
509
1,005
2,814
7,392
523
646
1,548
2,717
2,044
349
1,044
2,081
5,518
598
49
1,351
1,998
$
$
$
$
$
$
$
$
41,552
3,537
3,374
4,658
53,121
523
28,664
3,521
32,708
39,738
2,858
3,830
2,871
49,297
598
28,574
3,334
32,506
(a) Excluded intercompany advances from GECC to Trinity, which were eliminated in consolidation of $1,565 million and $1,837 million at December 31, 2014 and 2013,
respectively.
(b) We provide servicing to the CSEs and are contractually permitted to commingle cash collected from customers on financing receivables sold to CSE investors with our
own cash prior to payment to a CSE, provided our short-term credit rating does not fall below A-1/P-1. These CSEs also owe us amounts for purchased financial assets
and scheduled interest and principal payments. At December 31, 2014 and 2013, the amounts of commingled cash owed to the CSEs were $2,809 million and $6,314
million, respectively, and the amounts owed to us by CSEs were $2,913 million and $5,540 million, respectively.
(c) Asset amounts exclude intercompany receivables for cash collected on behalf of the entities by GECC as servicer, which are eliminated in consolidation. Such
receivables provide the cash to repay the entities’ liabilities. If these intercompany receivables were included in the table above, assets would be higher. In addition,
other assets, borrowings and other liabilities exclude intercompany balances that are eliminated in consolidation.
(d) Included $686 million of receivables originated by Appliances. We require third party debt holder consent to sell these assets. The receivables will be included in assets
of businesses held for sale when the consent is received.
Total revenues from our consolidated VIEs were $8,012 million, $7,540 million and $7,127 million in 2014, 2013 and 2012,
respectively. Related expenses consisted primarily of provisions for losses of $1,186 million, $1,247 million and $1,171 million
in 2014, 2013 and 2012, respectively, and interest and other financial charges of $358 million, $355 million and $541 million in
2014, 2013 and 2012, respectively. These amounts do not include intercompany revenues and costs, principally fees and
interest between GE and the VIEs, which are eliminated in consolidation.
208 GE 2014 FORM 10-K
F I N A N C I A L S T AT E M E N T S C O M M I T M E N T S , P R O D U C T W A R R A N T I E S A N D G U A R A N T E E S
INVESTMENTS IN UNCONSOLIDATED VARIABLE INTEREST ENTITIES
Our involvement with unconsolidated VIEs consists of the following activities: assisting in the formation and financing of the
entity; providing recourse and/or liquidity support; servicing the assets; and receiving variable fees for services provided. We
are not required to consolidate these entities because the nature of our involvement with the activities of the VIEs does not
give us power over decisions that significantly affect their economic performance.
Our largest exposure to any single unconsolidated VIE at December 31, 2014 is a $8,612 million investment in asset-backed
securities issued by the Senior Secured Loan Program (“SSLP”), a fund that invests in high-quality senior secured debt of
various middle-market companies. Other significant unconsolidated VIEs include investments in real estate entities ($1,564
million), which generally consist of passive limited partnership investments in tax-advantaged, multi-family real estate and
investments in various European real estate entities; and exposures to joint ventures that purchase factored receivables
($2,166 million).
The classification of our variable interests in these entities in our financial statements is based on the nature of the entity and
the type of investment we hold. Variable interests in partnerships and corporate entities are classified as either equity method
or cost method investments. In the ordinary course of business, we also make investments in entities in which we are not the
primary beneficiary but may hold a variable interest such as limited partner interests or mezzanine debt investments. These
investments are classified in two captions in our financial statements: “All other assets” for investments accounted for under
the equity method, and “Financing receivables – net” for debt financing provided to these entities.
INVESTMENTS IN UNCONSOLIDATED VIEs
December 31 (In millions)
Other assets and investment securities
Financing receivables – net
Total investments
Contractual obligations to fund investments or guarantees
Revolving lines of credit
Total
2014
9,500
2,942
12,442
2,218
168
14,828
$
$
2013
9,129
3,346
12,475
2,741
31
15,247
$
$
In addition to the entities included in the table above, we also hold passive investments in RMBS, CMBS and ABS issued by
VIEs. Such investments were, by design, investment-grade at issuance and held by a diverse group of investors. Further
information about such investments is provided in Note 3.
NOTE 24. COMMITMENTS, PRODUCT WARRANTIES AND GUARANTEES
COMMITMENTS
In our Aviation segment, we had committed to provide financing assistance on $2,887 million of future customer acquisitions of
aircraft equipped with our engines, including commitments made to airlines in 2014 for future sales under our GE90 and GEnx
engine campaigns. The GECAS business of GE Capital had placed multiple-year orders for various Boeing, Airbus and other
aircraft with list prices approximating $25,232 million and secondary orders with airlines for used aircraft of approximately
$2,144 million at December 31, 2014.
GE 2014 FORM 10-K 209
F I N A N C I A L S T AT E M E N T S C O M M I T M E N T S , P R O D U C T W A R R A N T I E S A N D G U A R A N T E E S
PRODUCT WARRANTIES
We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are
forecasts that are based on the best available information – mostly historical claims experience – claims costs may differ from
amounts provided. An analysis of changes in the liability for product warranties follows.
(In millions)
Balance at January 1
Current-year provisions
Expenditures
Other changes
Balance at December 31
GUARANTEES
2014
1,370
593
(714)
(50)
1,199
$
$
2013
1,429
798
(867)
10
1,370
2012
1,553
645
(757)
(12)
1,429
$
$
$
$
Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic,
liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a
significant adverse effect on our financial position, results of operations or liquidity. We record liabilities for guarantees at
estimated fair value, generally the amount of the premium received, or if we do not receive a premium, the amount based on
appraisal, observed market values or discounted cash flows. Any associated expected recoveries from third parties are
recorded as other receivables, not netted against the liabilities.
At December 31, 2014, we were committed under the following guarantee arrangements beyond those provided on behalf of
VIEs. See Note 23.
Credit Support. We have provided $2,531 million of credit support on behalf of certain customers or associated companies,
predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance
guarantees. These arrangements enable these customers and associated companies to execute transactions or obtain
desired financing arrangements with third parties. Should the customer or associated company fail to perform under the terms
of the transaction or financing arrangement, we would be required to perform on their behalf. Under most such arrangements,
our guarantee is secured, usually by the asset being purchased or financed, or possibly by certain other assets of the
customer or associated company. The length of these credit support arrangements parallels the length of the related financing
arrangements or transactions. The liability for such credit support was $38 million at December 31, 2014.
Indemnification Agreements. We have agreements that require us to fund up to $28 million at December 31, 2014 under
residual value guarantees on a variety of leased equipment. Under most of our residual value guarantees, our commitment is
secured by the leased asset. The liability for these indemnification agreements was $10 million at December 31, 2014.
At December 31, 2014, we also had $923 million of other indemnification commitments, substantially all of which relate to
representations and warranties in sales of businesses or assets.
Contingent Consideration. These are agreements to provide additional consideration to a buyer or seller in a business
combination if contractually specified conditions related to the acquisition or disposition are achieved.
210 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S S U P P L E M E N T AL C AS H F L O W S I N F O R M AT I O N
NOTE 25. SUPPLEMENTAL CASH FLOWS INFORMATION
Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.
Amounts reported in the “Proceeds from sales of discontinued operations” and “Proceeds from principal business dispositions”
lines in the Statement of Cash Flows are net of cash disposed and included certain deal-related costs. Amounts reported in
the “Net cash from (payments for) principal businesses purchased” line is net of cash acquired and included certain deal-
related costs and debt assumed and immediately repaid in acquisitions. Amounts reported in the “Proceeds from sale of equity
interest in NBCU LLC” line included certain deal-related costs.
Amounts reported in the “All other operating activities” line in the Statement of Cash Flows consist primarily of adjustments to
current and noncurrent accruals, deferrals of costs and expenses and adjustments to assets. GECC had non-cash
transactions related to foreclosed properties and repossessed assets totaling $218 million, $482 million and $839 million in
2014, 2013 and 2012, respectively. Certain supplemental information related to our cash flows is shown below.
