DIGITAL INDUSTRIAL
GE 2015 Annual Report
We act. We learn.
We get better. We insist
on being more than we
are today. Some companies
are retreating; we are
moving forward to become
the Digital Industrial.
— JEFF IMMELT
GE’s Global New Directions Team
CEO Jeff Immelt’s culture advisory group
made up of promising GE employees
from around the world
Cover: Krista Carroll, GE Aviation
JEFFREY R. IMMELT
Chairman of the Board
and Chief Executive
Officer
BETH COMSTOCK
Vice Chair
KEITH S. SHERIN
Vice Chairman,
GE, and Chairman and
Chief Executive Officer,
GE Capital
JOHN G. RICE
Vice Chairman and
CEO, Global Growth
Organization
JEFFREY S. BORNSTEIN
Senior Vice President and
Chief Financial Officer
BILL RUH
Senior Vice President
and Chief Digital Officer
VIC ABATE
Senior Vice President
and Chief Technology Officer
SUSAN P. PETERS
Senior Vice President,
Human Resources
ALEX DIMITRIEF
Senior Vice President
and General Counsel
HOW WE PERFORMED
AGAINST OUR 2015 OPERATING GOALS
2016 GOALS
Target
Actual Year-over-year
Operating Earnings Per Share1
Industrial
GE Capital Verticals
$1.10–1.20
~$0.15
$1.14
$0.17
19%
6%
Operating Profit Margins1, 2
Industrial (incl. Corporate) 3
+
15.3%
110bps
GE Capital Exit Plan
Asset sales (Ending Net Investment
[excluding liquidity])
Cash
~$90B
$104B
N/A
Free cash flow + dispositions1
$12–15B
Cash returned to investors
$10–30B
$15.2B
$33.0B
23%
$22B
1
2
3
Operating EPS: $1.45–1.55 (Industrial + Verticals)
• Organic growth of 2–4%
• Core margin expansion
• Corporate @ $2.0–2.2B
• Alstom ~$0.05; Appliances gain ~$0.20
• Restructuring = gains
• FX impact ~$(0.02) at today’s rates
• High-teens Industrial tax rate
Free Cash Flow + Dispositions: $29–32B
• CFOA of $30–32B; ~$18B Capital dividend
• Dispositions of $3–4B
• Net P&E of ~$4B
Cash Returned to Investors: ~$26B
• Dividend of ~$8B
• Buyback of ~$18B
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted
Accounting Principles Measures (Non-GAAP Financial Measures) on page 95.
2. Excluding Alstom.
3. Excluding restructuring and other & gains.
GE 2015 A REPORT 1
Act
Letter to Shareowners
It is easy to be uncertain as an investor to-
day. The global economy is long on volatility
and short on economic leadership. But GE
remains a good investment. In a complicated
world, we are simpler and more competitive.
In an uncertain world, we are skilled in man-
aging through tough cycles. In a risky world,
we have cultural strength and a lot of cash.
We are tested. Companies that think they
are perfect can get you in trouble in this
environment. GE is not perfect, but we make
progress every day. In 2015, we continued to
take strong actions that make GE better.
We transformed our portfolio by exiting most
of financial services while completing the
purchase of Alstom, our largest industrial
deal. This ends a period in which we refo-
cused GE as a high-tech leader. To do so, we
sold more than half the Company where
we lacked competitive advantage and re-
built our core franchises. Every GE business
today rests solidly on a bedrock of deep do-
main competency.
The bold strategy to exit GE Capital came
from Keith Sherin and his team. The plan was
complicated, challenging and risky. It involved
one of the largest corporate restructurings in
history. Their execution has been flawless.
The move says a lot about the GE culture: We
are willing to take bold actions in the face of
uncertainty; and our team puts the Company
ahead of their own interests.
At the same time, we accelerated our
transformation as a leader in the Industrial
Internet, becoming a “Digital Industrial” com-
pany. In the Industrial Internet we see the
next great wave of productivity both for our
company and for the customers we serve.
We are a company that invests in broad
industrial transitions, and they don’t come
much bigger than the full application of data
and analytics to machines and systems.
GE CAPITAL PORTFOLIO
REPOSITIONING IN 2015
Based on strong buyer interest and an
accelerated timeline, the portfolio transition
will be largely executed by the end of 2016.
GE CAPITAL
PROFIT CONTRIBUTION
GE Capital drove significant earnings
growth and helped fuel GE’s investment
in its industrial portfolio.
GE Capital Transition
GE Capital % of GE’s earnings
$157B
SIGNED
$104B
CLOSED
$200B
GOAL FOR
ASSET
DISPOSITIONS
~$50B
TO GO
~60%
% Earnings Growth
1990–2005
% Earnings: 1990–99
% Earnings: 2000–15
37%
41%
% Earnings: Future
<10%*
s
i
s
a
b
s
l
a
c
i
t
r
e
V
+
g
n
i
t
a
r
e
p
o
l
a
i
r
t
s
u
d
n
I
*
1930s
1940s–50s
1960s
1970s
1980s
1990s
2000s
2008–15
TODAY
GE Capital Historic Timeline
GE Credit
formed in 1932
to provide in-
stallment loans
to purchase
GE appliances
GE Credit
signs
8 millionth
contract
Real Estate
launches
Entered Aviation
financing
Commercial
Lending
and Leasing
launches
Energy Financial
Services
launches
GE Capital Retail
Card Finance
launches
E-business
launches
GE Capital
splits into 27
businesses
$107B
Earnings
since 1980
2 GE 2015 ANNUAL REPORT
Established GE Capital Verticals
to better align with GE’s industrial
businesses
Successful split-off of Synchrony
Financial through largest-ever
share exchange with 671MM GE
shares retired
GE Capital
revenues
reach ~50%
International;
~70% by 2006
Genworth IPO
(largest IPO of
2004)
Financial crisis &
new regulatory
bodies
GE Capital
Retail Finance
IPOs as
Synchrony
Financial (2014)
Milestone
Aviation
acquired; first
acquisition since
financial crisis
(2014)
The essence of GE is the unique ability to cre-
ate value from the intersection of horizontal
capability with vertical expertise. Competing
across multiple businesses and regions—“the
horizontal”—requires strategic agility and cul-
ture, but it is increasingly valuable. This is how
we create competitive advantage from size
and diversity. A digital world facilitates more
horizontal solutions for customer productiv-
ity and internal speed. A volatile world puts
more of a premium on reducing risk through
diversity, another horizontal skill. At the same
time, companies must be deeper to drive low
cost, achieving customer outcomes with high
share—“the vertical.” New innovation will re-
quire deep science and, many times, new
manufacturing techniques. There are not
many companies on Earth that can develop
high-tech infrastructure systems at scale, a
vertical strength. Maximizing the valuable
interface between horizontal and vertical is
institutional, part of our leadership capability
and embedded in our culture.
In the midst of our transformation, we de-
livered good results. In 2015, we grew our
Industrial earnings per share by 19%, ex-
panded our segment margins by 80 basis
points, and returned $33 billion of cash to our
investors. Our Industrial return on total capital
expanded 290 basis points to 16.9%. We won
in the marketplace, finishing the year with
$315 billion in backlog. Strong execution was
reflected in our share price. GE’s total stock
return was +28% in 2015, above the perfor-
mance of the S&P 500, which grew by 1%,
and the industrial index, which declined by
4%. We have solidly outperformed the broad-
er indices over the past three years, when we
grew by 64%, and five years, when we grew
by 101%. GE ended the year as the eighth
most valuable company in the world.
To sustain this performance, we will have
to win in challenging global markets. Some
say we are in an “industrial recession,” but
I don’t really know what that means. I learn
GE Capital Deal Team
In 2015, the team signed $157B in GE Capital dispositions—
a historic accomplishment and a critical piece of our transformation.
Pictured left to right: Jim Waterbury, Joe Nellis,
Matt Vaughan, Sarah Hedger, Duncan Berry,
Aneek Mamik, Keith Sherin, Jonas Svedlund,
Aris Kekedjian, Evelyn McAdam, Mark Landis,
Ephraim Rudman.
GE 2015 ANNUAL REPORT 3
Long-Term Investment in China
GE has been in China for 100 years, and is continuing to localize, partner
and go digital with strategic investments in its talent and economy.
22,000 employees
30+ plants
60+ technology labs
34 joint ventures
4 GE 2015 ANNUAL REPORT
Near-Term Goals: 10x10
$10B
$10B
in revenues
in sourcing
Pictured left to right:
Gary Gu, Ming Tu, Diana Tang, Peter Li,
Xiangli Chen, Rachel Duan, Fengming Liu,
Weiming Xiang, Xiang Qian, Dan Yang,
Jing Cheng
more from what I see in individual markets
and hear from customers. Commodity prices
are down significantly, primarily driven by
oversupply. Resource industries and regions
are restructuring. The dollar has strength-
ened, probably for an extended period of
time. This puts pressure on American export-
ers. At the same time, commercial air travel
is at a record high. Healthcare demographics
and access will demand an increase in global
spend. And one-third of the world’s population
still lacks sufficient access to electricity. The
global imperative for enhanced infrastructure
investment has not changed. Growth is avail-
able, but you have to work at it.
What is unique in this cycle is the difficult
relationship between business and govern-
ment, the worst I have ever seen. Technology,
productivity and globalization have been the
driving forces during my business career.
In business, if you don’t lead these chang-
es, you get fired; in politics, if you don’t fight
them, you can’t get elected. As a result, most
government policy is anti-growth. In the U.S.,
we want exports but seem to hate trade and
exporters; globally, governments love small
businesses but then regulate them to death.
And so, we perpetuate a cycle: slow growth,
poor job creation, populism, low productiv-
ity, higher regulation, poor policy and more
slow growth. We now live in a world where
the most promising growth policy is “negative
interest rates.” In the U.S., 2015 was the 10th
consecutive year when GDP growth failed to
reach 3%, a rate that used to be considered
our entitlement.
We don’t try to pick a cycle, or time a market,
or complain about elections. We will always
act to get more out of this economy than
our peers. We believe in “self-help.” We are
aggressively managing our cost structure to
capitalize on deflation. In 2016, we will fund
a record level of restructuring. We have a
very strong balance sheet with excess cash.
PreddixTM: Creaating Vaaluable OOutcommes foor Custtoommers
mers
Movement Planner
A sophisticated rail traffic control system
and logistics planner all-in-one, Movement
Planner intelligently analyzes and optimizes
traffic, allowing more locomotives to run
on the same infrastructure at faster speeds,
without laying new track.
• Significant improvement in on-time
performance
• Comprehensive view of the network
resulting in ~10% increase in network veloc-
ity and ~50% reduction in expired crews
• Orders from two Class 1 railroads
SmartOutage
GE Power’s SmartOutage
eliminates 70+ applications and
unites outage tasks and processes
into a single mobile-friendly platform
for a powerful productivity boost.
• Drove $150M of productivity in
2015; expected to drive $100M more
in 2016
• 50% reduction in customer report
delivery cycle time
Clarity with
Pitney Bowes
Pitney Bowes uses Predix to power
their new Industrial Internet software
solution, Clarity. Clarity improves
inserting and mail-finishing opera-
tions, and has helped Pitney Bowes
lower costs and optimize machine
performance.
• Machine efficiency improvement
from 2–10% over time
• Increased mail throughput produc-
tivity by up to 20%
GE Health Cloud
The GE Health Cloud is designed to
be a scalable, secure ecosystem
connecting software, hardware and
medical devices.
• Will connect to hundreds of thousands
of medical devices and machines from
multiple vendors, including 500,000+
GE Healthcare imaging devices
Aviation Analytics
With Predix, GE Aviation developed
analytics to segment commercial fleets
and provide in-depth asset condition
and operational insights.
• More than $175M in customer benefits in
2015 via Predix-optimized maintenance
• Improved fault detection accuracy
by 10 percentage points, eliminating
unnecessary disruption to more than
1,000 commercial flights
This gives us the ability to create value: buy
back stock, bolster your dividends or acquire
distressed industrial assets. We have the
ability to finance our industrial products, a
huge advantage to support our customers.
We can move production to the lowest-cost
regions and capitalize on currency or excess
capacity. And, we are continuing to invest.
Our long-term commitments for R&D, global-
ization and investments like Alstom have built
a valuable backlog. I encourage the GE team
to just focus on what we can control to stay
resilient and agile.
As uncertainty unfolds in front of you, this is
what I want you to remember about GE: we
have a great set of businesses. We are lead-
ing in this era’s biggest driver of industrial
growth and productivity. We have operating
momentum and cash flexibility due to sus-
tained execution of our enterprise strengths.
And we have a tested team who gets reward-
ed only when they deliver for you. GE should
be a safe investment in a sea of volatility.
Transformation:
A Focused
Industrial Leader
Going forward, we are competing as a
$130 billion high-tech industrial leader, filled
with strong franchises collectively gener-
ating consistent growth with high margins
and high returns. Every GE business feeds
off enterprise strength in technology, brand,
globalization and services. In a slow-growth
world, there is no case for an unfocused
conglomerate. Can anyone see GE acquiring
NBC or Insurance today, businesses with no
tangible fit? Yet, decades ago, this was ap-
plauded, and in the 1980’s and 90’s, it worked.
We are exiting most of our financial services
platforms. This was not an easy decision. GE
Capital was an important business for GE.
It generated 60% of GE’s earnings growth
from 1990–2005, at one point generating
half of our earnings. Despite the volatility of
the financial crisis, GE Capital emerged with
its franchises intact. However, the business
model for a large, wholesale-funded FinCo
like GE Capital changed dramatically, and it
was impossible to generate acceptable re-
turns. I knew that meeting the requirements
for Capital could not be contained and would
hurt our industrial competitiveness. We de-
termined that our financial businesses were
more valuable outside GE.
We decided to exit all of the financing plat-
forms not related to GE industrial businesses.
We completed the split-off of Synchrony, a
leader in retail finance. Synchrony as a public
company is valued 30% higher than it was
in GE. We returned $20 billion to investors
in the form of a share buyback. We are sell-
ing $200 billion of assets in 18 months, with
80% already signed. We are about one year
ahead of our original plan. As we exit these
GE 2015 ANNUAL REPORT 5
PER ASSET
ANALYTICS
=
E
Exact data on usage and
d
E
d
Exact data on usage and
Exact data on usage and
environment for a single machine
i
h
ro
le macc
onment for a si
ma
m
ment for a single m
m
m
m
environment for a single machine
to optimize its performance
m
ti
m
r
o
iz
ze
e its perf
s p
to optimize its performance
m
m
NEW
SERVICES
Digital Twin +
Digital Twin +
Digital Twin +
Controls +
Controls +
Controls +
Predix
x
P
x
ededr
Predix
DIGITAL
TWIN
THE FUTURE OF SERVICES FOR GE
THE FUTURE OF SERVICES FOR GE
Anim
Animated with real-world data,
Animated with real-world data,
the Digital Twin is a virtual replica of
the Digital Twin is a
Twin is a virtual replica of
any product, and is designed to h p
signed to help
any product, and is designed to help
GE predict and respond to
GE predict and respond to
customer problems.
customer problems.
6 GE 2015 ANNUAL REPORT
PHYSICAL MODEL
+
DATA
HOW IT WORKS
=
OUTCOME
Gas turbine +
steam turbine
Plant
operational
data, weather
forecasts
Increased fuel
efficiency
Combined-cycle power plant
PHYSICAL MODEL
+
DATA
=
OUTCOME
S1 blade +
coating
Per-flight data,
environmental
conditions, prior
damage
Optimized
inspection
schedule
GE90 aircraft engine
GE 2015 ANNUAL REPORT 7
↑
CREATES
WORLD’S MOST
EFFICIENT POWER
PLANT OFFERING
↑
IMPROVES
QUALITY OF
SERVICES BUSINESS
60% increase to Power
Services installed base
↑
COMPLETES
A COMPREHENSIVE
TRANSMISSION
AND DISTRIBUTION
SOLUTION
ALSTOM: EXPANDING THE GE OFFERING
• GE CONTRIBUTION • ALSTOM CONTRIBUTION
POWER
RENEWABLES
GRID
GAS
ONSHORE
WIND
DISTRIBUTION
STEAM
HYDRO
TRANSMISSION
OFFSHORE
WIND
↑
$3.6B
IN SYNERGIES
↑
DRIVES
GE2GE & GE4GE
GROWTH
OPPORTUNITIES
↑
ENHANCES
RENEWABLES
BUSINESS IN
MULTIPLE WAYS
8 GE 2015 ANNUAL REPORT
Mannnaaginggg Throough CCycclees
The GE Store harnesses the power of the Company’s
diverse businesses to capitalize on industry cycles.
Aviation (2020000–0002)
+ Sustained R&D investment
+ Supported customer solutions
+ Lowered cost
+ Expanded capability
PPPPPoowerr (200011–04)
+ Divversified portfolio
+ Gloobal investment
+ Lowwered cost
+ Exppanded capability
Engine
Shipments
~20%
NowNow wwi hh
NoNow
ww wiwithth
er $150B in
150B
oover $150B i
backloglacklog
Gas
Turbine
Shipments
~65%
NNow hhellps
ow he ps
generate
nerate
d of t
one-third f the
world’s power
GE
Aspirations
Oil && GGGass (2014–––)
+ Building technical advantage
+ Lower cost
+ Improving our capability & team
+ Expanding our capability
+ Offering customer solutions
To execute for our
ccustomers and
itiion ourourselselvesves
ves
for the future
posositiition
Oil Price
50%+
businesses, we are generating $35 billion of
cash, with $4.3 billion returned to the parent
in 2015 and another $18 billion in 2016. We
plan to use this cash to buy back shares.
Going forward, GE will retain a smaller fi-
nancial services capability connected to
our industrial core. This business should
promote industrial growth and generate re-
turns above our cost of capital. At this size,
we will apply to de-designate GE Capital as a
“systemically important financial institution,”
greatly reducing the regulatory risk in GE.
We completed the acquisition of Alstom that
we had begun in 2014. Alstom is a great
strategic and financial fit for GE. We plan to
generate $3 billion of cost synergy over five
years; Alstom will add $0.05 EPS in 2016 and
up to $0.20 by 2018. Alstom creates a more
global and technical GE. It adds significant
capability to our growth market footprint and
project management capability. It gives us
the potential for $5 billion of revenue through
replacing suppliers with internal capability
and by packaging complementary products
for our energy customers.
Alstom makes GE more competitive. In Saudi
Arabia, we recently won a 1.4 gigawatt order
based on efficiency gains derived through
combining a GE gas turbine with Alstom bal-
ance of plant. For this project, we were able to
lower system cost through the use of Alstom’s
project management capability. Alstom will
expand our presence in important markets
like India. Here, we have nearly doubled the
size of our revenue, our capability and mar-
ket potential. With Alstom, we become the
world’s largest renewable player. In Grid, the
combination of GE and Alstom makes us a
stronger competitor. We believe the Alstom
investment will generate a strong return.
We announced the sale of our Appliances
business to Haier for $5.4 billion in the first
quarter of 2016. This is a great outcome for GE
investors and our team. The appliance market
is globalizing, with the China market growing
quickly. We think Haier is a long-term investor
in the U.S., a good home for the GE team. We
plan to work with Haier in China to build out
distribution and develop the GE brand. We will
redeploy this capital to higher returns.
We are seeing some good inorganic oppor-
tunities as economic volatility increases and
valuations decline. Acquisitions will bolt-on to
our existing businesses to make them more
competitive and increase their growth rate.
Unlike the financial crisis, in this cycle GE has
substantial firepower to make strategic in-
vestments that create value.
We don’t count on acquisitions to grow GE.
Rather, we are strong believers that we can
grow organically over the long term. We in-
vest more than $10 billion each year in R&D,
capital expenditures and systems. We have
a deep pipeline of new business platforms,
each of which can generate substantial reve-
nue over time. In Aviation, we are penetrating
one of our largest “untapped” segments in
turboprops. This has long been the domain
of our competitors. This began with a small
Czech acquisition in 2008. Over time, we lev-
eraged our technical strength to produce an
all-new engine design. This year we won the
biggest application on the Textron Advanced
Turboprop, set to certify in 2019. This will
lead to $40 billion in revenue over 25 years,
a long-lasting competitive win. GE Ventures is
a key catalyst for investing in mobile monitor-
ing and cell therapy, growth initiatives for our
Healthcare franchise. And we spun our LED
business into a new energy-efficiency plat-
form called Current. At $1 billion in revenue,
we are one of the biggest players in LED. By
packaging this with other energy-efficiency
technologies, controls and financing, we can
GE 2015 ANNUAL REPORT 9
build this to $5 billion in 2020. We are part-
nering with a great group of customers like
Walgreens, J.P. Morgan and Simon Property.
We will bring our business-building capability
to all new investments, like Alstom.
Diversification is essential for consistent fi-
nancial performance in volatile times. We
navigated our Aviation business through
the 9/11 crisis when engine shipments de-
clined 20%. Since then, Aviation earnings
have tripled and our share has grown. Our
shipments of gas turbines declined by 65%
between 2001–2004 as a “U.S. bubble” for
power generation burst. Yet we have a
stronger Power business today. Through
those cycles, the “Big GE” protected the busi-
nesses and gave them strategic flexibility.
That gives us confidence as we approach a
difficult Oil & Gas cycle. Between 2014–2016
we expect our Oil & Gas earnings will de-
cline 20–25%. Like past cycles, the strength
throughout GE is being transferred to our Oil
& Gas business. We are able to invest more
in R&D, something our competitors can’t do.
We are providing lower-cost solutions to
our customers that allow them to sustain
at current resource market pricing. And we
can invest in new assets based on favorable
economics. As in the tough times in Power
and Aviation, our investment in Oil & Gas is a
long-term proposition powered by the basics
of a vital industry.
Our portfolio is set. Going forward, we will
get more value from our market position by
leading the digital wave that is reshaping the
industrial world.
Transformation:
Creating the Digital
Industrial
We are just beginning our transformation
as the Digital Industrial Company. The Inter-
net has had a massive impact on consumer
productivity and commerce. Its impact on in-
dustrial markets is just now being realized. By
2020, 10,000 gas turbines, 68,000 jet engines,
more than 100 million lightbulbs and 152 mil-
lion cars will be connected to the Internet.
At GE, we have decided to generate and
model this data ourselves—both inside the
Company and with our customers. This is
what we mean by becoming a Digital Indus-
trial. Our Digital Industrial capabilities will
expand our growth rate, improve our margins
and bring us closer to our customers.
10 GE 2015 ANNUAL REPORT
There was a time when every sale had a
clear endpoint, followed only by routine ser-
vice and maintenance. Now, sensors on our
products send constant streams of data,
analyzed and translated into upgrades that
drive productivity in industries where even
the smallest incremental efficiency can mean
very large gains. Capturing it will be a mission
in every one of our businesses. Our aspiration
is to offer with every GE product a pathway
to greater productivity through sensors, soft-
ware and big-data analytics.
Why GE? I assure you we didn’t wake up
one morning with “software envy.” We have
been investing in software and accumulating
data for decades. Competing will not require
big acquisitions. Rather, the technology re-
quired to compete is in our sweet spot. So, why
not us?
Our investments are aimed at delivering more
productivity for our customers and GE. The
performance, so far, of technology companies
to generate industrial productivity has been
subpar. Industrial productivity, which aver-
aged 4% annually from 1990–2010, is only
1% today. This is because pure connectivity
does nothing to create value. Operational pro-
ductivity requires domain data, physical and
digital engineering models, industrial analytics
and the ability to modify machines to achieve
different outcomes. Ask a hospital CEO how
their results have changed once they im-
plemented a new Electronic Medical Record
System, and the answer is typically silence.
They still lack the data that drives outcomes.
The “killer app” for the Industrial Internet is
GE’s Digital Twin. GE is creating living digi-
tal profiles of 500,000+ industrial machines
in the field to provide new opportunities for
customer growth and productivity. The Dig-
ital Twin is a software model of a physical
asset or process that will make it possible to
manage more precisely than we ever thought
possible and deliver better outcomes. The
Twin will create new business models and
services for GE’s customers and our business-
es. On the GE90 engine, we have used Digital
Twins to increase fleet availability while sav-
ing tens of millions of dollars in unnecessary
service overhauls. In rail, we are using Digital
Twin models of the Evolution Locomotive to
enable our customers to minimize fuel con-
sumption and emissions. The data economy
for the industrial world has arrived, and GE
is in a unique position to lead it. We enter it
bringing decades of deep domain expertise
about our industries and volumes of data
about our machines and their processes that
no one else can match.
The Formation
of GE Digital
This year, GE announced the creation
of GE Digital, a transformative move
that brings together the digital
capabilities from across the Company
into one organization.
Pictured: Software developers and
engineers at GE’s facility in San Ramon.
CIO
is king
A key driver of
employee empowerment
and productivity
Customer
outcomes
Increased
productivity for
our customers
Digital
Thread
Common systems
strategy leveraging
PredixTM
Technical
leadership
Digital Twin
combines physics
& analytics
Ecosystem
approach
Co-creating with
customers, developers,
partners
Culture of
simplification
Act with speed
& new business
models
GE 2015 ANNUAL REPORT 11
With this technical leadership, GE can be-
come a top 10 software company by 2020.
At the center of this effort is our cloud-based
operating system, PredixTM. Predix offers our
customers complete situational awareness
to monitor, and continually improve, equip-
ment performance. In practice, it will assure
everyone in a given enterprise—whether it’s
an airline, a hospital, a railroad, an oilfield, or
a wind farm—a real-time stream of relevant
information, accessible on mobile assets. Ev-
erything we are doing in data and analytics
comes together in this operating system.
GE is unique in developing its own operating
system. We are doing this, first and foremost,
because we need it for our own productivity.
At our scale, we can drive a common platform
across GE economically. As an industrial com-
pany—and the owner of the Digital Twin—we
understand the requirements. We plan to
open Predix to our customers and other in-
dustrial companies. This gives GE a unique
opportunity to create value in the platform
ecosystem. We launched Predix in the second
half of 2015. By the end of 2016, we expect it
to have 200,000 assets under management,
100 GE applications and 20,000 developers
creating many more applications. Cyber secu-
rity is essential for Predix, and we are building
world-class capability. We have world-class
partners like Intel and SoftBank who will help
us develop and deploy Predix.
GE applications provide a show site for the
Industrial Internet. This year we will gener-
ate $500 million of productivity by applying
data and analytics inside GE. We will have
75 “brilliant factories” driving yield, cycle and
uptime through model-based design. We are
using model-based design on our New Prod-
uct Introductions which allows us to develop
and launch new products with reduced cy-
cles, lower cost and higher quality. We can
correlate material usage with product perfor-
mance to change the work scope in a service
agreement which drives productivity for GE
and the customer.
The revenue for our analytical applications
and software is $5 billion and growing 20%
annually. We are offering our customers a
complete range of software analytics that
are positioned to achieve superior out-
comes. In Power, we have digitized wind
farms and power plants. These are soft-
ware-defined products complete with a
digital infrastructure including Predix and
a plant suite including asset performance
management and generation optimiza-
tion. The value for our customers could
be as high as $100 million per wind farm
and $230 million per power plant. We
launched a Healthcare cloud that gives
radiologists anywhere access to analytics
and images. Physicians can deliver supe-
rior outcomes by accessing data to spot
disease patterns and by collaborating with
multi-disciplinary teams. Our Healthcare
IT installs are growing by 10%. Each of
our industrial businesses is aiming to build
$1 billion+ digital franchises.
Our innovation is driving customer outcomes.
RasGas is a Qatar-based world leader in
natural gas. Our asset performance manage-
ment tool will monitor the pipeline, delivering
reliability that could save them hundreds
of millions of dollars. At the National Health
Service in the U.K., we are delivering enter-
prise imaging solutions on the Health Cloud.
This will improve clinical collaboration and
lower cost. The City of San Diego is execut-
ing an “intelligent city” powered by Predix
with connected LEDs for efficiency. At AEP,
we are executing an integrated distribution
operating platform for enhanced productivi-
ty and uptime. At BNSF, we are executing on
a movement planner that leverages data to
improve asset utilization. At Emirates Airlines,
we are using analytics to improve aircraft fuel
performance and maintenance productivity.
We are working solution-by-solution, custom-
er-by-customer and country-by-country to
deliver outcomes.
Our success as a Digital Industrial depends
on partnering with our customers. We must
access the data and deliver outcomes by
working together. A key to this is the Indus-
CURRENT:: A NNEWW SSTARTUPP WITHIN GGE
Current will meeet thhee unnique needs of a wide rangge of commmercial, industriaal,, municcippal and uttility customers.
GE TECHNOLOGIES
LED
SOLAR
ELECTRIC VEHICLE
INFRASTRUCTURE
ENERGY
STORAGE
OUTCOMES
Leveraging Predix, Current will:
Reduce energy costs
Create energy-efficient systems and
software and new business models
Enable intelligent environments
Improve productivity by capturing
real-time data and actions with
intelligent lighting
Provide on-site power for commercial
and industrial customers
Advance grid efficiency, cleaner energy
and smarter infrastructure solutions
with Predix
$1B
in revenues
at launch
$5B
in revenues
by 2020
12 GE 2015 ANNUAL REPORT
LLAAUUNCCH CCUUUSSTOOOMMMMERRRS
The GE Store
The GE Store is the transfer of technology, talent, expertise and connections
through GE’s massive, diverse network of businesses and markets. GE’s businesses give and
take from the Store, and in 2015, the Company made great progress.
Value of scale and diversity
↑
LEVERAGING
SCALE
←→
SPREADING
IDEAS AND CONNECTING
SOLUTIONS
↑
CREATING
SOLUTIONS
POWER
CAPITAL
RENEWABLE
ENERGY
APPLIANCES &
LIGHTING
GLOBAL
SCALE
CULTURE &
SIMPLIFICATION
OIL & GAS
DIGITAL
TECHNOLOGY
TRANSPORTATION
ENERGY
MANAGEMENT
HEALTHCARE
AVIATION
Outcome
Outcomes
↑
EXPANDING
MARGINS
↑
FASTER
GROWTH
↑
DEVELOPING
LEADERS
GE 2015 ANNUAL REPORT 13
HORIZONTAL CAPABILITY
Size
+
Diversity
efficiency of scale
reduces risk
VERTICAL
EXPERTISE
Deep domain
science
+
Experience,
insight and
capability
“The essence of GE is the
unique ability
to create value from the
intersection of horizontal
capabilities with vertical
expertise.”
trial CIO, a forgotten and unappreciated role
in most industrial companies. In retrospect,
most industrial companies have outsourced
too much IT capability. Competency must be
restored to improve productivity.
Analytics provide a competitive advantage
back into the way we design our products.
The new products in our Oil & Gas business
now are optimized by digital capability. In
the future, our Onshore Solutions will embed
reservoir characterization and visualization
into submersible pumping, literally digitizing
the rocks. We will have “smart iron” to pro-
vide precision drilling. We are finding ways
to create an “invisible oil field,” one that can
optimize downhole processing with improved
environmental performance. We are creating
a valuable cycle: Analytics will enhance our
installed base; we can then use those ana-
lytics to improve our products, which grows
our own share and provides a bigger base for
our analytics.
Becoming a Digital Industrial will require
investment and will test our culture. Our
success is not a given. We are creating a
$15 billion software and digital company
inside of GE built on agile practices and
new business models. We are plugging this
software business into thousands of indus-
try-domain experts and a $226 billion services
backlog. There is no blueprint for what we are
trying to do and, at times, it will be messy.
But the opportunities for value creation are
boundless: in better products, leading to add-
ed market share; in faster growth in services;
in more productivity and higher margins. Over
the last 15 years, trillions of dollars in wealth
have been created in all kinds of consumer
Internet stocks; in the next 15 years, trillions in
wealth will be generated across the Industrial
Internet. My commitment to you is that GE will
be better positioned than any rival to create
that value and earn those rewards.
14 GE 2015 ANNUAL REPORT
DAVID JOYCE
Aviation, CEO
We are applying data analytics and new
digital technologies to advance our
own operations. Digital design tools,
additive manufacturing, advanced
automated machining and advanced
inspection, all are enabling our opera-
tions, partners and suppliers to dramat-
ically reduce cycle time while improving
quality. For example, our most sophisti-
cated turbine blade design concepts
are now on test in two weeks, not the
nine months it once required, thanks to
rapid prototyping and 3D printing.
A digital industrial GE Aviation business
moves at a much faster pace, with the
confidence and speed enabled by a new
reality where physics meets analytics,
and our customers and shareholders win.
JOHN FLANNERY
Healthcare, CEO
With the first industry-specific cloud—
our “GE Health Cloud,” powered by Pre-
dix—tech innovators can join a secure
ecosystem where they can build, deploy
and market their applications. These
apps help doctors to manage complex
data such as 3D imaging scans, while
making clinical collaboration as simple
and routine as social networking.
In perhaps no other sector are the
implications of the Industrial Internet
more in evidence, or more promising,
than in healthcare. And no other compa-
ny has adapted its culture more than we
have to be the best partner possible
for our customers as they work to solve
the challenges ahead.
What does Digital Industrial
mean for my business,
and how are we driving it?
For full strategy memos from each CEO,
visit gereports.com/ar2015
KATE JOHNSON
GE Digital, Chief Commercial Officer
By the year 2020, all critical industrial
equipment will be connected and one
exabyte (1 million terabytes!) of data per
day will be available.
GE Digital has assembled the people,
process and technology required to de-
liver a broad range of digital capabilities.
These capabilities yield new, compelling
business outcomes for customers,
such as more power at a lower cost,
better health diagnostics per scan with
reduced dose and increased velocity in
transportation.
In GE Digital, almost all of our employ-
ees have a software background and
therefore have what we call a “digital
DNA.” They intuitively focus on speed
of execution and rapid, measurable
results. They understand the power of
customer and partner ecosystems, and
the potential multiplier effect these
ecosystems can have on scalability and
value generation.
RUSSELL STOKES
Energy Connections, CEO
Taking innovation into the field, we
are expanding our Software and Grid
Automation businesses to drive better
outcomes for electric utilities. These
solutions sharply reduce the time it
takes to gather, analyze and interpret
equipment data, shave 30% off response
times and reduce repair costs by as
much as 75%.
Energy Connections uses millions of
connected assets and their insights to
support mission-critical, real-time con-
trol systems for pipeline management,
real-time energy market platforms,
gas distribution systems and electrical
transmission and distribution grids.
Our team is completely centered on
delivering in a digital world. We use
Product Lifecycle Management tools
to increase productivity and quality. 3D
modeling and simulation tools com-
press the design cycle for new product
development. The models are linked by
the Digital Thread to our shop floor to
ensure product efficiency and quality.
LORENZO SIMONELLI
Oil & Gas, CEO
Operations are greatly enhanced by the
knowledge customers gain through our
digital technology. When insights from
equipment, sub-surface reservoirs and
external data points are all brought
together, operational planning and
decision-making become more efficient
and focused—with corresponding gains
in performance and safety.
STEVE BOLZE
Power, CEO
In 2015, we launched Digital Power
Plant, a suite of software applications,
powered by Predix, that helps deliver
more power, higher reliability, greater
efficiencies and lower emissions. The
Digital Power Plant can generate up to
$50 million of incremental value over
the life of an existing plant, and up to
$230 million for a new one.
Using Predix, we now offer oil and gas
operators an enterprise-wide manage-
ment dashboard, which is proving a
crucial advantage in very competitive
conditions.
At the same time, we are transforming
our very own business, creating end-
to-end digital connections across our
operations to benefit our customers. This
Digital Thread weaves together several
initiatives—design system integration,
model-based enterprise and virtual
manufacturing. The advantages of the
Digital Thread are enormous: allowing us
to “see” more and to deliver better out-
comes for our customers, while gener-
ating nearly $900 million in productivity
savings over the next three years.
JAMIE MILLER
Transportation, CEO
With our Services teams, we are
increasingly leveraging a computer-
based “Digital Twin” of our equipment
to analyze individual asset
performance, prevent failure
modes and optimize maintenance
throughout its life.
Because we already know the
condition of locomotive engines
through our digital models, we can
route them for remanufacturing
based solely on what needs to
be repaired, rather than using a
standard full remanufacturing spec
for every engine. In our customers’
service shops, we know the exact
maintenance to perform on a
locomotive before it even comes
in for repair.
We are breaking free of our traditional
“functions,” with mission-based and
agile teams—teams with singular
purpose, empowered to leverage any
discipline in our business to achieve
their mission.
JÉRÔME PÉCRESSE
Renewable Energy, CEO
The Onshore Wind business has been
pioneering digital systems, launching
its Digital Wind Farm ecosystem in May
2015. Using the power of big data, wind
farms are configured to maximize the
performance of each turbine at each
location according to the surrounding
wind conditions. Their performance
is monitored and adjusted in real time
to ensure that the wind farm operates
as efficiently as possible.
More and more employees are looking
at our operations, seeing opportunities
for digital tools to improve our produc-
tivity and taking the initiative to act.
They know that making renewable
power more affordable will accelerate
penetration and help tackle the energy
challenge—for the benefit of people
everywhere.
GE 2015 ANNUAL REPORT 15
COMMITMENT
TO LONG-TTERM
ORGANIC GGROWTH
Using the GE Sto
ADVANCED TURBOPROP
GE Aviation used technology, expertise and FastWo
astWorks
from across the Company to aggressively enter a new
w
market with its cutting-edge advanced turboprop engine
for a $40B opportunity over 25 years.
GE Store,
$40B
opportunity over
next 25 years
FastWorks
increased speed
of product
development
Additive
manufacturing
techniques
improved
product cost
Global
supply chain
expertise enabled
efficiency
Manufacturing
footprint
in Europe made
development
possible
Superior
Performance
Powered by
the GE Store
A transformed GE is delivering for you. Over
the next three years, we plan to grow our
earnings to more than $2 per share, or rough-
ly 15% each year. This is based on reducing
our share count, integrating Alstom and
growing our core operating profit. We plan to
return roughly $100 billion to you in buyback
and dividends from 2015–2018.
Further, as we execute our portfolio strategy
and reduce the size of GE Capital, we plan to
run GE with a more typical industrial balance
sheet. This may allow us to increase leverage
by more than $20 billion while still retaining
a highly rated balance sheet. We plan to use
this incremental capital for acquisitions or ad-
ditional buyback, building shareholder value
for the long term.
Our team knows exactly what they need
to do in the future and are compensated
to execute. They also have a competitive
advantage that capitalizes on our unique
depth and enterprise skill. We call this the
GE Store. The GE Store captures our ability
to share knowledge, technology and capa-
bilities across the GE businesses. The Store
delivers results. Over the last five years,
our organic growth has averaged 5%, two
times our industrial peer group. And, since
2011, our margins have grown from 14.8%
to 17.0%.
The Store allows GE to innovate at scale, in-
vesting more than our peers and spreading
the innovation across more businesses. The
Global Research Center is investing to lead
in the material science revolution that is
transforming the way we make things. We
recently invested $50 million in a 3D printing
facility in Alabama to make a critical fuel-sys-
tem component for LEAP jet engines. We will
print 1,000 such components annually, with
a target of raising production to 40,000. The
component is designed to withstand high
temperature and pressure, and was histori-
cally made from 20 different parts. Now, we
are printing the component, with laser fus-
ing of a powered “super alloy” composed of
cobalt, chrome and molybdenum. It is 25%
lighter and five times more durable than its
predecessor. We are transferring this capabil-
ity throughout GE.
The Store provides global scale and capa-
bility. Our global reach has taken decades
to build; the talent, capability, partnerships
and reputation can’t be matched. GE is one
of the world’s largest multi-nationals, with
global orders of $75 billion. Over the past five
years, our global growth has been 7%, twice
the GDP. We invest using a total-company
approach, with most of our facilities used by
all of our businesses. Our global backlog is
$224 billion, with balanced business and geo-
graphic diversity.
GE
is an experienced global competitor,
and that really comes in handy as we navi-
gate the changes in China. We will continue
to be a full participant in China; we plan to
have more than $10 billion in revenue and
16 GE 2015 ANNUAL REPORT
FASTWORKSS: HHELLPING GGE DELLIVEERR
EERR
S
IMPACT FFORR CUUSTTOMERSS + INVVESSTTOORRS
TW
ACT F
NG
ME
CUUS
D
I
SS:
INCREASING
PRODUCTIVITY
FastWorks has helped
reduce enterprise resource
planning systems by 77% since
2010, creating more efficiency
and scale across GE’s
enabling functions.
DIGITAL WIND FARM
FastWorks drove a
customer solution in less
than four months, leading
to 20% more renewable
energy per wind farm.
PREDICTING
DERAILMENTS
GE Transportation used
FastWorks to run quick
collaborative iterations
with customers, bringing a
data and wind prediction
solution to market.
LEADERSHIP
MINDSET
SHIFT
INVESTING
FOR
GROWTH
BETTER
CUSTOMER OUTCOMES,
FASTER
CHANGING
EVERYDAY
BEHAVIORS
SAVING NEWBORNS
GE Healthcare used
FastWorks to create a fast,
low-cost, easy-to-use
baby warmer to help medical
practitioners save newborns
from hypothermia.
LAUNCHING
FLAGSHIP PRODUCTS
GE Oil & Gas used FastWorks
to create its new NovaLT16
turbine with its customers,
launching in 30 months
vs. ~5 years.
HACKATHONS
GE Power used Fastworks
to disrupt how we work,
bringing together global talent
to innovate solutions for
real-world challenges
in record time.
FastWorks combines the speed & agility of a startup with the scale & resources of GE
GE 2015 ANNUAL REPORT 17
GE Health Cloud
The GE Health Cloud is a scalable,
secure and connected cloud
ecosystem designed to deliver
healthcare-specific software
applications as-a-service. It will
connect to thousands of medical
devices from multiple vendors
and will host apps from GE and
thousands of independent software
vendors. Applications will range
from visualization to life sciences to
monitoring to asset management.
It is designed to improve patient
care and drive improved clinical,
financial and operational outcomes.
Collaborate
Connect
Compute
Visualize
Workflow
Archive
Consistent User
Experience
Interoperability
Analytic
Services
Deployment &
Service Models
Data
Management
Industry-Compliant
Security & Privacy
CUSTOMER
OUTCOME
National Health Service Trusts in the
UK are using the GE Health Cloud as part
of a complete enterprise imaging solution
across their facilities. The GE Health Cloud
will help improve clinical collaboration
and lower operating costs.
500,000
GE Health Cloud will
connect to hundreds of
thousands of medical
imaging devices from
multiple vendors.
$10 billion in sourcing in the near future. The
benefits of long-term investing and partner-
ing are extensive. We work with China EPC
on infrastructure projects in Africa. We can
tap into China Bank financing to get global
projects done. We are working with state-
owned enterprises to build capability in China
for the rest of the world. We are building a bio-
process manufacturing industry inside China,
working with drug companies to create local
capability. China will remain an important
market, and GE is well-positioned.
The Store provides market solutions by tying
together GE businesses. One of the best-
known solutions in GE is to grow in clean
energy and reduce the impact of climate
change. Ecomagination has been a de-
cade-long effort to solve one of the world’s
toughest problems. We work with customers,
like Statoil, to reduce flare gas in oil discovery
or reduce emissions in subsea drilling. This will
use multiple GE products and services for an
innovative solution. In 2015 our Ecomagina-
tion revenue was $36 billion, up sixfold from
where we started.
Increasingly, our customers want flexible
solutions to support their technical programs,
turning capex into opex. We recently com-
pleted an innovative partnership with Temple
University Health System, a three-hospital
academic health system in Philadelphia. Like
most health systems, they are grappling with
increased volume and lower reimbursement.
GE Healthcare worked with Temple to focus
on strategy and collaboration, not just equip-
ment replacement. Using an outcomes-based
approach, both Temple and GE are reward-
18 GE 2015 ANNUAL REPORT
ed by lowering costs and improving patient
care. Together, we are targeting $40 million
in operational savings, which will help fund
new technology. As part of the plan, we will
provide Temple with comprehensive service,
equipment, analytics and financing, totaling
more than $80 million of future growth for
GE. GE’s people are working in the facility to
deliver outcomes. The GE Store is packaging
financing, analytics and innovation to solve
customer problems.
The Store spreads intellect by convening fo-
cused and accountable horizontal councils.
Our Service Council has been operational
for about 20 years. It is charged to grow our
dollar per installed base by 3–5% and $1 bil-
lion of productivity. This year we will focus on
gaining share of aged fleet, service analytics
and advancing repair technology. Our busi-
nesses learn from each other.
The Store is backed by process tools. We are
in the third year of training our teams on
FastWorks, a tool that combines the best
of lean manufacturing and entrepreneur-
ial speed. We have trained 30,000 of the GE
team. This work is being applied to increase
NPI capacity, operational speed and variable
cost productivity. FastWorks is becoming
the way we work.
constantly looking outside GE to recruit new
knowledge and capability that will make the
Company stronger. At the heart of the Store is
a robust meritocracy.
We are driving margin programs at the Store.
While we have made progress boosting ser-
vice margins and lowering structural cost,
our product costs are too high. At GE, we
work with an $80 billion pool of product and
service costs. Our plan is threefold: double
our backward integration; expand our sourc-
ing deflation to $1 billion, nearly twice what
it was in 2014; and target $900 million of
manufacturing productivity. In businesses like
Healthcare and Power, we believe our product
costs can be substantially lower in the future
improved design and advanced
through
supply-chain strategies.
Working on product cost is forcing us to
change the way we think about backward
integration. We currently source about $30
billion in parts we design, and we pay sub-
stantially more than they should cost. With
a huge and predictable backlog, backward
integration offers incremental margin oppor-
tunity. In Power, we plan to leverage Alstom
capability to grow our content. In Aviation, we
have invested $5 billion in vertical integration
at high returns.
The Store is built on a legacy of leadership
development. We have a common set of
leadership expectations, framed by the GE
Beliefs. We have contemporary leadership
programs through our Crotonville learning
center and globally develop the best and
the brightest for our talent pipeline. We are
We typically run our businesses well, but
there is still room for improvement. In 2015,
we invested in Renewable Energy, Energy
Management and parts of Healthcare to re-
store them to the competitive position you
expect from GE. We believe there is substan-
tial earnings power from improved operating
HOW
WE POWER THE WORLD WITH INNOVATION
Major product launches
34
ers to date
orders to date
ers to date
ers to date
SIGNA PET/MR SCANNER
1,399
orders and
commitments
in 2015
LEAP1 ENGINE
Market-leading engine for single-
aisle jetliners
GE Store contributes: CMCs, a material
breakthrough from the GE Store
Combines soft tissue with
cellular activity images
and enables faster diagnosis
and treatment planning
GE Store contributes:
Detector design, sensors and
algorithm innovations with
GE Global Research Centers
HA-TURBINE
33
in backlog
82
technical
selections
World’s largest, most
efficient gas turbine
GE Store contributes:
3D printing and thermal
coatings from Aviation,
and maintenance
learnings from Oil & Gas
756
locomotives
delivered
TIER 4
LOCOMOTIVE
Breakthrough
freight locomotive
GE Store contributes:
Locomotive motor and
control technology utilize
developments from
Energy Connections
1. LEAP is a trademark of CFM
International, a 50–50 joint venture
between Snecma (Safran) and GE.
63%
installed base
growth over
three years
THE XURI™
Cell Expansion System
Enables the
manufacture of cutting-
edge cell therapies
GE Store contributes:
Software from Bangalore
and San Ramon centers
launched in
30 months
versus
~5 years
NovaLT16
New standard for
16MW-class turbines
GE Store contributes:
Aero-derivative components
from Power & Aviation
GE 2015 ANNUAL REPORT 19
20 GE 2015 ANNUAL REPORT
GE STORE
DRIVES HISTORIC
LOCOMOTIVE DEAL
IN INDIA
$2.5B
supply and
maintenance contract;
largest infrastructure
deal ever closed by
GE in India
500+
Transportation
engineers working on
design at GE’s India
Technology Centre in
Bangalore
$200M
GE investment to manufacture and
service locomotives in India
+ GE to support 7% average
annual GDP growth over next
few years
+ Rail investment will enable the
most efficient form of freight
transportation
+ Production and maintenance
facilities will create many jobs
for local Indians
GE 2015 ANNUAL REPORT 21
performance, regardless of the environment.
A new, more highly leveraged, team-based
incentive compensation plan creates even
more alignment and accountability. GE lead-
ers earn more as we exceed goals that align
with shareholder value. And payouts are
broadly differentiated based on business per-
formance. In 2015, business payouts ranged
from 63% to 130% of target compensation.
Our teams want to win.
We are redefining what it means to govern
a large, global company. Historically corpo-
rate was a “temple for reviews.” We want to
make it smaller and intensify the impact of
the GE Store. GE is an operating company, so
the senior team will always enforce mutual
accountability. But gone are the days when
people would migrate to headquarters to
report out and receive instructions. Rather,
we must be in the world of ideas, so that we
remain contemporary and paranoid. This is
behind our move to Boston. We plan to keep
our corporate costs low—less than 2% of rev-
enue—but having a big impact. The GE Store
is valuable for investors, a key reason you
should own GE.
Simplification:
for the Team +
Investors
To accomplish all of this, we are embracing a
culture of simplification. I have put together
a team of early career GE leaders to coach
me on our simplification journey. They in-
spire and motivate me; but listening to them
is humbling. Through their eyes, I can see the
evil nature of corporate bureaucracy; they
are a good mirror for my own failings. The GE
they want to work at is a deeper and simpler
company—one where everyone is looking at
opportunities out there for the taking. I want
to make GE better for them.
Simplification is essential to become the Dig-
ital Industrial. We are leaving the world of
professional silos, disconnected spreadsheets
and bureaucratic workflows to agile teams
that are mission-based. We are acknowledg-
ing that, to the next generation, speed and
simplification are synonymous with quality
and innovation. We have asked many out-
standing people to join GE, leaving promising
careers in IT companies. They do so because
they share our vision for the Industrial Inter-
net. I have promised them that we will lead
in both technology and culture; that we will
not be burdened by old industrial procedures
that no longer are a foundation for success.
Achieving a culture of simplification is a stra-
tegic imperative at GE and will define our
leadership for the next generation.
Simplification reinforces that outcomes mat-
ter. Companies need to blunt the momentum
of “corporate political correctness.” It creates
a sense that, if the processes are followed,
outcomes don’t matter. In this world, it is
easy to lose a sense for priorities and propor-
22 GE 2015 ANNUAL REPORT
tionality. When political correctness invades
business, you lose your competitive edge. It
doesn’t do any good to win awards for good
governance if you are getting eaten alive by
competitors. Our sole truth of performance
is in the market, winning with customers and
investors.
Simplification is making GE safer. Integrity
is the foundation of GE. But I take a broader
view, not just a legalistic one. We want GE to
be morally sound, but also strong. The way
we keep GE safe is by having great engineers
who design reliable products; by taking cyber-
security seriously and holding senior leaders
accountable to be cyber experts; by having
a strong balance sheet that is impregnable
in a crisis; by having open reporting of rule
violations; by seizing growth opportunities
in an uncertain economy; and by creating a
culture of constructive conflict where every-
one has a voice. This includes people who
challenge procedures when they don’t make
sense. Simplification has helped us improve
risk management through operational excel-
lence, not by multiple reviews that cheapen
accountability.
Through simplification GE is more unified. It is
important to take out layers so that leaders
are in touch with their teams. We are reduc-
ing vertical reviews in favor of delegating
decisions to experts who are closer to our
customers. We have learned that even the
best people will underperform when they
have myopic goals. So we have simplified
our metrics to better align our teams. GE
has 333,000 employees working around the
world. Simplification is essential to lead them
with a unified purpose.
A simpler company is faster. Let’s face it,
complex systems are put in place by bu-
reaucrats to either stop progress or simulate
perfection. FastWorks is becoming the way
we work, favoring progress over perfection.
Becoming the Digital Industrial will take mul-
tiple improvements. We are not exactly sure
what every strategic step will look like. But,
we will find out quickly; we will learn and
adapt to win.
A simpler company is more empathetic. Sim-
plification forces you to actually learn how
your team works; to care more about their
tools and productivity. Doug Folsom leads GE
Aviation’s 50-year-old Hooksett, New Hamp-
shire factory, which embodies the best of GE’s
past and future. Here we have 700 motivated
teammates driving a transformation in what
we build and how we build it. They are em-
bracing a fully digital factory, including new
automated milling machines and 3D printing
capability. More than half of GE’s employees
are associated with high-tech manufactur-
ing. We are investing in their future, and they
are delivering advanced technologies to our
global customers. It requires investment and
empowerment to create valuable manufac-
turing jobs.
A simpler company is better for our custom-
ers. Maria Claudia Borras recently joined GE
as the Chief Commercial Officer in our Oil &
Gas business. At GE, we have become too
comfortable with fragmented approaches
that work internally, but make customers
miserable. She has reorganized our commer-
cial efforts to provide solutions, broken down
functional barriers and leveraged digital tools
to improve our service.
A simpler company is good for investors.
Good teams like the same things as good
investors. Low-cost companies are better
for your team and investors. It means fewer
layers, fewer processes, more delegation of
authority and better jobs. Information and
transparency produce more speed and more
accountability. Your team loves it and so do
investors. Linking beliefs with valuable out-
comes with compensation motivates our
team and investors.
We have done a better job of being our own
activist. Few companies can match our re-
cord of bold change. To be honest, I don’t
think activists are necessarily bad for com-
panies. They are able to take a fresh look.
We like having smart investors in the stock,
even when they have a point of view. Activ-
ists challenge companies to set priorities, stop
wasting money and time, and work on what is
essential. When a business team fails in GE,
this is what you find: complicated account-
ability, too much cost in the wrong places,
excessive priorities and low market aware-
ness. These are factors activists point to when
they criticize companies. Shame on us if we
need help from the outside to find this out.
But let’s face it, every CEO and company
should be proudest of long-term investing;
of building something, not just managing
it. I know I am. Everybody likes our Aviation
business today. It has an awesome franchise,
technical leadership and valuable customer
relationships. But nobody liked it after 9/11 or
during the financial crisis when we doubled
our R&D. We have the finest Life Scienc-
es business in the industry, one that is high
margin and fast growth. Building this position
was facilitated by an “expensive” acquisition
that today looks like a bargain. It has pros-
pered with the benefits of the GE Store. If we
had waited for this to be popular, we would
have missed the opportunity. For every com-
pany, there is a fine line between staying the
course and listening to new voices; between
short term and long term. GE is a 138-year-
old company. Frequently, our investors hold
our stock for only an hour, six months, three
years. They are important, but can’t be the
only voice. Not because these investors ask
for too much, but because they ask for too
little. Our strategic opportunities are vast. Our
products, and more importantly our custom-
er relationships, last for decades. At GE, we
are builders.
Recently, several big investors publically crit-
icized companies for being too short-term
oriented. They may be right, but large insti-
tutional investors are to blame as well. They
have allowed governance to become too
legalistic, about politics instead of protect-
Solutions
ECOMAGINATION: DRIVING REAL-WORLD SOLUTIONS
Develop technology and
techniques to increase
resource efficiency and
reduce emissions
Pilot energy-neutral
water treatment
including data
optimization in the UAE
Develop & demonstrate
next-generation
efficiency, renewables
and digital solutions
Create hybrid
cleaner energy
systems for
industrial use
Expand and
finance industrial
and municipal
water reuse
Incorporate
renewables,
efficiency and data
analytics
Develop advanced
digital optimization
techniques for
manufacturing
More economical and
sustainable solutions
for Oil & Gas
Solution implemented
across the
Middle East
Scaled solutions
for wider
commercial use
Decreased
energy costs and
emissions
Global adoption of
water-saving reuse
techniques
Lowered fuel costs
and emissions in
mining life cycle
Increased resource
productivity in
manufacturing
S
U
C
O
F
E
M
O
C
T
U
O
BUSINESS RESULTS
Revenue
$230B+
R&D
$16B+
ENVIRONMENTAL IMPACT1
All Down ~30%+
Energy intensity
Greenhouse gases
Water
’05–’15
’05–’15
32%
REDUCTION
(FROM 2004
BASELINE)
31%
REDUCTION
(FROM 2004
BASELINE)
42%
REDUCTION
(FROM 2006
BASELINE)
1. The reductions are from the baseline years through the end of 2014.
TURNING CAPEX TO OPEX
GE helps its industrial customers transform capital expenditures into
operating expenditures with innovative financing solutions.
GE ENERGY FINANCIAL SERVICES
PROVIDES:
Financing to acquire Diamond Offshore assets
GE OIL & GAS PROVIDES:
• Maintenance
• Services
• Predictive analytics
• On-site personnel
Diamond Offshore payments to GE are variable
based upon equipment performance.
FINANCING
INNOVATIVE
INDUSTRIAL DEALS
GE’s agreement with Diamond
Offshore to buy back and maintain
blow-out preventers was made
possible with financing from
GE Energy Financial Services.
Using Predix, GE will
leverage the Industrial Internet
to limit customers’
unplanned downtime.
GE 2015 ANNUAL REPORT 23
their GE
It is essential that GE continue to be relevant to the next
generation of leaders. I have assembled a group of young
leaders, whom I meet with frequently, to help me see GE
through their eyes. It is my dream that every young person
should want to come to work at our great company. I will
never give up that dream. I have asked them to answer
three essential questions: What does their GE do? What
should their GE look like? And, Why not us?
WHAT DOES OUR GE DO?
At our GE, every day we go to work to help save people’s lives. We
solve the toughest problems in the world: lack of access to quality
healthcare, power and water. When we put our minds into doing
something that is right for our customers, nothing can stop us. We
get it done. And we act with unyielding integrity.
We do what we say we are going to do. We said we wanted to build
a GE Store to leverage technology, growth markets and services, and
we are doing it. We said we would take risks and offer the market
game-changing technologies, and we are doing it. We said we would
transform GE into a Digital Industrial company that offers superior
customer outcomes…and we are doing it!
Our GE recognizes that the global marketplace is changing fast and
is ready for speed. It is willing to take more risk in new products, new
markets and new technologies and is doing it faster.
Our GE understands that without customers, we don’t exist and
because of that, we work horizontally, always focusing on customer
output, using the GE Store as a competitive advantage. With the
GE Store interwoven into our culture, the design-to-market process
will move with increased agility.
Our GE is becoming a more horizontal company where everyone
is focused on delivering for our clients, breaking down barriers and
challenging unnecessary bureaucracy. Hierarchy is becoming less
important when it comes to sharing relevant viewpoints. Our voices
are being heard at all levels.
Our next generation of leaders is highly collaborative, connected and
welcomes the opportunity to share information. In order to enable this
change, our leadership is focusing on creating a more collaborative
environment where ”getting things done” becomes easier every day.
Our GE is beginning to act more entrepreneurial. It is investing in
amazing ventures, betting on new solutions and business models like
Current. It is continuously searching for new ideas, striving to identify
emerging needs and providing the best solution in the shortest time.
Our GE believes in its people and invests in their development in
every corner of the globe. It recognizes the value of diversity and
encourages constructive conflict in order to provide the best solution
at all times.
Our GE is the place we want to come back to the next morning, the
place where we want to work together with our colleagues, the place
we want to be for the next 20 years.
24 GE 2015 ANNUAL REPORT
HOW SHOULD GE WORK?
The GE we want will be a place where we cherish customer data.
Assets will speak the same language—Predix—to drive the best
outcomes for customers. Each asset will reveal how it needs to be
groomed to perform at its best, resulting in the best experience,
adaptive to the setting it evolves in. We will interpret this data and
provide meaningful insights back to our customers, resulting in
concrete, relevant outcomes.
One thing that will not change is our proven strength of picking great
people and developing them to be great leaders. GE people are not
just incredibly smart, they are also good people with strong values
who are hungry to learn.
GE must use our generation’s technical skill and social culture as part of
the strategy for future success. This will require dismantling functional
silos, valuing horizontal thinking and accepting failure as part of the
innovation process. Collaborative, shared risk/reward relationships with
employees, customers and partners need to be enhanced.
GE will be a place that attracts abundant intellectual resources. We
will gather the best, hungriest talents and grow them into the leaders
of tomorrow. It will take time and iterations. We will encourage them,
coach them and be their cheerleaders. They may fail at times. It
would mean they had tried hard enough. If they fall, we will be there
to catch them.
We will encourage leaders to go deeper in markets, and we will
reward domain expertise in commercial and technical fields.
GE will be ever more global, with more leaders in growth markets.
These markets will require the solutions that only GE can provide.
As they grow, the face of GE will continue to change to reflect the
markets where we have the most opportunity.
GE will be a place that ignites people’s passions, an exciting place
with the spirit of camaraderie. Frontline teams will be empowered.
Operations will be more transparent and efficient, and structured
more simply.
Our teams will go beyond GE. We will collaborate with customers and
other partners to develop new solutions. We will be mission-driven.
We will be empowered to safely access, dissect and transform data
into valuable and sharable insights for the world to see.
Our workplaces will look different: more flexible work environments
with less formality. We are already seeing this change in many of our
workplaces.
ing the average investor. It is confusing for
investors when they are told that company
leadership is about filling out forms, not bold
growth strategies. It takes strong leadership to
bridge the divide between activist regulation
pushing you backward and activist investors
who want more right now. It is possible to be
ultra-competitive, strategically bold and disci-
plined at the same time. But, it requires great
people who want to make a difference. The
most important culture change still ahead of
us is to be completely intolerant of being nice
for the sake of getting along. To fight for ideas;
to fight for our customers; to fight for efficien-
cy; to fight for people who are different.
I want our leaders to learn to ask, “Why not
us?” I want them to dream about new levels
of growth and performance. I want them to
see the world both as it is and as it could be if
we are determined to lead. Brad Mottier is one
example. He is the architect of our big wins in
turboprops. He built this business as an entre-
preneur who leveraged the GE Store. Now, we
are penetrating one of GE’s biggest unserved
markets. We will change the game. Not every
great idea in the future will come from a start-
up in Silicon Valley. Some will come from big
companies who ask, “Why not us?”
Similarly, companies can have a broader im-
pact on the way the world works when we
are not afraid to act. Two years ago, with
the leadership of John Rice, we opened a
business process outsourcing center in Sau-
di Arabia. Our vision was to tap into a pool
of talented Saudi women to execute process
support for our activities in 50 countries.
Many people asked, why? Now the center is
growing and competing globally. It has creat-
ed 700 jobs. It is led by a Saudi woman, Dr.
Amal Fatani. Sometimes businesses can drive
change faster than governments if they ask,
“Why not us?”
I am really proud of the GE team. They are
talented, global and driven; they, too, have
been tested. The GE team will never be out-
worked, and we don’t give up. Last year, we
won a $2.5 billion order to upgrade the India
rail system. This was a project we worked on
for 20 years. It required global teams, week-
end travel and all the strength of the GE Store.
One of the heroes who delivered this win will
retire in 2016. His name is Dave Tucker. He
was the commercial leader in our Transpor-
tation business. Like many GE leaders, he has
lived the “American Dream,” becoming more
than he thought possible. He grabbed every
initiative and stayed contemporary. He hated
to lose and rarely did. He had the best pack-
age of traits for a leader in the world today:
He was a fantastic salesman, and he was a
shrewd risk manager. He was always willing
to change, lead and compete.
You never hear about the heroes who work
at GE. They are not evil globalists or crony
capitalists. They are your neighbors. We are
part of an economic ecosystem that is the
most competitive in the world. We create
great jobs through private enterprise and
ingenuity. We give back competency and
innovation directed at solving the world’s
toughest problems. We are all proud to work
at GE, a purposeful company that makes a
difference in the world.
That is the spirit with which I am asking
investors to join GE as we transform and ex-
ecute. We have delivered for you in the last
five years. But we are still underowned by big
investors. In this time of uncertainty, why not
GE? We have great businesses, global scale
and strong initiatives. We have a ton of cash
that can protect you. And we will lead the In-
dustrial Internet. We are the Digital Industrial.
We have grit. Our leaders learned from the
experience of economic volatility.
During the financial crisis, in 2008, we were
frequently criticized about the size of GE Cap-
ital. Investors would ask, “Why do you have
so much commercial real estate?” They had
a point. But we knew that merely shrinking
GE Capital would not create an enduring and
valuable GE. So we challenged ourselves with
a different aspiration: to reclaim our role as
the world’s most valuable industrial compa-
ny; one that will lead in innovation and value
creation. We are delivering on that dream.
We act. We learn. We get better. We insist on
being more than we are today. Some compa-
nies are retreating; we are moving forward to
become the Digital Industrial. We are commit-
ted to deliver for you. Join us as we create the
next wave of growth. Why not GE?
Jeffrey R. Immelt
Chairman of the Board
and Chief Executive Officer
February 26, 2016
GE 2015 ANNUAL REPORT 25
In the past, leaders were valued for their
knowledge; in the future it will be their
ability to learn and share. We must lead
the Digital Industrial by building real-time
decision-making in our machine-to-
machine connectivity. GE leaders will
make decisions that are collaborative
and outcome-driven.
WHY NOT US?
The needle is moving. Our early FastWorks
projects were met with reluctance
because of our inherent culture to win the
first time. However, the results from these
projects were real and undeniable. This
new methodology infiltrated our culture,
and today’s GE is one where big swings
are encouraged, failures are celebrated
and a faster solution is reached.
We are re-inventing ourselves. Whether
we’ve been with GE for 30 years or
even one year, the Company we knew
yesterday will not be the Company
of tomorrow.
The question is, “Are we finished?” The
answer is no. A GREAT GE is a simple GE,
and we still have work to do.
We are committed to becoming the best
Digital Industrial company in the world.
Come visit us and you can feel the change
across the Company. GE employees are
seeing the opportunities that are out there
for grabs, and more and more of them
are asking, “Why not us?” At stake is
the digital transformation of industry,
and the winners will win big as this
transformation occurs. So, why not us?
THE GE BOARD
The GE Board held 13 meetings during 2015, 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. In 2015, they received briefings on a variety of issues, including capital allocation,
risk management and business development, with a particular focus on Alstom and the GE Capital exit plan, implementing
GE Digital, business simplification, global market volatility, leadership development, technology excellence, IT and cybersecurity strategy,
advanced manufacturing, global research and development strategy, 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.
W. Geoffrey BeattieR
Chief Executive Officer,
Generation Capital,
private investment
company, Toronto,
Canada.
Director since 2009.
John J. BrennanG,M,R,L
Chairman Emeritus and
Senior Advisor, The
Vanguard Group, Inc.,
global investment
management company,
Malvern, Pennsylvania.
Director since 2012.
James I. Cash, Jr.M,S
Emeritus James E. Robison
Professor of Business
Administration,
Harvard Graduate
School of Business,
Boston, Massachusetts.
Director since 1997.
Marijn E. DekkersM,S
Chairman of the Board
of Management, Bayer AG,
multinational life sciences
company, Leverkusen,
Germany.
Director since 2012.
Francisco D’SouzaA,S
Chief Executive Officer,
Cognizant Technology
Solutions Corporation,
multinational IT company,
Teaneck, New Jersey.
Director since 2013.
Susan HockfieldG,S
President Emerita and
Professor of Neuroscience,
Massachusetts Institute
of Technology, leading
research university
with a prominent
renewable energy
program, Cambridge,
Massachusetts.
Director since 2006.
Jeffrey R. Immelt
Chairman of the
Board and Chief
Executive Officer, General
Electric Company,
Fairfield, Connecticut.
Director since 2000.
Andrea JungG,M,S
President & Chief
Executive Officer,
Grameen America,
nonprofit microfinance
organization,
New York, New York.
Director since 1998.
Robert W. LaneA,M
Former Chairman
of the Board and
Chief Executive Officer,
Deere & Company,
agricultural, construction
and forestry equipment
manufacturing company,
Moline, Illinois.
Director since 2005.
Rochelle B. LazarusG
Chairman Emeritus
and former Chief
Executive Officer, Ogilvy
& Mather Worldwide,
global marketing
communications
company, New York,
New York.
Director since 2000.
James J. MulvaA,S
Former Chairman,
President and
Chief Executive Officer,
ConocoPhillips,
international,
integrated global
energy company,
Houston, Texas.
Director since 2008.
James E. RohrM,R
Former Chairman of the
Board and Chief Executive
Officer, The PNC Financial
Services Group,
large financial
services company,
Pittsburgh,
Pennsylvania.
Director since 2013.
Mary L. SchapiroR
Vice Chairman,
Advisory Board of
Promontory Financial
Group, leading strategy,
risk management and
regulatory compliance
consulting firm,
and former Chairman,
U.S. Securities and
Exchange Commission,
Washington, D.C.
Director since 2013.
Robert J. SwieringaA
Professor of Accounting
and former Anne and
Elmer Lindseth Dean,
Johnson Graduate
School of Management,
Cornell University,
Ithaca, New York.
Director since 2002.
James S. TischG
President and Chief
Executive Officer, Loews
Corporation, diversified
multinational holding
company with subsidiaries
involved in energy,
insurance and hospitality,
New York, New York.
Director since 2010.
Douglas A. Warner IIIA,G,M
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.
A: Audit
G: Governance & Public Affairs
M: Management Development & Compensation
R: Risk
S: Science & Technology
L: Lead Director
26 GE 2015 ANNUAL REPORT
(Mark One)
United States Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-K
(cid:59) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2015
or
(cid:133) 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 (cid:59) No (cid:133)
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 (cid:133) No (cid:59)
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 (cid:59) No (cid:133)
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 (cid:59) No (cid:133)
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. (cid:133)
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 (cid:59)
Non-accelerated filer (cid:133)
Accelerated filer (cid:133)
Smaller reporting company (cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:133) No (cid:59)
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 $265.6 billion. There were 9,330,607,330 shares of voting common stock with a par value of $0.06
outstanding at January 31, 2016.
The definitive proxy statement relating to the registrant’s Annual Meeting of Shareowners, to be held April 27, 2016, is incorporated by reference into
Part III to the extent described therein.
DOCUMENTS INCORPORATED BY REFERENCE
GE 2015 FORM 10-K 1
Table of
Contents
10-K Introduction & Summary
Forward Looking Statements
About General Electric
Management’s Discussion and Analysis of Financial
Condition and Results of Operations (MD&A)
Key Performance Indicators
Consolidated Results
GE Capital
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
Management and Auditor’s Reports
Audited Financial Statements and Notes
Directors, Executive Officers and Corporate Governance
Exhibits and Financial Statement Schedules
Form 10-K Cross Reference Index
Signatures
4
19
20
23
27
29
32
35
65
68
70
78
79
86
87
93
95
108
110
111
116
121
123
127
212
213
217
218
2 GE 2015 FORM 10-K
GE 2015 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 19
Management’s
Discussion & Analysis
PAGE 23
Legal
Proceedings
PAGE 121
Financial
Resources &
Liquidity
PAGE 79
Risk
Factors
PAGE 116
Financial
Statements
PAGE 127
Index of frequently requested
10-K information
Five-Year Financial Performance Graph
Segment Operations
Corporate Items and Eliminations
Pension Costs
Income Taxes
Share Repurchase Program
Financial Statement Footnotes
page 28
page 35
page 65
page 71
page 72
page 109
page 136
WE WANT YOUR FEEDBACK
This year, we have simplified the presentation of some of our financial
statement footnotes (Postretirement Benefits – Note 12, Stock-Based
Compensation - Note 16 & Financial Instruments – Note 20). Let us know
what you think at www.ge.com/annualreport.
Many of the GE–specific terms & acronyms used
in this section are explained in Presentation on
page 23 and Other Terms Used by GE on page 24.
Some of the information we provide in this section
is forward-looking and, therefore, could change
over time to reflect changes in the environment in
which GE competes.
Certain measures that exclude Alstom are non-GAAP financial measures. For more information, see
Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP
Financial Measures) on page 95.
Throughout the Annual Report on Form 10-K, we use the following icons:
POWER
RENEWABLE ENERGY
OIL & GAS
ENERGY MANAGEMENT
AVIATION
HEALTHCARE
TRANSPORTATION
APPLIANCES & LIGHTING
CAPITAL
APPLIANCES
GE DIGITAL
PREDIXTM
INDUSTRIAL APP ECONOMY
4 GE 2015 FORM 10-K
in 2015
Revenues
$117.4B
Industrial Operating +
GE Capital Verticals EPS1
$1.31
Countries in
Which We Compete
~180
Employees
333K
Major Portfolio Changes
GAAP EPS
$0.17
Reflects certain GE Capital
exit-related charges
(see Supplemental
Information on page 95)
Dispositions
GE Capital exits
Appliances sale agreed upon
Synchrony split-off
M&A
Alstom acquisition
Organic Investment
Launched Current, powered by GE
Launched GE Digital
How We Performed
Against Our 2015 Operating Goals
Target
Actual
Year-over-year
OPERATING EARNINGS PER SHARE1
Industrial
GE Capital Verticals
$1.10–1.20
$1.14
~$0.15
$0.17
OPERATING PROFIT MARGINS1, 2
Industrial segments (without Corporate)
17.0%
by 2016
Industrial (with Corporate)
+
17.0%
in 2015
(1 year ahead
of plan)
15.3%3
19%
6%
80bps
110bps
GE CAPITAL EXIT PLAN
Asset sales (ending net investment
(ENI) excluding liquidity)
CASH
~$90B
$104B
N/A
Free cash flow + dispositions1
Cash returned to investors
$12–15B
$10–30B
$15.2B
$33.0B
23%
$22B
GE Cash From Operating Activities (CFOA) ($16.4B)
8%
– Net Plant & Equipment ($2.8B)
+ Disposition Proceeds ($1.7B)
= $15.2B
Dividends ($9.3B)
+ Buyback ($3.3B)
+ Synchrony Exchange ($20.4B)
= $33.0B
How We Tie
Pay to Performance
Goals Included
in 2015 Bonus Program
(cid:82)
(cid:82)
(cid:82)
(cid:82)
For more information on our
pay vs. performance alignment, see
our 2016 proxy statement.
1. Non-GAAP Financial Measure. See Financial Measures
That Supplement U.S. Generally Accepted Accounting
Principles Measures (Non-GAAP Financial Measures)
on page 95.
2. Excluding Alstom.
3. Excluding restructuring and other & gains.
GE 2015 FORM 10-K 5
nyanyanyanyanyy
Digital Industrial Company
Com
mpan
ompap
mpany
p
l C
Ne “Newew
“Ne
What Defines the “New GE”
E”
e “N
GE”
G
GE
GE
GE”
G
Wh
ew
In
ne
Unmatched
Unmatched
Digital Capabilities
Digital Capabilities
(2016 targets)
(2016 targets)
Digital
Digital
Thread
Thread
PredixTM
PredixTM
Connecting 200K machines
Connecting 200K machines
through our installed base & digitizing
through our installed base & digitizing
our engineering, commercial, sourcing
our engineering, commercial, sourcing
& services functions
& services functions
Creating a common language
Creating a common language
through our cloud-based Industrial
through our cloud-based Industrial
Internet operating platform with
Internet operating platform with
~20K developers & ~50 partners
~20K developers & ~50 partners
Industrial
Industrial
App Economy
App Economy
Driving customer outcomes
Driving customer outcomes
through 100+ innovative Industrial
through 100+ innovative Industrial
Internet apps
Internet apps
And the Largest,
Most Global Scale
+
REVENUES
~$120B
BACKLOG
$$$$$3$3$3$$$3
$315B
OPERATING
FOOTPRINT
~180
Countries
With a Portfolio
of Businesses Connected
Through the GE Store
POWER
CAPITAL
RENEWABLE
ENERGY
APPLIANCES &
LIGHTING
Global
Culture
OIL & GAS
Digital
Technology
TRANSPORTATION
ENERGY
MANAGEMENT
HEALTHCARE
AVIATION
6 GE 2015 FORM 10-K
The GE Store
The GE Store is the transfer of technology, talent, expertise, and connections through
GE’s massive, diverse network of businesses and markets. GE’s businesses give and take from
the Store, and in 2015, the company made some great progress.
Value of scale and diversity
↑
LEVERAGING
SCALE
←→
SPREADING
IDEAS AND CONNECTING
SOLUTIONS
↑
CREATING
SOLUTIONS
POWER
CAPITAL
RENEWABLE
ENERGY
APPLIANCES &
LIGHTING
GLOBAL
SCALE
CULTURE &
SIMPLIFICATION
OIL & GAS
DIGITAL
TECHNOLOGY
TRANSPORTATION
ENERGY
MANAGEMENT
HEALTHCARE
AVIATION
Outcome
Outcomes
↑
EXPANDING
MARGINS
↑
FASTER
GROWTH
↑
DEVELOPING
LEADERS
GE 2015 FORM 10-K 7
GE 2015 FORM 10-K 7
How We Use the GE Store to Win
Key Differentiators for GE
NEW 2015
Digital
“GE undertook a major reorganization
to create a unified digital business
within the company called GE Digital.”
Bill Ruh
SVP, Chief Digital Officer,
appointed September 2015
DIGITAL REVENUES1
2014
2015
2016
(goal)
$4B
$5B
++
DIGITAL THREAD
COST PRODUCTIVITY
$500M
(2016 goal)
1. For an explanation of GE Digital’s reporting,
see Other Terms Used by GE on page 24.
Reshaping GE as a Digital Industrial Company
A UNIFIED
CORPORATE
ORGANIZATION
Consolidating existing
digital functions into a
new organization
PRODUCT
MANAGEMENT
COMMERCIAL
SOFTWARE
ENGINEERING
INFORMATION
TECHNOLOGY
GE
Digital
HEADQUARTERED IN
SAN RAMON, CA
DEDICATED DIGITAL
RESOURCES AT
EACH BUSINESS
Appointing Chief Digital
Officers in each business
who report jointly to the
business CEO & to GE’s
Chief Digital Officer
and who have digital
resources focused on
each phase of the
product life cycle
OPERATING
PLANS
INCENTIVE
COMPENSATION
PLANS
CORPORATE &
BUSINESSES
ACCOUNTABLE TO
SHARED METRICS
TO DRIVE DIGITAL
SALES
CUSTOMER
SHAREOWNER
+
GROWTH
+
UPTIME
+
EFFICIENCY
+
SAFETY
+
CAPACITY
+
REVENUES
+
MARGINS
+
RETURNS
CREATE
CUSTOMER & SHAREOWNER
VALUE
“We plan to grow
GE Digital from $5B
revenues in 2015 to
~$15B revenues by 2020”
— Jeff Immelt
8 GE 2015 FORM 10-K
GLOBAL SCALE
CULTURE & SIMPLIFICATION
“GE’s acquisition of Alstom further
strengthens our global footprint by
adding more in-country capabilities.”
John Rice
Vice Chairman & CEO,
Global Growth Organization
SHARED SERVICES
“At the start of Year 3 of our shared services
initiative, you can see costs coming down
with the same or higher quality.”
Shane Fitzsimons
SVP, Global Operations
Industrial segment revenues from growth markets1
2010
2014
2015
$27B
$43B
$43B
12% average annual growth rate
Industrial selling, general & administrative (SG&A)
expenses as a % of sales
2013
2014
2015
15.9%
14.0%
13.9%2
GLOBAL GROWTH ORGANIZATION SNAPSHOT
SHARED SERVICES SNAPSHOT2
20
countries with
$1B+ orders
$67B
non-US
infrastructure orders
24,000+
GE leaders &
commercial/services
employees localized in
growth markets
Working at the core of the GE Store to leverage scale & identify innovative
solutions to deliver better outcomes at a lower cost for our customers
43%
of Industrial
functions
6
global
functions
10,000
employees
(up from ~6,000 in 2014)
1. GE launched the Global Growth Organization in 2010.
2. Excluding Alstom.
TECHNOLOGY
“Technology sharing across businesses
provides a higher return on capital
compared to single-use technologies.”
Vic Abate
SVP, Chief Technology Officer
LEADERSHIP
“Our new Performance Development approach
emphasizes day-to-day development —
driving accountability, better customer
outcomes, and faster, continuous growth.”
Susan Peters
SVP, Human Resources
GLOBAL RESEARCH SNAPSHOT
GLOBAL LEARNING SNAPSHOT
10
Research
Centers
~3,000
PhDs, engineers
& scientists
3,100+
new patents
filed in 2015
$1B
annual
investment
50,000
participants
50
countries
5,000
customers
200
locations
SELECTED RECENT PRODUCT LAUNCHES
PROGRESS: RISING HIGHER
LEAP3 Engine
Showcases unique technology
developments in additive
manufacturing & advanced materials
2015 orders &
commitments = 1,399 units
HA-Turbine
World’s largest, most
efficient gas turbine
2015 technical
selections = 82 units
(including 33 units in backlog)
3. LEAP is a trademark of CFM International, a 50-50 joint venture between Snecma (Safran) and GE.
GE Is the World’s Best Company for Global Leaders
#1
GE ranked #1 in the world on the 2014 Aon
Hewitt Top Companies for Leaders list.
Crotonville, our global leadership
institute, is at the forefront of thinking
in leadership, culture, strategy &
innovation. Some of GE’s best-known
initiatives — Lean Six Sigma, WorkOut,
Simplification & FastWorks — took
shape here.
GE 2015 FORM 10-K 9
Connected Multi-Business Portfolio
as a Competitive Advantage
How We Are Performing
Consolidated
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
Each business contributes
to GE by providing unique
expertise to the GE Store &
leverages the GE Store to
compete more effectively
Revenues
3%
$117.2B
0%
$117.4B
$113.2B
Earnings from
Continuing Operations
Attributable to GE
Common Shareowners
25%
$9.5B
$7.6B
83%
$1.7B
2013 2014 2015
Industrial Operating +
Verticals Earnings1
16%
$13.1B
9%
$11.3B
$10.3B
Businesses
Impacted
Businesses
Mitigating
Impact
Year
Event
2001
9/11
attacks
GE
Response
Invested
in next-gen
aircraft
engines
Outcome
GE 90, GEnx,
next-gen CFM
2013 2014 2015
2013 2014 2015
GE CFOA
$14.3B
$15.2B
$16.4B
$12.2B
$12.1B
2004 U.S. gas
turbine cycle
bottom
Most other
businesses saw
double-digit
growth
Invested
to diversify
energy
businesses
Stronger, more
diversified
energy
businesses
$8.3B
1
A
O
F
C
l
a
i
r
t
s
u
d
n
I
$6.0B
l
a
t
i
p
a
C
E
G
d
n
e
d
v
D
i
i
$3.0B
$4.3B
2009 Financial
crisis
2015 Oil price
drop
Industrial
businesses
generated ~$17B
of cash flow
(as originally
reported)
Supported
GE Capital with
cash infusions
Smaller GE
Capital that
is stronger &
more focused
Restructured
Oil & Gas and
acquired Alstom
energy businesses
at attractive price
CALS CONNECT TO INDUSTRIAA
HOW CAPITAL VERTICALS CONNECT TO INDUSTRIAL
AL
vestments through
Financing infrastructure investments through
GE Capital Aviation
Energy Financial Services, GE Capital Aviation
ce, including
Services & Industrial Finance, including
nce
Healthcare Equipment Finance
10 GE 2015 FORM 10-K
2013
2014
2015
Industrial
Backlog
$249B
$266B
$315B
$226B
$185B
s
e
c
i
v
r
e
S
t
n
e
m
p
u
q
E
i
$64B
$195B
$71B
$89B
2013
2014
2015
Segment Gross
Margins2
Industrial Operating
Profit Margins1, 3
80bps
26.6%
80bps
27.4%
27.4%
160bps
14.2%
110bps
15.3%
12.6%
2013 2014 20151
2013 2014 2015
1. Non-GAAP Financial Measure. See Financial Measures That
Supplement U.S. Generally Accepted Accounting Principles (Non-GAAP
Financial Measures) on page 95.
2. Excluding Alstom.
3. Including Corporate, excluding Alstom, restructuring and other & gains.
POWER
BLBBL
RENEWABLE ENERGY
OIL & GAS
MISSION: Leading globally in power
generation & water technologies
MISSION: Making renewable power
sources affordable, accessible & reliable for
the benefit of people everywhere
MISSION: Pushing the boundaries of
technology in oil & gas to bring energy to
the world
Major products: power generation services,
gas turbines, engines & generators, steam
turbines & generators, nuclear reactors,
water systems
Major products: onshore & offshore wind
turbines, hydropower plants, solar power
plants, geothermal power plants, biomass
power plants
Digital solutions: PowerOn Advantage™,
Operations Optimization, Asset
Performance Management
Digital solutions: Wind PowerUp™,
Wind Farm Wake Management,
Water & Process Insight
Major products: surface & subsea drilling
& production systems, floating production
platform equipment, mechanical drives &
compressors, high-pressure reactors,
artificial lift solutions, sensing & inspection
solutions
Digital solutions: Subsea Systems
Optimization, Intelligent Pipeline Solution,
Reliability Max, Field Vantage™
Revenues
Profits
2015 Ex.
Revenues = $20.6B 0%
Profits = $4.6B
2%
Revenues
Profits
2015 Ex.
Revenues
Profits
Revenues = $6.2B
Profits = $0.5B
28%
3%
7%
$20.6B
4%
$21.5B
$19.3B
33%
$6.4B
2%
$6.3B
$4.8B
10%
$19.1B
14%
$16.5B
$17.3B
4%
$4.5B
0%
$4.5B
$4.3B
43%
$0.7B
38%
$0.4B
$0.5B
17%
$2.8B
12%
$2.4B
$2.4B
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
Other 2015 results
Other 2015 results
Other 2015 results
Margins: 20.9%
Backlog: $77.1B
# gas turbines shipped: 107
90bps Ex. Alstom 22.3%
32% Ex. Alstom $61.6B
1
50bps
5%
Margins: 6.9%
Backlog: $12.4B
# wind turbines shipped: 2,869
390bps Ex. Alstom 8.1%
123% Ex. Alstom $7.1B
10
270bps
27%
Margins: 14.8%
30bps
Backlog: $22.9B
9%
+ Positive: Continued growth in natural gas
supplemented by Alstom acquisition
– Negative: Excess capacity in developed
markets and continued pressure on oil &
gas applications
Outlook: Improving global competitive position
despite intense competition & positioning the
business for growth with Alstom
+ Positive: Fastest growing energy market &
continued push towards carbon-free energy
– Negative: Challenging new product
transitions in onshore wind
Outlook: Positioning the business to deliver
high returns
+ Positive: Demand for technical & value-
focused solutions
– Negative: Continued pressure from oil
prices, excess capacity & lower customer
capital expenditures
Outlook: Improving competitive position in a
tough environment through cost reductions,
value-focused solutions & strategic
investments
investments
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
Advanced
manufacturing,
combustion science
& services installed
base
Sustainable power
systems & storage
Services, technology
& first-mover in
growth markets
GE 2015 FORM 10-K 11
ENERGY MANAGEMENT
AVIATION
HEALTHCARE
MISSION: Being a global technology
leader for the transmission, distribution &
conversion of electrical power
MISSION: Providing our aviation
customers with the most technologically
advanced & productive engines,
systems & services for their success
MISSION: Developing transformational
medical technologies & services that are
shaping a new age of patient care
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
Digital solutions: Grid IQ™, Proficy
Monitoring & Analysis™, SmallWorld™
Major products: jet & turboprop engines,
components & integrated systems for
commercial, military, business & general
aviation aircraft & ship propulsion
applications, global service network
Major products: diagnostic imaging systems
(MRI, CT, nuclear & molecular imaging, digital
mammography), surgical imaging products,
ultrasound, pharmaceutical research &
production tools
Digital solutions: Flight Efficiency Services,
Fuel Management, Fleet Management
Digital solutions: Centricity™, Dose
Management, Workforce Optimization,
Asset Optimization, Health Cloud
Revenues
Profits
Revenues
Profits
Revenues
Profits
$7.6B
3%
$7.3B
4%
$7.6B
2015 Ex.
Revenues = $6.6B
Profits = $0.3B
9%
12%
9%
$24.0B
3%
$24.7B
$21.9B
$18.2B
1%
$18.3B
4%
$17.6B
124%
$0.2B
10%
$0.3B
$0.1B
14%
$5.0B
11%
$5.5B
$4.3B
$3.0B
0%
$3.0B
5%
$2.9B
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
Other 2015 results
Other 2015 results
Other 2015 results
Margins: 3.6%
Backlog: $11.7B
(flat organically)
20bps Ex. Alstom 4.1%
134% Ex. Alstom $3.4B
70bps
33%
Margins: 22.3% 160bps Backlog: $151.2B 13%
# commercial engines shipped: 2,588
# GEnx engines shipped: 260
# military engines shipped: 766
Commercial spares rate: $37.1 million/day
$6.9M
302
27
17
40bps Backlog: $17.2B
4%
Margins: 16.3%
U.S. orders: $8.7B
Europe orders: $3.5B
Growth region orders: $5.3B
1%
8%
6%
+ Positive: Grid Solutions growth through
Alstom, strength in electrification & more
renewables on the grid
– Negative: Continued pressure from oil prices
& excess capacity
Outlook: Positioning the business for long-term
growth & margin expansion with Alstom
+ Positive: Lower fuel costs & continued
strength in air passenger traffic
– Negative: Military spending uncertain
Outlook: Delivering through commercial
product transition
+ Positive: Continued growth in developed
markets, demand for IT/analytics-
based solutions, biopharmaceutical
market expansion
– Negative: Pressure in emerging markets
Outlook: Positioning the business for long-
term growth
term growth
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
Electrification,
controls &
power conversion
technology
Advanced materials/
manufacturing &
engineering
productivity
Diagnostics
technology &
first-mover in
growth markets
12 GE 2015 FORM 10-K
TRANSPORTATION
ATTIOO
AAANNN
APPLIANCES & LIGHTING
AAAPPIIITATA
CAPITAL
MISSION: Being a global technology
leader & supplier to the railroad, mining,
marine, stationary power & drilling
industries
MISSION: Leading a global lighting
revolution to deliver innovative solutions
that change the way people light & think
about their world
MISSION: Investing financial, human &
intellectual capital to help our industrial
businesses and their customers build
their businesses
Major products: locomotives, diesel
engines, drilling motors, mining equipment
& propulsion systems, motorized drive
systems, software & analytics solutions to
optimize rail & mining operations
Digital solutions: Trip Optimizer™, Locotrol™
Distributed Power, GoLINC™, Railconnect™,
ShipperConnect™, Movement Planner™, Yard
Planner, Smart Intermodal and Automotive
Terminal, Customer Performance Analytics
RECENT DEVELOPMENTS
• Announced Appliances sale. See 2015 Portfolio
Changes on page 141
• Launched Current, powered by GE. A new energy
efficiency platform combining LEDs, solar, storage,
onsite power & electrical vehicle charging stations
Major products: GE industry-focused
financial services verticals, including
GE Capital Aviation Services, Energy
Financial Services and Industrial Finance
(including Healthcare Equipment Finance)
Major products: major home appliances
Major products: majmajoror homhome ae applpplianiancesces
& lighting products/services, including
& lighting products/services, including
li h i
i d
industrial-scale lighting solutions
Digital solutions: Intelligent Cities,
Intelligent Enterprises
i
l
l
l
i
Revenues
Profits
Revenues
Profits
Revenues
Profits
$5.9B
4%
$5.7B
5%
$5.9B
1%
$8.4B
4%
$8.8B
$8.3B
$11.3B
0%
$11.3B
5%
$10.8B
201%
$1.2B $(8.0)B
$0.4B
2013
2014
2015
$1.2B
3%
$1.1B
13%
$1.3B
13%
$0.4B
56%
$0.7B
$0.4B
Verticals Earnings
4%
$1.7B
14%
$1.6B
$1.4B
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
2013
2014
2015
Other 2015 results
Other 2015 results
Other 2015 results
150bps Backlog: $22.4B
Margins: 21.5%
# locomotives shipped: 985
189
# Tier 4 locomotives shipped: 756
6%
Margins: 7.7%
260bps
ENI (ex. liquidity)2, 3: $167B
54%
Exit plan sales closed (ENI): $104B
Tier 1 Common Ratio (Basel 3) (estimated)2: 14.5%
150bps
+ Positive: Digital & global expansion
+ Positive: LED market momentum & robust
opportunities
– Negative: Decreased North America locomo-
tive usage & global commodity price pressure
Outlook: Navigating a highly dynamic indus-
try environment by launching new products
& transforming business to align to a more
global/digital future
global/digital future
appliances market
– Negative: Continued decline in traditional
lighting
+ Positive: Market receptivity to GE Capital
dispositions & strong commercial air traffic
– Negative: Continued pressure from oil &
gas prices
Outlook: Continuing to grow LED while
investing in Current, powered by GE; expect
to close Appliances deal by mid-20161
Outlook: Stable Verticals earnings profile
& focus on enhancing the GE Store through
launch of Industrial Finance
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
CONTRIBUTION
TO GE STORE
Engine technology
& growth market
localization
LED is gateway
to energy efficiency
Financing for
infrastructure
investments
1. Subject to customary closing conditions.
2. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted
Accounting Principles (Non-GAAP Financial Measures) on page 95.
3. Including assets of discontinued operations.
GE 2015 FORM 10-K 13
2015 Portfolio Changes: the biggest portfolio shift in GE’s history
Alstom Aquisition Closed
On November 2, 2015, GE closed its aquisition of Alstom’s Thermal, Renewables & Grid businesses for approximately $10.1B.
Alstom’s Strategic Fit with GE
• Complementary technologies
• Global presence
• Ability to compete for “rest of the power plant”
• Installed base
POWER SERVICES INSTALLED BASE
60%
increase
15K units
9K units
• GE CONTRIBUTION
• ALSTOM CONTRIBUTION
GE Segments Impacted
GAS
TURBINE
HEAT
RECOVERY
STEAM
GENERATOR
GAS TURBINE
GENERATOR
GRID
SOLUTION
STEAM TURBINE
GENERATOR
STEAM
TURBINE
EPS Impact
2015 $0
Targeted 2016
Targeted 2018
~$0.05
~$0.15–0.20
2020 Targeted Synergy Benefits
COST
SYNERGIES
~$3B
GROWTH
SYNERGIES
$0.6B+
Capital
GE Capital Exit Plan Ahead of Schedule
On April 10, 2015, GE announced a plan to sell most of the assets of GE Capital (targeting ~$200B ENI in total sales), in addition
to the Synchrony split-off, retaining those financial assets that support our industrial businesses (which we call Verticals).
The New GE Capital
Executing Faster than Plan
VALUABLE INDUSTRIAL FINANCE COMPANY
Original 2015 Plan:
SMALLER, SIMPLER, SAFER
ENI1
$363B
$167B
≤$90B
2014
2015
2017
(targeted)
Aviation Services
Energy Financial Services
Industrial Finance, including Healthcare
Equipment Finance , Industrial Finance
Solutions, Working Capital Solutions,
Trade Payables Solutions
Other (including our run-off insurance
portfolio)
Enhancing the competitiveness
of our industrial businesses
Closed deals
Target for completing asset sales: 2017
$90B
Actual 2015 Progress (on a fourth-quarter 2014 basis):
Closed deals
Signed deals
Target for completing asset sales: 2016
(1 year ahead of plan)
$104B
$157B
Plan to apply for de-designation as a non-bank
systemically important financial institution (SIFI)
early 2016
Retaining GE Capital businesses that directly relate to,
and support the growth of, our core industrial businesses
On track to return ~$35B to
investors by 2018
Synchrony Split-Off Complete
On November 17, 2015, GE completed its exchange offer for Synchrony Financial (our North American credit card business).
Share buyback
$20.4B
GE shares retired
671M ENI reduction
$65B
Offer oversubscribed 3.2X
Appliances
Appliances Sale to Haier Expected to Close in 20162
On January 15, 2016, GE entered into an agreement to sell its Appliances business to Haier following GE’s termination
of its agreement with Electrolux on December 7, 2015.
ORIGINAL DEAL
Buyer: Electrolux
Purchase price: $3.3B
Expected gain: ~$0.05–0.07/share
GE terminated agreement & received $175M
breakup fee
NEW DEAL
Buyer: Haier
Purchase price: $5.4B
Expected gain: ~$0.20/share
1. Excluding liquidity and including assets of discontinued operations. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures
(Non-GAAP Financial Measures) on page 95.
2. Subject to customary closing conditions.
14 GE 2015 FORM 10-K
How We Allocate Your Capital
Jeff Bornstein
SVP & Chief Financial Officer
“Our financial services exits are unlocking significant capital that we are reallocating to generate
higher returns. This year, we retired 6.6% of GE’s public float through the Synchrony Financial
split-off and plan to use the dividends from the GE Capital exits to fund our buyback program.”
GENERATING CAPITAL
Cash from operating activities
GE Capital Exit Plan
Synchrony Financial split-off
Other dispositions
+
+
+
+
Potential for incremental debt to optimize
capital structure
$145B+
capital to allocate
from 2015–2018
(plus potential leverage
opportunity)
ALLOCATING CAPITAL
1 Return ~$55B from GE Capital to investors
via buyback
2 Sustain attractive dividend of $35B (yield > peers)
3 Reinvest in organic growth (plant & equipment,
technology, global scale, digital)
4 Disciplined M&A (see framework below)
HOW WE BALANCE CAPITAL ALLOCATION
• 2013 • 2014 • 2015
ALLOCATION /AMOUNTS
GOALS
ALLOCATION /AMOUNTS
GOALS
Dividends
$8.9B $9.3B
$7.8B
Sustain attractive dividend
(currently at $.23/share) with a
dividend yield higher than peers
GROWTH FUNDING
Research & Development, Plant & Equipment, Information Technology
$11.2B
$11.5B
$11.5B
Buyback
(reported on a book basis)
$23.7B
$10.4B
$1.9B
y
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.