For the years ended December 31 (In millions)
2014
2013
2012
GE
Net dispositions (purchases) of GE shares for treasury
Open market purchases under share repurchase program
Other purchases
Dispositions
GECC
All other operating activities
Amortization of intangible assets
Net realized losses on investment securities
Cash collateral on derivative contracts
Increase (decrease) in other liabilities
Other
Net decrease (increase) in GECC financing receivables
Increase in loans to customers
Principal collections from customers - loans
Investment in equipment for financing leases
Principal collections from customers - financing leases
Net change in credit card receivables
Sales of financing receivables
All other investing activities
Purchases of investment securities
Dispositions and maturities of investment securities
Decrease (increase) in other assets - investments
Proceeds from sales of real estate properties
Other
Newly issued debt (maturities longer than 90 days)
Short-term (91 to 365 days)
Long-term (longer than one year)
Repayments and other reductions (maturities longer than 90 days)
Short-term (91 to 365 days)
Long-term (longer than one year)
Principal payments - non-recourse, leveraged leases
All other financing activities
Proceeds from sales of investment contracts
Redemption of investment contracts
Other
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(2,211)
(49)
1,042
(1,218)
408
17
745
(1,771)
841
240
(323,050)
302,618
(8,120)
8,421
(5,571)
20,013
(5,689)
(10,346)
9,289
(476)
5,920
2,610
6,997
29
34,435
34,464
(47,694)
(4,909)
(454)
(53,057)
322
(1,113)
(300)
(1,091)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(10,225)
(91)
1,038
(9,278)
425
523
(2,271)
2,334
(912)
99
(311,860)
307,849
(8,652)
9,646
(8,058)
14,664
3,589
(16,422)
18,139
1,089
10,680
1,486
14,972
55
44,833
44,888
(52,553)
(3,291)
(585)
(56,429)
491
(980)
(420)
(909)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(5,005)
(110)
951
(4,164)
447
34
2,900
560
1,477
5,418
(308,156)
307,250
(9,192)
10,976
(8,030)
12,642
5,490
(15,666)
17,010
4,338
3,381
2,731
11,794
59
55,782
55,841
(94,114)
(9,368)
(426)
(103,908)
2,697
(5,515)
(49)
(2,867)
GE 2014 FORM 10-K 211
F I N AN C I AL S T AT E M E N T S
I N T E R C O M P AN Y T R AN S AC T I O N S
NOTE 26. INTERCOMPANY TRANSACTIONS
Transactions between related companies are made on an arms-length basis, are eliminated and consist primarily of
GECC dividends to GE; GE customer receivables sold to GECC; GECC services for trade receivables management and
material procurement; buildings and equipment (including automobiles) leased between GE and GECC; information
technology (IT) and other services sold to GECC by GE; aircraft engines manufactured by GE that are installed on aircraft
purchased by GECC from third-party producers for lease to others; and various investments, loans and allocations of GE
corporate overhead costs.
These intercompany transactions are reported in the GE and GECC columns of our financial statements, but are
eliminated in deriving our consolidated financial statements. Effects of these eliminations on our consolidated cash flows
from operating, investing and financing activities are $(5,404) million, $1,978 million and $3,426 million for 2014, $(5,088)
million, $492 million and $4,690 million for 2013 and $(8,542) million, $2,328 million and $6,703 million for 2012,
respectively. Details of these eliminations are shown below.
(In millions)
2014
2013
2012
Cash from (used for) operating activities-continuing operations
Combined
GE customer receivables sold to GECC
GECC dividends to GE
Other reclassifications and eliminations
Cash from (used for) investing activities-continuing operations
Combined
GE customer receivables sold to GECC
Other reclassifications and eliminations
Cash from (used for) financing activities-continuing operations
Combined
GE customer receivables sold to GECC
GECC dividends to GE
Other reclassifications and eliminations
$
$
$
$
$
$
32,919
(1,918)
(3,000)
(486)
27,515
(6,720)
1,766
212
(4,742)
(20,378)
152
3,000
274
(16,952)
$
$
$
$
$
$
34,125
360
(5,985)
537
29,037
28,182
262
230
28,674
(50,319)
(622)
5,985
(673)
(45,629)
$
$
$
$
$
$
39,557
(1,809)
(6,426)
(307)
31,015
9,262
2,005
323
11,590
(57,758)
(196)
6,426
473
(51,055)
212 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
NOTE 27. SUPPLEMENTAL INFORMATION ABOUT THE CREDIT QUALITY OF
FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING
RECEIVABLES
CREDIT QUALITY INDICATORS
Detailed information about the credit quality of our Commercial, Real Estate and Consumer financing receivables portfolios is
provided below. For each portfolio, we describe the characteristics of the financing receivables and provide information about
collateral, payment performance, credit quality indicators and impairment. We manage these portfolios using delinquency and
nonaccrual data as key performance indicators. The categories used within this section such as impaired loans, troubled debt
restructuring (TDR) and nonaccrual financing receivables are defined by the authoritative guidance and we base our
categorization on the related scope and definitions contained in the related standards. The categories of nonaccrual and
delinquent are used in our process for managing our financing receivables.
PAST DUE AND NONACCRUAL FINANCING RECEIVABLES
December 31 (In millions)
Commercial
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial
Real Estate
Over 30 days
past due
(cid:3)
2014
Over 90 days
past due (cid:3)
(cid:3) Nonaccrual
Over 30 days
past due (cid:3)
2013
Over 90 days
past due (cid:3)
(cid:3)
Nonaccrual
(cid:3)
$
503 $
1,483
1,986
-
-
-
1,986
242
284 $
749
1,033
-
-
-
1,033
1,054
946
2,000
68
419
-
2,487 (a)
$
755 $
1,490
2,245
-
-
-
2,245
359 $
820
1,179
-
-
-
1,179
1,275
1,459
2,734
4
-
6
2,744 (a)
183
1,254 (b)
247
212
2,551 (b)
Consumer
Non-U.S. residential mortgages
Non-U.S. installment and revolving credit
U.S. installment and revolving credit
Other
Total Consumer
Total
Total as a percent of financing receivables
$
2,171
333
2,492
141
5,137
7,365 $
3.0 %
1,195
89
1,147
64
2,495 (c)
3,711 $
1.5 %
1,262
53
2
167
1,484 (d)
5,225
2.2 %
$
3,406
601
2,442
172
6,621
9,113 $
3.5 %
2,104
159
1,105
99
3,467 (c)
4,858 $
1.9 %
2,161
106
2
351
2,620 (d)
7,915
3.1 %
(a) Included $1,549 million and $1,397 million at December 31, 2014 and 2013, respectively, that are currently paying in accordance with their contractual terms.
(b) Included $1,018 million and $2,308 million at December 31, 2014 and 2013, respectively, that are currently paying in accordance with their contractual terms.
(c) Included $1,231 million and $1,197 million of Consumer loans at December 31, 2014 and 2013, respectively, that are over 90 days past due and continue to accrue
interest until the accounts are written off in the period that the account becomes 180 days past due.
(d) Included $179 million and $324 million at December 31, 2014 and 2013, respectively, that are currently paying in accordance with their contractual terms.
GE 2014 FORM 10-K 213
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
IMPAIRED LOANS AND RELATED RESERVES
December 31 (In millions)
2014
Commercial
CLL
Americas
International(a)
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial(b)
Real Estate(c)
Consumer(d)
Total
2013
Commercial
CLL
Americas
International(a)
Total CLL
Energy Financial Services
GECAS
Other
Total Commercial(b)
Real Estate(c)
Consumer(d)
Total
With no specific allowance
With a specific allowance
Recorded
investment
in loans
Unpaid
principal
balance
Average
investment
in loans
Recorded
investment
in loans
Unpaid
principal
balance
Associated
allowance
Average
investment
in loans
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
$
(cid:3)
(cid:3)
(cid:3)
$
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
$
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
1,352 (cid:3) $
940
2,292 (cid:3)
53 (cid:3)
(cid:3)
329 (cid:3)
(cid:3)
-
2,674
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
1,897 (cid:3) $
2,500
4,397 (cid:3)
54 (cid:3)
(cid:3)
337 (cid:3)
(cid:3)
-
4,788
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
1,626 $
1,099
2,725
26
88
-
2,839
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
126 (cid:3) $
280
406 (cid:3)
15 (cid:3)
(cid:3)
- (cid:3)
-
421
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
160 $
965
1,125
15 (cid:3)
-
-
1,140
1,555 (cid:3)
(cid:3)
1,854 (cid:3)
(cid:3)
2,285
317 (cid:3)
(cid:3)
443 (cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
28 $
105
133
12 (cid:3)
-
-
145
25 (cid:3)
254
463
717
24
15
1
757
686
138
4,367 $
179
6,821 $
120
5,244 $
2,042
2,780 $
2,092
3,675 $
408
578 $
2,547
3,990
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
1,670 $
1,104
2,774
-
-
2
2,776
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
2,187 $
3,082
5,269
-
-
3
5,272
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
2,154 $
1,136
3,290
-
-
9
3,299
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
417 $
691
1,108
4
-
4
1,116
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
505 $
1,059
1,564
4
-
4
1,572
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
96 $
231
327
1
-
-
328
509
629
1,138
2
1
5
1,146
2,615
3,036
3,058
1,245
1,507
74
1,688
109
5,500 $
153
8,461 $
98
6,455 $
2,879
5,240 $
2,948
6,027 $
$
567
969 $
3,058
5,892
(a) Write-offs to net realizable value are recognized against the allowance for losses primarily in the reporting period in which management has deemed all or a portion of
the financing receivable to be uncollectible, but not later than 360 days after initial recognition of a specific reserve for a collateral dependent loan. However, in
accordance with regulatory standards that are applicable in Italy, commercial loans are considered uncollectible when there is demonstrable evidence of the debtor’s
insolvency, which may result in write-offs occurring beyond 360 days after initial recognition of a specific reserve.
(b) We recognized $178 million and $218 million of interest income, including none and $60 million on a cash basis, at December 31, 2014 and 2013, respectively,
principally in our CLL Americas business. The total average investment in impaired loans at December 31, 2014 and 2013 was $3,596 million and $4,445 million,
respectively.
(c) We recognized $56 million and $187 million of interest income, including none and $135 million on a cash basis, at December 31, 2014 and 2013, respectively. The total
average investment in impaired loans at December 31, 2014 and 2013 was $2,971 million and $4,746 million, respectively.
(d) We recognized $126 million and $221 million of interest income, including $5 million, and $3 million on a cash basis, at December 31, 2014 and 2013, respectively,
principally in our Consumer-U.S. installment and revolving credit portfolios. The total average investment in impaired loans at December 31, 2014 and 2013 was $2,667
million and $3,156 million, respectively.