B
4
0
2
$
Restructuring &
Other Charges
$2.0B $1.8B $1.7B
Reduce share count to 8-8.5B shares
outstanding through GE Capital Exit
Plan & Synchrony Financial split-off
Synchrony split-off reduced
GE public float by 6.6%
Targeting world-class Industrial
cost structure & margins: ~12.8%
Industrial SG&A expenses as a %
of sales in 2016 (excluding Alstom)
Priorities
• Expanding software & analytics
capabilities and investing in the
digital thread
• Supporting new product launches
• Localizing operations in key
growth markets
Acquisitions
$9.0B
$10.4B
$2.1B
M&A framework
+ Bolt-on to existing businesses
+ No growth synergies assumed
+ Market upside
+ Feeds GE strategic momentum
+ Additive to EPS goals
GE
TARGET 15%+ RETURNS
Organic Revenue Growth1
(Industrial segments)
Free Cash Flow1
(GE CFOA – Net P&E)
Operating Profit Margins1, 2
(Industrial with Corporate)
Returns1
(Industrial ROTC)
HOW CAPITAL ALLOCATION DRIVES RESULTS
7%
3%
0%
2013 2014 2015
Above-peer revenue
growth in a slower
growth environment
$13.5B
$11.0B $11.8B
15.3%
14.2%
12.6%
16.9%
14.3% 14.0%
2013 2014 2015
Strong GE Capital
dividend &
Industrial CFOA
2013 2014 2015
Segment margin
expansion & lower
corporate costs
2013 2014 2015
Higher industrial
earnings &
lower capital
Key Year-Over-Year Drivers
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 95.
2. Excluding Alstom, restructuring and other & gains.
GE 2015 FORM 10-K 15
How We Attack Industrial Margins
WHAT IS
OUR COST
BREAKDOWN
15% SG&A
70% Products & Services
15% Alstom
OUR
HISTORICAL
MARGIN
TRENDS
WITHOUT
CORPORATE
WITH
CORPORATE3
HOW
WE DRIVE
MARGINS
OPERATING PROFIT MARGIN1, 2
SEGMENT GROSS MARGIN1
14.8%
15.1%
15.7%
16.2%
12.0%
11.6%
12.6%
14.2%
17.0%
15.3%
28.0%
27.7%
27.4%
26.6%
27.4%
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
HISTORICAL &
ONGOING FOCUS
Leaner Structure
• 460bps reduction in Industrial SG&A
expenses as a % of sales from 18.5%
to 13.9%1 (2011-2015)
• 65% of processes moving to
shared services
RECENT
FOCUS
Lower Product Costs
• I• Invenvestistingng inin advadvancanceded
• Investing in advanced
iories
man fufactu irin &g &g didi
manufacturing & digitized factories
igitg iized fd fact
• Capturing supply chain value
• Capturing supply chain value
through deflation, sourcing &
backward integration
• 77% reduction in enterprise resource
• Designing for value through
planning systems (2010-2015)
• $1B+ reduction in Corporate
operating costs (2013-2015)3
FastWorks
We are segregating
Alstom’s costs
from our SG&A and
Products & Services
costs as we focus on
integrating Alstom
and achieving
our targeted cost
synergies
INTEGRATION
FOCUS
Cost Synergies
• Manufacturing
& services
• Sourcing
• SG&A expenses
• Engineering &
technology
WHAT WE
ARE DRIVING
TOWARDS
~12.8%
SG&A
expenses as
% of sales1
<2%
Corporate
operating costs
as % of Industrial
revenues3
+50 bps
gross margins
annually
~$3B
target cost
synergies by
2020
2016 INITIATIVES TO DRIVE PRODUCT MARGIN EXPANSION
INTEGRATING GE-WIDE COUNCILS
LAUNCHING NEW PRODUCT COST LABS
Product Management, Supply Chain & Engineering
Leaders councils integrated to prioritize shared
margin goals across functions
Launching Product Management & Variable
Cost Productivity labs within Global Research solely
focused on product management & costs
HOW WE ARE DEFINING OPERATING PROFIT MARGIN GOING FORWARD3
17%1,2
WITHOUT
CORPORATE
(in the past, our
margin targets
excluded Corporate)
1. Excluding Alstom.
2. Non-GAAP Financial Measure. See Financial
Measures That Supplement U.S. Generally Accepted
Accounting Principles Measures (Non-GAAP Financial
Measures) on page 95.
3. Excluding restructuring and other & gains.
16 GE 2015 FORM 10-K
PRODUCTIVITY
IMPROVEMENTS &
LOWER CORPORATE
COSTS
+50 BPS
EXCLUDING
ALSTOM
ALSTOM IMPACT
(100–150) BPS
14–14.5%
INCLUDING
ALSTOM
COST
SYNERGIES,
PRODUCTIVITY
IMPROVEMENTS
& LOWER
CORPORATE
COSTS
16%+
INCLUDING
ALSTOM
15.3%1,2
WITH
CORPORATE
2015
2016 (FORECAST)
2018 (TARGET)
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 & Chief Executive Officer
CORE RISK FOCUS AREAS
PRODUCT
QUALITY
CYBERSECURITY
LIQUIDITY
(THROUGH A CRISIS)
GLOBAL
COMPLIANCE
LINES OF DEFENSE
DEEP
DOMAIN
EXPERTISE
• 58,000+ engineers
• Global Research Centers
• 11,000+ IT & cyber
professionals
• 750+ Treasury
professionals
DISCIPLINED
BUSINESS
PROCESSES &
CHALLENGE
CULTURE
• Integrated GE-wide council
on product management,
supply chain & engineering
• Product Safety Boards
• Services Council
• IT Security Operations Center
• Increased investment
3X+ since 2009
• Product/system
design for security
• Installed base
remediation
• Cybersecurity Task Force
• Product Security Incident
Response Team
• Risk oversight & stress
testing
• Cash flow metrics
in compensation plans
• ~700 compliance
professionals
• ~600 ombuds
• Policy Compliance Review
Board…8 compliance
operating reviews in 2015
• Global Ombuds System
• Deep culture of integrity
(Spirit & Letter)…our
leaders own it
• Ethisphere Magazine…
GE named one of the world’s
most ethical companies
10 years in a row
STRONG AUDIT
& THIRD-PARTY
OVERSIGHT
• Regulators…e.g.,
FAA, FDA, NRC
• Internal audit…
Corporate Audit Staff
• Red team…penetration
testing challenges
• Wurldtech…industrial
product design
• Credit rating agencies
• External audit…KPMG
• Regulators…e.g., FRB, PRA
• Internal audit…GE Capital
Audit
(~300 partners & 500K+ audit
hours annually)
• Internal audit…
Corporate Audit Staff &
GE Capital Audit
BOARD
TRANSPARENCY &
MANAGEMENT
OVERSIGHT
GE Board
1
2
3
4
Each committee
oversees risk in its area
of expertise & reports
to the full Board
AUDIT
COMMITTEE
GOVERNANCE &
PUBLIC AFFAIRS
COMMITTEE
MANAGEMENT
DEVELOPMENT &
COMPENSATION
COMMITTEE
RISK
COMMITTEE
SCIENCE &
TECHNOLOGY
COMMITTEE
CORPORATE
AUDIT STAFF &
GE CAPITAL AUDIT
POLICY
COMPLIANCE
REVIEW BOARD
GE
BLUEPRINT
REVIEWS
GE CAPITAL 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
GE 2015 FORM 10-K 17
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" (cid:177) 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 our
announced plan to reduce the size of our financial services businesses, including expected cash and non-cash charges associated with
this plan (cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:11)(cid:57)(cid:72)(cid:85)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:86)(cid:12); 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 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)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals
associated with our announced plan to reduce the size of our financial services businesses;
our ability to complete incremental asset sales as part of that plan in a timely manner (or at all) and at the prices we have
assumed;
our ability to reduce costs as we execute that plan;
changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices
and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental
assets to be sold as part of our announced plan to reduce the size of our financial services businesses as well as other
aspects of that plan;
(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:47)(cid:47)(cid:38)(cid:182)s
(GE Capital) funding, and GE Capita(cid:79)(cid:182)(cid:86) exposure to counterparties;
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:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) ability to pay dividends to GE at the planned level, which may be affected by (cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)s cash flows and
earnings, financial services regulation and oversight, and other factors;
our ability to convert pre-order commitments/wins into orders/bookings;
the price we realize on orders/bookings since commitments/wins are stated at list prices;
customer actions or developments such as early aircraft retirements or reduced energy demand 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;
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 Appliances
disposition and our announced plan and transactions to reduce the size of our financial services businesses;
our success in integrating acquired businesses and operating joint ventures;
our ability to realize anticipated earnings and savings from announced transactions, acquired businesses and 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 or other 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 2015 FORM 10-K 19
GE 2015 FORM 10-K 19
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 a global digital industrial company, transforming industry with software-defined machines and solutions that are connected,
responsive and predictive. With products and services ranging from aircraft engines, power generation and oil and gas production
equipment to medical imaging, financing and industrial products, we serve customers in approximately 180 countries and employ
approximately 333,000 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.
OUR INDUSTRIAL OPERATING SEGMENTS
Power
Energy Management
Transportation
Renewable Energy
Aviation
Appliances & Lighting
Oil & Gas
Healthcare
OUR FINANCIAL SERVICES OPERATING SEGMENT
Capital
Business, operation and financial overviews for our operating segments are provided in the Segment Operations section within the
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(MD&A) section.
THE GE CAPITAL EXIT PLAN
On April 10, 2015, the Company announced a plan (the GE Capital Exit Plan) to create a simple, more valuable company by reducing
the size of its financial services businesses through the sale of most of the assets of GE Capital and aligning a smaller GE Capital with
(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)GE Capital to release approximately $35 billion in dividends to GE (subject to regulatory approval) as
a result of the sale of GE Capital assets. As of December 31, 2015, we are ahead of our plan, having signed agreements with buyers
for $157 billion of ending net investment (ENI), excluding liquidity of which $104 billion has closed. In addition, as part of our initiative to
reduce the size of our financial services businesses, we completed the split-off of our (cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)
Retail Finance business, Synchrony Financial, to holders of GE common stock, which resulted in a $20.4 billion buyback of GE
common stock (671.4 million shares) in 2015. Combined with cash dividends of $4.3 billion, GE Capital returned about $25 billion to GE
in 2015. In connection with the GE Capital Exit Plan, we completed a legal reorganization of GE Capital that included a merger of GE
Capital into GE, a guarantee by GE of GE Capital debt, and an exchange of $36 billion of GE Capital debt for new GE notes. The result
(cid:82)(cid:73)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:72)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:22)(cid:27)(cid:8)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:7)(cid:24)(cid:19)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:3)(cid:87)(cid:82)(cid:3)(cid:7)(cid:22)(cid:20)(cid:21)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)ber 31,
2015. We incurred charges of $22 billion related to these actions.
Given the progress of the GE Capital Exit Plan to date, we expect to largely complete that plan by the end of 2016 and are on track to
(cid:73)(cid:76)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:86)(cid:70)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:81)(cid:82)(cid:81)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:54)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:76)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:44)(cid:80)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:44)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:81)(cid:82)(cid:81)(cid:69)ank SIFI) in early 2016.
Further information on these activities is described in the GE Capital (cid:177) GE Capital Exit Plan section of the MD&A and Note 1 to the
consolidated financial statements.
20 GE 2015 FORM 10-K
20 GE 2015 FORM 10-K
A B O U T G E N E R A L E L E C T R I C
COMPETITIVE CONDITIONS AND ENVIRONMENT
In 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 GE Capital engages are subject to competition from various types of financial institutions, including commercial banks,
investment banks, leasing 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 MD&A.
OUR EMPLOYEES AND EMPLOYEE RELATIONS
At year-end 2015, General Electric Company and consolidated affiliates employed approximately 333,000 persons, of whom
approximately 125,000 were employed in the United States. For further information about employees, see the Other Financial Data
section within the MD&A.
Approximately 16,000 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. In
June 2015, we negotiated new four-year collective bargaining agreements with most of our U.S unions. These agreements continue to
provide employees with good wages and benefits while addressing competitive realities facing the Company.
Other GE affiliates are parties to labor contracts with various labor unions, also with varying terms and expiration dates that cover
approximately 3,300 employees.
PROPERTIES
Manufacturing operations are carried out at approximately 206 manufacturing plants located in 40 states in the United States and
Puerto Rico and at approximately 295 manufacturing plants located in 39 other countries.
GE 2015 FORM 10-K 21
GE 2015 FORM 10-K 21
A B O U T G E N E R A L E L E C T R I C
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.
GE’s Internet address at www.ge.com, 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.
Website references in this report are provided as a convenience and do not constitute, and should not be viewed as, incorporation by
reference of the information contained on, or available through, the websites. Therefore, such information should not be considered part
of this report.
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 about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
22 GE 2015 FORM 10-K
22 GE 2015 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, and its
successor GE Capital Global Holdings, LLC (GE Capital or Financial Services).
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 GE Capital, whose continuing operations are presented on a one-line basis,
giving effect to the elimination of transactions among such affiliates. Transactions between GE and GE Capital have not been
eliminated at the GE level. We present the results of GE in the center column of our consolidated statements of earnings, financial
position and cash flows. An example of a GE metric is GE cash from operating activities (GE CFOA).
(cid:120) General Electric Capital Corporation or GECC – the adding together of all affiliates of GECC, giving effect to the elimination of
transactions among such affiliates.
(cid:120) GE Capital Global Holdings, LLC or GECGH – the adding together of all affiliates of GECGH, giving effect to the elimination of
transactions among such affiliates.
(cid:120) GE Capital or Financial Services – refers to GECC, or its successor GECGH, and is the adding together of all affiliates of GE
Capital giving effect to the elimination of transactions among such affiliates. We present the results of GE Capital in the right-side
column of our consolidated statements of earnings, financial position and cash flows.
(cid:120) GE consolidated – the adding together of GE and GE Capital, giving effect to the elimination of transactions between the two. We
present the results of GE consolidated in the left-side column of our consolidated statements of earnings, financial position and
cash flows.
(cid:120)
(cid:120)
(cid:120)
Industrial – GE excluding the continuing operations of GE Capital. We believe that this provides investors with a view as to the
results of our industrial businesses and corporate items. An example of an Industrial metric is Industrial CFOA, which is GE CFOA
excluding the effects of dividends from GE Capital.
Industrial segment – the sum of our eight industrial reporting segments, without giving effect to the elimination of transactions
among such segments. This provides investors with a view as to the results of our industrial segments, without inter-segment
eliminations and corporate items. An example of an industrial segment metric is industrial segment revenue growth.
Total segment – the sum of our eight industrial segments and one financial services segment, without giving effect to the
elimination of transactions among such segments. This provides investors with a view as to the results of all of our segments,
without inter-segment eliminations and corporate items.
(cid:120) GE Capital Verticals or Verticals – the adding together of GE Capital businesses that we expect to retain, principally its vertical
financing businesses—GE Capital Aviation Services (GECAS), Energy Financial Services (EFS) and Healthcare Equipment
Finance—that relate to the Company’s core industrial domain and other operations, including Working Capital Solutions, our run-off
insurance activities, and allocated corporate costs.
GE 2015 FORM 10-K 23
GE 2015 FORM 10-K 23
M D & A
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 fourth quarter following the acquisition are considered the acquisition effect of such businesses.
Discussion of GE Capital’s total assets includes deferred income tax liabilities, which are presented within assets for purposes of our
consolidated statement of financial position presentations for this filing.
Amounts reported in billions in graphs within this 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. Certain columns and rows within
the tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in
millions.
Discussions throughout this MD&A are based on continuing operations unless otherwise noted.
The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements.
OTHER TERMS USED BY GE
(cid:120) Backlog – unfilled customer orders for products and product services (expected life of contract sales for product services).
(cid:120) 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, redeemable noncontrolling interest,
noncontrolling interests and total shareowners’ equity.
(cid:120) Digital revenues – revenues related to software-enabled product upgrades, internally developed software (including Predix) and
associated hardware, and software-enabled productivity solutions. These revenues are largely generated from our operating
businesses and are included in their segment results.
(cid:120) Earnings – unless otherwise indicated, we refer to captions such as “earnings from continuing operations attributable to common
shareowners” simply as earnings.
(cid:120) Earnings per share (EPS) – unless otherwise indicated, when we refer to earnings per share, it is the diluted per-share amount of
“earnings from continuing operations attributable to common shareowners”.
(cid:120) 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.
(cid:120) Equipment leased to others (ELTO) – rental equipment we own that is available to rent and is stated at cost less accumulated
depreciation.
(cid:120)
Free cash flow – GE’s cash from operating activities (continuing operations) less GE additions to property, plant and equipment,
plus GE dispositions of property, plant and equipment, which are included in cash flows from investing activities.
(cid:120) GE Capital Exit Plan – our plan, announced on April 10, 2015, to reduce the size of our financial services businesses through the
sale of most of the assets of GE Capital, and to focus on continued investment and growth in our industrial businesses. Further
information on the GE Capital Exit Plan is provided in the GE Capital – The GE Capital Exit Plan section within the MD&A and Note
1 to the consolidated financial statements.
(cid:120) Global Growth Organization (GGO) – organization that provides operational processes through a shared services structure for
the enabling functions: commercial, enterprise data management, finance, HR, IT, legal, supply chain and tax through a
partnership with the businesses and global functions.
(cid:120) Growth markets – consist of countries/regions which are expected to grow at above average world GDP rates over the long term
and typically are resource rich and/or have large infrastructure needs. They encompass the following: Australasia; Canada; Latin
America; Middle East, North Africa and Turkey; Russia and CIS; Sub-Saharan Africa; Greater China; South Asia; South East Asia
(ASEAN).
24 GE 2015 FORM 10-K
24 GE 2015 FORM 10-K
M D & A
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Industrial operating profit margin (cid:177) Industrial segment profit plus corporate items and eliminations (excluding gains, restructuring
and pre-tax non-operating pension costs) divided by industrial segment revenues plus corporate items and eliminations (excluding
gains and GE-GE Capital eliminations).
Industrial return on total capital (Industrial ROTC) (cid:177) earnings from continuing operations attributable to GE common
shareowners less GE Capital earnings from continuing operations plus GE after-tax interest, divided by average Industrial
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)plus average debt and other, net.
Industrial segment gross margin (cid:177) industrial segment sales less industrial segment cost of sales.
(cid:44)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:177) for purposes of the Industrial ROTC calculation
excludes the effects of discontinued operations and is calculated on an annual basis using a five-point average.
(cid:120) Non-operating pension costs (cid:177) comprise the expected return on plan assets, interest cost on benefit obligations and net actuarial
gain (loss) amortization for our principal pension plans.
(cid:120) Operating earnings (cid:177) GE earnings from continuing operations attributable to common shareowners excluding the impact of non-
operating pension costs.
(cid:120) Operating earnings per share (cid:177) unless otherwise indicated, when we refer to operating earnings per share, it is the diluted per-
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:179)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:180)(cid:17)
(cid:120) Operating pension costs (cid:177) comprise the service cost of benefits earned, prior service cost amortization and curtailment loss for
our principal pension plans.
(cid:120) Organic revenues (cid:177) revenues excluding the effects of acquisitions, dispositions and foreign currency exchange.
(cid:120) Product services (cid:177) for purposes of the financial statement display of sales and costs of sales in our Statement of Earnings,
(cid:179)(cid:74)(cid:82)(cid:82)(cid:71)(cid:86)(cid:180)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:54)(cid:40)(cid:38)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:3)(cid:80)(cid:88)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86),
including other services activities. In our MD&A section of this report, we refer to sales under product services agreements and
sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and
(cid:85)(cid:72)(cid:83)(cid:68)(cid:76)(cid:85)(cid:86)(cid:12)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:179)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:15)(cid:180)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:80)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:3)(cid:86)(cid:76)(cid:80)(cid:83)(cid:79)(cid:92)(cid:3)(cid:68)(cid:86)(cid:3)
(cid:179)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:48)(cid:39)(cid:9)(cid:36)(cid:17)
(cid:120) Product services agreements (cid:177) contractual commitments, with multiple-year terms, to provide specified services for products in
our Power, Renewable Energy, Oil & Gas, Aviation and Transportation installed base (cid:177) for example, monitoring, maintenance,
(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:83)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:3)(cid:74)(cid:68)(cid:86)(cid:3)(cid:87)(cid:88)(cid:85)(cid:69)(cid:76)(cid:81)(cid:72)(cid:18)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3)(cid:86)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:68)(cid:79)(cid:79)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:87)(cid:17)
(cid:120) Revenues (cid:177) unless otherwise indicat(cid:72)(cid:71)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:180)(cid:3)(cid:86)(cid:76)(cid:80)(cid:83)(cid:79)(cid:92)(cid:3)(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:86)(cid:17)
(cid:120) Segment profit (cid:177) refers to the operating profit of the industrial segments and the net earnings of the Financial Services segment.
See the Segment Operations section within the MD&A for a description of the basis for segment profits.
(cid:120) Shared Services (cid:177) sharing of business processes in order to standardize and consolidate services to provide value to the
businesses in the form of simplified processes, reduced overall costs and increased service performance.
GE 2015 FORM 10-K 25
GE 2015 FORM 10-K 25
M D & A
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
(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:68)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:179)(cid:81)(cid:82)(cid:81)-(cid:42)(cid:36)(cid:36)(cid:51)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:180)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:40)(cid:38)(cid:3)(cid:85)(cid:88)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)Specifically, we have referred, in various sections of
this report, to:
(cid:120)
Industrial segment organic revenue growth
(cid:120) Oil & Gas organic revenue and operating profit growth
(cid:120) Operating and non-operating pension costs (income)
(cid:120) Adjusted Corporate costs (operating)
(cid:120) GE pre-tax earnings from continuing operations, excluding GE Capital 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 GE Capital
earnings
(cid:120) Operating earnings, operating EPS and Industrial operating earnings
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Industrial operating + Verticals earnings and EPS
Industrial operating profit and operating margin (excluding Alstom)
Industrial segment operating profit and operating margin (excluding Alstom)
Industrial segment gross margin (excluding Alstom)
(cid:120) (cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)s of discontinued operations
(cid:120) (cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
(cid:120)
(cid:120)
(cid:120)
Industrial return on total capital (Industrial ROTC)
Industrial cash flows from operating activities (Industrial CFOA)
Free cash flow
(cid:120) Ratio of adjusted debt to equity at GE Capital, net of liquidity
(cid:120) Capital ending net investment (ENI), excluding liquidity
(cid:120) GE Capital 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. Non-GAAP financial measures referred to in this
report are designated with an asterisk (*).
26 GE 2015 FORM 10-K
26 GE 2015 FORM 10-K
M D & A
K E Y P E R F O R M A N C E I N D I C A T O R S
KEY PERFORMANCE INDICATORS
(Dollars in billions; per-share amounts in dollars)
REVENUES PERFORMANCE
INDUSTRIAL ORDERS
INDUSTRIAL BACKLOG
(cid:3)
Equipment
Services
(cid:3)
Equipment
Services
(cid:3)
(a) Includes $2.5 billion related to Alstom.
(a) Includes $29.2 billion related to Alstom.
(cid:3)
(cid:3)
INDUSTRIAL SEGMENT PROFIT
(cid:3)
INDUSTRIAL SEGMENT MARGIN
(cid:3)
(cid:3)
GE CFOA
(cid:3)
GE Capital
Dividend
Industrial
CFOA*
(cid:3)
(cid:3)
(cid:3)
(a) Includes $(0.2) billion related to Alstom.
(a) Includes (0.5)% related to Alstom.
(a) Includes $(0.3) billion related to Alstom.(cid:3)
EARNINGS PER SHARE
(cid:3)
OPERATING EPS*
(cid:3)
(cid:3)
(cid:3)
INDUSTRIAL OPERATING+
VERTICALS EPS*
(cid:3)
*Non-GAAP Financial Measure
(cid:3)
(cid:3)
GE 2015 FORM 10-K 27
GE 2015 FORM 10-K 27
M D & A
K E Y P E R F O R M A N C E I N D I C A T O R S
KEY PERFORMANCE INDICATORS
(Dollars in billions; per-share amounts in dollars)
SHAREHOLDER INFORMATION
RETURNED $33 BILLION TO
SHAREOWNERS IN 2015
ANNUAL MEETING
Dividends $9.3 billion
Stock buyback $3.3 billion
Synchrony Financial exchange $20.4 billion(cid:3)
(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)
Shareowners will be held on April 27, 2016,
in Jacksonville, Florida.
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
(cid:76)(cid:81)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:3)(cid:9)(cid:3)(cid:51)(cid:82)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:24)(cid:19)(cid:19)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:44)(cid:81)(cid:71)(cid:72)(cid:91)(cid:3)(cid:11)(cid:54)(cid:9)(cid:51)(cid:3)(cid:24)(cid:19)(cid:19)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:39)(cid:82)(cid:90)(cid:3)(cid:45)(cid:82)(cid:81)(cid:72)(cid:86)(cid:3)(cid:44)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:11)(cid:39)(cid:45)(cid:44)(cid:36)(cid:12) on
December 31, 2010, and that all quarterly dividends were reinvested. The cumulative dollar returns shown on the graph represent the
value that such investments would have had on December 31 for each year indicated.
STOCK PRICE RANGE AND DIVIDENDS
(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:15)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)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, 2016, there were approximately 458,000 shareowner accounts of record.
On February 12, 2016, our Board of Directors approved a quarterly dividend of $0.23 per share of common stock, which is payable April
25, 2016, to shareowners of record at close of business on February 29, 2016.
28 GE 2015 FORM 10-K
28 GE 2015 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)
2015 GEOGRAPHIC REVENUES
2015 SEGMENT REVENUES
SIGNIFICANT DEVELOPMENTS IN 2015
Our consolidated results were significantly affected by the stronger U.S. dollar compared with various foreign currencies
as described in our segment operating results and geographic information.
On April 10, 2015, we announced our plan to reduce the size of the financial services businesses through the sale of most
of its assets over the following 24 months. See the GE Capital Exit Plan section within the MD&A for additional
information.
On November 17, 2015, we completed the split-off of Synchrony Financial through which the Company accepted
671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833 shares of Synchrony
Financial common stock that it owned and recorded an after-tax gain of $3.4 billion in discontinued operations.
On November 2, 2015, we completed the acquisition of Al(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:55)(cid:75)(cid:72)(cid:85)(cid:80)(cid:68)(cid:79)(cid:15)(cid:3)(cid:53)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)rid businesses. The
completion of the transaction followed the regulatory approval of the deal in over 20 countries and regions including the
EU, U.S., China, India, Japan and Brazil. (cid:55)(cid:75)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:188)(cid:28)(cid:17)2 billion (approximately $10.1 billion). The
acquisition and alliances with Alstom affected our Power, Renewable Energy, and Energy Management segments.
On November 2, 2015, we also completed the sale of our Signaling business to Alstom with proceeds of $0.8 billion and a
pre-tax gain of $0.6 billion.
On December 7, 2015, we announced that we had terminated our agreement to sell our Appliances business to
Electrolux.
On January 15, 2016, we announced the signing of a definitive agreement to sell our Appliances business to Qingdao
Haier Co., Ltd. (Haier(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:24)(cid:17)(cid:23)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:43)(cid:68)(cid:76)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)
directors and remains subject to customary closing conditions, including Haier shareholder approval, and regulatory
approvals. The transaction is targeted to close in mid-2016.
GE 2015 FORM 10-K 29
GE 2015 FORM 10-K 29
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 AND FINANCIAL SERVICES REVENUES
(a)
Includes $2.0 billion related to Alstom
(a)
Includes $2.0 billion related to Alstom
COMMENTARY: 2015 (cid:177) 2014
2014 (cid:177) 2013
(cid:3)
Consolidated revenues increased $0.2 billion.
Consolidated revenues increased $3.9 billion, or 3%.
(cid:120)
Industrial segment revenues decreased less than 1%,
reflecting negative foreign currency impacts and the
effects of dispositions, partially offset by organic growth
of 3% and the effects of acquisitions (primarily Alstom).
(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 $0.5 billion, or
5%, primarily as a result of organic revenue declines,
primarily resulting from lower ending net investment
(ENI), lower gains and higher impairments, partially offset
by the effects of acquisitions and dispositions.
(cid:120) Other income increased $1.4 billion, primarily due to the
gain on sale of our Signaling business of $0.6 billion,
NBCU settlement of $0.5 billion, and $0.2 billion break-up
fee from Electrolux.
(cid:120) The effects of acquisitions increased consolidated
revenues $2.5 billion and $1.7 billion in 2015 and 2014,
respectively. Dispositions affected our ongoing results
through increased revenues of $0.4 billion in 2015 and
lower revenues of $3.6 in 2014.
(cid:120) The effects of a stronger U.S. dollar compared to mainly
the euro, Brazilian real, and Canadian dollar, decreased
consolidated revenues by $4.9 billion.
(cid:120) Financial Services revenues increased $0.1 billion as a result of
organic revenue growth and higher gains, partially offset by the
effects of dispositions.
(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 $1.5 billion in 2014 and 2013, respectively. Dispositions
affected our ongoing results through lower revenues of $3.6 billion
and $0.1 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 $0.6 billion.
*Non-GAAP Financial Measure
30 GE 2015 FORM 10-K
30 GE 2015 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
OPERATING EARNINGS*
COMMENTARY: 2015 (cid:177) 2014
2014 (cid:177) 2013
Consolidated earnings decreased $7.9 billion or 83%, primarily
due to lower Financial Services income.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Industrial segment profit increased 1% with growth driven by
Aviation, Appliances & Lighting, Transportation, Energy
Management, and Power, partially offset by lower
performance for Oil & Gas, Renewable Energy and
Healthcare.
Industrial segment margin increased 30 basis points (bps)
driven by higher productivity, pricing and impacts of material
deflation, partially offset by effects of Alstom results.
Excluding Alstom, Industrial segment margins increased 80
bps.* to 17.0%.
Financial Services net earnings decreased $9.2 billion,
primarily due to charges associated with the GE Capital Exit
Plan. See the GE Capital and Capital segment sections for
more details.
The effects of acquisitions on our consolidated net earnings
were insignificant in 2015 and a $0.2 billion increase in 2014.
The effects of dispositions on net earnings were an increase
of $0.9 billion in 2015 and a decrease of $1.6 billion in 2014.
Industrial SG&A as a percentage of total sales remained flat
at 14% as a result of global cost reduction initiatives, primarily
at Oil & Gas, Healthcare and Corporate. This was partially
offset by lower revenues and higher acquisition-related costs.
Consolidated earnings increased $1.9 billion or 25%, 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)
(cid:120)
(cid:120)
(cid:120)
Industrial segment profit increased 10% with growth driven by
Aviation, Oil & Gas, and Renewable Energy.
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.
Financial Services net earnings increased $0.8 billion as a
result of core increases, equipment leased to others (ELTO)
impairments related to our operating lease portfolio of
commercial aircraft, and higher gains, partially offset by the
effects of dispositions.
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 $1.6 billion in 2014 and an increase of
$0.1 billion in 2013.
Industrial SG&A as a percentage of total sales decreased to
14% as a result of global cost reduction initiatives, primarily at
Power and Healthcare. This was partially offset by higher
acquisition-related costs.
See the Other Consolidated Information section within the MD&A for a discussion of postretirement benefit plans costs, income taxes
and geographic data.
*Non-GAAP Financial Measure
GE 2015 FORM 10-K 31
GE 2015 FORM 10-K 31
M D & A
C O N S O L I D AT E D R E S U L T S
GE CAPITAL
CAPITAL SEGMENT AND DISCONTINUED OPERATIONS
GE Capital results include continuing operations, which are reported in the Capital segment (see Segment discussion), and
discontinued operations (see Discontinued Operations section and Note 2).
THE GE CAPITAL EXIT PLAN
SALES AGREEMENTS
During 2015, GE signed agreements to sell approximately $157 billion of ENI, excluding liquidity (as originally reported at December 31,
2014), of which approximately $98 billion, $34 billion and $25 billion related to our Commercial Lending and Leasing (CLL), Real Estate
and Consumer businesses, respectively.
Of the signed agreements, sales representing approximately $104 billion of ENI, excluding liquidity (as originally reported at December
31, 2014) have closed, including approximately $46 billion, $34 billion and $24 billion related to our CLL, Real Estate and Consumer
businesses, respectively. Real Estate transactions that have closed included the majority of GE Capital’s Real Estate debt and equity
portfolio sold to funds managed by The Blackstone Group (which, in turn, sold a portion of this portfolio to Wells Fargo & Company). In
connection with The Blackstone Group transactions, GE Capital provided $3.2 billion of seller financing to The Blackstone Group, which
GE Capital intends to syndicate by the end of 2016. As of December 31, 2015, GE Capital has collected or sold approximately $2.3
billion of this seller financing.
AFTER-TAX CHARGES RELATED TO THE GE CAPITAL EXIT PLAN
In connection with the April 10, 2015 announcement of the GE Capital Exit Plan, the Company estimated that it would incur
approximately $23 billion in after-tax charges through 2016, approximately $6 billion of which were expected to result in future net cash
expenditures. These charges relate to: business dispositions, including goodwill allocations (approximately $13 billion), tax expense
related to expected repatriation of foreign earnings and write-off of deferred tax assets (approximately $7 billion), and restructuring and
other charges (approximately $3 billion).
During 2015, GE recorded $22.0 billion of after-tax charges related to the GE Capital Exit Plan, of which $7.7 billion was recorded in
continuing operations and $14.3 billion was recorded in discontinued operations. A description of after-tax charges for 2015 is provided
below.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$9.5 billion of net loss primarily related to the completed and planned dispositions of the Real Estate business, the Consumer
business and most of the CLL business, which was recorded in discontinued operations under the caption “Earnings (loss)
from discontinued operations, net of taxes” in the Statement of Earnings.
$6.5 billion of tax expense related to expected repatriation of foreign earnings and write-off of deferred tax assets, of which
$6.3 billion was recorded in continuing operations and reported in GE Capital’s Corporate component and $0.1 billion was
recorded in discontinued operations in our Consumer business under the caption “Earnings (loss) from discontinued
operations, net of taxes” in the Statement of Earnings.
$4.7 billion of net asset impairments due to shortened hold periods, of which $3.2 billion was recorded in discontinued
operations in our Consumer business and $1.5 billion was recorded in discontinued operations in our CLL business, all under
the caption “Earnings (loss) from discontinued operations, net of taxes” in the Statement of Earnings.
$0.8 billion impairment charge of a coal-fired power plant in the U.S. related to a decision in the fourth quarter to exit the
investment over time recorded in continuing operations in GE Capital’s Corporate component under the caption “Other costs
and expenses” in the Statement of Earnings.
$0.6 billion of restructuring and other charges, of which $0.5 billion was recorded in continuing operations in GE Capital’s
Corporate component under the captions “Selling, general and administrative expenses” and “Other costs and expenses” in
the Statement of Earnings and less than $0.1 billion was recorded in discontinued operations under the caption “Earnings
(loss) from discontinued operations, net of taxes” in the Statement of Earnings.
32 GE 2015 FORM 10-K
32 GE 2015 FORM 10-K
M D & A
C O N S O L I D AT E D R E S U L T S
REORGANIZATION AND EXCHANGE OFFERS
During December 2015, General Electric Capital Corporation merged into GE. The merger and creation of a new intermediate holding
company was part of a reorganization of GE Capital’s businesses (the Reorganization) pursuant to which GE separated GE Capital’s
international and U.S. operations. GE Capital’s international operations have been consolidated under a new international holding
company (GE Capital International Holdings Limited), which has a separate capital structure and is supervised by the U.K. Prudential
Regulation Authority. The Reorganization, debt exchange offers (as described below) and establishment of GE Capital International
Holdings Limited were intended, among other things, to establish an efficient and simplified capital structure that is satisfactory to GE
Capital’s regulators, a key step in terminating the nonbank SIFI designation for GE Capital. In addition, the debt exchange offers were
designed to align the liabilities of GE Capital International Holdings Limited to its assets from a maturity profile and liquidity standpoint,
taking into consideration asset sales, and where appropriate, shortening the maturity profile of targeted liabilities.
As part of the GE Capital Exit Plan, on September 21, 2015, GE Capital commenced private offers to exchange (the Exchange Offers)
up to $30 billion of certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On
October 19, 2015, given the high level of participation, the offering was increased by $6 billion with the aggregate principal amount of
$36 billion (representing $31 billion of outstanding principal and $5 billion of premium) of outstanding notes being tendered for
exchange and settled on October 26, 2015. The new notes that were issued at closing are composed of $15.3 billion of 0.964% Six
Month Notes due April 2016, £0.8 billion of 1.363% Six Month Notes due April 2016, $6.1 billion of 2.342% Notes due 2020, $2.0 billion
of 3.373% Notes due 2025 and $11.5 billion of 4.418% Notes due 2035. Of the $16.2 billion exchanged into the Six Month Notes, $1.3
billion had been previously classified in short term borrowings. GE Capital will continue to evaluate the opportunity to repurchase debt
while maintaining our liquidity at the levels communicated as part of the GE Capital Exit Plan. The new notes have been fully,
irrevocably and unconditionally guaranteed by GE.
Immediately prior to the Reorganization, GE Capital had $5.0 billion in aggregate liquidation preference of Series A, B and C preferred
stock outstanding. In connection with the Reorganization, on December 3, 2015, holders who previously held GE Capital preferred
stock were issued an aggregate liquidation preference of $5.9 billion of new GE Series A, B and C preferred stock. The Series A, B and
C preferred stock bear an initial fixed interest rate of 4.00%, 4.10% and 4.20%, respectively, through their initial call date and are
callable on June 15, 2022, December 15, 2022 and June 15, 2023, respectively. Subsequent to the call date, the Series A, B and C
preferred stock will bear a floating interest rate equal to three-month LIBOR plus 2.28%, 2.32% and 2.37%, respectively, thereafter.
Subsequent to the issuance of the preferred stock on December 3, 2015, in response to investor feedback, GE launched an exchange
offer on December 18, 2015 that allowed GE preferred stock investors to exchange their existing Series A, B and C preferred stock into
a Series D GE preferred stock. These Series D instruments bear an initial fixed interest rate of 5.00% through January 21, 2021, will
bear a floating rate equal to three-month LIBOR plus 3.33% thereafter and are callable on January 21, 2021. On January 20, 2016,
$2.7 billion of Series A, $2.0 billion of Series B and $1.0 billion of Series C were exchanged into $5.7 billion Series D GE preferred
stock. Following the exchange, $0.1 billion of Series A, $0.1 billion of Series B and $0.1 billion of Series C remain outstanding.
GUARANTEE
As part of the GE Capital Exit Plan, on April 10, 2015, GE and GE Capital entered into an amendment to their existing financial support
agreement. Under this amendment (the Amendment), the Company has provided a full and unconditional guarantee (the Guarantee) of
the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial
paper issued or guaranteed by GE Capital identified in the Amendment. In the aggregate, the Guarantee applied to approximately
$85.8 billion of GE Capital debt as of December 31, 2015. The Guarantee replaced the requirement that the Company make certain
income maintenance payments to GE Capital in certain circumstances. GE Capital’s U.S. public indentures were concurrently amended
to provide the full and unconditional guarantee by the Company set forth in the Guarantee.
GE 2015 FORM 10-K 33
GE 2015 FORM 10-K 33
M D & A
C O N S O L I D AT E D R E S U L T S
SYNCHRONY FINANCIAL EXCHANGE OFFER
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(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:44)(cid:51)(cid:50)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:90)(cid:85)(cid:76)(cid:87)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:21)(cid:17)(cid:27)(cid:3)
billion and retained 84.6% of Synchrony Financial.
(cid:50)(cid:81)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:20)(cid:28)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:27)(cid:23)(cid:17)(cid:25)(cid:8)(cid:3)
owned subsidiary, Synchrony Financial. On November 17, 2015, we completed the split-off of Synchrony Financial, through which the
Company accepted 671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833 shares of Synchrony
Financial common stock that it owned and recorded an after-tax gain of $3.4 billion within discontinued operations. In connection with
the public offering and sale of Synchrony Financial, GE Capital indemnified Synchrony Financial and its directors, officers, and
(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:38)(cid:38)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86) of the businesses that are part of Synchrony
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:182)(cid:86) ongoing operations. With the completion of the split-(cid:82)(cid:73)(cid:73)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:182)(cid:86)(cid:3)(cid:11)(cid:41)(cid:53)(cid:37)(cid:12)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:72)(cid:84)(cid:88)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:72)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:86)(cid:68)(cid:89)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:42)(cid:40) Capital is no longer a savings and loan holding
company.
34 GE 2015 FORM 10-K
34 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S
SEGMENT OPERATIONS
SEGMENT CHANGES
(cid:120) The Power segment (formerly Power & Water) was affected through the splitting out of the Renewable Energy business, principally
the onshore wind business.
(cid:120) A new segment named Renewable Energy was created that includes (cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:74)(cid:68)(cid:70)(cid:92)(cid:3)(cid:82)(cid:81)(cid:86)(cid:75)(cid:82)(cid:85)(cid:72)(cid:3)(cid:90)(cid:76)(cid:81)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72) wind and hydro
businesses acquired from Alstom.
(cid:120) Energy Management was affected through the formation of a joint venture with Alstom.
(cid:120) Additionally, a portion of the Distributed Power business that provides turbines for oil & gas applications was realigned from the
Power segment to the Oil & Gas segment.
(cid:120) Transportation sold its Signaling business to Alstom.
(cid:120) The remaining segments, Healthcare, Aviation, and Appliances & Lighting were not affected by any significant segment
changes in 2015.
(cid:120) The financial services segment, previously referred to as GE Capital, is now called Capital. GE Capital now refers to GECC or its
successor, GECGH.
REVENUES AND PROFIT
Segment revenues include 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 material 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 segme(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
management is measured:
(cid:120)
(cid:120)
Interest and other financial charges, income taxes and GE preferred stock dividends are excluded in determining segment profit
(cid:11)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:90)(cid:72)(cid:3)(cid:86)(cid:82)(cid:80)(cid:72)(cid:87)(cid:76)(cid:80)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:180)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)
Interest and other financial charges, income taxes and GE Capital preferred stock dividends are included in determining segment
profit (which w(cid:72)(cid:3)(cid:86)(cid:82)(cid:80)(cid:72)(cid:87)(cid:76)(cid:80)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:81)(cid:72)(cid:87)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:180)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)
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 is all(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)
ALSTOM - ACQUISITION IMPACTING MULTIPLE SEGMENTS
(cid:50)(cid:81)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:55)(cid:75)(cid:72)(cid:85)(cid:80)(cid:68)(cid:79)(cid:15)(cid:3)(cid:53)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:85)(cid:76)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
transaction followed the regulatory approval of the deal in over 20 countries and regions including the EU, U.S., China, India, Japan and
(cid:37)(cid:85)(cid:68)(cid:93)(cid:76)(cid:79)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:188)(cid:28)(cid:17)(cid:21)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:7)(cid:20)(cid:19)(cid:17)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:79)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71) our Power,
Renewable Energy and Energy Management segments. See Note 8 to the consolidated financial statements for further information.
For the two months that GE owned Alstom in 2015, the entity contributed $(0.2) billion of operating profit to the industrial segments and
$(0.2) billion of operating profit at Corporate, resulting in an overall pre-tax loss of $(0.4) billion. Offsetting the pre-tax loss was $0.4
billion of increased tax benefits principally related to the integration of our existing services bus(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:17)(cid:3)
GE 2015 FORM 10-K 35
GE 2015 FORM 10-K 35
M D & A
S E G M E N T O P E R A T I O N S
(Dollars in billions)
INDUSTRIAL SEGMENT EQUIPMENT
& SERVICES REVENUES
INDUSTRIAL SELLING, GENERAL & ADMINISTRATIVE
(SG&A) AS A % OF SALES
Equipment(a)
Services(b)
In 2015, $59.8 billion, excluding $1.1 billion related to Alstom
In 2015, $47.1 billion, excluding $0.8 billion related to Alstom
(a) 13.9% excluding $2.0 billion of Alstom sales and $0.4 billion of
Alstom SG&A(cid:3)
(a)
(b)
(cid:3)
SUMMARY OF OPERATING SEGMENTS
(In millions)
2015
2014
2013
2012
2011
General Electric Company and consolidated affiliates
Revenues
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial segment revenues
Capital
Total segment revenues
Corporate items and eliminations
Consolidated revenues
Segment profit
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial segment profit
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 GE common shareowners
Earnings (loss) from discontinued
operations, net of taxes
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations
Earnings (loss) from discontinued operations,
net of tax and noncontrolling interest
Consolidated net earnings (loss)
attributable to GE common shareowners
36 GE 2015 FORM 10-K
36 GE 2015 FORM 10-K
$
$
$
$
$
$
$
$
$
21,490
6,273
16,450
7,600
24,660
17,639
5,933
8,751
108,796
10,801
119,597
(2,211)
117,386
4,502
431
2,427
270
5,507
2,882
1,273
674
17,966
(7,983)
9,983
(5,108)
(1,706)
(1,506)
1,663
(7,495)
312
(7,807)
20,580
6,399
19,085
7,319
23,990
18,299
5,650
8,404
109,727
11,320
121,047
(3,863)
117,184
4,486
694
2,758
246
4,973
3,047
1,130
431
17,764
1,209
18,973
(6,225)
(1,579)
(1,634)
9,535
5,855
157
5,698
$
$
$
19,315
4,824
17,341
7,569
21,911
18,200
5,885
8,338
103,383
11,267
114,650
(1,405)
113,245
4,328
485
2,357
110
4,345
3,048
1,166
381
16,220
401
16,621
(6,002)
(1,333)
(1,667)
7,618
5,475
36
5,439
$
$
$
20,364
7,373
15,539
7,412
19,994
18,290
5,608
7,967
102,548
11,268
113,816
(1,228)
112,588
4,368
914
2,064
131
3,747
2,920
1,031
311
15,487
1,245
16,731
(4,719)
(1,353)
(2,013)
8,646
5,047
53
4,995
20,335
4,924
13,874
6,422
18,859
18,083
4,885
7,692
95,074
11,843
106,918
3,145
110,062
4,213
714
1,754
78
3,512
2,803
757
237
14,067
1,469
15,536
(1,317)
(1,299)
(4,839)
8,081
5,143
104
5,039
$
(6,145)
$
15,233
$
13,057
$
13,641
$
13,120
M D & A
S E G M E N T O P E R A T I O N S | P O W E R
POWER
BUSINESS OVERVIEW
Leader: Steve Bolze
Headquarters & Operations
(cid:120) Senior Vice President, GE and President &
CEO, GE Power
(cid:120) Over 20 years of service with General
Electric
(cid:120) 18% of segment revenues in 2015
(cid:120) 20% of industrial segment revenues
(cid:120) 25% of industrial segment profit
(cid:120) Headquarters: Schenectady, NY
(cid:120) Serving customers in 150+ countries
(cid:120) Employees: approximately 62,000
Products & Services
Power serves power generation, industrial, government and other customers worldwide with products and services
related to energy production and water reuse. Our products and technologies harness resources such as oil, gas,
coal, diesel, nuclear and water to produce electric power and include gas and steam turbines, full balance of plant,
upgrade and service solutions, as well as data-leveraging software.
(cid:120) Gas Power Systems (cid:177) offers a wide spectrum of heavy-duty and aeroderivative gas turbines for utilities, independent power
producers and industrial application, from small, mobile power to utility scale power plants.
(cid:120)
(cid:120)
(cid:120)
Steam Power Systems (cid:177) offers steam power technology for coal and nuclear applications including boilers, generators, steam
turbines, and Air Quality Control Systems (AQCS) to help efficiently produce power and provide performance over the life of a
power plant.
Power Services (cid:177) delivers maintenance, service and upgrade solutions across total plant assets and over their operational
lifecycle, leveraging the Industrial Internet to improve the performance of such solutions.
Distributed Power (cid:177) provides technology-based products and services to generate reliable and efficient power at or near the point
of use. The product portfolio features highly efficient, fuel flexible industrial gas engines, including Jenbacher and Waukesha
engines, which generate power for numerous industries globally.
(cid:120) Water & Process Technologies (cid:177) provides comprehensive chemical and equipment solutions and services to help manage and
optimize water resources across numerous industries and municipalities, including water treatment, wastewater treatment and
process system solutions.
(cid:120) GE Hitachi Nuclear (cid:177) 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.
GE 2015 FORM 10-K 37
GE 2015 FORM 10-K 37
M D & A
S E G M E N T O P E R A T I O N S | P O W E R
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 21.5 BILLION
ORDERS
Equipment
Services
Equipment
Services
2015 SUB-SEGMENT REVENUES
BACKLOG
(a) Includes $1.0 billion related to Alstom
(cid:3)
(a) Includes Water & Process Technologies and GE Hitachi Nuclear
(cid:3)
(a) Includes $15.5 billion related to Alstom
EQUIPMENT/SERVICES REVENUES
UNIT SALES
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120)
(cid:120)
(cid:120)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:80)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:55)(cid:75)(cid:72)(cid:85)(cid:80)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)
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 costs.
The Wind business was transferred to a new segment, Renewable Energy.
The business continues to invest in new product development, such as our new H-Turbine, reciprocating engines and advanced
upgrades, to expand our equipment and services offerings.
(cid:120) Excess capacity in developed markets, continued pressure in oil and gas applications and macroeconomic and geopolitical
environments result in uncertainty for the industry and business.
(cid:120)
The Distributed Power business that provides turbines for oil and gas applications was realigned from the Power segment to the Oil
& Gas segment.
38 GE 2015 FORM 10-K
38 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S | P O W E R
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
(a) $20.6 billion, excluding $0.9 billion related to
Alstom*
(a) $4.6 billion, excluding $(0.1) billion related
to Alstom*
(a) 22.3%, excluding (1.4)% related to Alstom*
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
Revenues
$
20.6
$
0.8
0.1
(0.8)
N/A
N/A
N/A
-
0.9
$
21.5
$
Revenues
$
19.3
$
1.7
(0.2)
(0.1)
N/A
N/A
N/A
(0.2)
$
20.6
$
Profit
4.5
0.2
0.1
(0.1)
0.2
0.1
(0.4)
-
(0.1)
4.5
Profit
4.3
0.4
(0.2)
-
0.1
(0.2)
0.3
(0.1)
4.5
Segment revenues up $0.9 billion (4%);
Segment profit was flat as a result of:
(cid:120)
The increase in revenues was mainly driven by higher
volume, primarily at Power Services, as well as the effects of
the Alstom acquisition, partially offset by the impact of a
stronger U.S. dollar.
(cid:120) Profit was flat as higher volume, the effects of deflation,
higher prices, and favorable business mix were offset by
lower productivity, including an increase in SG&A cost, the
impact of a stronger U.S. dollar, and the effects of the Alstom
acquisition.
2014 (cid:177) 2013
Segment revenues up $1.3 billion (7%);
Segment profit up $0.2 billion (4%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was driven by higher volume,
primarily higher equipment sales at Gas Power Systems,
partially offset by lower prices and the impact of a stronger
U.S. dollar.
The increase in profit was mainly due to the higher volume at
Gas Power Systems, and higher productivity reflecting a
reduction in SG&A cost, partially offset by negative business
mix, driven by higher gas turbine shipments, and lower
prices.
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
Alstom
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
*Non-GAAP Financial Measure
GE 2015 FORM 10-K 39
GE 2015 FORM 10-K 39
M D & A
S E G M E N T O P E R A T I O N S | R E N E W A B L E E N E R G Y
RENEWABLE ENERGY
BUSINESS OVERVIEW
Leader: Jérôme Pécresse
Headquarters & Operations
(cid:120) President & CEO, GE Renewable Energy
(cid:120) Former Alstom Renewable Power Executive
Vice President
(cid:120) 5% of segment revenues in 2015
(cid:120) 6% of industrial segment revenues
(cid:120) 2% of industrial segment profit
(cid:120) Headquarters: Paris, France
(cid:120) Serving customers in 40+ countries
(cid:120) Employees: approximately 11,000
Products & Services
GE Renewable Energy makes renewable power sources affordable, accessible, and reliable for the benefit of
people everywhere. With one of the broadest technology portfolios in the industry, Renewable Energy creates
value for customers with solutions from onshore and offshore wind, hydro, and emerging low carbon technologies.
With operations in 40+ countries around the world, Renewable Energy can deliver solutions to where its customers
need them most.
(cid:120) Onshore Wind (cid:177) provides technology and services for the onshore wind power industry by providing wind turbine platforms and
hardware and software to optimize wind resources. Wind services help customers improve availability and value of their assets
over the lifetime of the fleet. Digital Wind Farm is a site level solution, creating a dynamic, connected and adaptable ecosystem that
(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:86)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:79)(cid:72)(cid:72)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)
(cid:120) Offshore Wind (cid:177) offers its high-yield offshore wind turbine, Haliade 150-6MW, which is compatible with bottom fixed and floating
foundations. It uses the innovative pure torque design and the Advanced High Density direct-drive Permanent Magnet Generator.
Wind services support customers over the lifetime of their fleet.
(cid:120) Hydro (cid:177) provides full range of solutions, products and services to serve the hydropower industry from initial design to final
commissioning, from Low Head / Medium / High Head hydropower plants to pumped storage hydropower plants, small hydropower
plants, concentrated solar power plants, geothermal power plants and biomass power plants.
Competition & Regulation
Renewable energy is now mainstream, able to compete with conventional options on an unsubsidized basis in many locations today.
New innovations such as the digitization of renewable energy will continue to drive down costs. 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.
40 GE 2015 FORM 10-K
40 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S | R E N E W A B L E E N E R G Y
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 6.3 BILLION
ORDERS
Equipment
Services
Equipment
Services
2015 SUB-SEGMENT REVENUES
BACKLOG
(a) Includes $0.5 billion related to Alstom
(cid:3)
(a) Alstom business acquired in November 2015
(cid:3)
(a) Includes $5.3 billion related to Alstom
EQUIPMENT/SERVICES REVENUES
UNIT SALES
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) Renewable energy has experienced a surge of development in the last decade. Renewable energy capacity additions account for
approximately half of all power plant additions worldwide.
(cid:120) We expanded our Renewa(cid:69)(cid:79)(cid:72)(cid:3)(cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:69)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:87)(cid:3)
offshore wind, hydro, and emerging renewable technologies to the portfolio.
(cid:120)
In our Onshore Wind business we continue to lead in digital innovation. The digital solutions we offer allow our customers to
increase revenue and reduce cost and risk. We are expanding our digital capability into the newly acquired Alstom Offshore Wind
and Hydro businesses.
(cid:120) Excess capacity in developed markets and macroeconomic and geopolitical environments result in uncertainty for the industry and
business.
(cid:120)
The Digital Wind Farm combines the new 2 and 3 MW wind turbine platforms with Predix software and diagnostics. Together, this
hardware and software technology delivers up to 20% more (cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:85)(cid:80)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)
machines.
GE 2015 FORM 10-K 41
GE 2015 FORM 10-K 41
M D & A
S E G M E N T O P E R A T I O N S | R E N E W A B L E E N E R G Y
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
(a) $6.2 billion, excluding $0.1 billion related to
Alstom*
(a) $0.5 billion, excluding $(0.1) billion related
to Alstom*
(a) 8.1%, excluding (1.2)% related to Alstom*
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
Segment revenues down $0.1 billion (2%);
Segment profit down $0.3 billion (38%) as a result of:
(cid:120)
(cid:120)
The decrease in revenues was primarily driven by the effects
of a stronger U.S. dollar, partially offset by higher volume,
driven by the sale of 2 MW onshore units, higher prices, the
effects of the Alstom acquisition and other income.
The decrease in profit was due to lower productivity, primarily
driven by a shift to new products and technology, the effects
of inflation, the effects of the Alstom acquisition and negative
business mix, partially offset by higher prices and other
income.
2014 (cid:177) 2013
Segment revenues up $1.6 billion (33%);
Segment profit up $0.2 billion (43%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was driven by higher volume,
partially offset by lower prices and the impact of a stronger
U.S. dollar.
The increase in profit was mainly due to higher cost
productivity and higher volume, partially offset by lower prices.
Revenues
6.4
0.3
0.1
(0.6)
N/A
N/A
N/A
0.1
0.1
6.3
$
$
$
$
Revenues
$
4.8
$
2.0
(0.2)
(0.1)
N/A
N/A
N/A
-
$
6.4
$
Profit
0.7
-
0.1
-
(0.1)
(0.1)
(0.1)
0.1
(0.1)
0.4
Profit
0.5
0.2
(0.2)
-
-
-
0.3
-
0.7
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
Alstom
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
*Non-GAAP Financial Measure
42 GE 2015 FORM 10-K
42 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S | O I L & G AS
OIL & GAS
BUSINESS OVERVIEW
Leader: Lorenzo Simonelli
Headquarters & Operations
(cid:120) Senior Vice President, GE and President &
CEO, GE Oil & Gas
(cid:120) 21 years of service with General Electric
(cid:120) 14% of segment revenues in 2015
(cid:120) 15% of industrial segment revenues
(cid:120) 14% of industrial segment profit
(cid:120) Headquarters: London, UK
(cid:120) Serving customers in 140+ countries
(cid:120) Employees: approximately 39,000
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 segments, such as Aviation and Healthcare, to continuously improve oil and
gas industry performance, output and productivity.
(cid:120)
Turbomachinery Solutions (TMS) (cid:177) 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) Subsea Systems & Drilling (SS&D) (cid:177) provides a broad portfolio of subsea products and services required to facilitate the safe
and reliable flow of hydrocarbons from the subsea wellhead to the surface. In addition, the sub-segment designs and manufactures
onshore and offshore drilling and production systems and equipment for floating production platforms and provides a full range of
services related to onshore and offshore drilling activities.
(cid:120) Measurement & Controls (M&C) (cid:177) provides equipment and services for a wide range of industries, including oil & gas, power
generation, aerospace, metals, and transportation. The offerings include sensor-based measurement; non-destructive testing and
inspection; turbine, generator and plant controls and condition monitoring, as well as pipeline integrity solutions.
(cid:120) Surface (cid:177) provides products and services for onshore oil & gas wells and manufactures artificial lift equipment for extracting crude
oil and other fluids from wells. Specific products include downhole tools for well integrity, dry trees and surface wellheads, electric
submersible pumps, surface wellheads, wireline logging, artificial lift technologies, drilling pressure control equipment.
(cid:120) Downstream Technology Solutions (DTS) (cid:177) provides products and services to serve the downstream segments of the industry
including refining, petrochemical, distributed gas, flow and process control and other industrial applications. Products include steam
turbines, reciprocating and centrifugal compressors, 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 2015 FORM 10-K 43
GE 2015 FORM 10-K 43
M D & A
S E G M E N T O P E R A T I O N S | O I L & G AS
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 16.5 BILLION
ORDERS
2015 SUB-SEGMENT REVENUES
BACKLOG
Equipment
Services
Equipment
Services
EQUIPMENT/SERVICES REVENUES
Services Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120)
L(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:82)(cid:76)(cid:79)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:70)(cid:68)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:79)(cid:79)(cid:72)(cid:81)(cid:74)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)f 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.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
In November 2015, we completed the acquisition of Advantec group for $0.1 billion. The group, mainly based in Norway, provides
subsea intervention equipment and services to the oil and gas industry.
The Distributed Power business that provides turbines for oil and gas applications was realigned from the Power segment to the Oil
& Gas segment.
In June 2014, we acquir(cid:72)(cid:71)(cid:3)(cid:38)(cid:68)(cid:80)(cid:72)(cid:85)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:70)(cid:76)(cid:83)(cid:85)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:19)(cid:17)(cid:25)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:76)(cid:83)(cid:85)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
compression equipment and aftermarket services for oil and gas production, gas processing, gas distribution and independent
power industries.
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. Results for Lufkin are included in the Surface sub-segment.
44 GE 2015 FORM 10-K
44 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S | O I L & G AS
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
Revenues
$
19.1
$
(1.0)
-
(1.6)
N/A
N/A
N/A
-
$
16.5
$
Revenues
$
17.3
$
1.7
0.1
(0.1)
N/A
N/A
N/A
-
$
19.1
$
Profit
2.8
(0.1)
-
(0.3)
0.1
-
0.1
-
2.4
Profit
2.4
0.2
0.1
-
-
(0.2)
0.3
-
2.8
Segment revenues down $2.6 billion (14%);
Segment profit down $0.3 billion (12%) as a result of:
(cid:120)
(cid:120)
The decrease in revenues was primarily due to the impact of a
stronger U.S. dollar and lower volume at Surface and SS&D,
driven by lower oil prices. Organic revenues* were down 5%
compared with prior year.
The decrease in profit was primarily due to the impact of a
stronger U.S. dollar and lower volume at Surface and SS&D,
driven by lower oil prices, partially offset by the effects of
deflation and cost productivity. Organic profit* increased 1%
compared with prior year.
2014 (cid:177) 2013
Segment revenues up $1.7 billion (10%);
Segment profit up $0.4 billion (17%) 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 Surface, SS&D
and TMS, as well as the $0.3 billion net impact of acquisitions,
primarily Lufkin, and dispositions, primarily Wayne. These
increases were partially offset by the impact 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.
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
*Non-GAAP Financial Measure
GE 2015 FORM 10-K 45
GE 2015 FORM 10-K 45
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
ENERGY MANAGEMENT
BUSINESS OVERVIEW
Leader: Russell Stokes
Headquarters & Operations
(cid:120) Senior Vice President, GE and President &
CEO, GE Energy Management
(cid:120) 19 years of service with General Electric
(cid:120) 6% of segment revenues in 2015
(cid:120) 7% of industrial segment revenues
(cid:120) 2% of industrial segment profit
(cid:120) Headquarters: Atlanta, GA
(cid:120) Serving customers in 150+ countries
(cid:120) Employees: approximately 45,000
Products & Services
GE Energy Management designs and deploys industry-leading technologies that transport, convert, automate and
optimize energy to ensure safe, efficient and reliable electrical power. Combining all the resources and scale of the
(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:71)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:3)(cid:69)(cid:85)(cid:76)(cid:79)(cid:79)(cid:76)(cid:68)(cid:81)(cid:87)(cid:3)(cid:80)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:72)(cid:86)(cid:15)(cid:3)(cid:74)(cid:85)(cid:76)(cid:71)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:88)(cid:87)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:82)(cid:76)(cid:79)(cid:3)(cid:9)(cid:3)(cid:74)(cid:68)(cid:86)(cid:15)(cid:3)
marine, mining and renewables customers, that keep our world running. Beginning in 2016, this segment will be
referred to as Energy Connections.
(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 telecommunication markets.
(cid:120) Grid Solutions (cid:177) a GE and Alstom joint venture, equips 90% of power utilities worldwide to bring power from the point of
generation to end consumers. With over 200 years combined experience in providing advanced energy solutions, our products and
services enable more resilient, efficient and reliable power systems. Our products and services, such as high voltage equipment,
power electronics, automation and protection equipment, software solutions, in addition to our robust projects and services
capabilities modernize the grid. We serve industries such as generation, transmission, distribution, oil & gas, telecommunication,
mining and water and our strategic partnership ventures, primarily in Mexico and China, allow us to support our customers through
various product and service offerings.
(cid:120) Power Conversion (cid:177) applies the s(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:72)(cid:79)(cid:83)(cid:3)(cid:71)(cid:85)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)
energy infrastructure. Our product portfolio includes motors, generators, automation and control equipment and 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.
46 GE 2015 FORM 10-K
46 GE 2015 FORM 10-K
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
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 7.6 BILLION
ORDERS
Equipment
Services
2015 SUB-SEGMENT REVENUES
BACKLOG
(a) Includes $1.1 billion related to Alstom
EQUIPMENT/SERVICES REVENUES
(a) Includes $8.4 billion related to Alstom
Equipment
Services
(cid:3)(cid:3)
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) On November 2, 2015, (cid:90)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:42)(cid:85)(cid:76)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)
(cid:120)
(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:85)(cid:3)(cid:39)(cid:76)(cid:74)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:42)(cid:85)(cid:76)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:73)(cid:82)(cid:85)(cid:80)(cid:3)(cid:42)(cid:85)(cid:76)(cid:71)(cid:3)(cid:54)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:68)(cid:3)(cid:42)(cid:40)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:89)(cid:72)(cid:81)(cid:87)(cid:88)(cid:85)(cid:72).
The Intelligent Platforms Embedded Systems Products business of Industrial Solutions was sold in December 2015 for
approximately $0.5 billion and the Electricity Meters business of Grid Solutions was sold in December 2015 for approximately $0.2
billion.
(cid:120) We are seeing growth in renewable energy industries, specifically wind & solar industries, which is driving demand in our Power
Conversion business for equipment and services. This growth is offset by the decline in the oil & gas industry.
(cid:120) We see soft demand in the North American electrical distribution market, slow economic recovery in Europe, and continued soft
demand 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.
GE 2015 FORM 10-K 47
GE 2015 FORM 10-K 47
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
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
(a) $6.6 billion, excluding $1.0 billion related to
Alstom*
(a) $0.3 billion, excluding an insignificant
amount related to Alstom*
(a) 4.1%, excluding (0.5)% related to Alstom*
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
Revenues
$
7.3
$
(0.1)
-
(0.5)
N/A
N/A
N/A
-
1.0
7.6
$
$
0.3
Profit
0.2
-
-
(0.1)
-
-
0.1
-
-
Segment revenues up $0.3 billion (4%);
Segment profit up (10%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher sales at
Grid Solutions, driven by the effects of the Alstom acquisition,
and a gain on the sale of a meters business, partially offset by
the impact of a stronger U.S. dollar and lower volume at
Industrial Solutions.
The increase in profit was primarily due to higher productivity,
including a reduction in SG&A, partially offset by the impact of
a stronger U.S. dollar.
2014 (cid:177) 2013
Segment revenues down $0.3 billion (3%);
Segment profit up $0.1 billion as a result of:
(cid:120)
(cid:120)
The decrease in revenues was primarily due to lower volume
from weakness in North American utility and electrical
distribution markets, partially offset by higher sales in Power
Conversion.
The increase in profit was primarily due to higher productivity
reflecting a reduction in SG&A cost.
Revenues
$
7.6
$
(0.2)
-
-
N/A
N/A
N/A
-
$
7.3
$
Profit
0.1
-
-
-
-
-
0.1
-
0.2
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
Alstom
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
*Non-GAAP Financial Measure
48 GE 2015 FORM 10-K
48 GE 2015 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) Senior Vice President, GE and President &
CEO, GE Aviation
(cid:120) Over 30 years of service with General
Electric
(cid:120) 21% of segment revenues in 2015
(cid:120) 23% of industrial segment revenues
(cid:120) 31% of industrial segment profit
(cid:120) Headquarters: Cincinnati, OH
(cid:120) Serving customers in 120+ countries
(cid:120) Employees: approximately 45,000
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 (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 engines and components 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 civil air travel and demand and military procurement cycles.
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 2015 FORM 10-K 49
GE 2015 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 V I A T I O N
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 24.7 BILLION
ORDERS
2015 SUB-SEGMENT REVENUES
BACKLOG
EQUIPMENT/SERVICES REVENUES
UNIT SALES
Equipment
Services
Equipment
Services
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:894)(cid:258)(cid:895) GEnx engines are a subset of commercial engines
(cid:894)(cid:271)(cid:895) Commercial spares shipment rate in millions of dollars per day
(cid:3)
(cid:120) Our digital industrial business is providing insights and operational value for our customers, unlocking opportunities to deliver more
productivity beyond our traditional services and (cid:69)(cid:72)(cid:70)(cid:82)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:69)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:87)(cid:82)(cid:88)(cid:74)(cid:75)(cid:72)(cid:86)(cid:87)(cid:3)
operational problems. Digital design tools, additive manufacturing, advanced automated machining, and advanced inspection, are
all enabling our operations, partners and suppliers to dramatically reduce cycle time while improving quality.
(cid:120)
The installed base continues to grow with new product launches. In 2016, through our CFM joint venture, we expect to launch the
LEAP engine for application on the Airbus A320 NEO and the Boeing 737 MAX aircraft. In addition, we are continuing development
of the GE9X engine incorporating the latest technologies for application in the widebody aircraft space.
(cid:120) We expect military shipments to be lower due to continued pressure on the U.S. military budget but continue to work on next
generation science and technology programs related to engine propulsion.
(cid:120)
The reduction in fuel costs is expected to result in increased airline profitability and continued growth in passenger traffic and
freight.
50 GE 2015 FORM 10-K
50 GE 2015 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
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
$
24.0
$
0.1
0.5
-
N/A
N/A
N/A
-
$
24.7
$
Profit
5.0
-
0.5
-
(0.2)
0.2
0.1
(0.1)
5.5
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 $0.7 billion (3%);
Segment profit up $0.5 billion (11%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was due to higher prices in
Commercial Engines and higher services volume, partially
offset by decreased equipment sales.
The increase in profit was mainly due to higher prices,
favorable business mix and higher cost productivity, partially
offset by the effects of inflation and lower other income.
2014 (cid:177) 2013
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.
GE 2015 FORM 10-K 51
GE 2015 FORM 10-K 51
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) Senior Vice President, GE and President &
CEO, GE Healthcare
(cid:120) Over 25 years of service with General
Electric
(cid:120) 15% of segment revenues in 2015
(cid:120) 16% of industrial segment revenues
(cid:120) 16% of industrial segment profit
(cid:120) Headquarters: Chicago, IL
(cid:120) Serving customers in 130+ countries
(cid:120) Employees: approximately 52,000
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), surgical
and 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 (cid:177) 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 diagnostics.
(cid:120) Healthcare IT (cid:177) 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 and regulations that apply to claims submitted under Medicare, Medicaid or other government funded
healthcare programs.
52 GE 2015 FORM 10-K
52 GE 2015 FORM 10-K
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
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 17.6 BILLION
ORDERS
2015 SUB-SEGMENT REVENUES
BACKLOG
EQUIPMENT/SERVICES REVENUES
Equipment
Services
Equipment
Services
Services (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/cloud-based
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.
Life Sciences is expanding its business through bioprocess market growth and enterprise solutions.
(cid:120)
(cid:120) Clarient, one of our Life Science businesses, was sold on December 30, 2015.
GE 2015 FORM 10-K 53
GE 2015 FORM 10-K 53
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
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
$
18.3
$
0.8
(0.3)
(1.1)
NA
NA
N/A
(0.1)
$
17.6
$
Revenues
$
18.2
$
0.6
(0.3)
(0.2)
N/A
N/A
N/A
-
$
18.3
$
Profit
3.0
0.1
(0.3)
(0.1)
(0.2)
-
0.3
-
2.9
Profit
3.0
0.1
(0.3)
(0.1)
(0.2)
-
0.5
-
3.0
Segment revenues down $0.7 billion (4%);
Segment profit down $0.2 (5%) as a result of:
(cid:120)
(cid:120)
The decrease in revenues was primarily due to the effects of a
stronger U.S. dollar, as well as lower prices, mainly at
Healthcare Systems, partially offset by higher volume in Life
Sciences and Healthcare Systems.
The decrease in profit was primarily due to lower prices,
mainly in Healthcare Systems, the effects of inflation and the
impact of a stronger U.S. dollar, partially offset by higher
productivity, as increased R&D and related costs were more
than offset by higher cost productivity, and higher volume.
2014 (cid:177) 2013
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.
54 GE 2015 FORM 10-K
54 GE 2015 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: Jamie S. Miller
Headquarters & Operations
(cid:120) Senior Vice President, GE and President &
CEO, GE Transportation
(cid:120) 7 years of service with General Electric
(cid:120) 5% of segment revenues in 2015
(cid:120) 5% of industrial segment revenues
(cid:120) 7% of industrial segment profit
(cid:120) Headquarters: Chicago, IL
(cid:120) Serving customers in 60+ countries
(cid:120) Employees: approximately 12,000
Products & Services
Transportation is a global technology leader and supplier to the railroad, mining, marine, stationary power and
drilling industries. Products and services offered by Transportation include:
(cid:120)
Locomotives (cid:177) we provide freight and passenger locomotives as well as rail services to help solve rail challenges. We
manufacture high-horsepower, diesel-electric locomotives including the Evolution Series TM, which meets or exceeds the U.S.
(cid:40)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:51)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:36)(cid:74)(cid:72)(cid:81)(cid:70)(cid:92)(cid:182)(cid:86)(cid:3)(cid:11)(cid:40)(cid:51)(cid:36)(cid:12)(cid:3)(cid:55)(cid:76)(cid:72)(cid:85) 4 requirements for freight and passenger applications.
(cid:120) Services (cid:177) 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) Digital Solutions (cid:177) we offer a suite of software-enabled solutions to help our customers lower operational costs, increase
productivity and improve service quality and reliability.
(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 marine diesel engines and stationary power diesel engines and motors for land and
offshore drilling rigs.
Competition & Regulation
The competitive environment for locomotives and mining equipment and services consists of large global competitors. A number of
smaller competitors compete in a limited-size product range and geographic regions. North America will remain a focus of the industry,
due to the EPA Tier 4 emissions standard that went into effect in 2015.
GE 2015 FORM 10-K 55
GE 2015 FORM 10-K 55
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
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 5.9 BILLION
ORDERS
2015 SUB-SEGMENT REVENUES
BACKLOG
(cid:3)
(a) Includes Digital Solutions, Marine, Stationary & Drilling
(cid:3)
EQUIPMENT/SERVICES REVENUES
UNIT SALES
Equipment
Services
Equipment
Services
Services (cid:3)(cid:3)(cid:3)(cid:3)Equipment
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120) Rail carload volumes, especially in North America, continue to decline and the number of parked locomotives increased throughout
2015.
(cid:120) Demand for natural resources remains low, driving a decline in the overall mining industry.
(cid:120)
(cid:120)
The Signaling business was sold to Alstom on November 2, 2015 for approximately $0.8 billion.
In 2015, we launched the new Tier 4 locomotive. A total of 756 Tier 4 compliant locomotives were shipped in 2015.
56 GE 2015 FORM 10-K
56 GE 2015 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
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
Profit
$
5.7
$
0.3
-
-
N/A
N/A
N/A
-
$
5.9
$
1.1
0.1
-
-
-
(0.2)
0.2
-
1.3
Segment revenues up $0.3 billion (5%);
Segment profit up $0.1 (13%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher volume
driven by Tier 4 locomotive sales, partially offset by the
Signaling disposition.
The increase in profit was primarily due to higher productivity,
including a reduction in SG&A cost, and higher volume driven
by Tier 4 locomotive sales, partially offset by negative
business mix.
2014 (cid:177) 2013
Revenues
$
5.9
$
Profit
1.2
Segment revenues down $0.2 billion (4%);
Segment profit down 3% as a result of:
(0.2)
-
-
N/A
N/A
N/A
-
-
-
-
-
-
-
-
$
5.7
$
1.1
(cid:120)
(cid:120)
The decrease in revenues was due to lower volume, primarily
in Mining reflecting weakness in the industry, partially offset by
an increase in volume in the locomotive services business.
The decrease in profit was due to lower volume, primarily in
Mining as discussed above, was partially offset by deflation
and cost productivity.
GE 2015 FORM 10-K 57
GE 2015 FORM 10-K 57
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) 7% of segment revenues in 2015
(cid:120) 8% of industrial segment revenues
(cid:120) 4% 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 (cid:177) 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,
(cid:86)(cid:82)(cid:73)(cid:87)(cid:72)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:75)(cid:72)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:75)(cid:92)(cid:69)(cid:85)(cid:76)(cid:71)(cid:3)(cid:90)(cid:68)(cid:87)(cid:72)(cid:85)(cid:3)(cid:75)(cid:72)(cid:68)(cid:87)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:71)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:48)(cid:82)(cid:81)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:138)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:73)(cid:112)(cid:140)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:76)(cid:79)(cid:72)(cid:140)(cid:15)(cid:3)(cid:42)(cid:40)(cid:138)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:36)(cid:85)(cid:87)(cid:76)(cid:86)(cid:87)(cid:85)(cid:92)(cid:140)(cid:15)(cid:3)
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 is 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
(cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:54)(cid:80)(cid:68)(cid:85)(cid:87)(cid:138)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:71)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:140)(cid:15)(cid:3)(cid:42)(cid:55)(cid:91)(cid:140)(cid:15)(cid:3)(cid:44)(cid:80)(cid:80)(cid:72)(cid:85)(cid:86)(cid:76)(cid:82)(cid:81)(cid:140)(cid:15)(cid:3)(cid:44)(cid:81)(cid:73)(cid:88)(cid:86)(cid:76)(cid:82)(cid:81)(cid:140)(cid:15)(cid:3)(cid:47)(cid:88)(cid:80)(cid:76)(cid:81)(cid:68)tion(cid:15)(cid:140) Albeo,(cid:140)(cid:3)(cid:55)(cid:85)(cid:76)(cid:42)(cid:68)(cid:76)(cid:81)(cid:140)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:55)(cid:72)(cid:87)(cid:85)(cid:68)(cid:138)(cid:3)
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.
58 GE 2015 FORM 10-K
58 GE 2015 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)
2015 GEOGRAPHIC REVENUES: $ 8.8 BILLION
2015 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 AB for $3.3 billion.
On July 1, 2015, GE was notified that the Department of Justice had initiated court proceedings seeking to enjoin the sale
of Appliances to Electrolux AB. On December 7, 2015, GE announced that it had terminated its agreement to sell its
Appliances business to Electrolux AB and would pursue other options to sell the Appliances business. GE received a
break-up fee of $175 million from Electrolux AB.
(cid:120) On January 15, 2016, GE announced the signing of a definitive agreement to sell its Appliances business to Qingdao
Haier Co., Ltd. (Haier) for $5.4 billion. The transaction has been approved by the board of directors of GE and of Haier,
and remains subject to customary closing conditions, including Haier shareholder approval, and regulatory approvals. The
transaction is targeted to close in mid-2016.
(cid:120) While the demand in the non-LED market segment is slowing, there is a strong global shift to energy efficient lighting
including continued growth in LED products.
(cid:120)
Launched Current, powered by GE, a digital power service business to deliver integrated energy systems combining
LEDs, solar, storage and onsite power.
GE 2015 FORM 10-K 59
GE 2015 FORM 10-K 59
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
FINANCIAL OVERVIEW
(Dollar in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
SEGMENT REVENUES & PROFIT WALK:
2015 (cid:177) 2014
COMMENTARY:
2015 (cid:177) 2014
2014
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2015
2014 (cid:177) 2013
2013
Volume
Price
Foreign Exchange
(Inflation)/Deflation
Mix
Productivity
Other
2014
Revenues
$
8.4
$
0.5
(0.1)
(0.1)
N/A
N/A
N/A
-
$
8.8
$
Profit
0.4
-
(0.1)
-
0.1
-
0.2
-
0.7
Segment revenues up $0.3 billion (4%);
Segment profit up $0.2 billion (56%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher volume
in Appliances and gains on asset sales in Lighting, partially
offset by lower prices and the impact of a stronger U.S. dollar.
The increase in profit was primarily due to improved
productivity, including the effects of classifying Appliances as
a business held for sale, and the effects of deflation, partially
offset by lower prices.
2014 (cid:177) 2013
Revenues
$
8.3
$
Profit
0.4
Segment revenues up $0.1 billion (1%);
Segment profit up $0.1 billion (13%) as a result of:
(cid:120)
(cid:120)
The increase in revenues was primarily due to higher volume
driven by higher sales at Appliances.
The increase in profit was primarily due to improved
productivity including the effects of classifying Appliances as a
business held for sale in the third quarter of 2014.
0.1
-
-
N/A
N/A
N/A
-
-
-
-
-
-
-
-
$
8.4
$
0.4
60 GE 2015 FORM 10-K
60 GE 2015 FORM 10-K
M D & A
S E G M E N T O P E R A T I O N S | C AP I T AL
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) 9% of segment revenues in 2015
(cid:120) Headquarters: Norwalk, CT
(cid:120) Employees: approximately 24,000
Products & Services
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:74)(cid:72)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:88)(cid:87)(cid:76)(cid:79)(cid:76)(cid:93)(cid:72)(cid:3)(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)-specific expertise in
aviation, energy, infrastructure and healthcare to capitalize on market-specific opportunities and are further described below.
In addition, we continue to operate our run-off insurance activities as part of our continuing operations. Collectively, we refer
to these businesses as Verticals. Products and services include:
(cid:120) Commercial Lending and Leasing (CLL) (cid:177) offers capital and services to industrials served by GE, including the healthcare
industry through its Healthcare Equipment Finance business. The CLL business also provides factoring solutions through its
Working Capital Solutions business to the GE industrial businesses by purchasing GE customer receivables. Beginning in 2016,
this business will be referred to as Industrial Finance.
(cid:120) Energy Financial Services (EFS) (cid:177) 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) offers commercial aircraft financing and leasing for a wide range of aircraft types and
financing options.
(cid:36)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:76)(cid:87)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:15)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:68)(cid:79)(cid:3)(cid:40)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73) its CLL business are classified
as discontinued operations and are no longer reported as part of the Capital segment. All comparative prior period information has been
reclassified to reflect Real Estate, Consumer and most of CLL as discontinued operations.
Competition & Regulation
The businesses in which we engage are subject to competition from various types of financial institutions, including commercial banks,
investment banks, leasing companies, independent finance companies, finance companies associated with manufacturers and
insurance and reinsurance companies.
GE Capital is a nonbank systemically important financial institution (nonbank SIFI) under the Dodd-Frank Wall Street Reform and
Consumer Protection Act (DFA). As a result, GE Capital is subject to FRB supervision as described in Regulations and Supervision. GE
has discussed the GE Capital Exit Plan with its regulators and staff of the Financial Stability Oversight Council (FSOC) and plans to file
its application with the FSOC in early 2016 (cid:87)(cid:82)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:54)(cid:50)(cid:38)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:81)(cid:82)(cid:81)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:54)(cid:44)(cid:41)(cid:44)(cid:17)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
of the Synchrony Financial split-(cid:82)(cid:73)(cid:73)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:53)(cid:37)(cid:182)(cid:86)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:72)(cid:84)(cid:88)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:72)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:86)(cid:68)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)
holding company, GE Capital is no longer a savings and loan holding company. In addition, in connection with the December 2015
(cid:85)(cid:72)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:71)(cid:72)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:76)(cid:87)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:48)(cid:39)(cid:9)(cid:36)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)ated
under a new international holding company, GE Capital International Holdings Limited. GE Capital International Holdings Limited is a
wholly-owned subsidiary of GE Capital with its own capital structure and is supervised by the U.K. Prudential Regulation Authority
(cid:11)(cid:51)(cid:53)(cid:36)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:51)(cid:53)(cid:36)(cid:182)(cid:86)(cid:3)(cid:86)(cid:88)(cid:83)(cid:72)(cid:85)(cid:89)ision includes capital and liquidity standards that could impact the payment of dividends to GE Capital, and
(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:3)(cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:86)(cid:88)(cid:83)(cid:72)(cid:85)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:89)(cid:72)(cid:81)(cid:3)(cid:76)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:81)(cid:82)(cid:81)(cid:69)(cid:68)nk SIFI is
terminated.
GE 2015 FORM 10-K 61
GE 2015 FORM 10-K 61
M D & A
S E G M E N T O P E R A T I O N S | C AP I T AL
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $10.8 BILLION
2015 SUB-SEGMENT REVENUES
ENDING NET INVESTMENT, EXCLUDING
LIQUIDITY*
SUB-SEGMENT ASSET ALLOCATION AS OF
DECEMBER 31, 2015
(a) As originally reported
(b) $167 billion including discontinued operations
SIGNIFICANT TRENDS & DEVELOPMENTS
(cid:120)
The GE Capital Exit Plan - On April 10, 2015, the Company announced its plan to reduce the size of the financial services
businesses through the sale of most of its assets over the following 24 months. It is expected that as a result of the GE Capital Exit
Plan, the Capital businesses that will remain with GE will account for about $90 billion in ending net investment (ENI), excluding
liquidity, including about $40 billion in the U.S. ENI is a metric used to measure the total capital invested in the financial services
(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:17)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:40)(cid:49)(cid:44)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:13)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:7)(cid:27)(cid:21)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)(cid:3)Further information on the GE Capital Exit
Plan is provided in the Consolidated Results section of the MD&A and Note 1 to the consolidated financial statements.
(cid:120)
The GE Capital Exit Plan (cid:177) As the GE Capital Exit Plan progresses, we will continue to incur interest on non-Verticals borrowings,
restructuring costs and GE and GE Capital headquarters costs that are in excess of those allocated to the Verticals. These costs
are recorded within other continuing operations within Capital.
(cid:120) Milestone Aviation Group (cid:177) On January 30, 2015, we acquired Milestone Aviation Group, a helicopter leasing business, for
approximately $1.8 billion.
(cid:120) Dividends - GE Capital paid $4.3 billion, $3.0 billion and $6.0 billion of dividends to GE in the years ended December 31, 2015,
2014 and 2013, respectively.
*Non-GAAP Financial Measure
62 GE 2015 FORM 10-K
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M D & A
S E G M E N T O P E R A T I O N S | C AP I T AL
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT (LOSS)(a)
Total Capital
Other Continuing
Verticals
Total Capital
Verticals
Other Continuing
(a)
Interest and other financial charges and income taxes are
included in determining segment profit for the Capital
segment.
COMMENTARY: 2015 (cid:177) 2014
Capital revenues decreased by $0.5 billion, or 5%, primarily as a result of organic revenue declines, primarily due to lower ENI, lower
gains and higher impairments, partially offset by the effects of acquisitions and dispositions.
(cid:120) Within Capital, Verticals revenues decreased by $0.7 billion, or 6%, as a result of organic revenue declines ($0.9 billion), lower
gains ($0.2 billion) and higher impairments ($0.1 billion), partially offset by the effects of acquisitions and dispositions ($0.5
billion).
(cid:120) CLL revenues increased by $0.1 billion, or 6%, as a result of organic revenue growth ($0.1 billion), partially offset by
the effects of currency exchange.
(cid:120) EFS revenues decreased by $0.7 billion, or 42%, as a result of organic revenue declines ($0.5 billion), lower gains
($0.3 billion) and higher impairments ($0.2 billion), partially offset by the effects of dispositions ($0.2 billion).
(cid:120) GECAS revenues increased by $0.1 billion, or 1%, as a result of the effects of acquisitions ($0.3 billion), lower
impairments ($0.1 billion) and higher gains ($0.1 billion), partially offset by organic revenue declines ($0.4 billion).
(cid:120)
Insurance revenues decreased $0.1 billion as a result of organic revenue declines ($0.1 billion) and lower gains.
Capital net earnings decreased by $9.2 billion primarily due to charges associated with the GE Capital Exit Plan.
(cid:120) Within Capital, Verticals net earnings increased by $0.1 billion, or 4%, as a result of lower equipment leased to others (ELTO)
impairments ($0.1 billion) related to our operating lease portfolio of commercial aircraft and the effects of acquisitions and
dispositions ($0.2 billion), partially offset by lower gains ($0.1 billion) and core decreases ($0.1 billion).
(cid:120) CLL net earnings increased by $0.1 billion, or 18%, as a result of core increases of $0.1 billion, partially offset by the
effects of currency exchange.
(cid:120) EFS net earnings decreased by $0.3 billion, or 78%, as a result of lower gains ($0.2 billion), core decreases ($0.1
billion) and higher impairments ($0.1 billion), partially offset by the effects of dispositions ($0.1 billion).
(cid:120) GECAS net earnings increased by $0.3 billion, or 28%, as a result of ELTO impairments ($0.2 billion) related to our
operating lease portfolio of commercial aircraft, the effects of acquisitions ($0.1 billion) and higher gains, partially
offset by core decreases ($0.1 billion).
(cid:120)
Insurance net earnings decreased $0.1 billion as a result of core decreases ($0.1 billion) and lower gains.
GE 2015 FORM 10-K 63
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(cid:120) Other Capital net earnings decreased by $9.3 billion primarily as a result of the GE Capital Exit Plan as follows:
(cid:120) Higher tax expenses of $7.0 billion primarily related to expected repatriation of foreign earnings and write-off of
deferred tax assets related to the GE Capital Exit Plan.
(cid:120) Higher treasury operation expenses of $1.0 billion reflecting excess interest expense, including costs associated with
the debt exchange completed in October 2015 and derivative activities that reduce or eliminate interest rate, currency
or market risk between financial assets and liabilities. We expect to continue to have excess interest costs in 2016 as
asset sales outpace our debt maturities. We may engage in liability management actions, such as buying back debt,
based on market and economic conditions.
(cid:120)
The 2015 $0.8 billion impairment of a coal-fired power plant in the U.S. related to a decision in the fourth quarter to
exit the investment over time.
COMMENTARY: 2014 (cid:177) 2013
Capital revenues increased $0.1 billion as a result of organic revenue growth and higher gains, partially offset by the effects of
dispositions.
(cid:120) Within Capital, Verticals revenues increased as a result of organic revenue growth ($0.2 billion) and higher gains ($0.2 billion)
offset by the effects of dispositions ($0.2 billion) and higher impairments ($0.1 billion).
(cid:120) CLL revenues increased 2% as a result of organic revenue growth.
(cid:120) EFS 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 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).
(cid:120)
Insurance revenues decreased $0.1 billion as a result of organic revenue declines ($0.1 billion).
Capital net earnings increased by $0.8 billion as a result of core increases, ELTO impairments related to our operating lease portfolio of
commercial aircraft, and higher gains, partially offset by the effects of dispositions.
(cid:120) Within Capital, Verticals net earnings increased by $0.2 billion, or 14%, as a result of higher gains ($0.1 billion), ELTO
impairments ($0.1 billion) related to our operating lease portfolio of commercial aircraft, and core increases ($0.1 billion),
partially offset by the effects of dispositions ($0.1 billion).
(cid:120) CLL net earnings increased slightly or 2% as a result of core increases.
(cid:120) EFS 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 net earnings increased by $0.2 billion, or 17%, as a result of 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).
(cid:120)
Insurance net earnings increased as a result of core increases.
(cid:120) Other Capital net earnings increased by $0.6 billion primarily as a result of higher tax benefits of $0.6 billion and higher
treasury operation income of $0.3 billion, partially offset by higher corporate headquarters expenses of $0.2 billion.
64 GE 2015 FORM 10-K
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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 Operation (cid:884)(cid:3)Summary of Operating Segment table 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 Organization).
REVENUES AND OPERATING PROFIT (COST)
(In millions)
2015
2014
2013
Revenues
Gains (losses) on disposed or held for sale businesses
NBCU settlement
NBCU LLC
Eliminations and other
Total Corporate Items and Eliminations
Operating profit (cost)
Gains (losses) on disposed or held for sale businesses
NBCU settlement
NBCU LLC
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 charges, gains and NBCU settlement
Adjusted Corporate costs (operating)*
$
1,047
450
-
(3,708)
(2,211)
1,047
450
-
(2,760)
(1,734)
(2,111)
(5,108)
2015
(5,108)
(2,764)
(2,344)
(237)
(2,107)
$
$
$
$
$
$
$
91
-
-
(3,954)
(3,863)
91
-
-
(2,313)
(1,788)
(2,215)
(6,225)
2014
(6,225)
(2,120)
(4,105)
(1,697)
(2,408)
$
$
$
$
$
$
$
453
-
1,528
(3,386)
(1,405)
447
-
1,528
(3,222)
(1,992)
(2,763)
(6,002)
2013
(6,002)
(2,624)
(3,378)
(17)
(3,361)
(a)
Included non-operating pension cost* of $2.8 billion, $2.1 billion and $2.6 billion in 2015, 2014 and 2013, respectively, which includes
expected return on plan assets, interest costs and non-cash amortization of actuarial gains and losses.
.
*Non-GAAP Financial Measure
GE 2015 FORM 10-K 65
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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
2015 (cid:177) 2014 COMMENTARY
Revenues and other income increased $1.7 billion, primarily a result of:
(cid:120)
$1.0 billion of higher gains from disposed businesses, which included $0.2 billion of a break-up fee paid by Electrolux AB due to the
termination of the agreement to acquire the GE Appliances business,
(cid:120)
(cid:120)
$0.5 billion higher other income from a settlement related to the NBCU transaction, and
$0.2 billion of lower eliminations and other, which was driven by $0.4 billion of lower inter-segment eliminations, partially offset by
$0.2 billion lower licensing, asset management and other income.
Operating costs decreased $1.1 billion, primarily as a result of:
(cid:120)
$1.0 billion of higher gains from disposed businesses, which included $0.2 billion of a break-up fee paid by Electrolux AB due to
termination of the agreement to acquire the GE Appliances business,
(cid:120)
(cid:120)
$0.5 billion higher other income from a settlement related to the NBCU transaction, and
Lower headquarter functional costs offset by higher investment in Information Technology (IT) growth initiatives.
These decreases to operating costs were partially offset by $0.4 billion higher costs associated with our principal retirement plans
including the effects of lower discount rates and updated mortality assumptions.
2014 (cid:177) 2013 COMMENTARY
Revenues and other income decreased $2.5 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
$0.6 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, $0.1 billion of asset write-offs at a consolidated nuclear joint venture in which we hold a
51% interest at Power and $0.1 billion curtailment loss on the principal retirement plans resulting from our plan 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.
66 GE 2015 FORM 10-K
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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
COSTS AND GAINS NOT INCLUDED IN SEGMENT RESULTS
As discussed in the Segment Operations section within the MD&A, 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
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total
GAINS(a)
(In billions)
Power
Renewable Energy
Oil & Gas
Energy Management(b)
Aviation
Healthcare(c)
Transportation(d)
Appliances & Lighting
Total
$
$
$
$
2015
0.3
0.2
0.5
0.2
-
0.3
0.1
0.1
1.7
2015
-
-
-
0.1
-
0.1
0.6
-
0.9
$
$
$
$
2014
0.5
0.1
0.3
0.2
0.3
0.5
-
0.1
2.1
2014
-
-
0.1
-
-
-
-
-
0.1
$
$
$
$
2013
0.3
0.1
0.3
0.2
0.6
0.6
0.1
0.2
2.4
2013
0.1
-
0.1
-
-
0.2
-
-
0.5
(a)
(b)
(c)
(d)
Related to business dispositions.
Related to the Intelligent Platforms Embedded System Products business disposition in 2015.
Related to the Clarient business disposition in 2015.
Related to the Signaling business disposition in 2015.
GE 2015 FORM 10-K 67
GE 2015 FORM 10-K 67
M D & A
D I S C O N T I N U E D O P E R A T I O N S
DISCONTINUED OPERATIONS
Discontinued operations primarily relate to our financial services businesses as a result of the GE Capital Exit Plan and include our
Consumer business, most of our CLL business, our Real Estate business, and our U.S. mortgage business (WMC). All of these
operations were previously reported in the Capital segment.
We have entered into Transitional Service Agreements (TSA) with and provided certain indemnifications to buyers of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)
assets. Under the TSAs, GE Capital provides various services for terms generally between 12 and 24 months and receives a level of
cost reimbursement from the buyers.
Indemnifications amount to $1.5 billion, for which we have recognized related liabilities of $0.1 billion at December 31, 2015. In addition,
we provided $0.7 billion of credit support, the vast majority on behalf of certain CLL customers aligned with signed disposal transactions
scheduled to close in 2016, and recognized an insignificant liability at December 31, 2015.
As part of the GE Capital Exit Plan, we entered into hedges (on an after-tax basis) of our net investment in businesses that we plan to
dispose. These derivatives are treated as standalone hedges and the mark to market valuation changes on the derivatives are recorded
in earnings of discontinued operations.
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)
2015
2014
Earnings (loss) from discontinued operations, net of taxes
$
(7,495)
$
5,855
$
2013
5,475
The 2015 loss from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$7.9 billion after-tax loss at our CLL business (including a $8.7 billion after-tax loss on disposals),
$2.0 billion after-tax loss at our Real Estate business primarily loss on disposals, and
$0.1 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.
2015 losses were partially offset by $2.5 billion after-tax earnings at our Consumer business, primarily $3.4 billion after-tax gain on
the split-off of Synchrony Financial, $0.5 billion after-tax gain on other transactions closed, partially offset by $0.8 billion after-tax
loss on disposals and $0.6 billion after-tax loss from operations.
The 2014 earnings from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$3.2 billion of after-tax earnings from operations at our Consumer business,
$1.8 billion of after-tax earnings from operations at our CLL business,
$1.0 billion of after-tax earnings from operations at our Real Estate business, and
$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.
2014 earnings were partially offset by a $0.2 billion after-tax loss on incremental reserves related to retained representation and
warranty obligations to repurchase previously sold loans on the 2007 sale of WMC.
68 GE 2015 FORM 10-K
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M D & A
D I S C O N T I N U E D O P E R A T I O N S
The 2013 earnings from discontinued operations, net of taxes, primarily reflected the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$4.3 billion of after-tax earnings from operations at our Consumer business,
$1.7 billion of after-tax earnings from operations at our Real Estate business, and
$1.5 billion of after-tax earnings from operations at our CLL business.
2013 earnings were partially offset by $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,
$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 disposal of Consumer Russia.
For additional information related to discontinued operations, see Note 2 to the consolidated financial statements.
GE 2015 FORM 10-K 69
GE 2015 FORM 10-K 69
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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
OTHER CONSOLIDATED INFORMATION
INTEREST AND OTHER FINANCIAL CHARGES
Interest on borrowings and other financial charges amounted to $3.5 billion, $2.7 billion and $2.9 billion in 2015, 2014 and 2013,
respectively. Substantially all of our borrowings are in Financial Services, where interest expense was $2.3 billion (including $0.1 billion
in debt extinguishment cost), $1.6 billion and $2.0 billion in 2015, 2014 and 2013, respectively. GE Capital average borrowings declined
from 2014 to 2015 and from 2013 to 2014. Interest rates have been flat over the three-year period primarily attributable to a mix shift in
funding sources, in addition to declining global benchmark interest rates. GE Capital average borrowings were $217.5 billion, $267.6
billion and $297.3 billion in 2015, 2014 and 2013, respectively. The GE Capital average composite effective interest rate (including
interest allocated to discontinued operations) was 2.6% in 2015, 2.6% in 2014 and 2.6% in 2013. In 2015, GE Capital average assets
continue to decrease in line with the GE Capital Exit Plan. See the Liquidity and Borrowings section within the MD&A for a discussion of
liquidity, borrowings and interest rate risk management.
It is our policy to allocate Capital interest expense that is either directly attributable or related to discontinued operations. The allocation
is based on a market based leverage ratio, taking into consideration the underlying characteristics of the assets for the specific
discontinued operations. Interest expense that is associated with debt that is not assumed by the buyer or required to be repaid as a
result of the disposal transaction is reflected in continuing operations after the disposal occurs.
POSTRETIREMENT BENEFIT PLANS
(Dollars in billions)
BENEFIT PLANS COST
DISCOUNT RATES (December 31)
EXPECTED RATE OF RETURN
PRINCIPAL PENSION PLANS
2015 (cid:177) 2014 COMMENTARY
(cid:120) Postretirement benefit plans cost increased in 2015, primarily because of the effects of lower discount rates and new mortality
assumptions, which were partially offset by lower loss amortization related to our principal pension plans and by changes to
principal retiree benefit plans.