214 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
December 31 (In millions)
(cid:3)
2014
Commercial
Real Estate
Consumer
Total
2013
Commercial
Real Estate
Consumer
Total
Non-impaired
financing receivables
General reserves
Impaired loans
Specific reserves
$
$
$
$
118,381
17,925
98,640
234,946
125,377
16,039
106,051
247,467
$
$
$
$
758
136
3,603
4,497
677
118
3,414
4,209
$
$
$
$
3,095
1,872
2,180
7,147
3,892
3,860
2,988
10,740
$
$
$
$
145
25
408
578
328
74
567
969
We regularly review our Real Estate loans for impairment using both quantitative and qualitative factors, such as debt service
coverage and loan-to-value ratios. We evaluate a Real Estate loan for impairment when the most recent valuation reflects a
projected loan-to-value ratio at maturity in excess of 100%, even if the loan is currently paying in accordance with its
contractual terms.
Of our $1,872 million of impaired loans at Real Estate at December 31, 2014, $1,641 million are currently paying in
accordance with the contractual terms of the loan and are typically loans where the borrower has adequate debt service
coverage to meet contractual interest obligations. Impaired loans at CLL primarily represent senior secured lending positions.
IMPAIRED LOAN BALANCE CLASSIFIED BY THE METHOD USED TO MEASURE IMPAIRMENT
December 31 (In millions)
Discounted cash flow
Collateral value
Total
2014
3,994
3,153
7,147
$
$
2013
5,558
5,182
10,740
$
$
Our loss mitigation strategy is intended to minimize economic loss and, at times, can result in rate reductions, principal
forgiveness, extensions, forbearance or other actions, which may cause the related loan to be classified as a troubled debt
restructuring (TDR), and also as impaired. The determination of whether these changes to the terms and conditions of our
commercial loans meet the TDR criteria includes our consideration of all relevant facts and circumstances. At December 31,
2014, TDRs included in impaired loans were $5,806 million, primarily relating to Consumer ($2,132 million), CLL ($1,869
million) and Real Estate ($1,757 million).
GE 2014 FORM 10-K 215
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
Impaired loans classified as TDRs in our CLL business were $1,869 million and $2,961 million at December 31, 2014 and
2013, respectively, and were primarily attributable to CLL Americas ($1,031 million and $1,770 million, respectively). At
December 31, 2014, we modified $926 million of loans classified as TDRs, primarily in CLL Americas ($515 million). Changes
to these loans primarily included extensions, interest only payment periods, debt to equity exchange and forbearance or other
actions, which are in addition to, or sometimes in lieu of, fees and rate increases. Of our $926 million and $1,509 million of
modifications classified as TDRs at December 31, 2014 and 2013, respectively, $36 million and $71 million have subsequently
experienced a payment default at December 31, 2014 and 2013, respectively.
Real Estate TDRs decreased from $3,625 million at December 31, 2013 to $1,757 million at December 31, 2014, primarily
driven by resolution of TDRs through paydowns. For borrowers with demonstrated operating capabilities, we work to
restructure loans when the cash flow and projected value of the underlying collateral support repayment over the modified
term. We deem loan modifications to be TDRs when we have granted a concession to a borrower experiencing financial
difficulty and we do not receive adequate compensation in the form of an effective interest rate that is at current market rates
of interest given the risk characteristics of the loan or other consideration that compensates us for the value of the concession.
The limited liquidity and higher return requirements in the real estate market for loans with higher loan-to-value (LTV) ratios
has typically resulted in the conclusion that the modified terms are not at current market rates of interest, even if the modified
loans are expected to be fully recoverable. For the year ended December 31, 2014, we modified $672 million of loans
classified as TDRs. Changes to these loans primarily included forbearance, maturity extensions and changes to collateral or
covenant terms or other actions, which are in addition to, or sometimes in lieu of, fees and rate increases. We received the
same or additional compensation in the form of rate increases and fees for the majority of these TDRs. Of our $672 million and
$1,595 million of modifications classified as TDRs during 2014 and 2013, respectively, $252 million and $197 million have
subsequently experienced a payment default in 2014 and 2013, respectively.
The substantial majority of the Real Estate TDRs have reserves determined based upon collateral value. Our specific reserves
on Real Estate TDRs were $25 million and $70 million and were 1.4% and 1.9%, of Real Estate TDRs, respectively, at
December 31, 2014 and 2013. In many situations these loans did not require a specific reserve as collateral value adequately
covered our recorded investment in the loan. While these modified loans had adequate collateral coverage, we were still
required to complete our TDR classification evaluation on each of the modifications without regard to collateral adequacy.
Impaired loans in our Consumer business represent restructured smaller balance homogeneous loans meeting the definition
of a TDR, and are therefore subject to the disclosure requirement for impaired loans, and commercial loans in our Consumer–
Other portfolio. The recorded investment of these impaired loans totaled $2,180 million (with an unpaid principal balance of
$2,271 million) and comprised $138 million with no specific allowance, primarily all in our Consumer–Other portfolio, and
$2,042 million with a specific allowance of $408 million at December 31, 2014. The impaired loans with a specific allowance
included $70 million with a specific allowance of $7 million in our Consumer–Other portfolio and $1,972 million with a specific
allowance of $401 million across the remaining Consumer business and had an unpaid principal balance and average
investment of $2,092 million and $2,547 million, respectively, at December 31, 2014.
216 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
Impaired loans classified as TDRs in our Consumer business were $2,132 million and $2,874 million at December 31, 2014
and 2013, respectively. We utilize certain loan modification programs for borrowers experiencing financial difficulties in our
Consumer loan portfolio. These loan modification programs primarily include interest rate reductions and payment deferrals in
excess of three months, which were not part of the terms of the original contract, and are primarily concentrated in our non-
U.S. residential mortgage and U.S. credit card portfolios. For the year ended December 31, 2014, we modified $981 million of
consumer loans for borrowers experiencing financial difficulties, which are classified as TDRs, and included $506 million of
non-U.S. consumer loans, primarily residential mortgages, credit cards and personal loans and $475 million of U.S. consumer
loans, primarily credit cards. We expect borrowers whose loans have been modified under these programs to continue to be
able to meet their contractual obligations upon the conclusion of the modification. Of our $981 million and $1,441 million of
modifications classified as TDRs during 2014 and 2013, respectively, $102 million and $266 million have subsequently
experienced a payment default in 2014 and 2013, respectively.
We also utilize certain short-term (three months or less) loan modification programs for borrowers experiencing temporary
financial difficulties in our Consumer loan portfolio, which are not classified as TDRs. These loan modification programs are
primarily concentrated in our non-U.S. residential mortgage and non-U.S. installment and revolving portfolios. We sold our
U.S. residential mortgage business in 2007 and, as such, do not participate in the U.S. government-sponsored mortgage
modification programs. For the year ended December 31, 2014, we provided short-term modifications of $45 million of
consumer loans for borrowers experiencing financial difficulties, substantially all in our non-U.S. residential mortgage, credit
card and personal loan portfolios. For these modified loans, we provided insignificant interest rate reductions and payment
deferrals, which were not part of the terms of the original contract. We expect borrowers whose loans have been modified
under these short-term programs to continue to be able to meet their contractual obligations upon the conclusion of the short-
term modification.
SUPPLEMENTAL CREDIT QUALITY INFORMATION
COMMERCIAL
Substantially all of our Commercial financing receivables portfolio is secured lending and we assess the overall quality of the
portfolio based on the potential risk of loss measure. The metric incorporates both the borrower’s credit quality along with any
related collateral protection.
Our internal risk ratings process is an important source of information in determining our allowance for losses and represents a
comprehensive approach to evaluate risk in our financing receivables portfolios. In deriving our internal risk ratings, we stratify
our Commercial portfolios into 21 categories of default risk and/or six categories of loss given default to group into three
categories: A, B and C. Our process starts by developing an internal risk rating for our borrowers, which is based upon our
proprietary models using data derived from borrower financial statements, agency ratings, payment history information, equity
prices and other commercial borrower characteristics. We then evaluate the potential risk of loss for the specific lending
transaction in the event of borrower default, which takes into account such factors as applicable collateral value, historical loss
and recovery rates for similar transactions, and our collection capabilities. Our internal risk ratings process and the models we
use are subject to regular monitoring and internal controls. The frequency of rating updates is set by our credit risk policy,
which requires annual Risk Committee approval.
As described above, financing receivables are assigned one of 21 risk ratings based on our process and then these are
grouped by similar characteristics into three categories in the table below. Category A is characterized by either high-credit-
quality borrowers or transactions with significant collateral coverage that substantially reduces or eliminates the risk of loss in
the event of borrower default. Category B is characterized by borrowers with weaker credit quality than those in Category A, or
transactions with moderately strong collateral coverage that minimizes but may not fully mitigate the risk of loss in the event of
default. Category C is characterized by borrowers with higher levels of default risk relative to our overall portfolio or
transactions where collateral coverage may not fully mitigate a loss in the event of default.