(cid:120)
In 2015, we amended our principal retiree benefit plans affecting post-65 retiree health and retiree life insurance for certain
production participants. These plan amendments reduced our principal postretirement benefit obligations by approximately
$3.3 billion.
2014 (cid:177) 2013 COMMENTARY
(cid:120) Postretirement benefit plans cost decreased due to higher discount rates and lower loss amortization related to our principal
pension plans, partially offset by a lower expected investment return on pension plan assets.
(cid:120) We updated our mortality assumptions at December 31, 2014 based on tables issued by the Society of Actuaries to reflect
longer life expectancies. The new mortality assumptions increased our principal postretirement benefit obligations by $4.6
billion at year-end 2014.
70 GE 2015 FORM 10-K
70 GE 2015 FORM 10-K
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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
Looking forward, our key assumptions affecting 2016 postretirement benefits costs are as follows:
(cid:120) Discount rate at 4.38%, reflecting current long-term interest rates.
(cid:120) Assumed long-term return on our principal pension plan assets of 7.5%.
We expect postretirement benefit plans cost to decrease by approximately $1.0 billion in 2016.
PENSION COSTS
GAAP AND NON-GAAP PENSION COSTS
(In billions)
GAAP principal pension plans' cost
Non-GAAP operating pension cost*
$
2015
4.5
1.7
$
2014
3.6
1.5
$
2013
4.4
1.8
Our operating pension cost for our principal pension plans includes only those components that relate to benefits earned by active
employees during the period (service cost, prior service cost amortization and curtailment loss). Non-operating pension cost elements
such as interest cost, expected return on plan assets and non-cash amortization of actuarial gains and losses are excluded from this
measure. We expect operating pension cost will be about $1.5 billion in 2016.
FUNDED STATUS OF PLANS
The table below presents the funded status of our benefit plans. The funded status represents the fair value of plan assets less benefit
obligations.
FUNDED STATUS
(In billions)
GE Pension Plan
GE Supplementary Pension Plan
Other pension plans
Principal retiree benefit plans
2015-2014 COMMENTARY
$
$
2015
(16.9)
(6.1)
(4.3)
(6.1)
2014
(15.8)
(6.6)
(3.2)
(9.9)
(cid:120)
(cid:120)
(cid:120)
The GE Pension Plan deficit increased in 2015 primarily due to the growth in pension liabilities and plan amendments, partially
offset by higher discount rates.
The increase in the underfunding of our other pension plans was primarily attributable to the acquisition of Alstom and liability
growth, partially offset by higher discount rates, employer contributions and investment performance.
The decrease in the principal retiree benefit plans deficit was primarily attributable to plan amendments.
The Employee Retirement Income Security Act (ERISA) determines minimum pension funding requirements in the U.S. We did not
contribute to the GE Pension Plan in either 2015 or 2014. On an ERISA basis, our preliminary estimate is that the GE Pension Plan
was approximately 98% funded at January 1, 2016. The ERISA funded status is higher than the GAAP funded status (73% funded)
primarily because the ERISA prescribed interest rate 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 no required minimum pension funding contributions to the GE Pension Plan in 2016 and approximately
$2.1 billion in projected contributions in 2017.
*Non-GAAP Financial Measure
GE 2015 FORM 10-K 71
GE 2015 FORM 10-K 71
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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
We expect to contribute $0.9 billion to our other pension plans in 2016, as compared to $0.5 billion in 2015 and $0.7 billion in 2014. GE
Capital is a member of certain GE pension plans. As a result of the GE Exit Plan, GE Capital will have additional funding obligations for
these pension plans. These obligations do not relate to the Verticals and a(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)
operations when they become probable and estimable. In 2015, the additional funding obligations recognized by GE Capital was $0.1
billion. This additional funding is recorded as a contra expense (cid:73)(cid:82)(cid:85)(cid:3)(cid:42)(cid:40)(cid:3)(cid:68)(cid:86)(cid:3)(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:83)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:69)(cid:72) paid by GE Capital. On
a consolidated basis, the additional required pension funding does not affect current period earnings but rather will be reflected as a
reduction of the pension liability when paid.
We also expect to contribute $0.5 billion to our principal retiree benefit plans in 2016 similar to our actual contributions of $0.5 billion in
both 2015 and 2014.
The funded status of our postretirement benefit plans and future effects on operating results depend on economic conditions and
investment performance. For further information about our benefit plans and the effects of this activity on our financial statements see
the Critical Accounting Estimates section within the MD&A and Notes 12 and 27 to the consolidated financial statements.
INCOME TAXES
GE pays the income taxes it owes in every country it does business. While GE and GE Capital file a consolidated U.S. federal income
tax return, many factors impact our income tax expense and cash tax payments. The most significant factor is that we conduct
business in approximately 180 countries and more than half of our revenue is earned outside the U.S., often in countries with lower tax
rates than in the U.S. We reinvest most of our foreign earnings overseas to be able to fund our active non-U.S. business operations.
Our tax liability is also affected by U.S. and foreign tax incentives designed to encourage certain investments, like research and
development; and by acquisitions, dispositions and tax law changes. Finally, our tax returns are routinely audited, and settlements of
issues raised in these audits sometimes affect our tax rates.
GE and GE Capital file a consolidated U.S. federal income tax return. This enables GE and GE Capital to use tax deductions and
credits of one member of the group to reduce the tax that otherwise would have been payable by another member of the group. The GE
Capital effective tax rate reflects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GE Capital
(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:83)(cid:68)(cid:92)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:3)(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:71)(cid:88)(cid:72)(cid:17)
CONSOLIDATED
(Dollars in billions)
(cid:3)
EFFECTIVE TAX RATE (ETR)
PROVISION FOR INCOME TAXES CASH INCOME TAXES PAID
2015 (cid:177) 2014 COMMENTARY
The consolidated income tax rate for 2015 was greater than 35% due to charges associated with the GE Capital Exit Plan.
(cid:120)
(cid:120) As discussed in Note 14 to the consolidated financial statements, in 2015 in conjunction with the GE Capital Exit Plan, we incurred
tax expense of $6.3 billion related to expected repatriation of foreign earnings and write-off of deferred tax assets.
The increase in the income tax expense is primarily due to the tax expense incurred as part of the GE Capital Exit Plan.
The consolidated tax provision includes $1.6 billion and $1.5 billion for GE (excluding GE Capital) for 2014 and 2015, respectively.
(cid:120)
(cid:120)
72 GE 2015 FORM 10-K
72 GE 2015 FORM 10-K
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
2014 (cid:177) 2013 COMMENTARY
(cid:120)
(cid:120)
The decrease in the consolidated provision for income taxes was attributable to increased benefits from lower taxed global
operations, excluding the benefit of audit resolutions.
This decrease was partially offset by an increase in income taxed at rates above the average rate.
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
Absent the effects of the GE Capital Exit Plan, 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 indefinitely reinvested outside the U.S. and are not subject to current U.S. income tax. 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. 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 certain
non-U.S. operations through foreign companies that are subject to low foreign taxes.
A substantial portion of the 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 and from our Power Services
manufacturing operations located in Hungary. 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
(cid:79)(cid:68)(cid:90)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:76)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:15)(cid:3)(cid:82)(cid:88)(cid:85) 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 $
GE Capital Exit Plan
Benefit of audit resolutions
Other
Total
$
2015
1.1
(6.1)
0.2
0.4
(4.4)
$
$
2014
1.2
-
0.1
0.5
1.8
$
$
2013
0.8
-
0.2
-
1.0
2015 (cid:177) 2014 COMMENTARY
Our benefits from lower-taxed global operations decreased in 2015 because of the tax expense associated with the GE Capital Exit
Plan.
2014 (cid:177) 2013 COMMENTARY
Our benefits from lower-taxed global operations increased in 2014 because of benefits from indefinitely reinvested earnings taxed at
less than the U.S. rate and the non-repeat of foreign valuation allowance increases.
GE 2015 FORM 10-K 73
GE 2015 FORM 10-K 73
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
OTHER INFORMATION
To the extent non-(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:90)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:15)(cid:3)(cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)
indefinitely reinvest those earnings. Included in 2015 is a tax expense of $6.1 billion related to the expected repatriation of foreign
earnings and write-off of deferred tax assets in conjunction with the GE Capital Exit Plan.
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 c(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:55)(cid:68)(cid:91)(cid:3)(cid:82)(cid:81)(cid:3)
(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:85)(cid:87)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:20)(cid:23)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)ents.
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. The nature of business activities and associated income taxes differ for GE and for GE Capital;
therefore, a separate analysis of each is presented in the paragraphs that follow.
GE EFFECTIVE TAX RATE (EXCLUDING GE CAPITAL 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 GE Capital net earnings from continuing operations, as GE tax expense does not include taxes on GE Capital
earnings. For further information on this calculation, see the Supplemental Information section within the MD&A.
GE ETR, EXCLUDING GE CAPITAL EARNINGS*
GE PROVISION (BENEFIT) FOR INCOME TAXES
2015 (cid:177) 2014 COMMENTARY
(cid:120)
(cid:120)
The GE provision for income taxes decreased in 2015 because of increased benefits from lower taxed global operations ($0.2
(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:12)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:17)
The GE provision for income taxes also decreased due to increases in the benefit of audit resolutions ($0.2 billion) shown below
and deductible stock losses ($0.2 billion).
(cid:120) Partially offsetting these decreases was an increase in income taxed at rates above the average tax rate ($0.5 billion).
2014 (cid:177) 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), discussed above.
*Non-GAAP Financial Measure
74 GE 2015 FORM 10-K
74 GE 2015 FORM 10-K
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
Resolution of audit matters reduced the GE provision for income taxes by $0.3 billion, $0.1 billion and $0.4 billion in 2015, 2014 and
2013, respectively. The effects of such resolutions are included in the following captions in Note 14 to the consolidated financial
statements.
AUDIT RESOLUTIONS - EFFECT ON GE TAX RATE, EXCLUDING GE CAPITAL EARNINGS
Tax on global activities including exports
U.S. business credits
All other - net
Total
GE CAPITAL EFFECTIVE TAX RATE
(Dollars in billions)
2015
(1.5) %
(0.5)
(0.3)
(2.3) %
2014
(0.2)%
-
(0.7)
(0.9)%
2013
(2.4) %
(0.6)
(1.0)
(4.0) %
GE CAPITAL ETR
GE CAPITAL PROVISION (BENEFIT) FOR
INCOME TAXES
2015 (cid:177) 2014 COMMENTARY
(cid:120)
The increase in the income tax expense from a benefit of $0.9 billion for 2014 to an expense of $5.0 billion for 2015 is primarily due
to the tax expense, discussed in Note 14 to the consolidated financial statements, related to the GE Capital Exit Plan.
2014 (cid:177) 2013 COMMENTARY
(cid:120)
The increase in tax benefit of $0.5 billion from 2013 to 2014 was primarily due to increased benefits from lower tax global
operations ($0.2 billion), non-repeat of an expense for IRS audit resolutions ($0.2 billion) and increased state and local tax benefits
($0.1 billion).
GE 2015 FORM 10-K 75
GE 2015 FORM 10-K 75
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
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 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 Brazilian real and the Chinese renminbi.
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
2015
2014
2013
2015-2014
2014-2013
V%
$
53.2
$
51.1
$
49.4
4 %
4 %
16.8
19.3
12.0
16.0
64.1
117.4
$
18.4
20.2
11.8
15.6
66.0
117.2
$
$
18.2
20.9
11.3
13.5
63.9
113.2
56%
(3)%
- %
3 %
3 %
Non-U.S. Revenues as a % of Consolidated Revenues
55%
56%
NON-U.S. REVENUES
The decrease in non-U.S. revenues in 2015 was primarily due to decreases in growth markets of 11% in Canada and 29% in Australia
& New Zealand (ANZ), partially offset by an increase of 2% in Middle East, North Africa and Turkey (MENAT) and 1% in China.
The increase in 2014 was primarily due to increases in growth markets of 14% in MENAT, 28% in sub-Sahara, and 7% in Latin
America, partially offset by a decrease of 15% in ANZ.
The effects of currency fluctuations on reported results were as follows:
(cid:120) Decreased revenues by $4.9 billion in 2015, primarily driven by the euro ($2.6 billion), the Brazilian real ($0.9 billion) and the
Canadian dollar ($0.2 billion).
(cid:120) Decreased revenues by $0.6 billion in 2014, primarily driven by the Brazilian real ($0.2 billion), Canadian dollar ($0.1 billion) and
Japanese yen ($0.1 billion), partially offset by the British pound ($0.1).
(cid:120) Decreased revenues by $0.4 billion in 2013, primarily driven by the Japanese yen ($0.3 billion) and Brazilian real ($0.2 billion),
partially offset by the euro ($0.2 billion).
The effects of foreign currency fluctuations decreased earnings in 2015 by $0.7 billion, primarily driven by the euro ($0.6 billion) and
Brazilian real ($0.1 billion). The effects of foreign currency fluctuations on earnings were minimal in 2014.
76 GE 2015 FORM 10-K
76 GE 2015 FORM 10-K
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
ASSETS
(cid:58)(cid:72)(cid:3)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:76)(cid:73)(cid:92)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:68)(cid:81)(cid:81)(cid:82)(cid:87)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:76)(cid:81)(cid:74)(cid:73)(cid:88)(cid:79)(cid:79)(cid:92)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:74)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:3)(cid:68)(cid:85)(cid:72)(cid:68)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:180)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:83)urpose.
TOTAL ASSETS (CONTINUING OPERATIONS)
December 31 (In billions)
U.S.
Non-U.S.
Europe
Asia
Americas
Other Global
Total Non-U.S.
Total
2015
$
177.3
$
141.0
22.0
17.5
14.0
194.5
371.7
$
$
2014
171.8
102.8
26.1
17.1
13.6
159.6
331.4
The increase in total assets of non-U.S. operations on a continuing basis reflected an increase primarily in Europe driven by the Alstom
acquisition, partially offset by the strengthening of the U.S. dollar against most major currencies.
GE 2015 FORM 10-K 77
GE 2015 FORM 10-K 77
M D & A
S T AT E M E N T O F F I N A N C I AL P O S I T I O N
STATEMENT OF FINANCIAL POSITION
Because GE and GE Capital 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 GE Capital activities in order to permit meaningful analysis of each individual consolidating statement.
MAJOR CHANGES IN OUR FINANCIAL POSITION DURING 2015
(cid:120) Cash and equivalents increased $0.5 billion. GE Cash and equivalents decreased $5.5 billion due to cash flows from operating
activities of $16.4 billion, more than offset by $10.4 billion used to acquire businesses (primarily Alstom) and $12.1 billion cash
returned to investors in the form of dividends of $9.3 billion and buyback of treasury stock of $2.8 billion (cash basis). GE Capital
Cash and equivalents increased $6.0 billion primarily driven by $79.6 billion in proceeds from business dispositions, partially offset
by $59.3 billion net repayment of debt and $4.6 billion in payments of dividends to shareowners. See the Statement of Cash Flows
section for additional information.
(cid:120) Goodwill increased $12.3 billion, primarily as a result of the Alstom and Milestone acquisitions, partially offset by currency
exchange effects of the stronger U.S. dollar and disposals.
(cid:120) All other assets increased $12.6 billion, primarily due to purchases of time deposits at GE Capital of $10.4 billion.
(cid:120) Assets of discontinued operations decreased $202.6 billion, primarily due to the disposition of Consumer businesses of $113.8
billion (including the Synchrony Financial split-off), CLL businesses of $56.1 billion and Real Estate of $33.0 billion. See Note 2 for
additional information.
(cid:120) Other GE current liabilities increased $9.3 billion, primarily driven by the Alstom acquisition of $5.6 billion and taxes payable of
$2.7 billion.
(cid:120) Borrowings decreased $63.1 billion, primarily due to net repayments on GE Capital borrowings of $55.3 billion, along with an
$8.9 billion reduction in the balances driven by the strengthening of the U.S. dollar against major currencies, partially offset by a net
increase in borrowings by GE of $2.0 billion.
(cid:120)
Liabilities of discontinued operations decreased $81.7 billion, primarily driven by the disposition of Consumer businesses of
$69.1 billion (including the Synchrony Financial split-off), CLL businesses of $11.6 billion and Real Estate of $1.7 billion. See Note
2 for additional information.
(cid:120) Retained earnings decreased $15.3 billion, due to common stock dividends of $9.1 billion in addition to a net loss of $6.1 billion.
(cid:120) Common stock held in treasury increased $20.9 billion, primarily due to the Synchrony Financial share exchange of $20.4
billion and buyback of treasury stock of $3.3 billion (book basis). This was partially offset by treasury stock dispositions of $2.8
billion, primarily stock option exercises of $1.8 billion.
(cid:120) Noncontrolling interests decreased $6.8 billion, primarily due to the GE Capital preferred share exchange of $4.9 billion and the
Synchrony Financial split-off of $2.8 billion, partially offset by noncontrolling interests related to the Alstom acquisition of $0.7
billion. The impact of the preferred share exchange is also the primary driver for the increase in Other capital of $4.7 billion. See
Note 15 for additional information.
78 GE 2015 FORM 10-K
78 GE 2015 FORM 10-K
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
FINANCIAL RESOURCES AND LIQUIDITY
LIQUIDITY AND BORROWINGS
We maintain a strong focus on liquidity. At both GE and GE Capital 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 GE Capital 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 GE Capital, and also have historically maintained a commercial paper program that we regularly use to fund
operations in the U.S., principally within the quarters.
GE Capital has historically relied on 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. Subsequent to April 10, 2015 and with the
execution of the GE Capital Exit Plan, we do not plan to issue any incremental GE Capital senior unsecured term debt for four
years. Furthermore we have reduced our commercial paper from $25 billion to $5 billion as of December 31, 2015 and with our
executed and current disposition plans we have substantially reduced our reliance on deposits and securitization. Today, we mainly rely
on excess cash positions, cash generated through dispositions, and the cash flow from our Verticals business to fund our debt
maturities and our operating and interest expense costs. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) liquidity position is targeted to meet its obligations under both
normal and stressed conditions. We expect to maintain an elevated liquidity position as we generate cash from asset sales, returning to
more normalized levels in 2019. During this period we expect to have excess interest costs as asset sales outpace our debt maturities.
While we maintain elevated liquidity levels, we may engage in liability management actions, such as buying back debt, based on market
and economic conditions in order to reduce our excess interest costs. In 2015, we repurchased $1 billion of long-term unsecured debt.
In addition, we repurchased $0.8 billion of debt for which we had the right to call.
Our 2016 GE Capital funding plan anticipates repayment of principal on outstanding short-term borrowings, including the current portion
of long-term debt ($42.6 billion at December 31, 2015), principally through dispositions, asset sales and cash on hand. Long-term
maturities and early redemptions were $41.3 billion in 2015.
We maintain a detailed liquidity policy for GE Capital that requires GE Capital to maintain a contingency funding plan. The liquidity
policy defines GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) liquidity risk tolerance under different stress scenarios based on its liquidity sources and also establishes
procedures to escalate potential issues. We actively monitor GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) 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 Capital will continue
to evaluate the need to modify the existing contingency funding plan due to the GE Capital Exit Plan.
As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange up to $30 billion of
certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On October 19, 2015, given
the high level of participation, the offering was increased by $6 billion with the aggregate principal amount of $36 billion (representing
$31 billion of outstanding principal and $5 billion of premium) of outstanding notes being tendered for exchange and settled on October
26, 2015. The new notes that were issued at closing are composed of $15.3 billion of 0.964% Six Month Notes due April 2016, £0.8
billion of 1.363% Six Month Notes due April 2016, $6.1 billion of 2.342% Notes due 2020, $2.0 billion of 3.373% Notes due 2025 and
$11.5 billion of 4.418% Notes due 2035. Of the $16.2 billion exchanged into Six Month Notes, $1.3 billion had been in short-term
borrowings. GE Capital will continue to evaluate the opportunity to repurchase debt while maintaining our liquidity at the levels
communicated as part of the GE Capital Exit Plan. The new notes have been fully, irrevocably and unconditionally guaranteed by GE.
On December 2, 2015, $87.7 billion of senior unsecured notes and $4.9 billion of commercial paper was assumed by GE upon its
merger with GE Capital. See Note 10 to the consolidated financial statements.
On May 28, 2015, GE issued (cid:188)(cid:22)(cid:15)(cid:20)(cid:24)(cid:19) million senior unsecured debt, composed of (cid:188)(cid:25)(cid:24)(cid:19) million of Floating Rate Notes due 2020, (cid:188)(cid:20)(cid:15)(cid:21)(cid:24)(cid:19)
million of 1.250% Notes due 2023 and (cid:188)(cid:20)(cid:15)(cid:21)(cid:24)(cid:19) million of 1.875% Notes due 2027. On October 9, 2015, $2.0 billion of long-term debt
issued by GE matured.
GE 2015 FORM 10-K 79
GE 2015 FORM 10-K 79
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
In addition to GE cash of $10.4 billion at December 31, 2015, GE Capital maintained liquidity sources of $90.9 billion that consisted of
cash and equivalents of $60.1 billion, high-quality investments of $10.4 billion presented in Other Assets and cash and equivalents of
$20.4 billion classified as discontinued operations. Additionally, we have $45.6 billion of committed unused credit lines.
CASH AND EQUIVALENTS
December 31 (In billions)
GE(a)
GE Capital(b)
$
2015
10.4
60.1
U.S.
Non-U.S.(c)
$
2015
20.4
50.1
(a)
(b)
(c)
At December 31, 2015, $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.
At December 31, 2015, GE Capital cash and equivalents of about $0.7 billion were primarily in insurance entities and were subject to regulatory
restrictions.
Of this amount at December 31, 2015, $3.5 billion is held outside of the U.S. and is available to fund operations and other growth of non-U.S.
subsidiaries; it is also available to fund our needs in the U.S. on a short-term basis through short-term loans, without being subject to U.S. tax.
Under the Internal Revenue Code, these loans are permitted to be outstanding for 30 days or less and the total of all such loans is required to be
outstanding for less than 60 days during the year. If we were to repatriate this cash, we would be subject to additional U.S. income taxes and
foreign withholding taxes.
COMMITTED UNUSED CREDIT LINES
December 31 (In billions)
Revolving credit agreements (exceeding one year)
Revolving credit agreements (364-day line)(a)
Total(b)
$
$
2015
24.5
21.1
45.6
(a)
Included $20.9 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 48 financial institutions but can be drawn on and lent to GE Capital.
In conjunction with the GE Capital Exit Plan, we are currently evaluating the amount of credit lines we require in the future.
FUNDING PLAN
We reduced our Capital ENI, excluding liquidity*, to $82 billion at December 31, 2015.
During the first quarter of 2015, GE Capital completed issuances of $8.1 billion of senior unsecured debt (excluding securitizations
described below) with maturities up to 10 years.
COMMERCIAL PAPER
(In billions)
Average commercial paper borrowings during the fourth quarter of 2015
Maximum commercial paper borrowings outstanding during the fourth quarter of 2015
$
GE
13.8
16.8
$
GE Capital
9.2
12.7
GE Capital commercial paper maturities have historically been 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. As of December 31, 2015, GE Capital reduced the outstanding
commercial paper to $5 billion, consistent with the announced GE Capital Exit Plan.
We securitize financial assets as an alternative source of funding. During the first twelve months of 2015, we completed $2.1 billion of
non-recourse issuances and $3.4 billion of non-recourse borrowings matured. At December 31, 2015, consolidated non-recourse
securitization borrowings were $3.1 billion.
*Non-GAAP Financial Measure
80 GE 2015 FORM 10-K
80 GE 2015 FORM 10-K
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
We have eight deposit-taking banks outside of the U.S., which are classified as discontinued operations, and one deposit-taking bank in
the U.S., GE Capital Bank, an industrial bank (IB), which is also classified as discontinued operations. The IB currently issues
certificates of deposit (CDs) in maturity terms up to 10 years.
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-(cid:70)(cid:68)(cid:79)(cid:79)(cid:72)(cid:71)(cid:3)(cid:179)(cid:86)(cid:75)(cid:82)(cid:70)(cid:78)(cid:180)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:86)(cid:72)(cid:72)(cid:78)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:71)(cid:72)(cid:79)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:75)(cid:76)(cid:73)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17)(cid:3)(cid:54)(cid:88)(cid:70)(cid:75)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:75)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
assumptions used (described further below) and should not be viewed as a forecast; actual effects would depend on many variables,
(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:17)(cid:3)
(cid:120)
(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, 2016, interest rates decreased by 100 basis points
(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:76)(cid:72)(cid:79)(cid:71)(cid:3)(cid:70)(cid:88)(cid:85)(cid:89)(cid:72)(cid:3)(cid:11)(cid:68)(cid:3)(cid:179)(cid:83)(cid:68)(cid:85)(cid:68)(cid:79)(cid:79)(cid:72)(cid:79)(cid:3)(cid:86)(cid:75)(cid:76)(cid:73)(cid:87)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:88)(cid:85)(cid:89)(cid:72)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:80)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:72)(cid:91)t 12
months. Based on the year-end 2015 portfolio and holding all other assumptions constant, we estimated that our consolidated net
earnings for the next 12 months, starting in January 2016, would decline by less than $0.3 billion as a result of this parallel shift in
the yield curve.
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 2015 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 2016 consolidated net earnings would decline by less than $0.2 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, 2015, (cid:42)(cid:40)(cid:182)(cid:86) and GE Capital(cid:182)(cid:86) long-term unsecured debt ratings from Standard and (cid:51)(cid:82)(cid:82)(cid:85)(cid:182)(cid:86) Ratings Service (S&P)
were AA+ and the short-term funding rating from S&P were A-1+. The rating outlook for GE was downgraded from stable to negative on
October 7, 2015, while the rating outlook for GE Capital remains stable. On April 10, 2015, (cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86) Investors Service (cid:11)(cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86)(cid:12)
downgraded the senior unsecured debt rating for GE to A1 from Aa3 following (cid:42)(cid:40)(cid:182)(cid:86) April 10 announcement of the GE Capital Exit
Plan. (cid:42)(cid:40)(cid:182)(cid:86) P-1 short-term rating was affirmed. (cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86) affirmed GE Capital(cid:182)(cid:86) A1/P-1 ratings. The rating outlook for GE and GE Capital
were stable. 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.
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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
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 or other ratings levels agreed upon with the counterparty. 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 $0.7 billion at December 31, 2015. See Notes 20 and 27 to the consolidated financial
statements.
For further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements see
Notes 20 and 27 to the consolidated financial statements.
INCOME MAINTENANCE AGREEMENT AND GE GUARANTEE OF CERTAIN GE CAPITAL DEBT
GE provides implicit and explicit support to GE Capital through commitments, capital contributions and operating support. As part of the
GE Capital Exit Plan, on April 10, 2015, GE and GE Capital entered into an amendment to their existing financial support agreement.
Under this amendment (the Amendment), the Company has provided a full and unconditional guarantee (the Guarantee) of the
payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial
paper issued or guaranteed by GE Capital identified in the Amendment. The Guarantee replaced the requirement that the Company
make certain income maintenance payments to GE Capital in certain circumstances. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) U.S. public indentures were
concurrently amended to provide the full and unconditional guarantee by the Company set forth in the Guarantee. At December 31,
2015, the balance of this debt that GE assumed was $85.1 billion, and the Guarantee applied to approximately $85.8 billion of GE
Capital debt.
STATEMENT OF CASH FLOWS (cid:177) OVERVIEW FROM 2013 THROUGH 2015
CONSOLIDATED CASH FLOWS
We evaluate our cash flow performance by reviewing our industrial (non-GE Capital) businesses and GE Capital 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.
GE CASH FLOWS
(Dollars in billions)
OPERATING CASH FLOWS
2013 2014 2015
INVESTING CASH FLOWS
FINANCING CASH FLOWS
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.
2013
2014
2015
2013
2014
2015
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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
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 GE Capital. 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 GE Capital represent the distribution of a portion of GE Capital retained earnings, and
are distinct from cash from continuing operations within the GE Capital businesses.
2015(cid:177)2014 COMMENTARY
GE cash from operating activities increased $1.2 billion primarily due to the following:
(cid:120) A decrease of operating cash collections of $0.4 billion to $109.3 billion in 2015, primarily due to lower GE segment revenues from
sales of goods and services.
(cid:120) A decrease of operating cash payments of $0.3 billion to $97.2 billion in 2015, primarily driven by decreased inventory spend.
(cid:120)
Further, GE Capital paid dividends totaling $4.3 billion and $3.0 billion to GE in 2015 and 2014, respectively.
GE cash used for investing activities increased $6.9 billion primarily due to the following:
(cid:120) Higher business acquisition activity of $8.3 billion is primarily driven by the 2015 acquisition of Alstom of $10.1 billion. This is
partially offset by the 2014 acquisitions of certain Thermo Fisher Scientific Inc. life-(cid:86)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:20)(cid:17)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:38)(cid:68)(cid:80)(cid:72)(cid:85)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)
Reciprocating Compression Division for $0.6 billion and API Healthcare (API) for $0.3 billion.
This is partially offset by $1.1 billion higher proceeds from principal business dispositions and $0.3 billion higher proceeds from
dispositions of property, plant and equipment.
(cid:120)
GE cash used for financing activities increased $1.5 billion primarily due to the following:
(cid:120)
The 2015 repayment of $2.0 billion of GE unsecured notes. This is partially offset by the 2015 issuance of unsecured notes of $3.4
billion compared with $3.0 billion in 2014.
2014(cid:177)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, GE Capital paid dividends totaling $3.0 billion and $6.0 billion to GE in 2014 and 2013, respectively.
GE cash used for investing activities decreased $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 certain
Thermo Fisher Scientific Inc. life-(cid:86)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:20)(cid:17)(cid:20)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:38)(cid:68)(cid:80)(cid:72)(cid:85)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:70)(cid:76)(cid:83)(cid:85)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:39)(cid:76)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:19)(cid:17)(cid:25)(cid:3)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)
and API Healthcare (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.
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GE CAPITAL CASH FLOWS
(Dollars in billions)
OPERATING CASH FLOWS
INVESTING CASH FLOWS
FINANCING CASH FLOWS
2013 2014 2015
2013 2014 2015
2015(cid:177)2014 COMMENTARY
2013
2014
2015
GE Capital cash from operating activities decreased $4.7 billion primarily due to the following:
(cid:120) A decrease in net cash collateral activity with counterparties on derivative contracts of $2.7 billion.
(cid:120) A decrease in accounts payable of $0.4 billion in addition to a decrease in cash generated from earnings and other activity.
GE Capital cash from investing activities increased $49.1 billion primarily due to the following:
(cid:120)
In 2015, we closed the sale of certain of our CLL, Real Estate and Consumer businesses for proceeds of $35.2 billion, $27.7 billion
and $16.7 billion, respectively.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
This increase was partially offset by the investment in high quality interest bearing deposits that mature in April 2016 of $10.4
billion.
Lower aircraft sales deposits of $2.2 billion.
The net cash payment of $1.7 billion for the 2015 acquisition of Milestone Aviation Group.
Lower activity in other assets-investments of $1.2 billion driven by net activity of our equity-method investments.
GE Capital cash used for financing activities increased $27.7 billion primarily due to the following:
(cid:120) Higher net repayments of borrowings of $25.7 billion driven primarily by an increase in short-term and long-term debt maturities.
(cid:120) Higher dividends paid to GE totaling $4.3 billion and $3.0 billion in 2015 and 2014, respectively.
2014(cid:177)2013 COMMENTARY
GE Capital cash from operating activities increased $1.0 billion primarily due to the following:
(cid:120) An increase in net cash collateral activity with counterparties on derivative contracts of $3.0 billion.
(cid:120) An increase in cash generated from earnings and other activity.
(cid:120)
These increases were partially offset by a net decrease in tax activity of $3.9 billion driven by net tax payments in 2014 compared
with net tax refunds in 2013.
GE Capital cash from investing activities decreased $15.7 billion primarily due to the following:
(cid:120) A net decrease in financing receivables activity of $3.2 billion driven by net originations of financing receivables in 2014 of $0.2
billion, compared with net collections (which includes sales) of financing receivables of $3.0 billion in 2013.
(cid:120) A net decrease in investment securities activity of $3.4 billion driven by net sales of $0.7 billion in 2014, compared with net sales of
$4.1 billion in 2013.
(cid:120)
Lower activity in other assets-investments of $0.5 billion driven by net activity of our equity-method investments.
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GE Capital cash used for financing activities increased $7.0 billion primarily due to the following:
(cid:120) Higher net repayments of borrowings, consisting primarily of lower issuances, of $9.2 billion.
(cid:120)
Lower dividends paid to GE totaling $3.0 billion and $6.0 billion, including special dividends of $1.0 billion and $4.1 billion in 2014
and 2013, respectively.
INTERCOMPANY TRANSACTIONS AND ELIMINATIONS
Effects of transactions between related companies are made on an arms-length basis, are eliminated and consist primarily of GE
Capital dividends to GE; GE customer receivables sold to GE Capital; GE Capital services for trade receivables management and
material procurement; buildings and equipment leased between GE and GE Capital; information technology (IT) and other services sold
to GE Capital by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GE Capital from third-party
producers for lease to others; expenses related to parent-subsidiary pension plans, and various investments, loans and allocations of
GE corporate overhead costs.
GE sells customer receivables to GE Capital 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 GE Capital. 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 GE Capital increased (cid:42)(cid:40)(cid:182)(cid:86) CFOA by $1.6
billion, $2.2 billion and $0.1 billion in 2015, 2014 and 2013, respectively.
See Note 23 to the consolidated financial statements for additional information about the eliminations of intercompany transactions
between GE and GE Capital.
CONTRACTUAL OBLIGATIONS
As defined by reporting regulations, our contractual obligations for future payments as of December 31, 2015, follow.
(In billions)
Total
2016
2017-2018
2019-2020
Borrowings (Note 10)
Interest on borrowings
Purchase obligations(a)(b)
Insurance liabilities (Note 11)(c)
Operating lease obligations (Note 26)
Other liabilities(d)
Contractual obligations of discontinued operations(e)
$
198.3
69.1
50.0
11.5
4.2
79.9
46.5
$
$
50.8
5.1
20.9
1.2
0.8
5.2
46.5
$
43.0
8.0
10.0
2.1
1.3
12.1
-
$
28.2
6.4
13.1
1.6
1.0
9.8
-
2021 and
thereafter
76.3
49.6
6.1
6.7
1.1
52.8
-
Payments due by period
(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. For further information on these commitments and other
guarantees, see Note 20 and 22 to the consolidated financial statements.
(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: derivatives,
deferred revenue and other sundry items. For further information on certain of these items, see Notes 14, 20 and 27 to the consolidated financial
statements.
(e)
Included payments for other liabilities.
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E X P O S U R E S
EXPOSURES
VENEZUELA
The results of our Venezuelan businesses have been reported under highly inflationary accounting since the beginning of 2010, at
which time the functional currency of our Venezuelan entities was changed from the bolivar to the U.S. dollar.
Our activities related to Venezuela generated revenues of less than one percent of consolidated revenues, consisting of both exports to
and operations within the country. The majority of these revenues are denominated in U.S. dollars and euro but we also transact in
bolivars for certain businesses.
For our operations in Venezuela, determining the appropriate exchange rate for remeasurement of bolivar-denominated net monetary
assets into U.S. dollars continues to be subject to uncertainty. As of December 31, 2015 the Venezuelan government operated three
different exchange mechanisms: the government-operated CENCOEX (the official exchange mechanism), the government-operated
auction based SICAD mechanism and an open market Marginal Currency System (SIMADI). The SIMADI mechanism is intended to
operate with fewer restrictions and its exchange rate on December 31, 2015 was approximately 198 bolivars per U.S. dollar compared
to SICAD at 13.5 bolivars per U.S. dollar.
At the end of each period, we remeasure the net monetary assets of our Venezuelan businesses using the rate we expect to settle
them at, including through the payment of dividends. The industries in which these businesses operate were not selected for
participation in any SICAD auctions during 2015. In light of continued uncertainty regarding availability of exchange mechanisms and
decreasing liquidity in those mechanisms, we completed an extensive review of each of our business activities within Venezuela during
the fourth quarter of 2015. Based on that review, we decided to reduce certain business activities in Venezuela and to begin accessing
the SIMADI market to obtain U.S. dollars, to the extent possible, for our residual Oil & Gas and Power operations. Our Appliances
business in Venezuela, which is conducted through an equity method investment, similarly concluded that the SIMADI exchange
mechanism provides the most appropriate rate for measuring its net monetary assets. We also concluded, based on our review,
consolidating our remaining Venezuelan operations remains appropriate.
Use of the SIMADI rate to remeasure our Venezuelan net monetary assets at December 31, 2015 resulted in exchange rate losses of
$83 million. Restructuring and impairment charges of $12 million also were recorded during the fourth quarter of 2015 as a result of the
review discussed above. Net monetary assets subject to remeasurement at the SIMADI rate were approximately $5 million at
December 31, 2015, including approximately $3 million within our Appliances equity method investment. In addition to our bolivar-
denominated net monetary assets, we also have non-bolivar credit exposures of approximately $292 million at December 31, 2015 and
recoverable amounts of non-monetary assets in Venezuela of approximately $89 million at December 31, 2015, which consists
principally of inventory and property, plant and equipment.
OIL & GAS INDUSTRY
The sharp decline experienced in oil prices and the prospect of a continuation of prevailing oil prices could have 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. In this environment, our Oil & Gas business continues to
experience declines in orders, some project commencement delays and pricing pressures. In response to this uncertain industry
outlook, we continue to execute cost actions with an increased focus on execution and productivity. We expect that ongoing low oil
prices will provide some benefit to our 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.
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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
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, which discusses our most significant
accounting policies.
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 change(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)
utilization of assets. We routinely review estimates under product services agreements and regularly revise them to adjust for changes
in outlook.
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
(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:17)(cid:3)(cid:53)(cid:72)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:68)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)mated profitability resulting in an adjustment of earnings; such
adjustments increased earnings by $1.4 billion, $1.0 billion and $0.3 billion in 2015, 2014 and 2013, respectively. We provide for
probable losses when they become evident.
Further information is provided in Notes 1 and 9 to the consolidated financial statements.
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, which discusses the
determination of fair value of investment securities.
Further information about actual and potential impairment losses is provided in Notes 1 and 3 to the consolidated financial statements.
GE 2015 FORM 10-K 87
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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
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
(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:15)(cid:3)(cid:76)(cid:73)(cid:3)(cid:68)(cid:81)(cid:92)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:87)(cid:88)(cid:85)(cid:81)(cid:15)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)res 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 discount rate and independent appraisals, as appropriate.
Our operating lease portfolio of commercial aircraft is a significant concentration of assets in 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
(cid:79)(cid:72)(cid:86)(cid:86)(cid:72)(cid:72)(cid:182)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)t 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 costs required to
prepare aircraft to be redeployed. Fair value used to measure impairment is based on management's best estimates which are
benchmarked against third-party appraiser current market values for aircraft of similar type and age.
Further information on impairment losses and our exposure to the commercial aviation industry is provided in Notes 7 and 22 to the
consolidated financial statements.
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
(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:76)r 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 10.0% to 15.5%.
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.
During the third quarter of 2015, 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.
88 GE 2015 FORM 10-K
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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
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.
BUSINESSES AND ASSETS HELD FOR SALE
Businesses held for sale represent components that meet the accounting requirements to be classified as held for sale and are
presented as single asset and liability amounts in our financial statements with a valuation allowance, if necessary, to recognize the net
carrying amount at the lower of cost or fair value, less cost to sell. Financing receivables that no longer qualify to be presented as held
for investment must be classified as held for sale and recognized in our financial statements at the lower of cost or fair value, less cost
to sell, with that amount representing a new cost basis at the date of transfer.
The determination of fair value for businesses and portfolios of financing receivables involves significant judgments and assumptions.
Development of estimates of fair values in this circumstance is complex and is dependent upon, among other factors, the nature of the
potential sales transaction (for example, asset sale versus sale of legal entity), composition of assets and/or businesses in the disposal
group, the comparability of the disposal group to market transactions, negotiations with third party purchasers, etc. Such factors bear
directly on the range of potential fair values and the selection of the best estimates. Key assumptions were developed 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.
We review all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully
recoverable in comparison to estimated fair values.
PENSION ASSUMPTIONS
Pension assumptions are significant inputs to the actuarial models that measure pension benefit obligations and related effects on
operations. Two assumptions (cid:177) discount rate and expected return on assets (cid:177) 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.
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, 2015, 2014 and 2013 were 4.38%, 4.02% and 4.85%, respectively,
reflecting market interest rates.
GE 2015 FORM 10-K 89
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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
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
(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:182)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:80)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:3)(cid:89)(cid:76)(cid:72)(cid:90)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:69)(cid:85)(cid:82)(cid:68)(cid:71)(cid:17) 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 0.6% in 2015, and had average annual returns of 6.4%, 5.0%, and 8.5% per year in the 5-,
10- and 25-year periods ended December 31, 2015, respectively. The average historical 10- and 25- year 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 2016
compared to 7.5% in 2015 and 2014 and 8.0% in 2013.
Changes in key assumptions for our principal pension plans would have the following effects.
(cid:120) Discount rate (cid:177) 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 $2.2 billion.
(cid:120) Expected return on assets (cid:177) 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 (cid:177) Postretirement Benefit Plans section
within the MD&A and in Note 12 and 27 to the consolidated financial statements.
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
(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:77)(cid:88)(cid:71)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)future operations of the Company. At December 31, 2015 and 2014,
approximately $104 billion and $119 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 $5.1
billion and $5.5 billion at December 31, 2015 and 2014, including $0.8 billion and $1.7 billion at December 31, 2015 and 2014,
respectively, of deferred tax assets, net of valuation allowances, associated with losses reported in discontinued operations, primarily
related to our Real Estate and Consumer businesses and our loss on the sale of GE Money Japan. Such year-end 2015 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 (cid:177) Income Taxes section within the MD&A and in
Note 14 to the consolidated financial statements.
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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
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, 20 and 27 to the consolidated financial statements.
FAIR VALUE MEASUREMENTS
Assets and liabilities measured at fair value every reporting period include investments in debt and equity securities and derivatives.
Other assets and liabilities are subject to fair value measurements only in certain circumstances, including purchase accounting applied
to assets and liabilities acquired in a business combination, 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. Upon closing an acquisition, we estimate the fair values of assets and liabilities acquired and integrate the acquisition as soon
as practicable. The size, scope and complexity of an acquisition will affect the time it takes to obtain the necessary information to record
the acquired assets and liabilities at fair value. It may take up to one year to finalize the initial fair value estimates used in the
preliminary purchase accounting. Accordingly, it is reasonably likely that our initial estimates will be subsequently revised, which could
affect carrying amounts of goodwill, intangibles and potentially other assets and liabilities in our financial statements. Assets that are
written down to fair value when impaired 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 and related matters is provided in Notes 1, 8, 19, 20 and 27 to the consolidated
financial statements.
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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
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 22 to the consolidated financial statements.
92 GE 2015 FORM 10-K
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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. In July 2015, the FASB approved a one-year deferral of this standard, with a revised effective date for fiscal years
beginning after December 15, 2017. Early adoption is permitted, although not prior to fiscal years beginning after December 15, 2016.
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 and continue to evaluate 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. Upon adoption of the amendment on January 1, 2016, we will
deconsolidate certain entities where we no longer meet the definition of primary beneficiary under the revised guidance. The effect of
deconsolidation on total assets and liabilities, net of our investment in these entities, is expected to be immaterial. We do not expect to
consolidate any incremental entities as a result of adoption. As a result of the modified evaluation of whether limited partnerships and
similar legal entities are VIEs or voting interest entities, we will have incremental disclosure of unconsolidated VIEs.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. The ASU
eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively.
The ASU is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The
effect that the ASU will have on our consolidated financial statements will be dependent upon any measurement-period adjustments
identified in future periods.
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 $0.3 billion in
2015 and approximately $0.4 billion in each of the years 2014 and 2013. We presently expect that such remediation actions will require
average annual expenditures of about $0.3 billion in 2016 and $0.2 billion in 2017.
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. Following Phase 1, the EPA conducted a peer review of the project, made modifications and GE
agreed to perform Phase 2. We 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. Between 2012 and 2015, GE completed Phase 2 and the EPA confirms that all dredging has
been performed in accordance with the aforementioned consent decree. As of December 31, 2015, the company retains sufficient
reserves to address remaining operations and management obligations required for all post-dredging work.
As previously reported, in 2000, GE and the EPA entered into a consent decree relating to PCB cleanup of the Housatonic River in
Massachusetts. In 2012, the EPA issued a status report describing potential conceptual approaches to a 10-mile stretch of the river
downstream from a previously remediated area. In September 2015, the EPA released an intended final decision for the so called (cid:179)(cid:53)(cid:72)(cid:86)(cid:87)
of (cid:53)(cid:76)(cid:89)(cid:72)(cid:85)(cid:180)(cid:17) This is not the EPA's final decision, rather, the consent decree provides for discussions and a detailed dispute resolution
process between GE and the EPA, after which the EPA will issue its final decision. As of December 31, 2015, and based on its
assessment of current facts and circumstances, GE believes that it has recorded adequate reserves to cover future obligations
associated with an expected final remedy.
GE 2015 FORM 10-K 93
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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
$
$
2015
5,278
(803)
(226)
4,249
$
$
2014
5,273
(721)
(319)
4,233
$
$
2013
5,461
(711)
(107)
4,643
Aviation accounts for the largest share of (cid:42)(cid:40)(cid:182)(cid:86) research and development expenditures with funding from both GE and external funds.
Power 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
2015
3 %
2
2014
3 %
3
2013
4 %
3
94 GE 2015 FORM 10-K
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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
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). Ce(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:68)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:179)(cid:81)(cid:82)(cid:81)-GAAP financial
(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:180)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:85)(cid:88)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)port, to:
Industrial segment organic revenue growth
(cid:120)
(cid:120) Oil & Gas organic revenue and operating profit growth
(cid:120) Operating and non-operating pension costs (income)
(cid:120) Adjusted Corporate costs (operating)
(cid:120) GE pre-tax earnings from continuing operations, excluding GE Capital 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 GE Capital
earnings
Industrial operating + Verticals earnings and EPS
Industrial segment gross margin (excluding Alstom)
Industrial operating profit and operating margin (excluding Alstom)
Industrial segment operating profit and operating margin (excluding Alstom)
(cid:120) Operating earnings, operating EPS and Industrial operating earnings
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120) (cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)ed operations
(cid:120) (cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
(cid:120)
(cid:120)
(cid:120) Free cash flow
(cid:120) Ratio of adjusted debt to equity at GE Capital, net of liquidity
(cid:120) Capital ending net investment (ENI), excluding liquidity
(cid:120) GE Capital Tier 1 common ratio estimate
Industrial cash flows from operating activities (Industrial CFOA)
Industrial return on total capital (Industrial ROTC)
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)
GE 2015 FORM 10-K 95
GE 2015 FORM 10-K 95
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
INDUSTRIAL SEGMENT ORGANIC REVENUE GROWTH
(Dollars in millions)
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)
(Dollars in millions)
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)
(Dollars in millions)
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)
2015
2014
$ 108,796
$ 109,727
V%
(1)%
(2,479)
1,270
$ 111,276
$ 108,457
2014
2013
$ 109,727
$ 103,383
1,870
2,175
$ 107,856
$ 101,208
2013
2012
$ 103,383
$ 102,548
1,566
842
3%
V%
6%
7%
V%
1%
$ 101,816
$ 101,707
0%
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 2015 FORM 10-K
96 GE 2015 FORM 10-K
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
OIL & GAS ORGANIC REVENUE GROWTH
(Dollars in millions)
Oil & Gas segment revenue
Less the effects of:
Acquisitions, business dispositions (other than
dispositions of businesses acquired for investment)
and currency exchange rates
Oil & Gas revenues excluding effects of acquisitions,
business dispositions (other than dispositions of
businesses acquired for investment) and currency
exchange rates (Oil & Gas organic revenue)
OIL & GAS ORGANIC OPERATING PROFIT GROWTH
(Dollars in millions)
Oil & Gas segment profit
Less the effects of:
Acquisitions, business dispositions (other than
dispositions of businesses acquired for investment)
and currency exchange rates
Oil & Gas segment profit excluding effects of acquisitions,
business dispositions (other than dispositions of
businesses acquired for investment) and currency
exchange rates (Oil & Gas organic operating profit)
2015
2014
V%
$
16,450 $
19,085
(14)%
(1,427)
349
$
17,878
$
18,735
(5)%
2015
2014
V%
$
2,427
$
2,758
(12)%
(340)
18
$
2,768
$
2,739
1%
Organic revenue and operating profit growth measure revenue and profit excluding the effects of acquisitions, business dispositions
and currency exchange rates. We believe that these measures provide 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. Management
recognizes that the terms "organic revenue growth" and (cid:179)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:70) operating profit (cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:180) 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 Oil & Gas business and may therefore be a
useful tool in assessing period-to-period performance trends.