GE 2014 FORM 10-K 217
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
COMMERCIAL FINANCING RECEIVABLES BY RISK CATEGORY
December 31 (In millions)
2014
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total
2013
CLL
Americas
International
Total CLL
Energy Financial Services
GECAS
Other
Total
A
B
C
Total
Secured
$
$
$
$
63,754
41,476
105,230
2,479
7,908
130
115,747
65,545
44,930
110,475
2,969
9,175
318
122,937
$
$
$
$
1,549
474
2,023
60
237
-
2,320
1,587
619
2,206
9
50
-
2,265
$
$
$
$
1,443
891
2,334
16
118
-
2,468
1,554
1,237
2,791
-
152
-
2,943
$
$
$
$
66,746
42,841
109,587
2,555
8,263
130
120,535
68,686
46,786
115,472
2,978
9,377
318
128,145
For our secured financing receivables portfolio, our collateral position and ability to work out problem accounts mitigate our
losses. Our asset managers have deep industry expertise that enables us to identify the optimum approach to default
situations. We price risk premiums for weaker credits at origination, closely monitor changes in creditworthiness through our
risk ratings and watch list process, and are engaged early with deteriorating credits to minimize economic loss. Secured
financing receivables within risk Category C are predominantly in our CLL businesses and are primarily composed of senior
term lending facilities and factoring programs secured by various asset types including inventory, accounts receivable, cash,
equipment and related business facilities as well as franchise finance activities secured by underlying equipment.
Loans within Category C are reviewed and monitored regularly, and classified as impaired when it is probable that they will not
pay in accordance with contractual terms. Our internal risk rating process identifies credits warranting closer monitoring; and
as such, these loans are not necessarily classified as nonaccrual or impaired.
Our unsecured Commercial financing receivables portfolio is primarily attributable to our Interbanca S.p.A. and GE Sanyo
Credit acquisitions in CLL International. At December 31, 2014 and 2013, these financing receivables included $332 million
and $313 million rated A, $408 million and $580 million rated B, and $201 million and $231 million rated C, respectively.
REAL ESTATE
Due to the primarily non-recourse nature of our Debt portfolio, loan-to-value ratios (the ratio of the outstanding debt on a
property to the re-indexed value of that property) provide the best indicators of the credit quality of the portfolio.
December 31 (In millions)
Less than
80%
2014
80% to
95%
Loan-to-value ratio
Greater than
95%
Less than
80%
2013
80% to
95%
Greater than
95%
Debt
$
16,915
$
1,175
$
958
$
15,576
$
1,300
$
2,111
218 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
The credit quality of the owner occupied/credit tenant portfolio is primarily influenced by the strength of the borrower’s general
credit quality, which is reflected in our internal risk rating process, consistent with the process we use for our Commercial
portfolio. As of December 31, 2014, the balances of our owner occupied/credit tenant portfolio with an internal risk rating of A,
B and C approximated $589 million, $70 million and $90 million, respectively, as compared to the December 31, 2013,
balances of $571 million, $179 million and $162 million, respectively.
The financing receivables within our Debt portfolio are primarily concentrated in our North American and European Lending
platforms and are secured by various property types. A substantial majority of our Debt financing receivables with loan-to-
value ratios greater than 95% are paying in accordance with contractual terms. Substantially all of these loans and the majority
of our owner occupied/credit tenant financing receivables included in Category C are impaired loans that are subject to the
specific reserve evaluation process. The ultimate recoverability of impaired loans is driven by collection strategies that do not
necessarily depend on the sale of the underlying collateral and include full or partial repayments through third-party refinancing
and restructurings.
CONSUMER
At December 31, 2014, our U.S. consumer financing receivables included private-label credit card and sales financing for
approximately 64 million customers across the U.S. with no metropolitan area accounting for more than 6% of the portfolio. Of
the total U.S. consumer financing receivables, approximately 67% relate to credit card loans that are often subject to profit and
loss sharing arrangements with the retailer (which are recorded in revenues), and the remaining 33% are sales finance
receivables that provide financing to customers in areas such as electronics, recreation, medical and home improvement.
Our Consumer financing receivables portfolio comprises both secured and unsecured lending. Secured financing receivables
comprise residential loans and lending to small and medium-sized enterprises predominantly secured by auto and equipment,
inventory finance, and cash flow loans. Unsecured financing receivables include private-label credit card financing. A
substantial majority of these cards are not for general use and are limited to the products and services sold by the retailer. The
private-label portfolio is diverse with no metropolitan area accounting for more than 5% of the related portfolio.
Non-U.S. residential mortgages
For our secured non-U.S. residential mortgage book, we assess the overall credit quality of the portfolio through loan-to-value
ratios (the ratio of the outstanding debt on a property to the value of that property at origination). In the event of default and
repossession of the underlying collateral, we have the ability to remarket and sell the properties to eliminate or mitigate the
potential risk of loss.
December 31 (In millions)
80% or
less
2014
Greater than
80% to 90%
Loan-to-value ratio
Greater than
90%
80% or
less
2013
Greater than
80% to 90%
Greater than
90%
Non-U.S. residential mortgages
$
13,964
$
4,187
$
6,742
$
17,224
$
5,130
$
8,147
The majority of these financing receivables are in our U.K. and France portfolios and have re-indexed loan-to-value ratios of
70% and 55%, respectively. Re-indexed loan-to-value ratios may not reflect actual realizable values of future repossessions.
We have third-party mortgage insurance for about 21% of the balance of Consumer non-U.S. residential mortgage loans with
loan-to-value ratios greater than 90% at December 31, 2014. Such loans were primarily originated in France and the U.K.
GE 2014 FORM 10-K 219
F I N AN C I AL S T AT E M E N T S F I N AN C I N G R E C E I V AB L E S – S U P P L E M E N T AL I N F O R M AT I O N
Installment and Revolving Credit
We assess overall credit quality using internal and external credit scores. For our U.S. installment and revolving credit portfolio
we use Fair Isaac Corporation (“FICO”) scores. FICO scores are generally obtained at origination of the account and are
refreshed at a minimum quarterly, but could be as often as weekly, to assist in predicting customer behavior. We categorize
these credit scores into the following three categories; (a) 661 or higher, which are considered the strongest credits; (b) 601 to
660, which are considered moderate credit risk; and (c) 600 or less, which are considered weaker credits.
December 31 (In millions)
U.S. installment and
revolving credit
661 or
higher
2014
601 to
660
Refreshed FICO score
600 or
less
661 or
higher
2013
601 to
660
600 or
less
$
43,466
$
11,865
$
4,532
$
40,079
$
11,142
$
4,633
For our non-U.S. installment and revolving credit, our internal credit scores imply a probability of default that we consistently
translate into three approximate credit bureau equivalent credit score categories, including (a) 671 or higher, which are
considered the strongest credits; (b) 626 to 670, which are considered moderate credit risk; and (c) 625 or less, which are
considered weaker credits.
December 31 (In millions)
Non-U.S. installment and
revolving credit
Internal ratings translated to approximate credit bureau equivalent score
671 or
higher
2014
626 to
670
625 or
less
671 or
higher
2013
626 to
670
625 or
less
$
6,599
$
2,045
$
1,756
$
9,705
$
3,228
$
2,798
U.S. installment and revolving credit accounts with FICO scores of 600 or less and non U.S. installment and revolving credit
accounts with credit bureau equivalent scores of 625 or less have an average outstanding balance less than one thousand
U.S. dollars and are primarily concentrated in our retail card and sales finance receivables in the U.S. and closed-end loans
outside the U.S., which minimizes the potential for loss in the event of default. For lower credit scores, we adequately price for
the incremental risk at origination and monitor credit migration through our risk ratings process. We continuously adjust our
credit line underwriting management and collection strategies based on customer behavior and risk profile changes.
Consumer – Other
We develop our internal risk ratings for this portfolio in a manner consistent with the process used to develop our Commercial
credit quality indicators, described above. We use the borrower’s credit quality and underlying collateral strength to determine
the potential risk of loss from these activities.
At December 31, 2014, Consumer – Other financing receivables of $5,006 million, $276 million and $382 million were rated A,
B and C, respectively. At December 31, 2013, Consumer – Other financing receivables of $6,137 million, $315 million and
$501 million were rated A, B and C, respectively.
220 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S O P E R AT I N G S E G M E N T S
NOTE 28. OPERATING SEGMENTS
BASIS FOR PRESENTATION
Our operating businesses are organized based on the nature of markets and customers. Segment accounting policies are the
same as described in Note 1. Segment results for our financial services businesses reflect the discrete tax effect of
transactions.
Results of our formerly consolidated subsidiary, NBCU, and our equity method investment in NBCU LLC, which we sold in the
first quarter of 2013 are reported in the Corporate items and eliminations line on the Summary of Operating Segments.
A description of our operating segments as of December 31, 2014, can be found below, and details of segment profit by
operating segment can be found in the Summary of Operating Segments table in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” section in this Form 10-K Report.
POWER & WATER
Power plant products and services, including design, installation, operation and maintenance services are sold into global
markets. Gas, steam and aeroderivative turbines, nuclear reactors, generators, combined cycle systems, controls and related
services, including total asset optimization solutions, equipment upgrades and long-term maintenance service agreements are
sold to power generation and other industrial customers. Renewable energy solutions include wind turbines. Water treatment
services and equipment include specialty chemical treatment programs, water purification equipment, mobile treatment
systems and desalination processes.
OIL & GAS
Oil & Gas supplies mission critical equipment for the global oil and gas industry, used in applications spanning the entire value
chain from drilling and completion through production, liquefied natural gas (LNG) and pipeline compression, pipeline
inspection, and including downstream processing in refineries and petrochemical plants. The business designs and
manufactures surface and subsea drilling and production systems, equipment for floating production platforms, compressors,
turbines, turboexpanders, high pressure reactors, industrial power generation and a broad portfolio of auxiliary equipment.