GE 2015 FORM 10-K 97
GE 2015 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 cost
Expected return on plan assets
Interest cost on benefit obligations
Net actuarial loss amortization
Non-operating pension cost
Total principal pension plans cost
2015
1,424
205
105
1,734
(3,302)
2,778
3,288
2,764
4,498
$
$
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
$
$
We have provided the operating and non-operating components of cost for our principal pension plans. Operating pension cost
comprise the service cost of benefits earned, prior service cost amortization and curtailment loss for our principal pension plans. Non-
operating pension cost 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 cost better reflects the ongoing
service-related cost 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 cost and operating results with the pension plan cost and operating results of
other companies.
ADJUSTED CORPORATE COSTS (OPERATING)
(In millions)
Total Corporate Items and Eliminations
Less non-operating pension cost
Total Corporate costs (operating)
Less, NBCU LLC, restructuring and other charges, gains and NBCU settlement
Adjusted Corporate costs (operating)
$
$
$
2015
(5,108)
(2,764)
(2,344)
(237)
(2,107)
$
$
$
2014
(6,225)
(2,120)
(4,105)
(1,697)
(2,408)
$
$
$
2013
(6,002)
(2,624)
(3,378)
(17)
(3,361)
Operating corporate costs exclude non-service-related pension costs of our principal pension plans, which comprise interest costs,
expected return on plan assets and amortization of actuarial gains/losses. Service cost, prior service cost and curtailment loss
components of our principal pension plans are included in operating corporate costs. We believe that these components of pension
cost better reflect the ongoing service-related costs of providing pension benefits to our employees. Accordingly, we believe that our
measure of operating corporate costs provides management and investors with a useful measure of the operational costs incurred
outside of our businesses. We believe that this measure, considered along with the corresponding GAAP measure, provides
management and investors with additional information for comparison of our operating corporate costs to the operating corporate costs
of other companies.
We also believe that adjusting operating corporate costs to exclude the effects of items that are not closely associated with ongoing
corporate operations, such as earnings of previously divested businesses, gains and losses on disposed and held for sale businesses,
restructuring and other charges, and a settlement provides management and investors with a meaningful measure that increases the
period-to-period comparability of our ongoing corporate costs.
98 GE 2015 FORM 10-K
98 GE 2015 FORM 10-K
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
GE PRE-TAX EARNINGS FROM CONTINUING OPERATIONS, EXCLUDING GE CAPITAL EARNINGS FROM
CONTINUING OPERATIONS AND THE CORRESPONDING EFFECTIVE TAX RATES
(Dollars in millions)
2015
2014
2013
GE earnings from continuing operations before income taxes
Less GE Capital earnings from continuing operations attributable to the Company
Less GE preferred dividend
Total
GE provision for income taxes
GE effective tax rate, excluding GE Capital earnings
$
$
$
3,252
(7,672)
18
10,906
$
$
11,119
1,532
-
9,587
1,506
$
13.8 %
1,634
17.0 %
$
$
$
9,531
699
-
8,832
1,667
18.9 %
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO GE EFFECTIVE TAX RATE,
EXCLUDING GE CAPITAL 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 (cid:177) net
GE effective tax rate, excluding GE Capital earnings
2015
2014
2013
35.0 %
35.0 %
35.0 %
(15.8)
(1.2)
(4.2)
(21.2)
13.8 %
(13.9)
(1.1)
(3.0)
(18.0)
17.0 %
(7.9)
(2.8)
(5.4)
(16.1)
18.9 %
We believe that the GE effective tax rate is best analyzed in relation to GE earnings before income taxes excluding the GE Capital net
earnings from continuing operations, as GE tax expense does not include taxes on GE Capital earnings. Management believes that in
addition to the Consolidated and GE Capital tax rates shown in Note 14 to the consolidated financial statements, 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 2015 FORM 10-K 99
GE 2015 FORM 10-K 99
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 EARNINGS AND OPERATING EPS
(In millions; except earnings per share)
Earnings from continuing operations attributable to GE
common shareowners
Adjustment (net of tax): non-operating pension costs (income)
Operating earnings
Earnings per share (cid:177) diluted(a)
Continuing earnings per share
Adjustment (net of tax): non-operating pension costs (income)
Operating earnings per share
2015
2014
2013
$
$
$
$
1,663
1,797
3,460
0.17
0.18
0.35
$
$
$
$
9,535
1,378
10,913
0.94
0.14
1.08
$
$
$
$
7,618
1,705
9,323
0.74
0.17
0.90
(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 common shareowners
Adjustments (net of tax): non-operating pension costs (income)
Operating earnings
Less GE Capital earnings (loss) from continuing operations attributable to the Company
Less effect of GE Capital preferred stock dividends
2015
2014
2013
$
1,663
1,797
3,460
(7,654)
(330)
$
9,535
1,378
10,913
1,532
(322)
$
7,618
1,705
9,323
699
(298)
Operating earnings excluding GE Capital earnings (loss) from continuing operations
and the effect of GE Capital preferred stock dividends (Industrial operating earnings)
$
11,443
$
9,705
$
8,922
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.
100 GE 2015 FORM 10-K
100 GE 2015 FORM 10-K
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
INDUSTRIAL OPERATING + VERTICALS EARNINGS AND EPS
(Dollars in millions; except per share amounts)
2015
2014
2013
GE Capital earnings (loss) from continuing operations attributable
to GE common shareowners
Less: Verticals earnings(a)
Other Capital
Industrial operating earnings
Verticals earnings(a)
Industrial operating earnings + Verticals earnings
Earnings (loss) per share - diluted(b)
Industrial operating EPS
Verticals EPS
Industrial operating + Verticals EPS
$
$
$
$
$
(7,983) $
1,666
(9,649)
11,443 $
1,666
13,109 $
1.14 $
0.17
1.31 $
1,209 $
1,608
(399)
9,705 $
1,608
11,313 $
0.96 $
0.16
1.12 $
401
1,410
(1,009)
8,922
1,410
10,332
0.87
0.14
1.00
(a)
(b)
Verticals include businesses expected to be retained (GECAS, Energy Financial Services, Commercial Lending and Leasing and run-off
insurance activities), including allocated corporate costs of $133 million, $233 million, and $233 million after tax for the years ended December
31, 2015, 2014 and 2013, respectively.
Earnings per share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
As described above, Verticals represents the GE Capital businesses that we expect to retain. We believe that presenting Industrial
operating + Verticals earnings-per-share amounts provides management and investors with a useful measure to evaluate the
performance of the businesses we expect to retain after the disposition of most of our financial services business.
See below for a graphic presentation of the reconciliation between GAAP EPS from continuing operations to the Industrial operating +
Verticals EPS.
INDUSTRIAL OPERATING + VERTICALS EARNINGS AND EPS(a)
Industrial
operating &
Verticals
$1.31
Non-operating
pension &
other Capital
$(1.14)
Industrial
operating &
Verticals
$1.12
Non-operating
pension &
other Capital
$(0.18)
Industrial
operating &
Verticals
$1.00
Non-operating
pension &
other Capital
$(0.27)
GAAP Continuing EPS $0.17
$0.94
$0.74
(a) Earnings per share amounts are computed independently. As a result, the sum of per share amounts may not equal the total.
GE 2015 FORM 10-K 101
GE 2015 FORM 10-K 101
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
INDUSTRIAL OPERATING PROFIT AND OPERATING PROFIT MARGIN (EXCLUDING ALSTOM)
(Dollars in millions)
Revenues
Total industrial segment revenues
Corporate items and eliminations
Less: gains
Less: GE-GECC eliminations
Adjusted corporate items and eliminations
Total Industrial operating revenues
Less Alstom revenues
Total Industrial operating
revenues excluding Alstom
Segment profit (loss)
Total industrial segment profit
Corporate items and eliminations
Less: gains
Less: restructuring and other charges
Less: non-operating pension costs (pre-tax)
Adjusted corporate items and eliminations
Total Industrial operating profit
Less Alstom profit (loss)(a)
Total Industrial operating profit
excluding Alstom
Total Industrial operating profit margin
excluding Alstom
2015
2014
2013
2012
2011
$
108,796
$
109,727
$
103,383
$
102,548
$
95,074
(2,211)
1,497
(1,786)
(1,922)
106,874
1,956
(3,863)
91
(2,150)
(1,804)
107,923
-
(1,405)
1,981
(1,922)
(1,464)
101,919
-
(1,228)
1,801
(2,212)
(817)
101,731
-
3,145
5,686
(2,086)
(455)
94,619
-
$
104,918
$
107,923
$
101,919
$
101,731
$
94,619
$
17,966
$
17,764
$
16,220
$
15,487
$
14,067
(5,108)
1,497
(1,734)
(2,764)
(2,107)
15,859
(154)
(6,225)
91
(1,788)
(2,120)
(2,408)
15,356
-
(6,002)
1,975
(1,992)
(2,624)
(3,361)
12,859
-
(4,719)
1,801
(732)
(2,132)
(3,656)
11,831
-
(286)
4,535
(1,068)
(1,057)
(2,696)
11,371
-
$
16,013
$
15,356
$
12,859
$
11,831
$
11,371
15.3%
14.2%
12.6%
11.6%
12.0%
(a)
Loss from operations of the power and grid businesses of Alstom during the period of our ownership.
We have presented our Industrial operating profit and operating profit margin excluding restructuring, gains, and GE-GE Capital
eliminations as well as the results of our fourth quarter 2015 Alstom power and grid acquisition. We believe that Industrial operating
profit and operating profit margin adjusted for restructuring, gains and GE-GE Capital eliminations as well as the Alstom impacts are
meaningful measures because they increase the comparability of period-to-period results.
INDUSTRIAL SEGMENT OPERATING PROFIT AND OPERATING PROFIT MARGIN (EXCLUDING ALSTOM)
(Dollars in millions)
Revenues
Total industrial segment revenues
Less Alstom revenues
Total industrial segment
revenues excluding Alstom
2015
2014
2013
2012
2011
$
108,796
1,956
$
109,727 $
-
103,383
-
$
102,548
-
$
95,074
-
$
106,840
$
109,727 $
103,383
$
102,548
$
95,074
Segment operating profit (loss)
Total industrial segment operating profit
Total industrial segment operating profit margin
Less Alstom profit (loss)
Total industrial segment operating profit
excluding Alstom
Total industrial segment operating profit margin
excluding Alstom
$
$
$
17,966
16.5%
(154)
18,120
$
$
$
17,764 $
16.2%
16,220
15.7%
- $
-
17,764 $
16,220
$
$
$
15,487
$
15.1%
14,067
14.8%
-
15,487
$
$
-
14,067
17.0%
16.2%
15.7%
15.1%
14.8%
We have presented our industrial segment operating profit and operating profit margin excluding the results of our fourth quarter 2015
Alstom power and grid acquisition. We believe that industrial segment operating profit and operating profit margin adjusted for the
Alstom impacts are meaningful measures because they increase the comparability of period-to-period results.
102 GE 2015 FORM 10-K
102 GE 2015 FORM 10-K
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
INDUSTRIAL SEGMENT GROSS MARGIN (EXCLUDING ALSTOM)
(Dollars in millions)
Industrial Sales
Less: Corporate sales and eliminations
Industrial segment sales
Less: Alstom sales
Industrial segment sales excluding Alstom
Industrial cost of sales
Less: Corporate cost of sales and eliminations
Industrial segment cost of sales
Less: Alstom cost of sales
Industrial segment cost of sales excluding Alstom
Industrial segment gross margin
Industrial segment gross margin percentage
Industrial segment gross margin excluding Alstom
Industrial segment gross margin percentage excluding Alstom
$
$
$
$
$
$
$
$
2015
106,206
(1,858)
108,064
1,953
106,111
80,828
2,026
78,802
1,730
77,072
29,262
27.1%
29,039
27.4%
2014
107,308
(1,767)
109,075
-
109,075
81,876
1,775
80,101
-
80,101
28,974
26.6%
28,974
26.6%
We have presented our segment gross margin excluding the results of our fourth quarter 2015 Alstom power and grid acquisition. We
believe that industrial segment gross margin adjusted for the Alstom impacts is a meaningful measure because it increases the
comparability of period-to-period results.
Other measures excluding Alstom: We have also presented results of our Power, Renewable Energy and Energy Management
segments excluding the effects of the fourth quarter Alstom power and grid acquisition. These measurements included revenues,
operating profit and margin excluding Alstom, the reconciliations for which are included in the segment sections within MD&A. We also
presented Industrial SG&A as a percentage of sales excluding Alstom. We believe that these metrics adjusted for the Alstom impacts
are meaningful measures because they increase the comparability of period-to-period results.
AVERAGE GE SHAREOWNERS' EQUITY, EXCLUDING EFFECTS OF DISCONTINUED OPERATIONS(a)
(In millions)
2015
2014
2013
2012
2011
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity(a)
Less the effects of the average net investment
in discontinued operations
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)
effects of discontinued operations(b)
$ 111,140
$ 131,914
$ 124,501
$ 120,401
$ 122,289
27,910
45,455
44,948
41,399
38,130
$
83,230
$
86,459
$
79,553
$
79,002
$
84,159
(a)
(b)
On an annual basis, calculated using a five-point average.
Used for computing Industrial return on total capital (ROTC).
Our Industrial 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. Those earnings (losses) from discontinued operations include an
allocation of interest expense either directly attributable or related to discontinued operations. Net investment in discontinued operations
is calculated as assets of discontinued operations less liabilities of discontinued operations, including an allocation of GE Capital debt.
(cid:50)(cid:88)(cid:85)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:69)(cid:72)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:76)(cid:80)(cid:76)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:71)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:82)(cid:87)(cid:75)er
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-(cid:81)(cid:68)(cid:80)(cid:72)(cid:71)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)
discontinued operations, can be found in the Other Items and Measures section within the MD&A.
GE 2015 FORM 10-K 103
GE 2015 FORM 10-K 103
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
AVERAGE GE CAPITAL SHAREOWNERS' EQUITY, EXCLUDING EFFECTS OF DISCONTINUED OPERATIONS(a)
(In millions)
2015
2014
2013
2012
2011
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:11)(cid:68)(cid:12)
Less the effects of the average net
investment in discontinued operations
(cid:36)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)
excluding effects of discontinued operations(b)
$
67,930
$
85,370
$
83,358
$
79,873
$
73,852
28,028
45,589
45,023
41,504
30,239
$
39,902
$
39,781
$
38,335
$
38,369
$
43,613
(a)
(b)
On an annual basis, calculated using a five-point average.
Used for computing Industrial return on total capital (ROTC).
Our Industrial ROTC calculation excludes earnings (losses) of discontinued operations from the numerator because GAAP requires us
(cid:87)(cid:82)(cid:3)(cid:71)(cid:76)(cid:86)(cid:83)(cid:79)(cid:68)(cid:92)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:12)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:70)(cid:68)(cid:79)(cid:70)(cid:88)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:80)(cid:68)y 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.
INDUSTRIAL RETURN ON TOTAL CAPITAL (INDUSTRIAL ROTC)
(Dollars in millions)
2015
2014
2013
2012
2011
Earnings from continuing operations
Less GE Capital earnings (loss) from continuing
operations
Plus GE after-tax interest
Adjusted Industrial return
Average GE shareholders' equity, excluding effects
of discontinued operations(a)
Less average GE Capital's shareholders' equity,
excluding effects of discontinued operations(a)
Average Industrial shareholders' equity, excluding
effects of discontinued operations
Plus average debt(a)
Plus other, net(b)
Adjusted Industrial capital
$
1,700
$
9,490
$
7,881
$
8,816
$
9,301
(7,718)
1,262
10,680
$
1,537
1,026
8,979
$
716
865
8,030
$
1,378
880
8,318
$
1,493
845
8,653
$
$
83,230
$
86,459
$
79,553
$
79,002
$
84,159
39,902
43,328
18,465
1,536
63,329
$
39,781
46,678
15,770
1,743
64,191
$
38,335
41,218
13,665
1,367
56,250
$
38,369
40,633
12,908
(1,106)
52,435
$
43,613
40,546
10,734
5,682
56,962
$
Industrial ROTC
16.9 %
14.0 %
14.3 %
15.9 %
15.2 %
(a)
(b)
On an annual basis, calculated using a five-point average.
Includes average noncontrolling interests, calculated using a five-point average partially offset by the estimated value of assets held by GE to
support GE Capital.
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
(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:44)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:72)(cid:81)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:82)(cid:85)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:71)(cid:77)usted for
debt, redeemable noncontrolling interests, noncontrolling interests and the estimated value of assets held by the GE parent to support
GE Capital. We believe that these adjustments provide a more meaningful denominator in measuring the return on our industrial
businesses. Industrial ROTC was 16.9% in 2015 versus 14.0% in 2014 and 14.3% in 2013. In 2015, a 19% increase in the adjusted
Industrial return was combined with a 1% decrease in the adjusted Industrial capital. This decrease in capital was principally driven by
share buybacks and foreign currency translation exposure due to the strengthening U.S dollar. 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.
104 GE 2015 FORM 10-K
104 GE 2015 FORM 10-K
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
INDUSTRIAL CASH FLOWS FROM OPERATING ACTIVITIES (INDUSTRIAL CFOA)
(In millions)
Cash from GE's operating activities, as reported
Less dividends from GE Capital
Cash from GE's operating activities, excluding dividends
from GE Capital (Industrial CFOA)
2015
2014
2013
$
16,354
4,300
$
15,171
3,000
$
14,255
5,985
$
12,054
$
12,171
$
8,270
We refer to cash generated by our industrial businesses as "Industrial CFOA," which we define as (cid:42)(cid:40)(cid:182)(cid:86) cash from continuing operating
activities less the amount of dividends received by GE from GE Capital. This includes the effects of intercompany transactions,
including GE customer receivables sold to GE Capital; GE Capital services for trade receivables management and material
procurement; buildings and equipment (including automobiles) leased between GE and GE Capital; information technology (IT) and
other services sold to GE Capital by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GE Capital
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 (cid:42)(cid:40)(cid:182)(cid:86) operating cash flows without the effect of GE Capital 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. 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 (GE Capital) cash flows. We believe that our measures of Industrial CFOA 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
(In millions)
Cash from GE's operating activities (continuing operations)
Less GE additions to property, plant and equipment
Plus GE dispositions of property, plant and equipment
Free cash flow
Plus GE proceeds from principal business dispositions
Free cash flow plus dispositions
2015
2014
2013
$ 16,354
3,785
939
13,508
1,725
15,233
$ 15,171
3,970
615
11,816
602
12,418
$ 14,255
3,680
381
10,956
1,316
12,272
We define free cash flow as (cid:42)(cid:40)(cid:182)(cid:86) cash from operating activities (continuing operations) less GE additions to property, plant and
equipment and plus GE dispositions of 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. We also believe that presenting free cash flow plus proceeds from business dispositions provides investors with useful
information about the (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) actual performance against performance targets. 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 2015 FORM 10-K 105
GE 2015 FORM 10-K 105
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
RATIO OF ADJUSTED DEBT TO EQUITY AT GE CAPITAL, NET OF LIQUIDITY
December 31 (Dollars in millions)
2015
2014
2013
2012
2011
GE Capital debt
Add debt of businesses held for sale
and discontinued operations
Adjusted GE Capital debt
Less liquidity(a)
Less cash of businesses held for
sale and discontinued operations
GE Capital equity
Ratio
$ 180,795
$ 245,992
$ 284,686
$ 316,186
$ 364,266
31,075
211,870
70,497
105,923
351,915
55,361
86,692
371,379
65,492
81,256
397,442
52,810
79,091
443,357
69,219
20,395
$ 120,978
20,991
$ 275,563
9,617
$ 296,269
9,308
$ 335,324
7,754
$ 366,384
$
46,227
$
87,499
$
82,694
$
81,889
$
77,110
2.62:1
3.15:1
3.58:1
4.09:1
4.75:1
(a)
Liquidity includes cash and equivalents and $10.4 billion of high quality interest bearing deposits at December 31, 2015.
We have provided the GE Capital 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.
CAPITAL ENDING NET INVESTMENT (ENI), EXCLUDING LIQUIDITY
December 31 (In billions)
Financial Services (GE Capital) total assets
Adjustment: deferred income taxes
GE Capital total assets
Less assets of discontinued operations
Less non-interest bearing liabilities
Capital ENI
Less liquidity(b)
Capital ENI, excluding liquidity
Discontinued operations, excluding liquidity
Capital ENI (excluding liquidity) including discontinued operations
2015
312.1
4.6
316.7
120.9
43.3
152.4
70.5
81.9
85.0
166.9
$
$
2014(a)
494.0
6.2
500.2
1.2
60.5
438.5
75.5
363.0
(0.1)
362.9
$
$
$
(a)
(b)
As originally reported.
Liquidity includes cash and equivalents and $10.4 billion of high quality interest bearing deposits at December 31, 2015.
We use ENI to measure the size of our 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 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 high quality interest bearing deposits. 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 business.
106 GE 2015 FORM 10-K
106 GE 2015 FORM 10-K
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
GE CAPITAL TIER 1 COMMON RATIO ESTIMATE(a)
December 31 (Dollars in billions)
Shareowners' equity(b)
Adjustments:
Preferred equity
Goodwill and other intangible assets
Other additions (deductions)
GE Capital Tier 1 common
Estimated risk-weighted assets(c)
GE Capital Tier 1 common ratio estimate
(a)
(b)
(c)
Includes discontinued operations.
Total equity excluding noncontrolling interests.
Based on Basel 3 risk-weighted assets estimates.
2015
$
46.2
$
(5.0)
(5.2)
0.3
36.4
251.1
14.5%
2014
87.5
(4.9)
(25.6)
1.0
58.0
445.9
13.0%
The GE Capital 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 standardized U.S. Basel 3 capital rules on a transitional basis, which is subject to review and consultation with
our regulators. As such, the methodology of calculating this ratio may be refined over time as we discuss its interpretation and
application with our regulators. As of December 31, 2015, we are not required by our regulators to disclose this capital ratio, and
therefore this capital ratio is considered a non-GAAP financial measure. We believe that this estimated 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.
GE 2015 FORM 10-K 107
GE 2015 FORM 10-K 107
O T H E R F I N A N C I A L D A T A
OTHER FINANCIAL DATA
SELECTED FINANCIAL DATA
(Dollars in millions; per-share amounts in dollars)
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,
attributable to the Company
Net earnings (loss) attributable to the Company
Dividends declared(a)
(cid:53)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:11)(cid:69)(cid:12)
Per common share
Earnings from continuing operations (cid:177) diluted
Earnings (loss) from discontinued operations (cid:177) diluted
Net earnings (loss) (cid:177) diluted
Earnings from continuing operations (cid:177) basic
Earnings (loss) from discontinued operations (cid:177) basic
Net earnings (loss) (cid:177) 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 (cid:177) average (in thousands)
Common shareowner accounts (cid:177) average
Employees at year end
United States
Other countries
Total employees(c)
GE data
Short-term borrowings(d)
Long-term borrowings(d)
Redeemable noncontrolling interests
Noncontrolling interests
(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Total capital invested
Industrial return on total capital(b)*
Borrowings as a percentage of total capital invested(b)
GE Capital data
Revenues
Earnings (loss) from continuing operations attributable to GE Capital
Earnings (loss) from discontinued operations, net of taxes,
attributable to GE Capital
Less net earnings (loss) attributable to noncontrolling interests,
discontinued operations
Net earnings (loss) attributable to GE Capital
Net earnings (loss) attributable to GE Capital common shareowner
GE Capital shareowners' equity
Total borrowings(e)
Ratio of debt to equity at GE Capital(f)
Total assets(g)
2015
2014
2013
2012
2011
$ 117,386
1,681
$ 117,184 $ 113,245 $ 112,588 $ 110,062
9,113
9,535
7,618
8,646
(7,807)
(6,126)
9,161
5,698
15,233
8,948
5,439
13,057
8,060
4,995
13,641
7,372
5,039
14,152
7,498
1.6 %
10.8 %
9.5 %
10.9 %
10.7 %
$
0.17
(0.78)
(0.61)
0.17
(0.78)
(0.62)
0.92
31.49 -19.37
31.15
70,483
371,741
492,692
145,301
9,944,179
470,000
$
0.94 $
0.56
1.50
0.95
0.57
1.51
0.89
27.94-23.69
25.27
70,025
331,425
654,954
186,596
10,044,995
490,000
0.74 $
0.53
1.27
0.74
0.53
1.28
0.79
28.09-20.68
28.03
79,175
333,896
663,247
217,516
10,222,198
512,000
0.82 $
0.47
1.29
0.82
0.47
1.29
0.70
23.18-18.02
20.99
68,225
339,725
691,492
229,479
10,522,922
537,000
0.76
0.47
1.23
0.76
0.48
1.24
0.61
21.65-14.02
17.91
77,018
349,103
723,907
236,003
10,591,146
570,000
125,000
208,000
333,000
136,000
169,000
305,000
135,000
172,000
307,000
134,000
171,000
305,000
131,000
170,000
301,000
$
1,841 $
6,041 $
3,872 $
19,799 $
83,770
2,972
1,378
98,274
2,184
9,405
229
1,006
116,438
$ 206,192 $ 145,422 $ 144,936 $ 141,486 $ 129,262
15.2 %
9.0 %
11,428
214
777
123,026
11,515
178
835
130,566
12,468
98
825
128,159
14.0 %
11.2 %
15.9 %
12.3 %
14.3 %
9.2 %
16.9 %
50.2 %
$
10,801 $
(7,654)
11,320 $
1,532
11,267 $
699
11,268 $
1,368
11,843
1,469
(7,485)
5,860
5,540
4,901
5,144
312
(15,450)
(15,780)
46,227
180,795
3.91:1
$ 312,125
157
7,234
6,912
87,499
245,992
2.81:1
36
6,204
5,906
82,694
284,686
3.44:1
53
6,216
6,092
81,889
316,186
3.86:1
364,266
4.72:1
$ 500,589 $ 518,731 $ 539,844 $ 583,388
104
6,510
6,510
77,110
Transactions between GE and GE Capital have been eliminated from the consolidated information.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Included $18 million of preferred stock dividends in 2015 and $1,031 million of preferred stock dividends ($806 million related to our preferred
stock redemption) in 2011.
Indicates terms are defined in the Other Items and Measures section within the MD&A.
For 2015, includes 55,500 employees as a result of the Alstom acquisition.
Excluding assumed debt of GE Capital, GE total borrowings is $18,455 million.
Included $85,114 million of GE Capital debt assumed by GE and maintained as intercompany payable to GE at December 31, 2015.
Ratios of 2.62:1, 3.15:1, 3.58:1, 4.09:1, and 4.75:1 for 2015, 2014, 2013, 2012 and 2011, 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.
(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)cludes deferred income tax liabilities, which are presented within assets for purposes of our consolidating balance
sheet presentation.
*Non-GAAP Financial Measure
108 GE 2015 FORM 10-K
108 GE 2015 FORM 10-K
O T H E R F I N A N C I A L D A T A
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Period
(Shares in thousands)
2015
October
November
December
Total
Total number
of shares
purchased
as part of
our share
repurchase
program(b)
Approximate
dollar value
of shares that
may yet be
purchased
under our
share
repurchase
program(b)
Total number
of shares
purchased(a)
Average
price paid
per share
(cid:3)
895 $
672,357 $
98,922 $
772,174 $
28.24
30.36
30.62
30.39
846
910
98,835
100,591 $
46.7 billion
(a)
(b)
This category included 583 thousand shares repurchased from our various benefit plans. On November 17, 2015, GE accepted 671,366,809
shares of GE common stock at a price of $30.36 per share in exchange for shares of Synchrony Financial common stock that it owned.
Shares were repurchased through the 2015 GE Share Repurchase Program (the Program). As of December 31, 2015, we were authorized to
repurchase up to $50 billion of our common stock through 2018 and we had repurchased a total of approximately $3.3 billion under the
Program. The Program is flexible and shares will be acquired with a combination of borrowings and free cash flow from the public markets and
other sources, including GE Stock Direct, a stock purchase plan that is available to the public.
GE 2015 FORM 10-K 109
GE 2015 FORM 10-K 109
R E G U L A T I O N S A N D S U P E R V I S I O N
REGULATIONS AND SUPERVISION
GE Capital is a nonbank SIFI and as a result subject to FRB supervision. With the completion of the Synchrony Financial split-off, and
the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) subsequent approval of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) application to deregister as a saving and loan holding company, GE Capital is no longer
a savings and loan holding company.
On July 20, 2015 the Federal Reserve published a final order applying enhanced prudential standards to GE Capital as a nonbank SIFI.
The final order staggers the application of the enhanced prudential standards with the first set of standards becoming applicable on
January 1, 2016 and the second set becoming applicable on January 1, 2018. Under the standards applicable on January 1, 2016 GE
Capital became subject to the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) capital adequacy framework using the standardized approach to calculate risk weighted assets.
GE Capital also became subject to a liquidity coverage ratio (LCR) of 90% until December 31, 2016. After December 31, 2016, GE
Capital will need to maintain 100% LCR coverage.
If GE Capital is still a nonbank SIFI on January 1, 2018 the second set of enhanced prudential standards will apply. These standards
include stress testing and capital planning requirements under the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) more formal comprehensive capital analysis and review
(CCAR) regulations, enhanced leverage ratio requirements, enhanced governance requirements, daily liquidity calculations, additional
reporting requirements and a market terms requirement for transactions between GE and GE Capital.
While the enhanced prudential standards do not subject GE Capital to the Federal (cid:53)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:182)(cid:86) capital plan rule applicable to large bank
holding companies until the capital planning cycle beginning January 1, 2018, GE Capital conducts at a minimum 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, which contemplated the GE Capital Exit Plan, was approved by the GE Capital board of directors and the GE Board
of Directors Risk Committee in October 2015. While a nonbank SIFI like GE Capital 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.
As a nonbank SIFI, GE Capital is also required to submit an annual resolution plan to the FRB and Federal Deposit Insurance
Corporation (FDIC). GE Capital submitted its first resolution plan to the FRB and FDIC on June 30, 2014 and feedback was provided on
July 28, 2015. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) second Resolution Plan was submitted to the FRB and FDIC on December 31, 2015. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)
resolution plan describes how GE Capital 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 DFA authorizes the FRB and FDIC to impose more stringent capital,
leverage or liquidity requirements on GE Capital or restrict their growth or activities until they submit a plan remedying the deficiencies.
If the FRB and FDIC ultimately determine that GE Capital has not adequately addressed the deficiencies, they could order GE Capital
to divest assets or operations in order to facilitate their orderly resolution in the event of their failure.
GE Capital 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 (cid:179)(cid:83)(cid:85)(cid:82)(cid:83)(cid:85)(cid:76)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92) (cid:87)(cid:85)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:180) or acquiring or retaining ownership interest
in, or sponsoring or engaging in certain transactions with, a (cid:179)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72) (cid:73)(cid:88)(cid:81)(cid:71)(cid:180) or a (cid:179)(cid:83)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72) equity (cid:73)(cid:88)(cid:81)(cid:71)(cid:17)(cid:180) Proprietary trading and fund
investing, as prohibited by the rule, are not core activities for GE Capital.
As previously discussed, on April 10, 2015, the company announced the GE Capital Exit Plan to reduce the size of its financial services
businesses. GE has discussed the GE Capital Exit Plan, with its regulators and staff of the FSOC and plans to file its application with
the FSOC in early 2016 to terminate the (cid:41)(cid:54)(cid:50)(cid:38)(cid:182)(cid:86) designation of GE Capital as a nonbank SIFI.
In addition, in connection with the December 2015 reorganization described in The GE Capital Exit Plan section of the MD&A, GE
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) international operations were consolidated under a new international holding company, GE Capital International Holdings
Limited. GE Capital International Holdings Limited is a wholly owned subsidiary of GE Capital with its own capital structure, and it is
supervised by the U.K. Prudential Regulation Authority (PRA). The (cid:51)(cid:53)(cid:36)(cid:182)(cid:86) supervision includes capital and liquidity standards that could
impact the payment of dividends to GE Capital, and GE Capital International Holdings Limited will remain subject to such supervision
even if GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) designation as a nonbank SIFI is terminated.
110 GE 2015 FORM 10-K
110 GE 2015 FORM 10-K
R I S K M A N A G E M E N T
RISK MANAGEMENT
Refer to (cid:42)(cid:40)(cid:182)(cid:86) 2016 Proxy Statement for Board committee changes effective March 1, 2016.
GE 2015 FORM 10-K 111
GE 2015 FORM 10-K 111
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. This
section describes our risk management practices during 2015; refer to (cid:42)(cid:40)(cid:182)(cid:86) Proxy Statement for Board committee changes effective
March 1, 2016.
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. Significant
risks are presented and discussed in the context of the (cid:38)(cid:40)(cid:50)(cid:182)(cid:86) report on operations to the Board at regularly scheduled Board meetings
and at presentations to the Board and its committees by the vice chairmen, 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 the policies, processes and risks relating to the financial statements, the financial reporting
process, compliance, auditing and cybersecurity. The Audit Committee, discusses with management the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) risk assessment
and risk management practices and, when reviewing and approving the annual audit plan for the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) and GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) internal
audit functions, prioritizes audit focus areas based on their potential risk. The Audit Committee also coordinates closely with the Risk
Committee and periodically meets jointly with the Risk Committee and the GE Capital Board.
THE GOVERNANCE & PUBLIC AFFAIRS COMMITTEE oversees risk related to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) governance structure and
processes and risks arising from related-person transactions. It also reviews and discusses with management risks related to (cid:42)(cid:40)(cid:182)(cid:86)
public policy initiatives and activities and positions on corporate social responsibilities, and it oversees the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) environmental,
health and safety compliance and related risks.
THE MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE oversees risk associated with management
resources and structure, succession planning and management development and selection processes, and it reviews executive
compensation practices at GE and GE Capital to confirm that pay arrangements incentivize leaders to improve the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)
competitive position without encouraging excessive risk taking. The Management Development and Compensation Committee reviews
and discusses, at least annually, the relationship between risk management policies and practices, corporate strategy and senior
executive compensation.
THE RISK COMMITTEE assists the Board in its oversight of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) risk management framework. Its role also includes the
independent oversight of GE Capital, including the adequacy and effectiveness of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) risk management function and the GE
Capital Exit Plan, and the Risk Committee regularly meets jointly with the GE Capital Board throughout the year. Significant risks are
also discussed in full Board updates, Audit Committee updates and during director business visits.
THE SCIENCE & TECHNOLOGY COMMITTEE oversees the direction and effectiveness of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) R&D operations. It
also reviews the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) technology and innovation strategies and approaches, including the impact on the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)
performance, growth and competitive position. The Science & Technology Committee assists the Board in overseeing (cid:42)(cid:40)(cid:182)(cid:86)
investments and initiatives in science, technology and software and reviews science and technology trends that could significantly affect
the Company and the industries in which it operates.
112 GE 2015 FORM 10-K
112 GE 2015 FORM 10-K
R I S K M A N A G E M E N T
SENIOR MANAGEMENT
The GE (cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:182)(cid:86) risk oversight process builds upon (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) 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 (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) The Spirit & The Letter; regulatory compliance; health, safety and environmental compliance;
financial reporting and controllership; and information technology and security.
The Corporate Risk Function is responsible for overseeing and coordinating risk assessment and mitigation on an enterprise-wide
basis. It is responsible for the identification of key business risks, providing for appropriate oversight of the (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:182) 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 (cid:42)(cid:40)(cid:182)(cid:86) and GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) financial and compliance reporting.
THE POLICY COMPLIANCE REVIEW BOARD is a management-level committee that further assists in assessing and mitigating
risk. The Policy Compliance Review Board, members of which participated in eight compliance operating reviews in 2015, is chaired by
the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) 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 four times per year and include the most senior GE
business leaders.
GE (cid:38)(cid:36)(cid:51)(cid:44)(cid:55)(cid:36)(cid:47)(cid:182)(cid:54) ENTERPRISE RISK MANAGEMENT COMMITTEE oversees the implementation of GE Capital(cid:182)(cid:86) risk appetite,
and senior (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) establishment of appropriate systems to ensure enterprise risks are effectively identified, measured,
monitored, and controlled. Additional information on GE Capital(cid:182)(cid:86) 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 bring deep domain expertise to the (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:182) 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 as appropriate. Senior management discusses these risks periodically and assigns responsibility for them to the businesses.
The assigned owners 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 risk assessments and key risks to senior management 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 risk levels are within the C(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) risk
appetite.
GE 2015 FORM 10-K 113
GE 2015 FORM 10-K 113
R I S K M A N A G E M E N T
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 delegations of authority, 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.
(cid:3)
GE CAPITAL RISK MANAGEMENT & MITIGATION
GE Capital promotes a strong culture of risk management, combined with a risk framework that effectively supports appropriate risk
awareness, behaviors and sound risk-based decision making. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) risk framework recognizes that effective and comprehensive
risk management must include three distinct lines of defense made up of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) business units, Corporate Risk Management and
internal audit function.
Business units own and manage risk as a first line of defense with deep risk expertise. The GE Capital Corporate Risk Management
function provides independent oversight and challenge as a second line of defense. The senior risk professionals have, on average,
over 30 years of experience. GE Capital Audit provides the third line of defense.
Corporate Risk Management leverages the risk infrastructure in each of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) business units, which have adopted an approach
that corresponds to GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) overall risk policies, procedures and review mechanisms. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) risk infrastructure is designed
to manage all risks relevant to its business environment that, if they materialized, could prevent GE Capital from achieving its risk
objectives or result in losses. These risks comprise GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) 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 enhance its risk management processes consistent with the heightened supervisory expectations applicable to
it as 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 enterprise initiatives including capital planning, models,
valuations and regulatory reporting.
The GE Risk Committee and GE Capital Board establish GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) risk appetite and oversee its risk management framework and
risk assessment and management processes. All participants in the GE Capital risk management process must comply with approval
limits established by the GE Risk Committee and the GE Capital Board or within the business units pursuant to delegations of authority,
and the GE Risk Committee and the GE Capital Board retain approval authority for significant acquisitions, dispositions, borrowings and
investments.
GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) Enterprise Risk Management Committee (ERMC), which comprises the most senior leaders of GE Capital, oversees the
implementation of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) risk appetite, and senior (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) 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 the 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 and Investment
Risk Committee, Model Risk Management Committee, New Product Introduction Committee and Compliance Committee. A similar
committee structure, where appropriate, is replicated at the business unit level.
The GE Risk Committee and the GE Capital Board periodically review and approve key risk management policies and they meet with
GE Capital senior management throughout the year. At these meetings, GE Capital senior management focuses on the risk issues,
strategy and governance of the business.
(cid:3)
114 GE 2015 FORM 10-K
114 GE 2015 FORM 10-K
R I S K M A N A G E M E N T
GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) Corporate Risk function, in consultation with the ERMC, updates GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) Enterprise Risk Appetite Statement
annually. This document articulates the enterprise risk objectives, its key universe of risks and the supporting limit structure. GE
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) 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 GE Risk Committee and the GE Capital Board for review and approval at
least annually. On a quarterly basis, the status of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) performance against these limits is reviewed by the GE Risk Committee,
the GE Capital Board and the ERMC.
GE Capital monitors its capital adequacy including through economic capital, regulatory capital, scenario analysis and enterprise stress
testing methodologies. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) economic capital methodology uses internal models to estimate potential unexpected losses
across different portfolios with a confidence level equivalent to an A credit agency rating. GE Capital is also subject to the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) capital
adequacy framework using the standardized approach to calculate risk-weighted assets, and it uses scenario analysis and stress
testing for risk, liquidity and capital adequacy assessment and management purposes and as an integral part of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) overall
planning processes. Scenario analysis and 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,(cid:3)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 GE Capital Board review these results and their expected impact on capital levels and metrics. The
GE Risk Committee and the GE Capital Board are responsible for overseeing overall capital adequacy, and the capital adequacy
process, as well as approving GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) annual capital plan and capital actions. If GE Capital is still a non-bank SIFI on January 1,
2018, it will also become subject to stress testing and capital planning requirements under the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) more formal comprehensive
capital analysis and review (CCAR) regulations, enhanced leverage ratio requirements, enhanced governance requirements, daily
liquidity calculations, additional reporting requirements and a market terms requirement for transactions between GE and GE Capital.
For additional information about our risks, see the Risk Factors, Regulations and Supervision and Critical Accounting Estimates
sections within the MD&A.
GE 2015 FORM 10-K 115
GE 2015 FORM 10-K 115
R I S K F A C T O R S
RISK FACTORS
The following discussion of risk factors contains (cid:179)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)-looking stat(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:180) as discussed in the Forward-Looking Statements section.
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(cid:182)(cid:86) Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) section and the consolidated financial statements and related notes.
GE's Corporate Risk Function leverages the risk framework in each of our businesses, which have adopted an approach that
corresponds to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) 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 (cid:177) sometimes
materially different (cid:177) 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 (cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182) reactions to those developments will affect
our future results.
STRATEGIC RISKS
Strategic risk relates to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) 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 180 countries. In 2015, approximately 55% of our
revenue was attributable to activities outside the United States. Our operations and the execution of our business plans and strategies
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. For example, our anticipated
returns from the Alstom acquisition include cost and growth synergy benefits over a multi-year period that we may not fully realize. 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 are selling financial assets and businesses in numerous transactions in connection
with the GE Capital Exit Plan, and we also continue to evaluate the potential disposition of other 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. Alternatively, we may dispose of a business at a price or on terms that are less than we had anticipated, or with the
exclusion of assets that must be divested or run off separately. After reaching an agreement with a buyer or seller for the acquisition or
disposition of a business, such as the proposed sale of Appliances to Haier, the transaction remains subject to necessary regulatory
and governmental approvals on acceptable terms as well as the 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, transition service agreements, guarantees, indemnities or other current or contingent financial obligations.
Under these arrangements, performance by the divested businesses or other conditions outside our control could affect our future
financial results.
116 GE 2015 FORM 10-K
116 GE 2015 FORM 10-K
R I S K F A C T O R S
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 our
product design, manufacture and servicing, and other services that we provide, 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, attrition or labor relations, could have a material adverse effect on our business, reputation, financial
position and results of operations. For projects where we take on the full scope of engineering, procurement, construction or other
services, the potential risk is greater that operational, quality or other issues at particular projects could adversely affect (cid:42)(cid:40)(cid:182)(cid:86) 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
deliver products, services and outcomes in line with our projected performance and/or cost estimates.
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 (cid:42)(cid:40)(cid:182)(cid:86) and its (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182)(cid:15) (cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:15) (cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:85)(cid:86)(cid:182) and third-party service (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182) products, systems and networks and the
confidentiality, availability and integrity of (cid:42)(cid:40)(cid:182)(cid:86) and its (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:182) 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.
GE 2015 FORM 10-K 117
GE 2015 FORM 10-K 117
R I S K F A C T O R S
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 (cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86) 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, renewables, 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, low oil prices or 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, reduced electricity demand in our
Power and Renewable Energy businesses or declines in orders, project commencement delays and pricing pressures on our Oil & Gas
business from low oil prices could affect our ability to fully recover our 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 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(cid:182)(cid:86) 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 Notes
20 and 27(cid:3)to the consolidated financial statements), 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 (cid:42)(cid:40)(cid:182)(cid:86) or GE
Capital(cid:182)(cid:86) business, financial position and results of operations.(cid:3)
118 GE 2015 FORM 10-K
118 GE 2015 FORM 10-K
R I S K F A C T O R S
Funding access/costs - Failure to maintain our credit ratings, or conditions in the financial and credit markets, could
adversely affect our access to capital markets, funding costs and related margins, liquidity and competitive position.
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, 2015, GE and GE
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) long-term unsecured debt credit rating from Standard and (cid:51)(cid:82)(cid:82)(cid:85)(cid:182)(cid:86) Ratings Service (S&P) was AA+ (the second highest of 22
rating categories) with a negative outlook. The long-term unsecured debt credit rating from (cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86) Investors Service (cid:11)(cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86)(cid:12) for GE
and for GE Capital was A1 (the fifth highest of 21 credit ratings), both with stable outlooks. As of December 31, 2015, GE and GE
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) short-term credit rating from S&P was A-1+ (the highest rating category of six categories) and from (cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86) 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.
Furthermore, to the extent that we rely on the availability of the unsecured debt markets to access funding for term and commercial
paper maturities for 2016 and beyond, external conditions in the financial and credit markets may limit the availability of funding at
particular times or increase the cost of funding, which could affect our overall profitability. Factors that may affect the availability of
funding or cause an increase in our funding costs include decreased capacity and increased competition among commercial paper
issuers, and potential impacts arising in the United States, Europe or China from developments in sovereign debt situations, currency
movements or other potential market disruptions. If GE or GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) cost of funding were to increase, it may adversely affect our
competitive position and result in lower net interest margins, earnings and cash flows as well as lower returns on (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) 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 2016 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 2015, the GE Pension Plan was underfunded, on a GAAP basis,
by $16.9 billion, and the GE Supplementary Pension Plan, an unfunded plan, had a projected benefit obligation of $6.1 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, there may be upward pressure on the cost of providing healthcare benefits to current
employees and retirees. 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 (cid:177)
Postretirement Benefit Plans section and Notes 12 and 27 to the consolidated financial statements. See also the Critical Accounting
Estimates (cid:177) Pension Assumptions section 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; 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.
GE 2015 FORM 10-K 119
GE 2015 FORM 10-K 119
R I S K F A C T O R S
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 (cid:42)(cid:40)(cid:182)(cid:86)(cid:15) GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) or other regulated (cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:182) structure, operations, sales, liquidity, capital
requirements, effective tax rate and performance. For example, 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, as a result of GE Capital(cid:182)(cid:86) designation as a nonbank systemically important financial institution
(nonbank SIFI), which subjects us to increased and evolving regulatory requirements.
GE Capital is a nonbank SIFI and as a result is subject to Federal Reserve Board (FRB) supervision. On July 20, 2015 the FRB
published a final order that applies enhanced prudential standards to GE Capital as a nonbank SIFI. The final order staggers the
application of the enhanced prudential standards with the first set of standards becoming applicable on January 1, 2016 and the second
set becoming applicable on January 1, 2018. Under the standards applicable on January 1, 2016 GE Capital became subject to the
(cid:41)(cid:53)(cid:37)(cid:182)(cid:86) capital adequacy framework using the standardized approach to calculate risk-weighted assets, as well as to the maintenance of
a 90% liquidity coverage ratio until December 31, 2016 and a 100% ratio thereafter. If GE Capital is still a nonbank SIFI on January
1, 2018 the second set of enhanced prudential standards will apply. These standards would include stress testing and capital planning
requirements under the (cid:41)(cid:53)(cid:37)(cid:182)(cid:86) more formal comprehensive capital analysis and review (CCAR) regulations, enhanced leverage ratio
requirements, enhanced governance requirements, daily liquidity calculations, additional reporting requirements and a market terms
requirement for transactions between GE and GE Capital. GE Capital plans to file an application with the FSOC in early 2016 to
terminate the (cid:41)(cid:54)(cid:50)(cid:38)(cid:182)(cid:86) designation of GE Capital as a nonbank SIFI, but the timeline for the FSOC to act on the application will be
uncertain and a favorable FSOC decision is not assured. Until the FSOC approves the termination of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) designation as a
nonbank SIFI, GE Capital will remain subject to regulatory requirements and, depending on the timing of favorable FSOC action, may
need to delay planned cost reductions and potential capital distributions.
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, including the matters
described in the Legal Proceedings section. 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, changes
in business practices, fines and penalties or the assertion of private litigation claims and damages. Since closing our acquisition of
(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) Thermal, Renewables and Grid businesses in November 2015, we are also subject to legal proceedings and legal compliance
risks in connection with legacy matters involving those businesses that were previously outside our control and that we are now
independently assessing. In addition to commercial disputes arising in the ordinary course of business, there are Alstom legacy matters
in a number of jurisdictions that include alleged anti-competitive activities or improper payments. Although the alleged conduct predated
our acquisition of the relevant Alstom businesses, we may nevertheless be held liable for fines, judgments or settlements in connection
with currently pending or future proceedings. Additionally, we and our subsidiaries are subject to remedial actions to clean up
contaminated sites as required by federal and state laws, such as the dredging of a stretch of the upper Hudson River in New York
State that we completed in 2015 and anticipated remediation for a stretch of the Housatonic River in Massachusetts, as described in
the Environmental Matters section. While we believe that we have adopted appropriate risk management and compliance programs,
the global and diverse nature of our operations and the current enforcement environment mean that legal and compliance risks will
continue to exist with respect to our continuing and discontinued operations, and additional legal proceedings and other contingencies,
the outcome of which cannot be predicted with certainty, will arise from time to time.
120 GE 2015 FORM 10-K
120 GE 2015 FORM 10-K
L E G A L P R O C E E D I N G S
LEGAL PROCEEDINGS
There are 14 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.
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. 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 held an evidentiary hearing on February 1, 2016. In light of the state
court action seeking approval of the proposed settlement, the District Court has stayed further proceedings in the four cases until April
2016.
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. On September 18, 2015, the court granted (cid:71)(cid:72)(cid:73)(cid:72)(cid:81)(cid:71)(cid:68)(cid:81)(cid:87)(cid:86)(cid:182) motion to dismiss this case on statute of limitations
grounds, and the plaintiff filed a notice of appeal on October 21, 2015. 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.