ENERGY MANAGEMENT
Energy Management is GE’s electrification business. Global teams design leading technology solutions for the delivery,
management, conversion and optimization of electrical power for customers across multiple energy-intensive industries. GE
has invested in our Energy Management capabilities, with strategic acquisitions and joint ventures that enable GE to increase
its offerings to the utility, industrial, renewables, oil and gas, marine, metals and mining industries. Plant automation hardware,
software and embedded computing systems including controllers, embedded systems, advanced software, motion control,
operator interfaces and industrial computers are also provided by Energy Management.
AVIATION
Aviation products and services include jet engines, aerospace systems and equipment, replacement parts and repair and
maintenance services for all categories of commercial aircraft; for a wide variety of military aircraft, including fighters, bombers,
tankers and helicopters; for marine applications; and for executive and regional aircraft. Products and services are sold
worldwide to airframe manufacturers, airlines and government agencies.
GE 2014 FORM 10-K 221
F I N AN C I AL S T AT E M E N T S O P E R AT I N G S E G M E N T S
HEALTHCARE
Healthcare products include diagnostic imaging systems such as magnetic resonance (MR), computed tomography (CT) and
positron emission tomography (PET) scanners, X-ray, nuclear imaging, digital mammography and molecular imaging
technologies. Healthcare-manufactured technologies include patient and resident monitoring, diagnostic cardiology,
ultrasound, bone densitometry, anesthesiology and oxygen therapy, and neonatal and critical care devices. Related services
include equipment monitoring and repair, information technologies and customer productivity services. Products also include
diagnostic imaging agents used in medical scanning procedures, drug discovery, biopharmaceutical manufacturing and
purification, and tools for protein and cellular analysis for pharmaceutical and academic research, including a pipeline of
precision molecular diagnostics in development for neurology, cardiology and oncology applications. Products and services
are sold worldwide to hospitals, medical facilities, pharmaceutical and biotechnology companies, and to the life science
research market.
TRANSPORTATION
Transportation is a global technology leader and supplier to the railroad, mining, marine and drilling industries. GE provides
freight and passenger locomotives, diesel engines for rail, marine and stationary power applications, railway signaling and
communications systems, underground mining equipment, motorized drive systems for mining trucks, information technology
solutions, high-quality replacement parts and value added services.
APPLIANCES & LIGHTING
Products include major appliances and related services for products such as refrigerators, freezers, electric and gas ranges,
cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, residential water systems for
filtration, softening and heating, and hybrid water heaters. These products are distributed both to retail outlets and direct to
consumers, mainly for the replacement market, and to building contractors and distributors for new installations. Lighting
products include a wide variety of lamps and lighting fixtures, including light-emitting diodes. Products and services are sold in
North America and in global markets under various GE and private-label brands.
GE CAPITAL
GE Capital businesses offer a broad range of financial services and products worldwide for businesses of all sizes. Services
include commercial loans and leases, fleet management, financial programs, credit cards, personal loans and other financial
services. GE Capital also develops strategic partnerships and joint ventures that utilize GE’s industry-specific expertise in
aviation, energy, infrastructure and healthcare to capitalize on market-specific opportunities. Products and services are offered
in North America and in global markets through the following businesses: CLL, Consumer, Real Estate, Energy Financial
Services and GECAS.
222 GE 2014 FORM 10-K
F I N AN C I AL S T AT E M E N T S O P E R AT I N G S E G M E N T S
REVENUES
(In millions)
$
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial
GE Capital
Corporate items
and eliminations(c)
Total
Total revenues(a)
2013
2014
27,564 $
18,676
7,319
23,990
18,299
5,650
8,404
109,902
42,725
24,724 $
16,975
7,569
21,911
18,200
5,885
8,338
103,602
44,067
2012
28,299 $
15,241
7,412
19,994
18,290
5,608
7,967
102,811
45,364
Intersegment revenues(b)
2014
2013
969 $
401
890
692
6
(2)
22
2,978
1,348
947 $
360
848
500
14
12
25
2,706
1,150
2012
1,119 $
314
487
672
37
11
23
2,663
1,037
External revenues
2013
2014
26,595 $
18,275
6,429
23,298
18,293
5,652
8,382
106,924
41,377
23,777 $
16,615
6,721
21,411
18,186
5,873
8,313
100,896
42,917
2012
27,180
14,927
6,925
19,322
18,253
5,597
7,944
100,148
44,327
(4,038)
(1,624)
(1,491)
(4,326)
(3,856)
$ 148,589 $ 146,045 $ 146,684 $
- $
- $
(3,700)
2,209
- $ 148,589 $ 146,045 $ 146,684
2,232
288
(a) Revenues of GE businesses include income from sales of goods and services to customers and other income.
(b) Sales from one component to another generally are priced at equivalent commercial selling prices.
(c)
Includes the results of NBCU (our formerly consolidated subsidiary) and our former equity method investment in NBCUniversal LLC.
Revenues from customers located in the United States were $70,622 million, $68,617 million and $70,466 million in 2014,
2013 and 2012, respectively. Revenues from customers located outside the United States were $77,967 million, $77,428
million and $76,218 million in 2014, 2013 and 2012, respectively.
(In millions)
2014
2013
2012
2014
2013
2012
2014
2013
2012
Assets(a)(b)
At December 31
Property, plant and
equipment additions(c)
For the years ended December 31
Depreciation and amortization
For the years ended December 31
Power & Water
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
GE Capital
Corporate items
and eliminations(d)
Total
$
30,338 $
27,260
10,976
33,716
29,227
4,449
4,560
500,216
29,494 $
26,193
10,305
32,273
27,858
4,418
4,306
516,829
27,143 $
20,111
9,594
25,145
28,369
4,335
4,201
539,351
622 $
653
176
1,197
405
128
359
10,410
714 $
1,185
137
1,178
316
282
405
9,978
661 $
467
155
781
322
724
485
11,879
678 $
583
313
824
843
168
235
7,262
668 $
479
323
677
861
167
300
7,738
647
426
287
644
879
90
265
7,348
7,607
648,349 $
4,884
656,560 $
26,750
684,999 $
(110)
13,840 $
194
14,389 $
(99)
15,375 $
166
11,072 $
260
11,473 $
218
10,804
$
(a) Assets of discontinued operations, NBCU (our formerly consolidated subsidiary) and our former equity method investment in NBCUniversal LLC are included in
Corporate items and eliminations for all periods presented.
(b) Total assets of Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and GE Capital operating segments at
December 31, 2014, include investment in and advances to associated companies of $357 million, $146 million, $824 million, $1,378 million, $511 million, $6 million, $57
million and $16,747 million, respectively. Investments in and advances to associated companies contributed approximately $(7) million, $20 million, $29 million, $94
million, $(33) million, an insignificant amount , $70 million and $1,182 million to segment pre-tax income of Power & Water, Oil & Gas, Energy Management, Aviation,
Healthcare, Transportation, Appliances & Lighting and GE Capital operating segments, respectively, for the year ended December 31, 2014. Aggregate summarized
financial information for significant associated companies assuming a 100% ownership interest at December 31, 2014 included: total assets of $93,624 million, primarily
financing receivables of $46,481 million; total liabilities of $64,872 million, primarily debt of $40,244 million; revenues totaled $46,087 million; and net loss totaled
$(1,295) million.
(c) Additions to property, plant and equipment include amounts relating to principal businesses purchased.
(d)
Includes deferred income taxes that are presented as assets for purposes of our consolidating balance sheet presentation.
GE 2014 FORM 10-K 223
F I N AN C I AL S T AT E M E N T S Q U AR T E R L Y I N F O R M AT I O N
(In millions)
GE Capital
Corporate items and eliminations(a)
Total
$
$
Interest and other financial charges
Provision (benefit) for income taxes
2014
8,397 $
1,085
9,482 $
2013
2012
9,267 $
849
10,116 $
11,596 $
811
12,407 $
2014
138 $
1,634
1,772 $
2013
(992) $
1,668
676 $
2012
521
2,013
2,534
(a)
Included amounts for Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation and Appliances & Lighting, for which our measure of
segment profit excludes interest and other financial charges and income taxes.
Property, plant and equipment – net associated with operations based in the United States were $28,186 million, $28,657
million and $27,192 million at year-end 2014, 2013 and 2012, respectively. Property, plant and equipment – net associated
with operations based outside the United States were $38,201 million, $40,170 million and $41,441 million at year-end 2014,
2013 and 2012, respectively.
NOTE 29. QUARTERLY INFORMATION (UNAUDITED)
(In millions; per-share amounts in dollars)
First quarter
2014
Second quarter
2013
2014
2013
Third quarter
2014
Fourth quarter
2013
2014
2013
Consolidated operations
Earnings from continuing operations $
Earnings (loss) from discontinued
operations
Net earnings
Less net earnings (loss) attributable to
noncontrolling interests
Net earnings attributable to
the Company
Per-share amounts – earnings from
continuing operations
Diluted earnings per share
Basic earnings per share
Per-share amounts – earnings (loss)
from discontinued operations
Diluted earnings per share
Basic earnings per share
Per-share amounts – net earnings
Diluted earnings per share
Basic earnings per share
$
$
2,940 $
3,631 $
3,586 $
3,423 $
3,452 $
3,272 $
5,479 $
5,149
12
2,952
(120)
3,511
(41)
3,545
(124)
3,299
57
3,509
(91)
3,181
(140)
5,339
(1,785)
3,364
(47)
(16)
-
166
(28)
(10)
187
158
2,999 $
3,527 $
3,545 $
3,133 $
3,537 $
3,191 $
5,152 $
3,206
0.29 $
0.30
0.35 $
0.35
0.35 $
0.36
0.31 $
0.32
0.34 $
0.35
0.32 $
0.32
0.52 $
0.53
0.49
0.49
-
-
0.30
0.30
(0.01)
(0.01)
0.34
0.34
-
-
0.35
0.35
(0.01)
(0.01)
0.30
0.30
0.01
0.01
0.35
0.35
(0.01)
(0.01)
0.31
0.31
(0.01)
(0.01)
0.51
0.51
(0.18)
(0.18)
0.32
0.32
Selected data
GE
Sales of goods and services
Gross profit from sales
GECC
Total revenues
Earnings from continuing operations
attributable to the Company
$ 24,011
5,326
$ 22,303
4,867
$ 26,226
6,090
$ 24,623
6,006
$ 26,025
6,148
$ 25,262
5,691
$ 31,046
7,867
$ 28,826
6,820
10,515
11,468
10,247
10,916
10,451
10,606
11,512
11,077
1,933
1,938
1,864
1,924
1,492
1,903
2,052
2,493
For GE, gross profit from sales is sales of goods and services less costs of goods and services sold.
Earnings-per-share amounts are computed independently each quarter for earnings from continuing operations, earnings
(loss) from discontinued operations and net earnings. As a result, the sum of each quarter’s per-share amount may not equal
the total per-share amount for the respective year; and the sum of per-share amounts from continuing operations and
discontinued operations may not equal the total per-share amounts for net earnings for the respective quarters.
224 GE 2014 FORM 10-K
O T H E R I N F O R M AT I O N
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Executive Officers of the Registrant (As of February 1, 2015)
Date assumed
Executive
Name
Position
Age
Officer Position
Jeffrey R. Immelt
Jeffrey S. Bornstein
Elizabeth J. Comstock
Brackett B. Denniston III
Jan R. Hauser
Daniel C. Heintzelman
Susan Peters
John G. Rice
Keith S. Sherin
Chairman of the Board & Chief Executive Officer
Senior Vice President & Chief Financial Officer
Senior Vice President, Chief Marketing Officer
Senior Vice President & General Counsel
Vice President, Controller & Chief Accounting Officer
Vice Chairman, Enterprise Risk & Operations
Senior Vice President, Human Resources
Vice Chairman of General Electric Company;
President & CEO, Global Growth & Operations
Vice Chairman of General Electric Company; CEO,
GE Capital
58
49
54
67
55
57
61
58
56
January 1997
July 2013
April 2013
February 2004
April 2013
October 2013
August 2013
September 1997
January 1999
All Executive Officers are elected by the Board of Directors for an initial term that continues until the Board meeting
immediately preceding the next annual statutory meeting of shareowners, and thereafter are elected for one-year terms or until
their successors have been elected. All Executive Officers have been executives of General Electric Company for the last five
years except for Ms. Hauser. Prior to joining GE in March 2013, Ms. Hauser served as a partner, Accounting Services,
National Professional Services Group at PricewaterhouseCoopers LLP.
The remaining information called for by this item is incorporated by reference to “Election of Directors,” “Section 16(a)
Beneficial Ownership Reporting Compliance,” “Other Governance Policies and Practices” and “Board Committees” in our
definitive proxy statement for our 2015 Annual Meeting of Shareowners to be held April 22, 2015, which will be filed within 120
days of the end of our fiscal year ended December 31, 2014 (the 2015 Proxy Statement).
GE 2014 FORM 10-K 225
O T H E R I N F O R M AT I O N
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a)1. Financial Statements
Included in the “Financial Statements and Supplementary Data” section of this report:
Management’s Annual Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Statement of Earnings for the years ended December 31, 2014, 2013 and 2012
Consolidated Statement of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012
Consolidated Statement of Changes in Shareowners’ Equity for the years ended December 31, 2014, 2013 and 2012
Statement of Financial Position at December 31, 2014 and 2013
Statement of Cash Flows for the years ended December 31, 2014, 2013 and 2012
Notes to consolidated financial statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Summary of Operating
Segments
(a)2. Financial Statement Schedules
The schedules listed in Reg. 210.5-04 have been omitted because they are not applicable or the required information is
shown in the consolidated financial statements or notes thereto.
(a)3. Exhibit Index
Exhibit
Number
2(a)
3(i)
3(ii)
4(a)
4(b)
4(c)
Description
Master Agreement dated as of December 3, 2009 by and among General Electric Company, NBC Universal, Inc.,
Comcast Corporation and Navy, LLC. (Incorporated by reference to Exhibit 2(a) to General Electric’s Annual
Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2009).
The Certificate of Incorporation, as amended, of General Electric Company (Incorporated by reference to Exhibit
3(i) to General Electric’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year
ended December 31, 2013).
The By-Laws, as amended, of General Electric Company (Incorporated by reference to Exhibit 3(ii) of General
Electric’s Current Report on Form 8-K dated February 11, 2015 (Commission file number 001-00035)).
Amended and Restated General Electric Capital Corporation (GECC) Standard Global Multiple Series Indenture
Provisions dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(a) to GECC’s Registration
Statement on Form S-3, File No. 333-59707 (Commission file number 001-06461)).
Third Amended and Restated Indenture dated as of February 27, 1997, between GECC and The Bank of New
York Mellon, as successor trustee (Incorporated by reference to Exhibit 4(c) to GECC’s Registration Statement on
Form S-3, File No. 333-59707 (Commission file number 001-06461)).
First Supplemental Indenture dated as of May 3, 1999, supplemental to Third Amended and Restated Indenture
dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(dd) to GECC’s Post-Effective Amendment
No. 1 to Registration Statement on Form S-3, File No. 333-76479 (Commission file number 001-06461)).
226 GE 2014 FORM 10-K
O T H E R I N F O R M AT I O N
4(d)
4(e)
4(f)
4(g)
4(h)
4(i)
4(j)
4(k)
(10)
Second Supplemental Indenture dated as of July 2, 2001, supplemental to Third Amended and Restated
Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(f) to GECC’s Post-Effective
Amendment No.1 to Registration Statement on Form S-3, File No. 333-40880 (Commission file number 001-
06461)).
Third Supplemental Indenture dated as of November 22, 2002, supplemental to Third Amended and Restated
Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(cc) to GECC’s Post-Effective
Amendment No. 1 to the Registration Statement on Form S-3, File No. 333-100527 (Commission file number 001-
06461)).
Fourth Supplemental Indenture dated as of August 24, 2007, supplemental to Third Amended and Restated
Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(g) to GECC’s Registration
Statement on Form S-3, File number 333-156929 (Commission file number 001-06461)).
Indenture dated December 1, 2005, between General Electric Company and The Bank of New York Mellon, as
successor trustee (Incorporated by reference to Exhibit 4(a) of General Electric’s Current Report on Form 8-K filed
on December 9, 2005 (Commission file number 001-00035))
Senior Note Indenture dated as of October 9, 2012, between General Electric Company and The Bank of New
York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 to General Electric’s Current Report on Form 8-K
filed on October 9, 2012 (Commission file number 001-00035)).
Thirteenth Amended and Restated Fiscal and Paying Agency Agreement among GECC, GE Capital Australia
Funding Pty Ltd., GE Capital European Funding, GE Capital U.K. Funding and The Bank of New York Mellon and
The Bank of New York Mellon (Luxembourg) S.A., as fiscal and paying agents, dated as of April 5, 2014
(Incorporated by reference to Exhibit 4(j) to GECC’s Form 10-K Report for the year ended December 31, 2014
(Commission file number 001-06461)).
Letter from the Senior Vice President and Chief Financial Officer of General Electric to GECC dated September
15, 2006, with respect to returning dividends, distributions or other payments to GECC in certain circumstances
described in the Indenture for Subordinated Debentures dated September 1, 2006, between GECC and the Bank
of New York, as successor trustee (Incorporated by reference to Exhibit 4(c) to GECC’s Post-Effective
Amendment No. 2 to Registration Statement on Form S-3, File No. 333-132807 (Commission file number 001-
06461)).
Agreement to furnish to the Securities and Exchange Commission upon request a copy of instruments defining the
rights of holders of certain long-term debt of the registrant and consolidated subsidiaries.*
Except for 10(y), (z) and (aa) below, all of the following exhibits consist of Executive Compensation Plans or
Arrangements:
(a) General Electric Incentive Compensation Plan, as amended effective July 1, 1991 (Incorporated by reference
to Exhibit 10(a) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the
fiscal year ended December 31, 1991).
(b) General Electric Financial Planning Program, as amended through September 1993 (Incorporated by
reference to Exhibit 10(h) to General Electric Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 1993).
(c) General Electric Supplemental Life Insurance Program, as amended February 8, 1991 (Incorporated by
reference to Exhibit 10(i) to General Electric Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 1990).
(d) General Electric Directors’ Charitable Gift Plan, as amended through December 2002 (Incorporated by
reference to Exhibit 10(i) to General Electric Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 2002).
GE 2014 FORM 10-K 227
O T H E R I N F O R M AT I O N
(e) General Electric Leadership Life Insurance Program, effective January 1, 1994 (Incorporated by reference to
Exhibit 10(r) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the
fiscal year ended December 31, 1993).
(f) General Electric 1996 Stock Option Plan for Non-Employee Directors (Incorporated by reference to Exhibit A
to the General Electric Proxy Statement for its Annual Meeting of Shareowners held on April 24, 1996
(Commission file number 001-00035)).