GE 2015 FORM 10-K 121
GE 2015 FORM 10-K 121
L E G A L P R O C E E D I N G S
As previously reported, two cases were pending against WMC in the United States District Court for the Southern District of New York
at September 30, 2015. In the fourth quarter 2015, WMC concluded a settlement of one of these cases, resulting in the dismissal of the
lawsuit with prejudice. This case, which BNY filed in the third quarter 2012, involved claims on approximately $900 million of mortgage
loans and alleged damages in excess of $378 million. In 2014, the parties reached a settlement in principle on the claims arising from a
portion of the loans held in the trust, which became effective on September 16, 2015. On September 18, 2015, the parties reached a
settlement in principle on the remaining claims in the case, and the securitization trustee declared this settlement effective October 20,
2015 and the case was formally dismissed on October 23, 2015. The remaining case was initiated by the Federal Housing Finance
Agency (FHFA) in the fourth quarter 2012. In the second quarter 2013, Deutsche Bank, in its role as securitization trustee, 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 (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) motion to dismiss but, on its own motion, ordered re-
briefing on several issues raised by (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) motion to dismiss in February 2015. On July 10, 2015, the District Court entered an order
dismissing the lawsuit as time-barred under the applicable statute of limitations. Deutsche Bank filed a notice of appeal from this order
of dismissal on August 13, 2015.
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 WM(cid:38)(cid:182)(cid:86) reported claims at
December 31, 2015. See Note 2 to the consolidated financial statements for additional information.
In December 2015, we learned that, as part of continuing industry-wide investigation of subprime mortgages, the Civil Division of the
U.S. Department of Justice is investigating potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA) by WMC and its affiliates arising out of the origination, purchase or sale of residential mortgage loans between January
1, 2005 and December 31, 2007. The Justice Department subsequently issued subpoenas for documents to WMC and GE Capital in
January 2016. We will cooperate with the Justice (cid:39)(cid:72)(cid:83)(cid:68)(cid:85)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) investigation, which is at an early stage.
In connection with our acquisition of (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) Thermal, Renewables and Grid businesses in November 2015, we are subject to legal
proceedings and legal compliance risks in connection with legacy matters involving those businesses that were previously outside our
control and that we are now independently assessing. As previously reported by Alstom, following a European Union investigation of
alleged anti-competitive practices in the sale of gas-insulated switchgears that began in 2004 and concluded with (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) payment of
a (cid:188)(cid:26)(cid:28) million fine in 2014, in September 2013 the Israeli Antitrust Authority issued a decision whereby Alstom, Siemens AG and ABB
Ltd. were held liable for an alleged anti-competitive arrangement in the gas-insulated switchgears market in Israel. While there is no fine
in connection with that decision, claimants brought civil actions in 2013 seeking damages of approximately $950 million and $600
million, respectively, related to the alleged conduct underlying the decision that are currently pending before the Central District Court in
Israel. In March 2015, the court consolidated the civil actions into one proceeding as to liability, but no trial date has yet been set.
As previously reported, in 2000, GE and the Environmental Protection Agency (EPA) entered into a consent decree relating to PCB
cleanup of the Housatonic River in Massachusetts. In 2012, the EPA issued a status report describing potential conceptual approaches
to a 10-mile stretch of the river downstream from a previously remediated area. In September 2015, the EPA released an intended final
decision for the so called "Rest of River". This is not the EPA's final decision, rather, the consent decree provides for discussions and a
detailed dispute resolution process between GE and EPA, after which the EPA will issue its final decision. As of December 31, 2015,
and based on its assessment of current facts and circumstances, GE believes that it has recorded adequate reserves to cover future
obligations associated with an expected final remedy.
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. As previously reported, 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. The matter was resolved through a consent decree with
the U.S. federal government and the state of New York that was filed December 4, 2015, and pursuant to the agreement GE paid a
penalty of $2.3 million on January 4, 2016.
122 GE 2015 FORM 10-K
122 GE 2015 FORM 10-K
R E P O R T S
MANAGEMENT AND (cid:36)(cid:56)(cid:39)(cid:44)(cid:55)(cid:50)(cid:53)(cid:182)(cid:54) REPORTS
(cid:48)(cid:36)(cid:49)(cid:36)(cid:42)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:182)(cid:54) 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
(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) 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
(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:182)(cid:86) 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(cid:178)including internal control over financial reporting(cid:178)
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(cid:178)(cid:179)(cid:55)(cid:75)(cid:72) Spirit & The (cid:47)(cid:72)(cid:87)(cid:87)(cid:72)(cid:85)(cid:180)(cid:178)
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 35 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 2015, we further ensured strong disclosure by holding approximately 125 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 2015 follow.
GE 2015 FORM 10-K 123
GE 2015 FORM 10-K 123
R E P O R T S
(cid:48)(cid:36)(cid:49)(cid:36)(cid:42)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:182)(cid:54)(cid:3)(cid:36)(cid:49)(cid:49)(cid:56)(cid:36)(cid:47)(cid:3)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,
2015, 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, 2015.
(cid:50)(cid:81)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)(cid:55)(cid:75)(cid:72)(cid:85)(cid:80)(cid:68)(cid:79)(cid:15)(cid:3)(cid:53)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:85)(cid:76)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:17)(cid:3)(cid:3)(cid:36)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:71)
for recently acquired businesses, management has excluded the acquired Alstom businesses from its assessment of internal control
over financial reporting. The excluded Alstom businesses represent total assets and total revenues of 3.5 percent and 1.7 percent,
respectively, of the related consolidated financial statement amounts as of and for the year-ended December 31, 2015.
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 26, 2016(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 our disclosure controls and procedures were effective as of December 31,
2015.
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:79)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:81)(cid:82)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)rol over financial reporting during the
quarter ended December 31, 2015, that have materially affected, or are reasonably likely to materially affect, its internal control over
financial reporting.
On November 2, 2015, we closed the acquisition of Alstom's Thermal, Renewable, and Grid businesses. As a result of the timing,
breadth and complexity of the transaction, we increased the level of resources involved in the application of our internal processes and
controls to the financial closing and reporting processes and to reach a preliminary purchase price allocation. During 2016, we expect
the following will occur with respect to these acquired businesses: (1) purchase price allocations will be finalized, (2) they will continue
the transition to our accounting and reporting policies and processes, and (3) their systems and processes will be integrated into our
framework of internal controls over financial reporting. These actions may precipitate changes in processes or controls.
124 GE 2015 FORM 10-K
124 GE 2015 FORM 10-K
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 (cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3)(cid:68)(cid:86)(cid:3)
of December 31, (cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:21)(cid:19)(cid:20)(cid:23)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)
flows for each of the years in the three-(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)
financial reporting as of December 31, 2015, based on criteria established in Internal Control (cid:177) Integrated Framework (2013) issued by the
(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:83)(cid:82)(cid:81)(cid:86)(cid:82)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:55)(cid:85)(cid:72)(cid:68)(cid:71)(cid:90)(cid:68)(cid:92)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:179)(cid:38)(cid:50)(cid:54)(cid:50)(cid:180)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)ese
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
(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:86)(cid:17)
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.
(cid:36)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:68)(cid:85)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)iability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:11)(cid:20)(cid:12)(cid:3)(cid:83)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:68)(cid:81)(cid:70)e 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
(cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)
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.
On November 2, 2015, the Company completed th(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)(cid:3)Thermal, Renewables and Grid businesses (collectively, the
(cid:179)(cid:36)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:180)(cid:12)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)er financial
reporting as of December 31, 2015(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:36)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:182)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
3.5 percent of consolidated assets, and total revenues representing 1.7 percent of consolidated revenues and other income, included in the
consolidated financial statements of the Company as of and for the year ended December 31, 2015. Our audit of internal control over financial
reporting of the Company also excluded an evaluation of the internal control over financial reporting of the Acquired Businesses.
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, 2015 and 2014, and the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2015, 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, 2015, 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
New York, New York
February 26, 2016
GE 2015 FORM 10-K 125
GE 2015 FORM 10-K 125
[PAGE INTENTIONALLY LEFT BLANK]
126 GE 2015 FORM 10-K
126 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
AUDITED FINANCIAL STATEMENTS AND NOTES
Statement of Earnings
Consolidated Statement of Comprehensive Income (Loss)
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Statement of Financial Position
Statement of Cash Flows
Notes to Consolidated Financial Statements
1 Basis of Presentation and Summary of Significant Accounting Policies
2 Businesses Held for Sale and Discontinued Operations
3
Investment Securities
4 Current Receivables
5
Inventories
6 GE Capital Financing Receivables and Allowance for Losses on Financing Receivables
7 Property, Plant and Equipment
8 Acquisitions, Goodwill and Other Intangible Assets
9 Contract Assets and All Other Assets
10 Borrowings
11 Investment Contracts, Insurance Liabilities and Insurance Annuity Benefits
12 Postretirement Benefit Plans
13 All Other Liabilities
14 Income Taxes
15 (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
16 Other Stock-related Information
17 Other Income
18 Earnings Per Share Information
19 Fair Value Measurements
20 Financial Instruments
21 Variable Interest Entities
22 Commitments, Guarantees and Product Warranties
23 Intercompany Transactions
24 Operating Segments
25 Cash Flows Information
26 Cost Information
27 Supplemental Information
28 Quarterly Information (unaudited)
128
130
131
132
134
136
147
153
156
156
157
158
159
163
164
166
167
171
172
176
181
184
184
185
189
195
197
199
200
203
204
205
211
GE 2015 FORM 10-K 127
GE 2015 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)
GE Capital earnings from continuing operations
GE Capital revenues from services
Total revenues and other income
Costs and expenses (Note 26)
Cost of goods sold
Cost of services sold
Selling, general and administrative expenses
Interest and other financial charges
Investment contracts, insurance losses and
insurance annuity benefits
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 (loss)
Less net earnings (loss) attributable to noncontrolling interests
Net earnings (loss) attributable to the Company
Preferred stock dividends
Net earnings (loss) attributable to GE common shareowners
Amounts attributable to GE common shareowners
Earnings from continuing operations
Less net earnings (loss) attributable to
noncontrolling interests, continuing operations
Earnings from continuing operations attributable
to the Company
Preferred stock dividends
Earnings from continuing operations attributable
to GE common shareowners
Earnings (loss) from discontinued operations, net of taxes
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations
Net earnings (loss) attributable to GE common shareowners
Per-share amounts (Note 18)
Earnings from continuing operations
Diluted earnings per share
Basic earnings per share
Net earnings (loss)
Diluted earnings (loss) per share
Basic earnings (loss) per share
Dividends declared per common share
Amounts may not add due to rounding.
See Note 3 for other-than-temporary impairment amounts on investment securities.
See accompanying notes.
128 GE 2015 FORM 10-K
128 GE 2015 FORM 10-K
General Electric Company
and consolidated affiliates
2015
2014
2013
$
74,510 $
31,298
2,227
-
9,350
117,386
76,568 $
30,190
778
-
9,648
117,184
71,873
28,669
3,107
-
9,595
113,245
59,905
22,788
17,831
3,463
2,605
2,608
109,200
8,186
(6,485)
1,700
(7,495)
(5,795)
332
(6,126)
(18)
(6,145) $
61,257
22,447
16,848
2,723
2,530
1,115
106,921
10,263
(773)
9,490
5,855
15,345
112
15,233
-
15,233 $
57,867
21,974
17,945
2,870
2,661
828
104,145
9,100
(1,219)
7,881
5,475
13,355
298
13,057
-
13,057
1,700 $
9,490 $
7,881
19
(45)
1,681
(18)
1,663
(7,495)
9,535
-
9,535
5,855
262
7,618
-
7,618
5,475
312
(6,145) $
157
15,233 $
36
13,057
0.17 $
0.17 $
0.94 $
0.95 $
(0.61) $
(0.62) $
1.50 $
1.51 $
0.74
0.74
1.27
1.28
0.92 $
0.89 $
0.79
$
$
$
$
$
$
$
$
F I N A N C I A L S T AT E M E N T S
(cid:3)
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)
GE Capital earnings from continuing operations
GE Capital revenues from services
Total revenues and other income
Costs and expenses (Note 26)
Cost of goods sold
Cost of services sold
Selling, general and administrative expenses
Interest and other financial charges
Investment contracts, insurance losses and
insurance annuity benefits
Other costs and expenses
Total costs and expenses
Earnings (loss) from continuing operations
before income taxes
Benefit (provision) for income taxes (Note 14)
Earnings (loss) from continuing operations
Earnings (loss) from discontinued operations,
net of taxes (Note 2)
Net earnings (loss)
Less net earnings (loss) attributable to noncontrolling interests
Net earnings (loss) attributable to the Company
Preferred stock dividends
Net earnings (loss) attributable to GE common shareowners $
$
Amounts attributable to GE common shareowners:
Earnings (loss) from continuing operations
Less net earnings (loss) attributable to
noncontrolling interests, continuing operations
Earnings (loss) from continuing operations attributable
to the Company
Preferred stock dividends
Earnings (loss) from continuing operations attributable
to GE common shareowners
Earnings (loss) from discontinued operations, net of taxes
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations
Net earnings (loss) attributable to GE common shareowners $
GE(a)
Financial Services (GE Capital)
2015
2014
2013
2015
2014
2013
$
74,565 $
31,641
2,165
(7,672)
-
100,700
76,715 $
30,594
707
1,532
-
109,546
71,951
29,063
2,886
699
-
104,599
$
79 $
-
-
-
10,722
10,801
121 $
-
-
-
11,199
11,320
59,970
20,858
14,914
1,706
-
-
97,447
61,420
20,456
14,972
1,579
-
-
98,427
3,252
(1,506)
1,746
(7,807)
(6,061)
83
(6,145)
-
(6,145) $
11,119
(1,634)
9,485
5,698
15,182
(50)
15,233
-
15,233 $
57,962
19,668
16,104
1,333
-
-
95,068
9,531
(1,667)
7,864
5,439
13,303
245
13,057
-
13,057
1,746 $
9,485 $
7,864
$
$
69
2,273
3,512
2,301
2,737
2,647
13,539
(2,739)
(4,979)
(7,718)
104
2,394
2,689
1,638
2,660
1,159
10,645
676
861
1,537
(7,485)
(15,202)
248
(15,450)
(330)
(15,780) $
5,860
7,397
162
7,234
(322)
6,912 $
(7,718) $
1,537 $
716
83
(50)
245
(64)
5
1,663
-
1,663
(7,807)
9,535
-
9,535
5,698
7,618
-
7,618
5,439
(7,654)
(330)
(7,983)
(7,485)
1,532
(322)
1,209
5,860
-
(6,145) $
-
15,233 $
-
13,057
312
(15,780) $
$
157
6,912 $
17
699
(298)
401
5,540
36
5,906
126
-
-
-
11,141
11,267
108
2,700
2,550
2,021
2,764
856
10,999
268
448
716
5,540
6,256
53
6,204
(298)
5,906
(a)
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
Amounts may not add due to rounding.
In the consolidating data on this p(cid:68)(cid:74)(cid:72)(cid:15)(cid:3)(cid:179)(cid:42)(cid:40)(cid:180)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:20)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:30)(cid:3)(cid:179)(cid:42)(cid:40)(cid:3)
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:180)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:86)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:42)(cid:40)(cid:38)(cid:38)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:82)(cid:85)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:47)(cid:47)(cid:38)(cid:3)(cid:11)(cid:42)(cid:40)(cid:38)(cid:42)(cid:43)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)of their affiliates and
(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:54)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:75)(cid:82)(cid:90)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:179)(cid:42)(cid:40)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:17)(cid:180)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)en eliminated from
(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:73)(cid:73)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:180)(cid:3)(cid:70)(cid:82)(cid:79)(cid:88)(cid:80)(cid:81)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:17)
GE 2015 FORM 10-K 129
GE 2015 FORM 10-K 129
F I N A N C I A L S T AT E M E N T S
t
(cid:3)
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31 (In millions)
Net earnings (loss)
Less net earnings (loss) attributable to noncontrolling interests
Net earnings (loss) 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 (loss)
Less comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income (loss) attributable to the Company
2015
2014
2013
(5,795) $
332
(6,126) $
15,345 $
112
15,233 $
13,355
298
13,057
(553) $
(3,137)
99
5,165
1,575
(69)
1,644 $
(4,220) $
263
(4,483) $
708 $
(2,730)
234
(7,278)
(9,066)
(13)
(9,053) $
6,278 $
99
6,180 $
(374)
(308)
466
11,300
11,084
(25)
11,109
24,440
273
24,167
$
$
$
$
$
$
Amounts presented net of taxes. See Note 15 for further information about other comprehensive income (loss) and noncontrolling interests.
Amounts may not add due to rounding.
See accompanying notes.
130 GE 2015 FORM 10-K
130 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
(cid:3)
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY
t
(In millions)
2015
2014
2013
GE shareowners' equity balance at January 1
Net earnings (loss) attributable to the Company
Dividends and other transactions with shareowners
Redemption value adjustment for redeemable noncontrolling interests
Other comprehensive income (loss) attributable to the Company
Net sales (purchases) of shares for treasury(a)
Changes in other capital
Ending balance at December 31
Noncontrolling interests
Total equity balance at December 31
$ 128,159 $ 130,566 $ 123,026
13,057
(8,060)
(1)
11,109
(7,989)
(576)
130,566
6,217
$ 100,138 $ 136,833 $ 136,783
15,233
(8,948)
(2)
(9,053)
(32)
396
128,159
8,674
(6,126)
(9,155)
(25)
1,644
(20,946)
4,724
98,274
1,864
(a)
2015 included $(20,383) million related to the split-off of Synchrony Financial from GE, where GE shares were exchanged for shares of
Synchrony Financial.
Amounts may not add due to rounding.
(cid:54)(cid:72)(cid:72)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:20)(cid:24)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:73)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)
See accompanying notes.
GE 2015 FORM 10-K 131
GE 2015 FORM 10-K 131
F I N A N C I A L S T AT E M E N T S
t
(cid:3)
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 (cid:177) net (Note 6)
Other GE Capital receivables
Property, plant and equipment (cid:177) net (Note 7)
Receivable from GE Capital (debt assumption)
Investment in GE Capital
Goodwill (Note 8)
Other intangible assets (cid:177) net (Note 8)
Contract assets (Note 9)
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)
Long-term borrowings (Note 10)
Investment contracts, insurance liabilities and insurance annuity benefits (Note 11)
Non-current compensation and benefits
All other liabilities (Note 13)
Liabilities of businesses held for sale (Note 2)
Liabilities of discontinued operations (Note 2)
Total liabilities(a)
Redeemable noncontrolling interests (Note 15)
Preferred stock (5,944,250 shares outstanding at year-end 2015
and no shares outstanding at year-end 2014)
GECC preferred stock (no shares outstanding at year-end 2015
and 50,000 shares outstanding at year-end 2014)
Common stock (9,379,288,000 and 10,057,380,000 shares outstanding
at year-end 2015 and 2014, respectively)
Accumulated other comprehensive income (loss) (cid:177) 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
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Noncontrolling interests(c) (Note 15)
Total equity (Note 15 and 16)
Total liabilities, redeemable noncontrolling interests and equity
General Electric Company
and consolidated affiliates
2015
2014
$
$
$
$
70,483
31,973
27,022
22,515
12,052
6,782
54,095
-
-
65,526
16,744
21,156
37,471
3,105
2,818
120,951
492,692
49,892
13,680
15,776
2,167
23,597
3,083
145,301
25,692
40,487
22,558
861
46,487
389,582
2,972
6
-
702
460
(5,499)
(80)
(11,410)
37,613
140,020
(63,539)
98,274
1,864
100,138
492,692
$
$
$
$
70,025
35,505
23,237
17,689
13,445
6,261
48,070
-
-
53,207
13,182
16,960
24,836
6,183
2,826
323,529
654,954
70,425
12,067
12,537
2,317
14,323
4,403
186,596
27,432
42,238
16,511
941
128,233
518,023
98
-
-
702
1,013
(2,428)
(180)
(16,578)
32,889
155,333
(42,593)
128,159
8,674
136,833
654,954
(a) Our consolidated assets at December 31, 2015 included total assets of $8,542 million of certain variable interest entities (VIEs) that can only be
used to settle the liabilities of those VIEs. These assets included current receivables and net financing receivables of $4,387 million and investment
securities of $1,404 million within continuing operations and assets of discontinued operations of $1,798 million. Our consolidated liabilities at
December 31, 2015 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 $3,083 million within continuing operations and non-recourse borrowings of
CSEs within discontinued operations of $794 million. See Note 21.
(b) The sum of accumulated other comprehensive income (loss) (AOCI) attributable to the Company was $(16,529) million and $(18,172) million at
December 31, 2015 and 2014, respectively.
(c)
Included AOCI attributable to noncontrolling interests of $(264) million and $(194) million at December 31, 2015 and 2014, respectively.
Amounts may not add due to rounding.
See accompanying notes.
132 GE 2015 FORM 10-K
132 GE 2015 FORM 10-K
GE(a)
2015
Financial Services (GE Capital)
2014
2015
2014
F I N A N C I A L S T AT E M E N T S
(cid:3)
STATEMENT OF FINANCIAL POSITION (CONTINUED)
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)
Other GE Capital receivables
Property, plant and equipment (cid:177) net (Note 7)
Receivable from GE Capital (debt assumption)(b)
Investment in GE Capital
Goodwill (Note 8)
Other intangible assets (cid:177) net (Note 8)
Contract assets (Note 9)
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
Liabilities and equity
Short-term borrowings (Note 10)(b)
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)
Long-term borrowings (Note10)(b)
Investment contracts, insurance liabilities and insurance annuity benefits
Non-current compensation and benefits
All other liabilities (Note 13)
Liabilities of businesses held for sale (Note 2)
Liabilities of discontinued operations (Note 2)
Total liabilities
Redeemable noncontrolling interests (Note 15)
Preferred stock (5,944,250 shares outstanding at year-end 2015)
and no shares outstanding at year-end 2014)
GECC preferred stock (no shares outstanding at year-end 2015
and 50,000 shares outstanding at year-end 2014)
Common stock (9,379,288,000 and 10,057,380,000 shares outstanding
at year-end 2015 and 2014, 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 s(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Noncontrolling interests (Note 15)
Total equity (Notes 15 and 16)
Total liabilities, redeemable noncontrolling interests and equity
10,372 $
151
14,707
22,449
-
-
20,145
85,114
46,227
63,157
16,312
21,156
13,281
7,666
2,818
9
15,916 $
84
11,513
17,639
-
-
17,207
-
82,549
51,526
12,984
16,960
7,722
8,772
2,805
9
323,562 $
245,686 $
$
$
$
3,872 $
16,511
12,550
2,317
14,322
-
12,468
-
41,494
11,429
1,504
137
116,604
98
-
-
702
19,799 $
19,250
15,776
2,167
23,595
-
83,770
-
39,472
15,573
1,409
128
220,938
2,972
6
-
702
460
(5,499)
(80)
(11,410)
37,613
140,020
(63,539)
98,274
1,378
99,651
$
323,562 $
60,111 $
31,827
-
66
25,003
15,865
34,781
-
-
2,370
435
-
25,287
(4,561)
-
120,942
312,125 $
48,650 $
1,745
-
-
-
3,083
129,062
26,155
1,006
9,351
-
46,359
265,411
-
6
-
-
54,109
35,425
-
50
25,647
13,848
31,253
-
-
1,680
202
-
17,445
(2,590)
-
323,520
500,589
67,416
1,905
-
-
-
4,403
174,174
27,881
734
5,583
-
128,096
410,191
-
-
-
-
1,013
(2,428)
(180)
(16,578)
32,889
155,333
(42,593)
128,159
825
128,984
245,686 $
456
(898)
(112)
(540)
12,326
34,988
-
46,227
486
46,713
312,125 $
1,010
(839)
(172)
(577)
32,999
55,077
-
87,499
2,899
90,398
500,589
(a)
(b)
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. See Note 1.
On December 2, 2015, senior unsecured notes and commercial paper was assumed by GE upon its merger with GE Capital resulting in an
intercompany payable to GE. At December 31, 2015, this amounted to $17,649 million in short-term borrowings and $67,465 million in long-
term borrowings. See Note 10 for additional information.
Amounts may not add due to rounding.
In the consolidating data on this page, "GE" means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GE
Capital" means General Electric Capital Corporation (GECC) and its successor GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and
(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:54)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:75)(cid:82)(cid:90)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:179)(cid:42)(cid:40)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:17)(cid:180)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)en eliminated from
(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:73)(cid:73)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:86)(cid:180)(cid:3)(cid:70)(cid:82)(cid:79)(cid:88)(cid:80)(cid:81)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)e prior page.
GE 2015 FORM 10-K 133
GE 2015 FORM 10-K 133
F I N A N C I A L S T AT E M E N T S
t
(cid:3)
STATEMENT OF CASH FLOWS
For the years ended December 31 (In millions)
Cash flows (cid:177) operating activities
Net earnings (loss)
Less net earnings (loss) attributable to noncontrolling interests
Net earnings (loss) 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 GE Capital
Deferred income taxes
Decrease (increase) in GE current receivables
Decrease (increase) in inventories
Increase (decrease) in accounts payable
Increase (decrease) in GE progress collections
All other operating activities
Cash from (used for) operating activities (cid:177) continuing operations
Cash from (used for) operating activities (cid:177) discontinued operations
Cash from (used for) operating activities
Cash flows (cid:177) investing activities
Additions to property, plant and equipment
Dispositions of property, plant and equipment
Net decrease (increase) in GE Capital 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 (cid:177) continuing operations
Cash from (used for) investing activities (cid:177) discontinued operations
Cash from (used for) investing activities
Cash flows (cid:177) financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)
Newly issued debt (maturities longer than 90 days)
Repayments and other reductions (maturities longer than 90 days)
Proceeds from issuance of GE Capital preferred stock
Net dispositions (purchases) of GE shares for treasury
Dividends paid to shareowners
All other financing activities
Cash from (used for) financing activities (cid:177) continuing operations
Cash from (used for) financing activities (cid:177) 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
Amounts may not add due to rounding.
See accompanying notes.
134 GE 2015 FORM 10-K
134 GE 2015 FORM 10-K
General Electric Company
and consolidated affiliates
2015
2014 (cid:3)
2013
$
(5,795)
332
(6,126)
7,495
$
15,345
112
15,233
(5,855)
$
13,355
298
13,057
(5,475)
4,847
-
383
(52)
(314)
(541)
(996)
7,160
11,856
8,034
19,891
(7,309)
3,020
1,043
79,615
2,283
-
(12,027)
(5,013)
61,613
(2,125)
59,488
(24,459)
13,951
(47,038)
-
(1,099)
(9,295)
(1,605)
(69,547)
(6,507)
(76,054)
(3,464)
(138)
91,017
90,879
20,395
70,483
(9,558)
(2,486)
$
$
4,953
-
(882)
(1,913)
(872)
565
(515)
5,318
16,033
11,676
27,709
(7,134)
2,923
1,260
232
630
-
(2,091)
23,410
19,229
(24,263)
(5,034)
(6,409)
14,629
(38,410)
-
(1,218)
(8,852)
(652)
(40,912)
23,956
(16,956)
(3,492)
2,224
88,792
91,017
20,991
70,025
(9,560)
(2,955)
$
$
5,202
-
(3,540)
(485)
(1,368)
442
1,892
4,672
14,398
14,112
28,510
(6,754)
2,716
2,151
528
1,818
16,699
(8,026)
35,027
44,159
(15,042)
29,117
(14,048)
38,356
(53,624)
990
(9,278)
(7,821)
(1,388)
(46,813)
1,238
(45,575)
(795)
11,258
77,533
88,792
9,617
79,173
(8,988)
(2,487)
$
$
F I N A N C I A L S T AT E M E N T S
(cid:3)
STATEMENT OF CASH FLOWS (CONTINUED)
t
For the years ended December 31 (In millions)
GE(a)
Financial Services (GE Capital)
2015
2014
2013
2015
2014
2013
$
Cash flows (cid:177) operating activities
Net earnings (loss)
Less net earnings (loss) attributable to noncontrolling interests
Net earnings (loss) 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 GE Capital(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
All other operating activities
Cash from (used for) operating activities (cid:177) continuing operations
Cash from (used for) operating activities (cid:177) discontinued operations
Cash from (used for) operating activities
Cash flows (cid:177) investing activities
Additions to property, plant and equipment
Dispositions of property, plant and equipment
Net decrease (increase) in GE Capital 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 (cid:177) continuing operations
Cash from (used for) investing activities (cid:177) discontinued operations
Cash from (used for) investing activities
Cash flows (cid:177) financing activities
Net increase (decrease) in borrowings (maturities of
90 days or less)
Newly issued debt (maturities longer than 90 days)
Repayments and other reductions (maturities longer than 90 days)
Proceeds from issuance of GE Capital preferred stock
Net dispositions (purchases) of GE shares for treasury
Dividends paid to shareowners
All other financing activities
Cash from (used for) financing activities (cid:177) continuing operations
Cash from (used for) financing activities (cid:177) 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
$
$
(6,061) $
83
(6,145)
7,807
15,182 $
(50)
15,233
(5,698)
13,303
245
13,057
(5,439)
$
(15,202) $
248
(15,450)
7,485
7,397
162
7,234
(5,860)
$
6,256
53
6,204
(5,540)
2,473
12,284
(1,800)
666
(282)
276
(1,010)
2,083
16,354
(12)
16,342
(3,785)
939
-
-
1,725
-
(10,350)
(1,308)
(12,779)
12
(12,767)
603
3,560
(2,190)
-
(1,099)
(9,289)
203
(8,211)
-
(8,211)
(908)
(5,544)
15,916
10,372
2,508
1,625
(476)
(473)
(877)
884
(528)
2,973
15,171
(2)
15,169
(3,970)
615
-
-
602
-
(2,091)
(1,062)
(5,906)
2
(5,905)
243
3,084
(323)
-
(1,218)
(8,851)
346
(6,719)
-
(6,719)
(312)
2,234
13,682
15,916
2,449
5,321
(2,571)
(1,432)
(1,351)
809
1,919
1,492
14,255
(2)
14,253
(3,680)
381
-
-
1,316
16,699
(8,026)
(1,868)
4,822
2
4,823
949
512
(5,032)
-
(9,278)
(7,821)
(212)
(20,881)
-
(20,881)
(22)
(1,827)
15,509
13,682
2,436
-
2,183
-
(14)
(189)
-
5,087
1,537
8,046
9,583
(4,237)
2,526
226
79,615
532
-
(1,677)
(4,690)
72,295
(2,137)
70,158
(24,834)
10,391
(44,848)
-
-
(4,620)
(1,362)
(65,273)
(6,507)
(71,780)
(2,556)
5,406
75,100
80,506
2,529
-
(406)
-
27
258
-
2,480
6,263
11,678
17,941
(3,818)
2,331
(161)
232
-
-
-
24,574
23,158
(24,263)
(1,105)
(7,078)
11,545
(38,087)
-
-
(3,322)
(679)
(37,621)
23,956
(13,665)
(3,180)
(9)
75,109
75,100
-
10,372 $
-
15,916 $
-
13,682
(1,204) $
(1,636)
(1,215) $
(1,337)
(1,132)
(4,753)
$
$
20,395
60,111 $
20,991
54,109
(8,884) $
(850)
(8,910)
(1,618)
$
$
2,754
-
(969)
-
33
155
-
2,596
5,232
14,113
19,345
(3,274)
2,335
3,022
528
477
-
-
35,756
38,844
(15,043)
23,801
(13,710)
37,852
(48,592)
990
-
(6,283)
(878)
(30,621)
1,239
(29,382)
(773)
12,991
62,118
75,109
9,617
65,492
(8,146)
2,266
(a)
(b)
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.
Represents GE Capital earnings/loss from continuing operations attributable to the Company, net of GE Capital dividends paid to GE.
Amounts may not add due to rounding.
In the consolidating data on this page, "GE" means the basis of consolidation as described in Note 1 to the consolidated financial statements; "GE
Capital" means General Electric Capital Corporation (GECC) and its successor GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and
associated companies. Separate information is shown for (cid:179)(cid:42)(cid:40)(cid:180) and (cid:179)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79) Services (GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:12)(cid:17)(cid:180) Transactions between GE and GE Capital have
been eliminated from the (cid:179)(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:180) columns and are discussed in Note 23.
See Note 25 for additional information regarding the Statement of Cash Flows.
GE 2015 FORM 10-K 135
GE 2015 FORM 10-K 135
F I N A N C I A L 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
CONSOLIDATION
Our financial statements consolidate all of our affiliates (cid:177) 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 im(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:57)(cid:44)(cid:40)(cid:182)(cid:86)(cid:3)
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-(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:36)(cid:79)(cid:79)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:51)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81), net
of allowance for losses, which represents our best estimate of probable losses inherent in such assets.
FINANCIAL STATEMENT PRESENTATION
We have reclassified certain prior-year amounts to conform to the current-(cid:92)(cid:72)(cid:68)(cid:85)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17) Certain columns and rows may not add
due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions.
Upon closing an acquisition, we consolidate the acquired business as soon as practicable. The size, scope and complexity of an
acquisition can af(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:3)(cid:81)(cid:72)(cid:70)(cid:72)(cid:86)(cid:86)(cid:68)(cid:85)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)
our standards. Accordingly, it is possible that changes will be necessary to the carrying amounts and presentation of assets and
liabilities in our financial statements as the acquired company is fully assimilated.
Financial data and related measurements are presented in the following categories:
GE. This represents the adding together of all affiliates other than GE Capital, whose continuing operations are presented on a one-line
basis, giving effect to the elimination of transactions among such affiliates.
GE Capital. This refers to General Electric Capital Corporation (GECC), or its successor GE Capital Global Holdings, LLC (GECGH),
and is the adding together of all affiliates of GE Capital giving effect to the elimination of transactions among such affiliates.
Consolidated. This represents the adding together of GE and GE Capital, giving effect to the elimination of transactions between GE
and GE Capital.
Operating Segments. These comprise our nine businesses, focused on the broad markets they serve: Power, Renewable Energy, Oil
& Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and Capital.
136 GE 2015 FORM 10-K
136 GE 2015 FORM 10-K
F I N A N C I A L 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
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
(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)-end exchange rates, while revenues and
expenses are translated at average rates for the respective periods.
Preparing financial statements in conformity with U.S. generally accepted accounting principles (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 2016 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, incremental fair value marks on businesses and assets held for sale carried at lower of cost or
market, and increased tax liabilities.
THE GE CAPITAL EXIT PLAN
On April 10, 2015, the Company announced its plan (the GE Capital Exit Plan) to reduce the size of its financial services businesses
through the sale of most of the assets of GE Capital over the following 24 months, and to focus on continued investment and growth in
(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:17)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:40)(cid:91)(cid:76)(cid:87)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75) were
approved on March 31, 2015, the Company will retain certain GE Capital businesses, principally its vertical financing businesses(cid:178)GE
Capital Aviation Services (GECAS), Energy Financial Services (EFS) and Healthcare Equipment Finance(cid:178)that directly relate to the
Co(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:82)(cid:80)(cid:68)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:58)(cid:82)(cid:85)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:54)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:85)(cid:88)(cid:81)-off insurance activities, and
allocated corporate costs (together referred to as GE Capital Verticals or Verticals). The assets planned for disposition include Real
Estate, most of Commercial Lending and Leasing (CLL) and all Consumer platforms (including all U.S. banking assets).
AFTER-TAX CHARGES RELATED TO THE GE CAPITAL EXIT PLAN
In connection with the announcement of the GE Capital Exit Plan, the Company estimated that it would incur approximately $23 billion
in after-tax charges through 2016, approximately $6 billion of which were expected to result in future net cash expenditures. These
charges relate to: business dispositions, including goodwill allocations (approximately $13 billion), tax expense related to expected
repatriation of foreign earnings and write-off of deferred tax assets (approximately $7 billion), and restructuring and other charges
(approximately $3 billion).
During 2015, GE recorded $22,030 million of after-tax charges related to the GE Capital Exit Plan, of which $7,687 million was recorded
in continuing operations and $14,343 million was recorded in discontinued operations. A description of after-tax charges for 2015 is
provided below.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
$9,517 million of net loss primarily related to the completed and planned dispositions of the Real Estate business, the
Consumer business and most of the CLL business, which was recorded in discontinued operations under the caption
(cid:179)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)
$6,467 million of tax expense related to expected repatriation of foreign earnings and write-off of deferred tax assets, of which
$6,327 million was recorded in continuing operations (cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:81)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:7)(cid:20)(cid:23)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)
(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)
(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)
$4,666 million of net asset impairments due to shortened hold periods, of which $3,151 million was recorded in discontinued
operations in our Consumer business and $1,515 million was recorded in discontinued operations in our CLL business, all
(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)
$818 million impairment charge of a coal-fired power plant in the U.S. related to a decision in the fourth quarter to exit the
investment over time recorded in continuing operations in (cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) (cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:81)(cid:72)(cid:81)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86).
GE 2015 FORM 10-K 137
GE 2015 FORM 10-K 137
F I N A N C I A L 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
(cid:120)
(cid:7)(cid:24)(cid:25)(cid:20)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:15)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:7)(cid:24)(cid:23)(cid:20)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)
Corporate com(cid:83)(cid:82)(cid:81)(cid:72)(cid:81)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:179)(cid:54)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:7)(cid:21)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)
discontinued operations, ne(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)
REORGANIZATION AND EXCHANGE OFFERS
During December 2015, General Electric Capital Corporation merged into GE. The merger and creation of a new intermediate holding
company was part of a reorganization of GE Capit(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:53)(cid:72)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:12)(cid:3)(cid:83)(cid:88)(cid:85)(cid:86)(cid:88)(cid:68)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:42)(cid:40)(cid:3)(cid:86)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)
(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:68)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:75)(cid:82)(cid:79)ding
company (GE Capital International Holdings Limited), which has a separate capital structure and will be supervised by the U.K.
Prudential Regulation Authority. The Reorganization, debt exchange offers (as described below) and establishment of GE Capital
International Holdings Limited were intended, among other things, to establish an efficient and simplified capital structure that is
(cid:86)(cid:68)(cid:87)(cid:76)(cid:86)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:68)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:86)(cid:87)(cid:72)(cid:83)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:82)(cid:81)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:76)(cid:70)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:76)(cid:80)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:71)esignation for
GE Capital. In addition, the debt exchange offers were designed to align the liabilities of GE Capital International Holdings Limited to its
assets from a maturity profile and liquidity standpoint, taking into consideration asset sales, and where appropriate, shortening the
maturity profile of targeted liabilities.
As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange up to approximately
$30,000 million of certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On
October 19, 2015, given the high level of participation, the offering was increased by approximately $6,000 million with the aggregate
principal amount of approximately $36,000 million (representing $31,000 million of outstanding principal and $5,000 million of premium)
of outstanding notes being tendered for exchange and settled on October 26, 2015. The new notes that were issued at closing are
composed of $15,268 million of 0.964% Six Month Notes due April 2016, £778 million of 1.363% Six Month Notes due April 2016,
$6,107 million of 2.342% Notes due 2020, $1,979 million of 3.373% Notes due 2025 and $11,465 million of 4.418% Notes due 2035. Of
the $16,160 million exchanged into the Six Month Notes, $1,297 million had been previously classified in short-term borrowings. GE
Capital will continue to evaluate the opportunity to repurchase debt while maintaining our liquidity at the levels communicated as part of
the GE Capital Exit Plan. The new notes have been fully, irrevocably and unconditionally guaranteed by GE.
Immediately prior to the Reorganization, GE Capital had $5,000 million in aggregate liquidation preference of Series A, B and C
preferred stock outstanding. In connection with the Reorganization, on December 3, 2015, holders who previously held GE Capital
preferred stock were issued an aggregate liquidation preference of $5,950 million of new GE Series A, B and C preferred stock. The
Series A, B and C preferred stock bear an initial fixed interest rate of 4.00%, 4.10% and 4.20%, respectively, through their initial call
date and are callable on June 15, 2022, December 15, 2022 and June 15, 2023, respectively. Subsequent to the call date, the Series A,
B and C preferred stock will bear a floating interest rate equal to three-month LIBOR plus 2.28%, 2.32% and 2.37%, respectively,
thereafter.
Subsequent to the issuance of the preferred stock on December 3, 2015, in response to investor feedback, GE launched an exchange
offer on December 18, 2015 that allowed GE preferred stock investors to exchange their existing Series A, B and C preferred stock into
a Series D GE preferred stock. These Series D instruments bear an initial fixed interest rate of 5.00% through January 21, 2021, will
bear a floating rate equal to three-month LIBOR plus 3.33% thereafter and are callable on January 21, 2021. On January 20, 2016,
$2,687 million of Series A, $2,008 million of Series B and $999 million of Series C were exchanged into $5,694 million Series D GE
preferred stock. Post exchange, $91 million of Series A, $64 million of Series B and $95 million of Series C GE preferred stock remain
outstanding.
GUARANTEE
As part of the GE Capital Exit Plan, the Company and GE Capital entered into an amendment to their existing financial support
agreement. Under this amendment (the Amendment), the Company has provided a full and unconditional guarantee (the Guarantee) of
the payment of principal and interest on all tradable senior and subordinated outstanding long-term debt securities and all commercial
paper issued or guaranteed by GE Capital identified in the Amendment. In the aggregate, the Guarantee applied to approximately
$85,829 million of GE Capital debt as of December 31, 2015. The Guarantee replaced the requirement that the Company make certain
(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:70)(cid:76)(cid:85)(cid:70)(cid:88)(cid:80)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:17)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:76)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:68)(cid:80)(cid:72)nded
to provide the full and unconditional guarantee by the Company set forth in the Guarantee.
138 GE 2015 FORM 10-K
138 GE 2015 FORM 10-K
F I N A N C I A L 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
SYNCHRONY FINANCIAL EXCHANGE OFFER
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(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:44)(cid:51)(cid:50)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:90)(cid:85)(cid:76)(cid:87)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)Option of $2.8
billion and retained 84.6% of Synchrony Financial.
(cid:50)(cid:81)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:20)(cid:28)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:42)(cid:40)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:42)(cid:40)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:27)(cid:23)(cid:17)(cid:25)(cid:8)(cid:3)
owned subsidiary, Synchrony Financial. On November 17, 2015, we completed the split-off of Synchrony Financial, through which the
Company accepted 671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833 shares of Synchrony
Financial common stock that it owned and recorded an after-tax gain of $3,429 million within discontinued operations. In connection
with the public offering and sale of Synchrony Financial, GE Capital indemnified Synchrony Financial and its directors, officers, and
(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:40)(cid:38)(cid:38)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)ther than historical liabilities of the businesses that are part of Synchrony
(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:182)(cid:86) ongoing operations. With the completion of the split-off and the (cid:41)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:182)(cid:86)(cid:3)(cid:11)(cid:41)(cid:53)(cid:37)(cid:12)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:72)(cid:84)(cid:88)(cid:72)(cid:81)(cid:87)(cid:3)approval of GE
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) application to deregister as a savings and loan holding company, GE Capital is no longer a savings and loan holding
company.
ACCOUNTING PRINCIPLES AND POLICIES
Our financial statements are prepared in conformity with GAAP.
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.
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.
GE 2015 FORM 10-K 139
GE 2015 FORM 10-K 139
F I N A N C I A L 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
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 and military propulsion equipment. Delivery of commercial engines
and non-U.S. military equipment 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, Oil & Gas and
Transportation segments, where costs of performing services are incurred on other than a straight-line basis. We also sell similar long-
term product services in our Healthcare and Renewable Energy segments, where such costs generally are expected to be on a
straight-line basis. For the Aviation, Power, 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 and Renewable Energy 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.
GE CAPITAL 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. 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. Payments received on nonaccrual loans 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
(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3)(cid:82)(cid:85)(cid:76)(cid:74)(cid:76)(cid:81)(cid:68)(cid:79)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:11)(cid:69)(cid:12)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)(cid:17)(cid:3)(cid:58)(cid:75)(cid:72)(cid:81)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:82)(cid:85)rower,
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 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 these estimates, 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.
140 GE 2015 FORM 10-K
140 GE 2015 FORM 10-K
F I N A N C I A L 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
We recognize operating lease income on a straight-line basis over the terms of underlying leases.
BUSINESSES AND ASSETS HELD FOR SALE
Businesses held for sale represent components that meet accounting requirements to be classified as held for sale and are presented
as single asset and liability amounts in our financial statements with a valuation allowance, if necessary, to recognize the net carrying
amount at the lower of cost or fair value, less cost to sell. Financing receivables that no longer qualify to be presented as held for
investment must be classified as held for sale and recognized in our financial statements at the lower of cost or fair value, less cost to
sell, with that amount representing a new cost basis at the date of transfer.
The determination of fair value for businesses and portfolios of financing receivables involves significant judgments and assumptions.
Development of estimates of fair values in this circumstance is complex and is dependent upon, among other factors, the nature of the
potential sales transaction (for example, asset sale versus sale of legal entity), composition of assets and/or businesses in the disposal
group, the comparability of the disposal group to market transactions, negotiations with third party purchasers etc. Such factors bear
directly on the range of potential fair values and the selection of the best estimates. Key assumptions were developed 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.
We review all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully
recoverable in comparison to estimated fair values.
DEPRECIATION AND AMORTIZATION
The cost of GE manufacturing plant and equipment is depreciated over its estimated economic life. In 2015, we changed the method of
depreciating its U.S. assets from an accelerated method based on a sum-of-the-years digits formula to a straight-line basis in order to
align and harmonize our methodology for manufacturing plant and equipment. This change in estimate was made prospectively as of
October 1, 2015, and had an immaterial impact for 2015. As a result, as of October 1, 2015, GE manufacturing plant and equipment is
generally depreciated on a straight-line basis.
The cost of GE Capital 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.
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, 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. A portion of our CLL nonaccrual receivables are
excluded from this definition, as they represent smaller-balance homogeneous loans that we evaluate collectively by portfolio for
impairment.
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).
GE 2015 FORM 10-K 141
GE 2015 FORM 10-K 141
F I N A N C I A L 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
(cid:179)(cid:39)(cid:72)(cid:79)(cid:76)(cid:81)(cid:84)(cid:88)(cid:72)(cid:81)(cid:87)(cid:180)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:22)(cid:19)(cid:3)(cid:71)(cid:68)(cid:92)(cid:86)(cid:3)(cid:82)(cid:85)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:83)(cid:68)(cid:86)(cid:87)(cid:3)(cid:71)(cid:88)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79) terms. 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.
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.
Measurement of the loss on our impaired commercial loans is based on the present value of expected future cash flows discounted at
(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:79)(cid:79)(cid:68)(cid:87)(cid:72)(cid:85)(cid:68)(cid:79)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:15)(cid:3)(cid:76)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)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. 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.
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 ca(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:36)(cid:79)(cid:79)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:51)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:76)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
fair value less costs to sell.
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
primarily in the reporting period in which management has deemed all or a portion of the financing receivable to be uncollectible. 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.
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INVESTMENT SECURITIES
We report investments in debt and marketable equity securities, and certain other equity securities, at fair value. See Note 19 for further
information on fair value. Unrealized gains and losses on available-for-sale investment securities are included (cid:76)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)
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-(cid:87)(cid:72)(cid:80)(cid:83)(cid:82)(cid:85)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:72)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72) amount
(cid:76)(cid:81)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:17)(cid:3)(cid:44)(cid:73)(cid:3)(cid:90)(cid:72)(cid:3)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-(cid:87)(cid:72)(cid:80)(cid:83)(cid:82)(cid:85)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:85)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)
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 bet(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)
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 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 34% and 40% of
GE inventories at 2015 and 2014, respectively.
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
(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:79)(cid:76)(cid:72)(cid:71)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)will. 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-(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:15)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:83)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)
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.
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-(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)-lived assets
for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
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INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE ANNUITY BENEFITS
Our run-off insurance activities include providing insurance and reinsurance for life and health risks and providing certain annuity
products. Two primary product types 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.
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.
FAIR VALUE MEASUREMENTS
The following sections describe the valuation methodologies we use to measure financial and non-financial instruments accounted for
at fair value including certain assets within our pension plans and retiree benefit plans.
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 (cid:177) Quoted prices for identical instruments in active markets.
Level 2 (cid:177) 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 (cid:177) 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.
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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.
Annually, we conduct reviews of our primary pricing vendor to validate that the (cid:76)(cid:81)(cid:83)(cid:88)(cid:87)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:89)(cid:72)(cid:81)(cid:71)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:71)(cid:72)(cid:72)(cid:80)(cid:72)(cid:71)(cid:3)
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.
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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.
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. 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.
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 changed 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 (cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86) operations and financial results. The ASU also expanded 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 was permitted for disposals (or classifications as held for sale) that had not been previously
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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.
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 (including amounts reported in assets and liabilities
of discontinued operations) by $1,224 million as of January 1, 2014.
NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
NBCU
As previously disclosed, Comcast Corporation was obligated to share with us potential tax savings associated with its purchase of our
interest in NBCU LLC. During the second quarter of 2015, we recognized $450 million of pre-tax income related to the settlement of this
obligation.
ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
(cid:3)
In the fourth quarter of 2015, we signed an agreement to sell our Electricity Meters business within our Energy Management segment to
Aclara Technologies, LLC and our Clarient business within our Healthcare segment to NeoGenomics, Inc. The sale of our Electricity
Meters business was completed on December 21, 2015 for proceeds of $220 million. The sale of our Clarient business was completed
on December 30, 2015 for proceeds of $255 million.