(g) General Electric Supplementary Pension Plan, as amended effective January 1, 2012 (Incorporated by
reference to Exhibit 10(g) to General Electric’s Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 2010).
(h) General Electric 2003 Non-Employee Director Compensation Plan, Amended and Restated as of December
12, 2014.*
(i) Amendment to Nonqualified Deferred Compensation Plans, dated as of December 14, 2004 (Incorporated by
reference to Exhibit 10(w) to the General Electric Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 2004).
(j) GE Retirement for the Good of the Company Program, as amended effective January 1, 2009 (Incorporated
by reference to Exhibit 10(j) to General Electric’s Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 2008.
(k) GE Excess Benefits Plan, effective January 1, 2009 (Incorporated by reference to Exhibit 10(k) to General
Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended
December 31, 2008).
(l) General Electric 2006 Executive Deferred Salary Plan, as amended January 1, 2009 (Incorporated by
reference to Exhibit 10(l) to General Electric's Annual Report on Form 10-K (Commission file number 001-
00035) for the fiscal year ended December 31, 2008).
(m) General Electric Company 2007 Long-Term Incentive Plan (as amended and restated April 25, 2012)
(Incorporated by reference to Exhibit 99.1 to General Electric’s Registration Statement on Form S-8, dated
May 4, 2012, File number 333-181177 (Commission file number 001-00035)).
(n) Form of Agreement for Stock Option Grants to Executive Officers under the General Electric Company 2007
Long-term Incentive Plan, as amended January 1, 2009 (Incorporated by reference to Exhibit 10(n) to
General Electric's Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year
ended December 31, 2008).
(o) Form of Agreement for Annual Restricted Stock Unit Grants to Executive Officers under the General Electric
Company 2007 Long-term Incentive Plan, as amended February 7, 2014 (Incorporated by reference to
Exhibit 10(a) of General Electric’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014
(Commission file number 001-00035)).
(p) Form of Agreement for Periodic Restricted Stock Unit Grants to Executive Officers under the General Electric
Company 2007 Long-term Incentive Plan, as amended February 7, 2014 (Incorporated by reference to
Exhibit 10(b) of General Electric’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014
(Commission file number 001-00035)).
(q) Form of Agreement for Long Term Performance Award Grants to Executive Officers under the General
Electric Company 2007 Long-term Incentive Plan (as amended and restated April 25, 2012) (Incorporated by
reference to Exhibit 10(a) of General Electric’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2013 (Commission file number 001-00035)).
(r) Form of Agreement for Performance Stock Unit Grants to Executive Officers under the General Electric
Company 2007 Long-term Incentive Plan (Incorporated by reference to Exhibit 10.6 of General Electric’s
Current Report on Form 8-K dated April 27, 2007 (Commission file number 001-00035)).
228 GE 2014 FORM 10-K
O T H E R I N F O R M AT I O N
(s) First Restatement of the General Electric International Employee Stock Purchase Plan effective May 1, 2002
(Incorporated by reference to Exhibit 4.1 to General Electric's Registration Statement on Form S-8, File No.
333-163106 (Commission file number 001-00035)).
(t) Form of Agreement for Long Term Performance Award Grants to Executive Officers under the General
Electric Company 2007 Long-term Incentive Plan (Incorporated by reference to Exhibit 10 of General
Electric’s Current Report on Form 8-K dated February 12, 2010 (Commission file number 001-00035)).
(u) Time Sharing Agreement dated November 22, 2010 between General Electric Company and Jeffrey R.
Immelt (Incorporated by reference to Exhibit 10(z) to General Electric’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2010 (Commission file number 001-00035)).
(v)
GE Stock Option Grant Agreement Dated March 4, 2010 for Jeffrey R. Immelt Terms & Conditions as
Amended April 18, 2011 (Incorporated by reference to Exhibit 10(h) of General Electric’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011 (Commission file number 001-00035)).
(w)
Non-Competition Agreement between General Electric Company and John Krenicki effective July 24, 2012
(Incorporated by reference to Exhibit 10(a) of General Electric’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2012 (Commission file number 001-00035)).
(x)
Time Sharing Agreement dated March 13, 2013 between General Electric Company and Brackett B.
Denniston III (Incorporated by reference to Exhibit 10(b) of General Electric’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2013 (Commission file number 001-00035)).
(y) Amended and Restated Income Maintenance Agreement, dated February 24, 2015, between the Registrant
and General Electric Capital Corporation (Incorporated by reference to Exhibit 10 to GECC's Annual Report
on Form 10-K for the year ended December 31, 2014 (Commission file number 001-06461)).
(z) Transaction Agreement dated as of February 12, 2013 among General Electric Company, Comcast
Corporation, National Broadcasting Company Holding, Inc., Navy Holdings, Inc., NBCUniversal, LLC and
NBCUniversal Media, LLC (Incorporated by reference to Exhibit 10(a) of General Electric’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 2013 (Commission file number 001-00035)).
(aa) Amendment dated as of March 19, 2013 to the Transaction Agreement dated as of February 12, 2013 by and
among General Electric Company, Comcast Corporation, NBCUniversal, LLC, NBCUniversal Media, LLC,
National Broadcasting Company Holding, Inc. and Navy Holdings, Inc. (Incorporated by reference to Exhibit
10(c) of General Electric’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013(Commission
file number 001-00035)).
(bb) Time Sharing Agreement dated April 30, 2014 between General Electric Company and Keith S. Sherin
(Incorporated by reference to Exhibit 10(a) of General Electric’s quarterly Report on Form 10-Q for the
quarter ended June 30, 2014 ( Commission File number 001-00035)).
(11)
12(a)
12(b)
(21)
(23)
(24)
31(a)
31(b)
Statement re Computation of Per Share Earnings.**
Computation of Ratio of Earnings to Fixed Charges.*
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.*
Subsidiaries of Registrant.*
Consent of Independent Registered Public Accounting Firm.*
Power of Attorney.*
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
GE 2014 FORM 10-K 229
O T H E R I N F O R M AT I O N
(32)
99(a)
Certification Pursuant to 18 U.S.C. Section 1350.*
Undertaking for Inclusion in Registration Statements on Form S-8 of General Electric Company (Incorporated by
reference to Exhibit 99(b) to General Electric Annual Report on Form 10-K (Commission file number 001-00035)
for the fiscal year ended December 31, 1992).
99(b)
Computation of Ratio of Earnings to Fixed Charges (Incorporated by reference to Exhibit 12(a) to GECC’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2014 (Commission file number 001-06461)).
99(c)
Supplement to Present Required Information in Searchable Format*
(101)
The following materials from General Electric Company's Annual Report on Form 10-K for the year ended
December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings for
the years ended December 31, 2014, 2013 and 2012, (ii) Consolidated Statement of Comprehensive Income for
the years ended December 31, 2014, 2013 and 2012, (iii) Consolidated Statement of Changes in Shareowners'
Equity for the years ended December 31, 2014, 2013 and 2012, (iv) Statement of Financial Position at December
31, 2014 and 2013, (v) Statement of Cash Flows for the years ended December 31, 2014, 2013 and 2012, and
(vi) the Notes to Consolidated Financial Statements.*
*
**
Filed electronically herewith.
Information required to be presented in Exhibit 11 is provided in Note 20 to the consolidated financial statements in this
Form 10-K Report in accordance with the provisions of Financial Accounting Standards Board Accounting Standards
Codification 260, Earnings Per Share.
230 GE 2014 FORM 10-K
F O R M 1 0 - K C R O S S R E F E R E N C E I N D E X
FORM 10-K CROSS REFERENCE INDEX
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)
(cid:51)(cid:68)(cid:85)(cid:87)(cid:3)(cid:44)
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
(cid:51)(cid:68)(cid:85)(cid:87)(cid:3)(cid:44)(cid:44)(cid:3)(cid:3)
(cid:3)(cid:3)
Item 5.
(cid:3)(cid:3)
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
(cid:3)(cid:3)
(cid:51)(cid:68)(cid:74)(cid:72)(cid:11)(cid:86)(cid:12)(cid:3)
19-22, 30-61, 68-69, 92-93, 105-106, 233
112-117
Not applicable
21
118-119
Not applicable
26, 104
103
23-102,120-123
75-76, 107-111
125-224
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable
Item 9A.
Controls and Procedures
Item 9B.
(cid:51)(cid:68)(cid:85)(cid:87)(cid:3)(cid:44)(cid:44)(cid:44)(cid:3)(cid:3)
Item 10.
Other Information
(cid:3)(cid:3)
(cid:3)(cid:3)
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
(cid:3)(cid:3)
(cid:3)(cid:3)
Exhibits and Financial Statement Schedules
Item 14.
(cid:51)(cid:68)(cid:85)(cid:87)(cid:3)(cid:44)(cid:57)(cid:3)(cid:3)
Item 15.
(cid:54)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)
(a) February 24, 2015 amendment of income maintenance agreement.
125
77(a)
225
(b)
(c), Note 16
(d)
(e)
226-230
232
(b) Incorporated by reference to “Compensation Discussion and Analysis,” “Management Development and Compensation Committee Report,” “Summary Compensation,”
“All Other Compensation,” “Other Benefits,” “Grants of Plan-Based Awards,” “Outstanding Equity Awards,” “Option Exercises and Stock Vested,” “Pension Benefits,”
“Nonqualified Deferred Compensation,” “Potential Payments Upon Termination at Fiscal Year-End” and “Director Compensation” in the 2015 Proxy Statement.
(c) Incorporated by reference to “Stock Ownership Information” in the 2015 Proxy Statement.
(d) Incorporated by reference to “Related Person Transactions” and “How We Assess Director Independence” in the 2015 Proxy Statement.
(e) Incorporated by reference to “Independent Auditor Information” in the 2015 Proxy Statement.
GE 2014 FORM 10-K 231
(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this annual report on Form 10-K for the fiscal year ended December 31, 2014, to be signed on its behalf by
the undersigned, and in the capacities indicated, thereunto duly authorized in the Town of Fairfield and State of
Connecticut on the 27th day of February 2015.
General Electric Company
(Registrant)
By /s/ Jeffrey S. Bornstein
Jeffrey S. Bornstein
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signer
Title
Date
/s/ Jeffrey S. Bornstein
Jeffrey S. Bornstein
Senior Vice President and
Chief Financial Officer
/s/ Jan R. Hauser
Jan R. Hauser
Vice President and Controller
/s/ Jeffrey R. Immelt
Jeffrey R. Immelt*
Chairman of the Board of Directors
Principal Financial Officer
February 27, 2015
Principal Accounting Officer
February 27, 2015
Principal Executive Officer
February 27, 2015
W. Geoffrey Beattie*
John J. Brennan*
James I. Cash, Jr.*
Francisco D’Souza*
Marijn E. Dekkers*
Ann M. Fudge*
Susan Hockfield*
Andrea Jung*
Robert W. Lane*
Rochelle B. Lazarus*
James J. Mulva*
James E. Rohr*
Mary L. Schapiro*
Robert J. Swieringa*
James S. Tisch*
Douglas A. Warner III*
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
A majority of the Board of Directors
*By /s/ Christoph A. Pereira
Christoph A. Pereira
Attorney-in-fact
February 27, 2015
232 GE 2014 FORM 10-K
F O R W A R D L O O K I N G S T AT E M E N T S
FORWARD LOOKING STATEMENTS
This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context,
forward-looking statements often address our expected future business and financial performance and financial condition, and
often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-
looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about
expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows;
return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE
Capital earnings.
For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our
forward-looking statements include:
(cid:120)
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 General Electric Capital
Corporation’s (GECC) funding, GECC’s exposure to counterparties and our ability to reduce GECC’s asset levels as
planned;
the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit
defaults;
pending and future mortgage loan repurchase claims and other litigation claims 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;
the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly
dividend at the planned level or to repurchase shares at planned levels;
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120) GECC’s ability to pay dividends to GE at the planned level, which may be affected by GECC's cash flows and earnings,
financial services regulation and oversight, and other factors;
our ability to convert pre-order commitments/wins into orders;
the price we realize on orders since commitments/wins are stated at list prices;
customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that
may affect the level of demand and financial performance of the major industries and customers we serve;
the effectiveness of our risk management framework;
the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the
impact of financial services regulation and litigation;
adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us
or Synchrony Financial that could prevent us from completing the Synchrony Financial split-off as planned;
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 for, announced transactions, such as the proposed
transactions and alliances with Alstom and sale of Appliances, and our ability to realize anticipated earnings and savings;
our success in integrating acquired businesses and operating joint ventures;
the impact of potential information technology or data security breaches; and
the other factors that are described in the Risk Factors section of this Form 10-K Report.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking
statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking
projected financial information that is based on current estimates and forecasts. Actual results could differ materially.
GE 2014 FORM 10-K 233
GE 2014 AR & 10-K
022174
GE_AR14_AR_p234_v5
03/04/15
page 234
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
General Electric Company
3135 Easton Turnpike, Fairfield, CT 06828
(203) 373-2211
ANNUAL MEETING
GE’s 2015 Annual Meeting of Shareowners will be held on
Wednesday, April 22, 2015, at the Cox Convention Center in
Oklahoma City, Oklahoma.
SHAREOWNER INFORMATION
For shareowner inquiries, including enrollment information
and a prospectus for the Direct Purchase and Reinvestment
Plan, “GE Stock Direct,” write to GE Share Owner Services, c/o
Computershare, P.O. Box 30170, College Station, TX 77842-3170;
or call (800) 786-2543 (800-STOCK-GE) or (201) 680-6848.
For Internet access to general shareowner information and
certain forms, including transfer instructions, visit the website
at www.computershare.com/investor. You may also submit
shareowner inquiries using the online forms in the “Contact Us”
section of the website.
STOCK EXCHANGE INFORMATION
In the United States, GE common stock is listed on the New York
Stock Exchange (NYSE), its principal market. It also is listed
on certain non-U.S. exchanges, including the London Stock
Exchange, Euronext Paris and the Frankfurt Stock Exchange.
FORM 10-K AND OTHER REPORTS; CERTIFICATIONS
This 2014 GE Annual Report includes the financial section of the
GE Annual Report on Form 10-K. The Form 10-K Report filed with
the U.S. Securities and Exchange Commission (SEC) in February
2015 also contains additional information including exhibits such
as certifications of GE’s Chief Executive Officer and Chief Financial
Officer certifying the quality of the Company’s public disclosure.
GE’s Chief Executive Officer has also submitted to the NYSE a
certification certifying that he is not aware of any violations by
GE of the NYSE corporate governance listing standards.
General Electric Capital Corporation filed a Form 10-K Report
with the SEC, and this can also be viewed at www.ge.com/
secreports.
Copies of the GE and GECC Forms 10-K can be viewed
at www.ge.com/annualreport and are also available,
without charge, from GE Corporate Investor Communications,
3135 Easton Turnpike, Fairfield, CT 06828.
INTERNET ADDRESS INFORMATION
The 2014 GE Annual Report is available online at www.ge.com/
annualreport. For detailed news and information regarding our
strategy and our businesses, please visit our Press Room online
at www.genewsroom.com, our Investor Information site at
www.ge.com/investor or our corporate blog at www.gereports.com.
Information on the GE Foundation, GE’s philanthropic organi-
zation, can be viewed at www.gefoundation.com.
PRODUCT INFORMATION
For information about GE’s consumer products and services, visit
us at www.ge.com.
CORPORATE OMBUDSPERSON
To report concerns related to compliance with the law, GE policies
or government contracting requirements, write to GE Corporate
Ombudsperson, P.O. Box 911, Fairfield, CT 06825; or call
(800) 227-5003 or (203) 373-2603; or send an e-mail to
ombudsperson@corporate.ge.com.
CONTACT THE GE BOARD OF DIRECTORS
The Audit Committee and the non-management directors have
established procedures to enable anyone who has a concern
about GE’s conduct, or any employee who has a concern about the
Company’s accounting, internal accounting controls or auditing
matters, to communicate that concern directly to the presiding
director or to the Audit Committee. Such communications may be
confidential or anonymous, and may be submitted in writing to:
GE Board of Directors, General Electric Company (W2E), 3135
Easton Turnpike, Fairfield, CT 06828; or call (800) 417-0575 or
(203) 373-2652; or send an e-mail to Directors@corporate.ge.com.
©2015 General Electric Company. Printed in U.S.A.
, ecomagination, healthymagination and Imagination at Work are trademarks
GE,
and service marks of the General Electric Company. Other marks used throughout
are trademarks and service marks of their respective owners.
In 2014, patent applications and other applications protecting the Company’s
technology were filed by GE in 59 countries.
GE_AR14_AR_p234_v5.indd 234
Please check this proof carefully and indicate any corrections on the proof itself.
133239_GE_AR14_Financials.indd 234
Approved as is: No Changes [initial__________ date__________ ]
3/4/15 4:06 PM
3/4/15 4:09 PM
Make corrections as indicated and submit New Proof: With Changes [initial__________ date__________ ]
SUSTAINABILITY AT GE
As a 130+ year-old technology company, GE
works every day to solve some of the world’s
biggest challenges. Safety and sustainability
are embedded in GE’s culture and defi ne the
products we make, the services we offer
and the difference we make in communities
around the world.
www.gesustainability.com
IN 2014,
• GE employees, retirees and the
GE Foundation contributed
more than $168 million in grants,
contributions and Matching Gifts
to community organizations around
the world, while also surpassing
$1 billion in total Matching Gifts
since inception of that program in
1954. GE Volunteers gave of
their time by donating more than
1 million hours of volunteer work
in 55 countries.
• GE remains committed to
Ecomagination, with $15B in
Ecomagination R&D since this
innovative business initiative
was launched in 2005.
• GE continued our 10-year
improvement record in protecting
worker safety with a 41% reduction
in recordable injuries since 2004.
GE and the New York Stock Exchange have been partners for over 120 years and share a commitment
to innovation. GE is a proud member of the NYSE Century Index. Component companies have
demonstrated the ability to innovate, transform and grow through decades of economic and social
progress. The NYSE Century Index is composed of major companies that defi ne the American
economy and business icons. To learn more visit www.nyse.com/centuryindex.
GE is consistently ranked as one of the world’s leading corporations:
TOP
20
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The paper used in this report was
supplied by participants of the
Responsible Initiative Programs. The
majority of the power utilized to
manufacture this paper was renewable
energy, produced with GE’s wind and
biogas technologies, and powered by
GE steam engines and turbine engines.
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On the back cover: Natalie Lester, GE Power & Water
General Electric Company
Fairfi eld, Connecticut 06828
www.ge.com
3.EPC055148101A.105