In the third quarter of 2015, we signed an agreement to sell our Intelligent Platforms Embedded Systems Products business within our
Energy Management segment to Veritas Capital. The sale was completed on December 7, 2015 for proceeds of $515 million.
In the fourth quarter of 2014, we signed an agreement to sell our Signaling business within our Transportation segment to Alstom. The
transaction closed on November 2, 2015 for proceeds of $800 million.
In the third quarter of 2014, we signed an agreement to sell our Appliances business to Electrolux. On July 1, 2015, we were notified
that the Department of Justice had initiated court proceedings seeking to enjoin the sale of Appliances to Electrolux. On December 7,
2015, we announced the termination of our agreement to sell our Appliances business to Electrolux. We received a break-up fee of
$175 million from Electrolux, which is recorded under the caption (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:180) in the consolidated Statement of Earnings.
On January 15, 2016, we announced the signing of a definitive agreement to sell our Appliances business with assets of $2,818 million
and liabilities of $1,409 million, to Qingdao Haier Co., Ltd. (Haier) for approximately $5,400 million. The transaction has been approved
by the board of directors of GE and Haier and remains subject to customary closing conditions, including Haier shareholder approval
and regulatory approvals. The transaction is targeted to close in mid-2016.
GE 2015 FORM 10-K 147
GE 2015 FORM 10-K 147
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
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
December 31 (In millions)
Assets
Current receivables(a)
Inventories
Property, plant, and equipment (cid:177) net
Goodwill
Other intangible assets (cid:177) net
Other
Assets of businesses held for sale
Liabilities
Accounts payable(a)
Other current liabilities
Other
Liabilities of businesses held for sale
$
2015
79
583
1,208
370
162
416
2,818 $
503
325
33
861
$
$
2014
180
588
979
433
157
489
2,826
506
346
89
941
$
$
$
$
(a)
Certain transactions at our Appliances and Signaling businesses are made on an arms-length basis with GE Capital, consisting primarily of
GE customer receivables sold to GE Capital and GE Capital services for material procurement. These intercompany balances included within
our held for sale businesses are reported in the GE and GE Capital columns of our financial statements, but are eliminated in deriving our
consolidated financial statements.
DISCONTINUED OPERATIONS
Discontinued operations primarily included our Consumer business, most of our CLL business, our Real Estate business, and our U.S.
mortgage business (WMC). Results of operations, financial position and cash flows for these businesses are separately reported as
discontinued operations for all periods presented.
We have entered into Transitional Service Agreements (TSA) with and provided certain indemnifications to buyers of GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)
assets. Under the TSAs, GE Capital provides various services for terms generally between 12 and 24 months and receives a level of
cost reimbursement from the buyers.
Indemnifications amount to $1,543 million, for which we have recognized related liabilities of $62 million at December 31, 2015. In
addition, we provided $736 million of credit support, the vast majority on behalf of certain CLL customers aligned with signed disposal
transactions scheduled to close in 2016, and recognized an insignificant liability at December 31, 2015.
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)(b)
2015
2014
2013
$
$
$
$
$
$
23,003
887
(791)
96
(6,612)
(979)
(7,591)
(7,495)
$
$
$
$
$
$
31,136
6,615
(776)
5,839
14
1
15
5,855
$
$
$
$
$
$
32,987
6,558
699
7,257
(2,027)
246
(1,781)
5,475
(a)
(b)
The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, and GE Capital earnings (loss) from discontinued
operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued operations, is reported
within GE industrial earnings (loss) from discontinued operations, net of taxes, on the Consolidated Statement of Earnings (Loss).
Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(6,038) million, $6,472 million, and
$4,495 million for the years ended December 31, 2015, 2014, 2013, respectively.
148 GE 2015 FORM 10-K
148 GE 2015 FORM 10-K
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
December 31 (In millions)
2015
2014
Assets
Cash and equivalents
Investment securities
Financing receivables (cid:177) net
Other receivables
Property, plant and equipment (cid:177) net
Goodwill
Other intangible assets - net
Deferred income taxes
Financing receivables held for sale
Valuation allowance on disposal group classified as discontinued operations
Other
Assets of discontinued operations
Liabilities
Short-term borrowings
Accounts payable
Non-recourse borrowings
Bank deposits
Long-term borrowings
All other liabilities
Deferred income taxes
Other
Liabilities of discontinued operations
CONSUMER
$
$
$
$
20,395
8,478
3,205
1,221
7,537
7,764
80
2,447
69,847
(6,374)
6,350
120,951
739
2,870
3,994
25,613
730
11,053
1,437
52
46,487
$
$
$
$
20,991
13,349
213,514
2,896
18,354
23,452
987
3,530
3,475
-
22,980
323,529
3,780
4,280
25,536
62,839
13,767
11,046
6,810
174
128,233
In connection with the GE Capital Exit Plan, we announced the planned disposition of our Consumer business (including Synchrony
Financial) and classified the business as discontinued operations. On November 17, 2015, we completed the split-off of Synchrony
Financial through which GE accepted 671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833
shares of Synchrony Financial common stock that it owned. We closed certain of our other Consumer business dispositions for
proceeds of $17,550 million (excluding Synchrony Financial) for the year ended December 31, 2015. We expect to dispose of
substantially all of the remaining Consumer business in 2016.
FINANCIAL INFORMATION FOR CONSUMER
(In millions)
Operations
Total revenues and other income (loss)
Interest
Selling, general, and administrative expenses
Cost of services sold
Provision for losses on financing receivables
Investment contracts, insurance losses and insurance annuity
Other costs and expenses
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(a)
Earnings (loss) from discontinued operations, net of taxes(b)
$
$
$
$
$
$
2015
2014
2013
11,690
(2,081)
(3,940)
(1)
(5,029)
(12)
(392)
236
(878)
(642)
2,739
363
3,102
2,460
$
$
$
$
$
$
15,023
(2,611)
(4,572)
-
(3,544)
(18)
(388)
3,891
(736)
3,155
-
-
-
3,155
$
$
$
$
$
$
15,741
(2,669)
(4,349)
(1)
(4,048)
(15)
(337)
4,324
7
4,330
-
-
-
4,330
(a)
(b)
Included Synchrony Financial gain on sale of $3,429 million related to the share exchange.
Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $2,670 million, $3,752 million, and $4,312
million for the years ended December 31, 2015, 2014 and 2013, respectively.
GE 2015 FORM 10-K 149
GE 2015 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
COMMERCIAL LENDING AND LEASING
In connection with the GE Capital Exit Plan, we announced the planned disposition of most of our CLL business and classified this
portion of the business as discontinued operations. We closed certain of our CLL business dispositions for proceeds of $48,068 million
for the year ended December 31, 2015. We expect to dispose of substantially all of the remaining CLL business in 2016.
FINANCIAL INFORMATION FOR COMMERCIAL LENDING AND LEASING
(In millions)
Operations
Total revenues and other income (loss)
Interest
Selling, general and administrative expenses
Cost of services sold
Provision for losses on financing receivables
Other costs and expenses
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)
$
$
$
$
$
$
2015
2014
2013
10,580
(2,365)
(3,576)
(1,735)
(1,753)
(127)
1,024
(186)
838
(8,013)
(698)
(8,711)
(7,873)
$
$
$
$
$
$
13,413
(3,069)
(3,598)
(3,859)
(456)
(135)
2,296
(487)
1,808
-
-
-
1,808
$
$
$
$
$
$
13,144
(3,300)
(3,538)
(4,002)
(736)
(94)
1,474
65
1,539
-
-
-
1,539
(a)
Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(6,996) million, $2,279 million and
$1,457 million for the years ended December 31, 2015, 2014 and 2013, respectively.
REAL ESTATE
In connection with the GE Capital Exit Plan, we announced the planned disposition of our Real Estate business and classified the
business as discontinued operations. We closed certain of our Real Estate business dispositions for proceeds of $31,601 million for the
year ended December 31, 2015. We expect to dispose of substantially all of the remaining Real Estate business in 2016.
FINANCIAL INFORMATION FOR REAL ESTATE
(In millions)
Operations
Total revenues and other income (loss)
Interest
Selling, general and administrative
Cost of services sold
Provision for losses on financing receivables
Other costs and expenses
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)
$
$
$
$
$
$
2015
911
(457)
(444)
(5)
5
(158)
(149)
168
19
(1,338)
(639)
(1,977)
(1,958)
$
$
$
$
$
$
2014
2,969
(1,079)
(484)
-
86
(712)
780
224
1,003
-
-
-
1,003
$
$
$
$
$
$
2013
3,915
(1,278)
(568)
-
(28)
(788)
1,253
472
1,725
-
-
-
1,725
(a)
Earnings (loss) from discontinued operations attributable to the Company, before income taxes, was $(1,486) million, $778 million and $1,246
million for the years ended December 31, 2015, 2014 and 2013, respectively.
150 GE 2015 FORM 10-K
150 GE 2015 FORM 10-K
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
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, 2015, such claims consisted of $2,887 million of individual claims generally submitted before the filing of a
lawsuit (compared to $3,694 million at December 31, 2014) and $8,047 million of additional claims asserted against WMC in litigation
without making a prior claim (Litigation Claims) (compared to $9,225 million at December 31, 2014). The total amount of these claims,
$10,934 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, 2015, these amounts do not include approximately $112 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 law and the June 11, 2015 decision of the New York Court of Appeals in
ACE Securities Corp. v. DB Structured Products, Inc., on the statute of limitations period governing such claims.
Reserves related to repurchase claims made against WMC were $875 million at December 31, 2015, reflecting a net increase to
reserves in the year December 31, 2015 of $66 million due to incremental provisions net of settlements. The reserve estimate takes into
account recent settlement activity and is based upon (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) evaluation of the remaining exposures as a percentage of estimated
lifetime mortgage loan losses within the pool of loans supporting each securitization for which timely claims have been asserted in
litigation against WMC. Settlements in prior periods reduced (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) 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
2015
809
212
(146)
875
$
$
2014
800
365
(356)
809
$
$
Given the significant litigation activity and (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) continuing efforts to resolve the lawsuits involving claims made against WMC, it is
difficult to assess whether future losses will be consistent with (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) past experience. Adverse changes to (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) assumptions
supporting the reserve may result in an increase to these reserves. WMC estimates a range of reasonably possible loss from $0 to
approximately $500 million over its recorded reserve at December 31, 2015. This estimate involves significant judgment and may not
reflect the range of uncertainties and unpredictable outcomes inherent in litigation, including the matters discussed in Legal
Proceedings and potential changes in (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) legal strategy. This estimate excludes any possible loss associated with an adverse court
decision on the applicable statute of limitations or an adverse outcome in the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (FIRREA) investigation discussed in Legal Proceedings, as WMC is unable at this time to develop such a meaningful
estimate.
At December 31, 2015, there were 14 lawsuits involving claims made against WMC arising from alleged breaches of representations
and warranties on mortgage loans included in 13 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, 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.
GE 2015 FORM 10-K 151
GE 2015 FORM 10-K 151
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
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, (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) 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 (cid:58)(cid:48)(cid:38)(cid:182)(cid:86) 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
OTHER FINANCIAL SERVICES
$
$
2015
(184)
(146)
$
$
2014
(291)
(199)
$
$
2013
(346)
(232)
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.
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 OTHER FINANCIAL SERVICES
(In millions)
Total revenues and other income (loss)
Gain (loss) on disposal, net of taxes
Earnings (loss) from discontinued operations, net of taxes
$
$
$
2015
8
-
32
$
$
$
2014
23
15
92
$
$
$
2013
532
(1,781)(a)
(1,823)
(a)
Primarily reflects agreement with the buyer of GE Money Japan to extinguish an obligation under terms specified in the 2008 sale agreement.
GE INDUSTRIAL
The sum of GE industrial earnings (loss) from discontinued operations, net of taxes, was $(10) million, $(5) million, and $(66) million for
the years ended December 31, 2015, 2014, 2013, respectively. During the fourth quarter of 2013, we recorded an increase to our tax
reserve related to Spanish taxes for the years prior to 2007 disposition of our Plastics business. GE Capital earnings (loss) from
discontinued operations, net of taxes, after adjusting for earnings (loss) attributable to noncontrolling interests related to discontinued
operations, is reported within GE industrial earnings (loss) from discontinued operations, net of taxes, on the Statement of Earnings.
152 GE 2015 FORM 10-K
152 GE 2015 FORM 10-K
December 31 (In millions)
GE
Debt
U.S. corporate
Corporate (cid:177) non-U.S.
U.S. government and federal
agency
Equity
GE Capital
Debt
U.S. corporate
State and municipal
Mortgage and asset-backed(a)
Corporate (cid:177) non-U.S.
Government (cid:177) non-U.S.
U.S. government and federal
agency
Equity
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 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 and comprise mainly investment-grade debt securities
supporting obligations to annuitants and policyholders in our run-off insurance operations. We do not have any securities classified as
held-to-maturity.
2015
Amortized
cost
Gross
Gross
unrealized unrealized
losses
gains
Estimated
fair value
Amortized
cost
2014
Gross
unrealized
gains
Gross
unrealized
losses
Estimated
fair value
$
2 $
1
- $
-
- $
-
3 $
1
49
87
139
-
13
14
-
(2)
(2)
49
98
151
12 $
1
-
69
82
- $
-
-
4
4
- $
-
-
(2)
(2)
12
1
-
71
84
19,971
3,910
2,995
759
279
2,669
407
157
96
136
623
112
28,648
104
16
3,585
(285)
(73)
(35)
(9)
-
-
(4)
(407)
22,355
4,245
3,116
846
415
727
123
31,827
19,801
4,116
4,478
844
362
3,961
554
328
109
129
705
112
30,417
56
23
5,160
(70)
(52)
(29)
(1)
-
-
(1)
(153)
23,692
4,618
4,777
952
491
761
134
35,425
(4)
35,505
Eliminations
Total
(4)
-
-
(4)
(4)
-
-
$
28,783 $ 3,599 $
(409) $ 31,973 $
30,496 $ 5,164 $
(155) $
(a)
Included residential mortgage-backed securities substantially collateralized by U.S. mortgages. At December 31, 2015, $587 million related to
securities issued by government-sponsored entities and $30 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 decreased to $31,973 million at December 31, 2015, from $35,505 million at December 31,
2014, primarily due to a decline in unrealized gains resulting from higher interest rates, and net sales, primarily related to mortgage-
backed securities.
GE 2015 FORM 10-K 153
GE 2015 FORM 10-K 153
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 S E C U R I T I E S
ESTIMATED FAIR VALUE AND GROSS UNREALIZED LOSSES OF AVAILABLE-FOR-SALE INVESTMENT SECURITIES
(In millions)
December 31, 2015
Debt
U.S. corporate
State and municipal
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
Equity
Total
December 31, 2014
Debt
U.S. corporate
State and municipal
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
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)
$
$
$
$
2,966
494
719
56
36
4,273
556
67
174
39
10
846
$
$
$
$
(218)
(20)
(20)
(4)
(6)
(269)
(17)
(1)
(1)
(1)
(3)
(22)
$
$
$
$
433
155
84
14
-
686
836
274
307
-
-
1,417
$
$
$
$
(67)
(53)
(16)
(4)
-
(140) (c)
(53)
(51)
(28)
-
-
(132)
(a)
(b)
(c)
Includes the estimated fair value of and gross unrealized losses on equity securities held by GE. At December 31, 2015, the estimated fair
value of and gross unrealized losses on equity securities were $6 million and $(2) million, respectively. At December 31, 2014, the estimated
fair value of and gross unrealized losses on equity securities were $4 million and $(2) million, respectively.
Included gross unrealized losses of $(1) million related to securities that had other-than-temporary impairments previously recognized at
December 31, 2015.
Includes debt securities held to support obligations to holders of Guaranteed Investment Contracts (GICs) all of which are considered to be
investment-grade by the major rating agencies at December 31, 2015.
Unrealized losses are not indicative of the amount of credit loss that would be recognized and at December 31, 2015 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 2015 have not changed.
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.
Mortgage and asset-backed securities primarily comprise commercial and residential mortgage-backed securities.
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), about half of
which were originated in 2008 and prior. The vast majority of the securities in our CMBS portfolio have investment-grade credit ratings.
Our residential mortgage-backed securities (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, 2015, $587 million and $30 million related to agency and non-agency
securities, respectively. Additionally, $57 million was related to residential subprime credit securities, primarily supporting obligations to
annuitants and policyholders in our run-off insurance operations. Substantially all of the subprime exposure is related to securities
backed by mortgage loans originated in 2005 and prior and are investment grade.
154 GE 2015 FORM 10-K
154 GE 2015 FORM 10-K
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 S E C U R I T I E S
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)
$
$
2015
64
-
64
$
$
2014
316 $
(4)
312 $
2013
201
(31)
170
(a)
Included pre-tax, other-than-temporary impairments recorded in earnings related to equity securities of $5 million, $219 million and an
insignificant amount in 2015, 2014 and 2013, 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
$
$
$
2015
176
31
-
3
205
$
$
2014
473
1
4
301
176
$
2013
391
120
25
63
473
CONTRACTUAL MATURITIES OF INVESTMENT IN AVAILABLE-FOR-SALE DEBT SECURITIES
(EXCLUDING MORTGAGE 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
$
495
2,556
4,846
17,648
Estimated
fair value
501
2,745
5,097
20,248
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
GE Capital
Gains
Losses, including impairments
Net
Total
2015
7
(36)
(29)
121
(51)
70
41
2014
$
3 $
(218)
(215)
87
(104)
(16)
$
(231) $
2013
1
(20)
(19)
128
(156)
(28)
(47)
$
$
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.
Proceeds from investment securities sales and early redemptions by issuers totaled $5,746 million, $1,898 million and $6,406 million for
the years ended 2015, 2014 and 2013, respectively. In 2015, investment securities sales of U.S. government and federal agency
securities, CMBS, and RMBS at Trinity totaled $4,254 million.
GE 2015 FORM 10-K 155
GE 2015 FORM 10-K 155
F I N A N C I A L S T AT E M E N T S
C U R R E N T R E C E I V A B L E S & I N V E N T O R I E S
NOTE 4. CURRENT RECEIVABLES
December 31 (In millions)
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Corporate items and eliminations
Less Allowance for Losses
Total
Consolidated(a)
2015
6,675
2,336
4,958
2,930
4,133
4,022
609
1,502
372
27,538
(515)
27,022
$
$
2014
4,071 $
895
5,793
1,655
4,656
4,350
454
1,466
391
23,732
(495)
23,237 $
GE(b)
2015
4,377 $
1,418
2,764
1,980
1,876
1,943
193
194
464
15,209
(502)
14,707 $
$
$
2014
2,149
616
3,233
731
1,997
2,241
351
214
466
11,998
(485)
11,513
(a)
(b)
Includes GE industrial customer receivables factored through a GE Capital affiliate and reported as financing receivables by GE Capital of
$13,042 million and $12,533 million at December 31, 2015 and 2014, respectively.
GE current receivables of $251 million and $254 million at December 31, 2015 and 2014, 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 4% of GE
sales of goods and services were to the U.S. government in 2015, compared with 3% in 2014 and 4% in 2013.
GE current receivables balances at December 31, 2015 and 2014, before allowance for losses, included $10,535 million and $7,808
million, respectively, from sales of goods and services to customers, and $17 million and $22 million at December 31, 2015 and 2014,
respectively, from transactions with associated companies. The remainder of the balances primarily relates to supplier advances,
revenue sharing programs and other non-income based tax receivables.
NOTE 5. INVENTORIES
December 31 (In millions)
GE
Raw materials and work in process
Finished goods
Unbilled shipments
Revaluation to LIFO
Total GE
2015
2014
$
13,415 $
8,199
628
22,243
207
22,449
9,963
6,982
755
17,701
(62)
17,639
GE Capital
Finished goods
Total consolidated
(cid:3)
Inventory increased $4,826 million in 2015 primarily due to the Alstom acquisition of $4,298 million.
$
66
22,515 $
50
17,689
156 GE 2015 FORM 10-K
156 GE 2015 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
NOTE 6. GE CAPITAL 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 (cid:177) net
NET INVESTMENT IN FINANCING LEASES
2015
20,115
4,969
25,084
(81)
25,003
$
$
2014
20,270
5,471
25,741
(93)
25,647
$
$
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)
2015
2014
2015
2014
2015
2014
$
5,901 $
6,755 $
3,251 $
3,669 $
2,649 $
3,086
(1,482)
4,419
2,057
(1,507)
(1,868)
4,887
2,371
(1,787)
-
3,251
928
(913)
-
3,669
(1,482)
1,167
1,138
(1,101)
1,129
(593)
(1,868)
1,218
1,233
(686)
4,969
5,471
3,266
3,706
1,703
1,765
(27)
(1,665)
3,277 $
(29)
(1,899)
3,543 $
(15)
(593)
2,658 $
(14)
(697)
2,995 $
(13)
(1,071)
619 $
(15)
(1,202)
548
$
(a)
(b)
Included $24 million and $33 million of initial direct costs on direct financing leases at December 31, 2015 and 2014, respectively.
Included pre-tax income of $61 million and $53 million and income tax of $23 million and $20 million during 2015 and 2014, respectively. Net
investment credits recognized on leveraged leases during 2015 and 2014 were insignificant.
CONTRACTUAL MATURITIES
(In millions)
Due in
2016
2017
2018
2019
2020
2021 and later
Total
Total
loans
Net rentals
receivable
$
$
13,937
1,299
769
1,428
722
1,959
20,115
$
$
821
719
715
564
425
1,174
4,419
We expect actual maturities to differ from contractual maturities.
ALLOWANCE FOR LOSSES
(In millions)
Beginning balance
Provision
Net write-offs(a)
Other(b)
Ending balance
$
$
2015
93
48
(60)
(1)
81
$
$
2014
44 $
79
(27)
(3)
93 $
2013
43
4
(4)
1
44
(a)
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.
(b)
Other primarily includes effects of currency exchange.
GE 2015 FORM 10-K 157
GE 2015 FORM 10-K 157
F I N A N C I A L S T AT E M E N T S
P R O P E R T Y , P L A N T A N D E Q U I P M E N T
We manage our financing receivable portfolios using delinquency and nonaccrual data as key performance indicators. Substantially all
of our financing receivables are secured at December 31, 2015 and 2014.
At December 31, 2015, $622 million (2.5%), $201 million (0.8%) and $256 million (1.0%) of financing receivables were over 30 days
past due, over 90 days past due and on nonaccrual, respectively. At December 31, 2014, $610 million (2.4%), $131 million (0.5%) and
$512 million (2.0%) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively. The
vast majority of nonaccrual loans at December 31, 2015 and 2014, which are primarily at GECAS, are currently paying in accordance
with their contractual terms.
The recorded investment in impaired loans at December 31, 2015 and 2014 was $175 million and $412 million, respectively, primarily in
GECAS, and included $2 million and $20 million of impaired loans with specific allowances of $1 and $16 million, respectively, primarily
at EFS. The method used to measure impairment for these loans is primarily based on collateral value. At December 31, 2015, troubled
debt restructurings included in impaired loans were $116 million, the vast majority at GECAS.
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
GE Capital(b)
Land and improvements, buildings, structures and related
equipment
Equipment leased to others
Aircraft(c)
All other
Eliminations
Total
Depreciable
lives-new
(in years)
Original Cost
2015
Net Carrying Value
2014
2015
2014
8 (a) $
8-40
4-20
1-10
888 $
10,050
24,515
4,359
39,812
690 $
8,740
23,370
3,751
36,551
870 $
5,440
9,986
3,849
20,145
698
4,131
9,040
3,338
17,207
1-35(a)
267
318
101
142
15-20
3-35
50,339
543
51,149
(939)
90,022 $
46,017
767
47,102
(462)
83,191 $
34,316
364
34,781
(831)
54,095 $
30,573
539
31,253
(390)
48,070
$
(a)
(b)
(c)
Depreciable lives exclude land.
Included $1,024 million and $731 million of original cost of assets leased to GE with accumulated amortization of $83 million and $60 million at
December 31, 2015 and 2014, respectively.
The GECAS business of Capital recognized impairment losses of $168 million and $445 million in 2015 and 2014, respectively. These losses
are recorded in the caption (cid:179)Cost of services sold(cid:180) in the Statement of Earnings to reflect adjustments to fair value based on (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)
best estimates, which are benchmarked against third-party appraiser current market values for aircraft of similar type and age.
Consolidated depreciation and amortization related to property, plant and equipment was $4,847 million, $4,953 million and $5,202
million in 2015, 2014 and 2013, respectively. Amortization of GE Capital equipment leased to others was $2,266 million, $2,386 million
and $2,693 million in 2015, 2014 and 2013, respectively.
Noncancellable future rentals due from customers for equipment on operating leases at December 31, 2015, are as follows:
(In millions)
Due in
2016
2017
2018
2019
2020
2021 and later
Total
158 GE 2015 FORM 10-K
158 GE 2015 FORM 10-K
$ 4,162
3,876
3,378
2,920
2,455
7,128
$ 23,919
F I N A N C I A L S T AT E M E N T S
A C Q U I S I T I O N S & I N T A N G I B L E AS S E T S
NOTE 8. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
ACQUISITIONS
On November 2, 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. The purchase price was (cid:188)9,200
million ($10,135 million), net of cash acquired of approximately (cid:188)1,600 million ($1,765 million). As further discussed below and
elsewhere in this report, the acquired Alstom businesses had a significant impact on our industrial businesses, directly affecting
accounting and reporting related to three of our operating segments, as well as the creation of several new, jointly-owned entities.
Given the timing and complexity of the acquisition, the presentation of these businesses in our financial statements, including the
allocation of the purchase price, is preliminary and likely to change in future reporting periods. We will complete our post-closing
procedures and purchase price allocation no later than the fourth quarter of 2016.
As noted above, we formed three consolidated joint ventures with Alstom in grid technology, renewable energy, and global nuclear and
French steam power. In addition, GE contributed its Digital Energy business to the grid technology joint venture.
Alstom holds redemption rights with respect to its interest in each joint venture, which, if exercised, would require us to purchase all of
their interest during September 2018 or September 2019 for the grid technology and renewable energy joint ventures. Alstom also
holds similar redemption rights for the global nuclear and French steam power joint venture, that are exercisable during the first full
calendar quarter immediately following the fifth or sixth anniversary of the acquisition date. The redemption price would generally be
equal to (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) initial investment plus annual accretion of 3% for the grid technology and renewable energy joint ventures and plus
annual accretion of 2% for the nuclear and French steam power joint venture, with potential upside sharing based on an EBITDA
multiple. Alstom also holds additional redemption rights in other limited circumstances as well as a call option to require GE to sell all of
its interests in the renewable energy joint venture at the higher of fair value or Al(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) initial investment plus annual accretion of 3%
during the month of May in the years 2016 through 2019 and also upon a decision to IPO the joint venture.
GE holds a call option on (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) interest in the global nuclear and French steam power joint venture at the same amount as (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86)
redemption price in the event that Alstom exercises its put option in the grid technology or renewable energy joint ventures. GE also
has call options on (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) interest in the three joint ventures in other limited circumstances. In addition, the French Government holds
a preferred interest in the global nuclear and French steam power joint venture, giving it certain protective rights.
The acquisition and alliances with Alstom affected our Power, Energy Management and Renewable Energy segments. The financial
impact of acquired businesses on individual segments will be affected by a number of variables, including operating performance,
purchase accounting effects and expected synergies. In addition, due to the amount of time that elapsed between signing and closing,
the commercial operations of the businesses were negatively affected primarily as a result of uncertainty among Alstom customers
regarding the execution of the transaction. This affected the overall valuation of the acquired businesses at the time of close and,
accordingly, is reflected in the amounts assigned to the assets and liabilities recorded in purchase accounting. The fair value of the
acquired businesses, including a preliminary valuation of non-controlling interest, at the time of close was approximately $13,700
million, net of cash acquired. The preliminary purchase price allocation resulted in approximately $13,500 million of goodwill and $4,065
million of amortizable intangible assets. The preliminary fair value of the associated non-controlling interest is approximately $3,600
million, which consists of approximately $2,900 million for (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) redeemable non-controlling interest in the three joint ventures
(presented separately from total equity in the consolidated balance sheet) and $700 million for all other non-controlling interest.
In order to obtain approval by the European Commission and the Department of Justice, GE pledged to sell certain of (cid:36)(cid:79)(cid:86)(cid:87)(cid:82)(cid:80)(cid:182)(cid:86) gas-
turbine assets and its Power Systems Manufacturing subsidiary to Ansaldo Energia SpA (Ansaldo) after the close of the transaction for
approximately (cid:188)(cid:20)(cid:21)(cid:19) million. The purchase price will be paid by Ansaldo over a period of five years. The transaction closed on February
25, 2016.
On January 30, 2015, we acquired Milestone Aviation Group (Milestone Aviation), a helicopter leasing business, for approximately
$1,750 million, which is included in our Capital segment. The purchase price allocation resulted in goodwill of approximately $730
million and amortizable intangible assets of approximately $345 million.
GE 2015 FORM 10-K 159
GE 2015 FORM 10-K 159
F I N A N C I A L S T AT E M E N T S
A C Q U I S I T I O N S & I N T A N G I B L E AS S E T S
On June 2, 2014, we acquired (cid:38)(cid:68)(cid:80)(cid:72)(cid:85)(cid:82)(cid:81)(cid:182)(cid:86) 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 purchase price allocation resulted in goodwill of approximately $280
million and amortizable intangible assets of approximately $95 million.
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
purchase price allocation resulted in goodwill of approximately $270 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 purchase price allocation resulted in goodwill of approximately $695 million and amortizable intangible assets of approximately
$320 million.
GOODWILL
CHANGES IN GOODWILL BALANCES
(cid:3)
(cid:3)
(cid:3)
(In millions)
Balance at
January 1 Acquisitions(a)
Dispositions,
currency
exchange
and other
Balance at
December 31
Balance at
January 1
Acquisitions
Dispositions,
currency
exchange
and other
Balance at
December 31
2015
2014
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Capital
Corporate
Total
$
$
7,769 $
984
10,572
4,570
8,952
17,532
887
226
1,680
34
53,207 $
9,582 $
1,631
22
2,314
-
11
-
-
728
-
(615) $
(35)
-
(657)
(385)
(190)
(36)
(12)
(37)
-
16,736 $
2,580
10,594
6,227
8,567
17,353
851
214
2,370
34
7,852 $
970
10,516
4,748
9,103
16,643
1,012
606
1,684
3
14,287 $
(1,968) $
65,526 $ 53,137 $
21 $
-
276
-
-
1,004
2
-
-
31
1,334 $
(104) $
14
(220)
(178)
(151)
(115)
(127)
(380)
(3)
-
(1,264) $
7,769
984
10,572
4,570
8,952
17,532
887
226
1,680
34
53,207
(a)
Goodwill balances associated with Alstom and their allocations to segments are preliminary.
Goodwill balances increased by $12,319 million in 2015, primarily as a result of the Alstom and Milestone Aviation acquisitions, partially
offset by currency exchange effects of the stronger U.S dollar and disposals.
Goodwill balances increased $70 million in 2014, primarily as a result of acquisitions at Healthcare and Oil & Gas partially offset by
currency exchange effects of a stronger U.S. dollar.
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 (cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86) 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.
160 GE 2015 FORM 10-K
160 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
A C Q U I S I T I O N S & I N T A N G I B L E AS S E T S
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 10.0% to 15.5%.
During the third quarter of 2015, 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 in 2015, we identified one reporting unit for which the
fair value was not substantially in excess of its carrying value. Due to the sharp decline experienced in oil prices and the prospect of a
continuation of prevailing oil prices, the fair value of our Energy Financial Services reporting unit, within our Capital operating segment,
has been impacted and was in excess of its carrying value by approximately 13%. Due to the continued decline in oil prices, we
performed an impairment test in the fourth quarter using data as of December 31, 2015, which resulted in the fair value of our Energy
Financial Services reporting unit being in excess of its carrying value by approximately 12%. The goodwill associated with our Energy
Financial Services reporting unit was $1,386 million at December 31, 2015, representing approximately 2% of our total goodwill. Our Oil
& Gas business has also experienced declines in orders, project commencement delays and pricing pressures, which affect the fair
value of our Oil & Gas reporting units. While the goodwill of these reporting units is not currently impaired, we will continue to monitor
the oil & gas industry and the impact it may have on these businesses.
As of December 31, 2015, 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 2014, 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%. In the current year, the fair value of the Power Conversion reporting unit significantly exceeded its carrying
value. The increase in fair value over its carrying value was driven primarily by a stabilization of the business and cost cutting
measures. In addition, our carrying value has decreased due to currency effects of a stronger U.S. dollar.
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.
GE 2015 FORM 10-K 161
GE 2015 FORM 10-K 161
F I N A N C I A L S T AT E M E N T S
A C Q U I S I T I O N S & I N T A N G I B L E AS S E T S
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS - NET
December 31 (In millions)
Intangible assets subject to amortization
Indefinite-lived intangible assets(a)
Total
2015
16,634
109
16,744
$
$
2014
13,052
130
13,182
$
$
(a)
Indefinite-lived intangible assets principally comprise trademarks and in-process research and development.
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
8,650 $
8,543
7,375
1,337
167
651
267
26,990 $
2015
Accumulated
amortization
(2,059) $
(3,096)
(4,136)
(282)
(22)
(651)
(108)
(10,354) $
$
$
Net
6,591 $
5,447
3,239
1,055
145
-
159
16,634 $
Gross
carrying
amount
7,139 $
6,685
6,509
1,129
-
614
107
22,183 $
2014
Accumulated
amortization
(1,772) $
(2,894)
(3,547)
(251)
-
(614)
(53)
(9,131) $
Net
5,367
3,791
2,962
878
-
-
54
13,052
(a)
Balances at December 31, 2015 and 2014 reflect adjustments of $266 million and $293 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 2015, we recorded additions to intangible assets subject to amortization of $5,764 million, primarily driven by Alstom, capitalized
software across all business lines and Milestone Aviation. The components of finite-lived intangible assets acquired during 2015 and
their respective weighted average amortizable period follow.
COMPONENTS OF FINITE-LIVED INTANGIBLE ASSETS ACQUIRED DURING 2015
(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)
$
1,737
2,213
1,196
223
167
227
8.5
10.2
7.0
6.3
4.7
9.5
GE amortization expense related to intangible assets subject to amortization was $1,505 million, $1,386 million and $1,286 million in
2015, 2014 and 2013, respectively. GE Capital amortization expense related to intangible assets subject to amortization was $148
million, $84 million and $93 million in 2015, 2014 and 2013, respectively. Estimated GE Consolidated annual pre-tax amortization for
intangible assets over the next five calendar years follows.
ESTIMATED 5 YEAR CONSOLIDATED AMORTIZATION
(In millions)
2016
2017
2018
2019
2020
Estimated annual pre-tax amortization
$
1,952 $
1,853 $
1,851 $
1,725 $
1,591
162 GE 2015 FORM 10-K
162 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
C O N T R A C T A S S E T S A N D AL L O T H E R A S S E T S
NOTE 9. CONTRACT ASSETS AND ALL OTHER ASSETS
December 31 (In millions)
GE
Contract assets
2015
2014
$
21,156
$
16,960
Contract assets reflect revenues earned in excess of billings on our long-term contracts to construct technically complex equipment
(such as gas power systems and aircraft engines), long-term product maintenance or extended warranty arrangements and other
deferred contract related costs. Long-term product maintenance amounts are presented net of related billings in excess of revenues of
$2,602 million and $2,329 million at December 31, 2015 and 2014, respectively. Included in contract assets at December 31, 2015, is
$1,979 million related to the Alstom acquisition.
December 31 (In millions)
Investments
Associated companies
Other
Long-term receivables, including notes
Derivative instruments
Other
GE Capital
Investments
Associated companies
Assets held for sale(a)
Time deposits(b)
Other
Derivative instruments
Advances to suppliers
Deferred borrowing costs
Other(c)
Eliminations
All Other Assets
2015
2014
$
$
3,582
718
4,300
2,310
733
5,937
13,281
8,373
857
10,386
543
20,159
549
1,809
199
2,571
25,287
(1,097)
$
37,471
$
3,384
613
3,997
766
783
2,175
7,722
8,651
1,414
-
138
10,203
1,434
1,372
662
3,774
17,445
(331)
24,836
(a)
(b)
(c)
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,
2015 and 2014, such assets consisted primarily of loans, aircraft and equipment, and were accounted for at the lower of carrying amount or
estimated fair value less costs to sell.
Balances at December 31, 2015 included $10,386 million of high quality interest bearing deposits with European branches of global banks,
predominantly in the UK, that mature in April 2016.
Balances at December 31, 2015 and 2014 included $6 million and $7 million, respectively of deferred acquisition cost that reflect adjustments
of $544 million and $624 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.
GE 2015 FORM 10-K 163
GE 2015 FORM 10-K 163
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
NOTE 10. BORROWINGS
December 31 (Dollars in millions)
2015
2014
Short-term borrowings
GE
Commercial paper
Current portion of long-term borrowings
Other
Total GE short-term borrowings(b)
GE Capital
Commercial paper
U.S.
Non-U.S.
Current portion of long-term borrowings(c)
Intercompany payable to GE(d)
GE interest plus notes(f)
Other(e)
Total GE Capital short-term borrowings
Eliminations(d)
Total short-term borrowings
Long-term borrowings
GE
Senior notes
Subordinated notes
Subordinated debentures(g)
Other
Total GE long-term borrowings(b)
GE Capital
Senior notes(c)
Subordinated notes
Subordinated debentures(g)
Intercompany payable to GE(d)
Other(e)
Total GE Capital long-term borrowings
Eliminations(d)
Total long-term borrowings
Non-recourse borrowings of
consolidated securitization entities(h)
Total borrowings
$
Amount
500
17,777
1,522
19,799
650
4,351
24,996
17,649
-
1,005
48,650
(18,556)
49,892
$
Maturities
Amount
2017-2055 $
2021-2037
2066-2067
2017-2039
72,840
2,954
6,678
1,298
83,770
59,254
249
-
67,465
2,094
129,062
Average
Rate(a)
0.15 %
2.10
$
0.46
0.01
4.28
Average
Rate(a)
3.23 %
3.68
6.14
2.54
Average
Rate(a)
0.10 %
1.05
0.19
0.25
2.15
1.01
Average
Rate(a)
4.25 %
2.65
3.36
5.88
0.97 %
Amount
500
2,068
1,304
3,872
22,019
2,993
36,920
-
5,467
16
67,416
(863)
70,425
Amount
11,945
-
-
523
12,468
158,600
4,804
7,085
-
3,686
174,174
(46)
186,596
4,403
261,424
$
$
$
$
$
(67,531)
145,301
$
2016-2017 $
$
3,083
198,276
1.00 %
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Based on year-end balances and year-end local currency effective interest rates, including the effects from hedging.
Excluding assumed debt of GE Capital, GE total borrowings is $18,455 million.
Included $160 million and $439 million of obligations to holders of GICs at December 31, 2015 and 2014, respectively. These obligations
included conditions under which certain GIC holders could require immediate repayment of their investment should the long-term credit ratings
of GE Capital 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 GE Capital(cid:182)(cid:86)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:81)(cid:74)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)
Included $85,114 million of GE Capital debt assumed by GE and maintained as intercompany payable to GE at December 31, 2015.
Included $2,721 million and $3,830 million of funding secured by aircraft and other collateral at December 31, 2015 and 2014, respectively, of
which $1,537 million and $1,183 million is non-recourse to GE Capital at December 31, 2015 and 2014, respectively.
Entirely variable denomination floating-rate demand notes. The GE Interest Plus program was closed effective August 31, 2015.
Included $2,587 million of subordinated debentures, which constitute the sole assets of trusts that have issued trust preferred securities and
where GE owns 100% of the common securities of the trusts. Obligations associated with these trusts are unconditionally guaranteed by GE.
Included $918 million and $773 million of current portion of long-term borrowings at December 31, 2015 and 2014, respectively. See Note 21.
164 GE 2015 FORM 10-K
164 GE 2015 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
On May 28, 2015, GE issued (cid:188)(cid:22)(cid:15)(cid:20)(cid:24)(cid:19) million senior unsecured debt, composed of (cid:188)(cid:25)(cid:24)(cid:19) million of Floating Rate Notes due 2020, (cid:188)(cid:20)(cid:15)(cid:21)(cid:24)(cid:19)
million of 1.250% Notes due 2023 and (cid:188)(cid:20)(cid:15)(cid:21)(cid:24)(cid:19) million of 1.875% Notes due 2027. On October 9, 2015, $2.0 billion of long-term debt
issued by GE matured.
On April 10, 2015, GE provided a full and unconditional guarantee on the payment of the principal and interest on all tradable senior
and subordinated outstanding long-term debt securities and all commercial paper issued or guaranteed by GE Capital. $92.6 billion of
such debt was assumed by GE on December 2, 2015 upon its merger with GE Capital resulting in an intercompany payable to GE.
Prior to the merger $36 billion notional of GE Capital debt was exchanged into a new GE Capital international entity, including $16.2
billion which was exchanged into Six Month Notes and of which $14.9 billion was classified in long-term borrowings prior to exchange.
As part of the GE Capital Exit Plan, on September 21, 2015 GE Capital commenced private offers to exchange up to $30 billion of
certain outstanding debt for new notes with maturities of six months, five years, ten years or twenty years. On October 19, 2015, given
the high level of participation, the offering was increased by $6 billion with the aggregate principal amount of $36 billion of outstanding
notes (representing $31 billion of outstanding principal and $5 billion of premium) being tendered for exchange and settled on October
26, 2015. The new notes that were issued at closing are composed of $15.3 billion of 0.964% Six Month Notes due April 2016, £0.8
billion of 1.363% Six Month Notes due April 2016, $6.1 billion of 2.342% Notes due 2020, $2.0 billion of 3.373% Notes due 2025 and
$11.5 billion of 4.418% Notes due 2035.
December 31 (in millions)
2015
Short-term borrowings
GE
Current portion of long-term borrowings
GE Capital
Commercial paper-Non U.S.
Current portion of long-term borrowings
Other
Total short-term borrowings
Long-term borrowings
GE
Senior unsecured notes
Subordinated notes
Subordinated debentures
Other
GE Capital
Senior unsecured notes
Other
Total long-term borrowings
Total borrowings
Borrowings from
debt exchange(a)
Borrowings assumed
by GE
Borrowings
guaranteed by GE
$
$
$
$
$
- $
17,649 $
-
15,430
789
16,219 $
- $
-
-
-
16,756
-
16,756 $
32,975 $
-
-
-
17,649 $
57,433 $
2,954
6,678
400
-
-
67,465 $
85,114 $
-
4,351
24,334
789
29,474
-
-
-
-
56,355
-
56,355
85,829
(a)
Included $4.5 billion in additional bonds issued as a premium that will accrete up to face value ($36 billion) to the maturity date.
Additional information about borrowings and associated swaps can be found in Notes 20 and 27.
GE 2015 FORM 10-K 165
GE 2015 FORM 10-K 165
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
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(a)
GE Capital
2016
2017
2018
2019
2020
$
17,777
24,996 (b)
$
16,723
8,520
$
7,953
7,681
$
3,749
5,714
$
7,306
11,419
(a)
(b)
Included borrowings assumed by GE as part of the merger, for which GE has an offsetting amount due from GE Capital, of $17,649 million,
$12,454 million, $7,898 million, $3,707 million and $6,548 million in 2016, 2017, 2018, 2019, and 2020, respectively.
Fixed and floating rate notes of $458 million contain put options with exercise dates in 2016, and which have final maturity beyond 2019.
Committed credit lines totaling $45.6 billion had been extended to us by 48 banks at year-end 2015. $45.6 billion under these credit
lines can be on-lent to GE Capital. The GE lines include $24.5 billion of revolving credit agreements under which we can borrow funds
for periods exceeding one year. Additionally, $20.9 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.
December 31 (In millions)
Life insurance benefits(a)
Investment contracts
Other(b)
Eliminations
Total
2015
19,978
2,955
3,223
26,155
(463)
25,692
$
$
$
$
2014
20,688
3,970
3,224
27,881
(449)
27,432
(a)
(b)
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 2015 and 2014.
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
(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:85)(cid:72)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:17)(cid:3)(cid:53)(cid:72)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)GE Capital receivables" on our
Statement of Financial Position, and amounted to $1,880 million and $1,742 million at December 31, 2015 and 2014 respectively.
(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:3)(cid:85)(cid:72)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)es and
(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:17)(cid:180)(cid:3)(cid:53)(cid:72)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:7)295 million, $240 million and $250 million in 2015, 2014 and 2013,
respectively.
166 GE 2015 FORM 10-K
166 GE 2015 FORM 10-K
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
NOTE 12. POSTRETIREMENT BENEFIT PLANS
ABOUT OUR PLANS
We sponsor a number of pension plans, including our two principal pension plans for certain U.S. employees as well as other affiliate
pension plans. Our principal pension plans, the GE Pension Plan and the GE Supplementary Pension Plan, are discussed below. A
summary of other postretirement plans is also provided.
The GE Pension Plan is a defined benefit plan that covers 231,000 retirees and beneficiaries, 167,000 vested former employees and
75,000 active employees. This plan is closed to new participants. The GE Supplementary Pension Plan is an unfunded plan that
provides supplementary benefits to higher-level, longer-service employees. The GE Supplementary Pension Plan annuity benefit is
closed to new participants and has been replaced by an installment benefit. We use a December 31 measurement date for these plans.
On our balance sheet, we measure our plan assets at fair value and the obligations at the present value of the estimated payments to
plan participants. Participants earn benefits based on their service and pay. Those estimated payment amounts are determined based
on assumptions. Differences between our actual results and what we assumed are recorded in a separate component of equity each
period. These differences are amortized into earnings over the remaining average future service of active employees or the expected
life of participants, as applicable, who participate in the plan.
THE COST OF OUR PLANS
The amount we report in our earnings as pension cost consists of the following components:
(cid:120) Service cost - the cost of benefits earned.
(cid:120) Prior service cost amortization (cid:177) the effect of benefit changes resulting from plan amendments.
(cid:120) Expected return on plan assets (cid:177) the return we expect to earn on plan investments.
(cid:120)
(cid:120) Net actuarial loss amortization (cid:177) changes in estimates of the amount of the net pension obligation (based on assumption
Interest cost (cid:177) the accrual of interest on the pension obligation due to the passage of time.
changes and actual experience).
(cid:120) Curtailment loss (cid:177) immediate recognition of amounts previously deferred (due to an event, such as the sale of a business,
which shortens future service or eliminates future benefits).
Pension cost components follow.
COST OF PENSION 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 amortization
Curtailment loss
Pension cost
Principal pension plans
2015
1,424
205
(3,302)
2,778
3,288
105
4,498
$
$
$
$
2014
1,205
214
(3,190)
2,745
2,565
65
3,604
2013
1,535
246
(3,500)
2,460
3,664
-
4,405
$
$
(cid:3)
ASSUMPTIONS USED IN PENSION CALCULATIONS
Accounting requirements necessitate the use of assumptions to reflect the uncertainties and the length of time over which the pension
obligations will be paid. The actual amount of future benefit payments will depend upon when participants retire, the amount of their
benefit at retirement and how long they live. To reflect the obligation in (cid:87)(cid:82)(cid:71)(cid:68)(cid:92)(cid:182)(cid:86) dollars, we discount the future payments using a rate
that matches the time frame over which the payments will be made. We also need to assume a long-term rate of return that will be
earned on investments used to fund these payments.
GE 2015 FORM 10-K 167
GE 2015 FORM 10-K 167
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
The assumptions used to measure our pension benefit obligations (PBO) follow.
ASSUMPTIONS USED TO MEASURE PENSION BENEFIT OBLIGATIONS
December 31
Discount rate
Compensation increases
Principal pension plans
2015
4.38%
3.80
2014
4.02%
4.10
2013
4.85%
4.00
(cid:3)
The discount rate used to measure the pension obligation at the end of the year is also used to measure pension cost in the following
year. The assumptions used to measure pension costs follow.
ASSUMPTIONS USED TO MEASURE PENSION COST
December 31
Discount rate
Expected return on assets
Principal pension plans
2015
4.02%
7.50
2014
4.85%
7.50
2013
3.96%
8.00
(cid:3)
We evaluate these assumptions annually. We evaluate other assumptions periodically, such as retirement age, mortality and turnover,
and update them as necessary to reflect our actual experience and expectations for the future.
The Society of Actuaries issued new mortality tables in 2014 projecting longer life expectancies that resulted in higher postretirement
benefit obligations for U.S. companies. We updated our mortality assumptions as of December 31, 2014, which resulted in an increase
of $3,953 million in our principal pension (cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:182) benefit obligations.
We determine the discount rate using the weighted average yields on high-quality fixed-income securities that have maturities
consistent with the timing of benefit payments. Lower discount rates increase the size of the benefit obligation and pension expense in
the following year; higher discount rates reduce the size of the benefit obligation and subsequent-year pension expense.
The expected return on plan assets is the estimated long-term rate of return that will be earned on the investments used to fund the
pension obligation. To determine this rate, we consider the current and target composition of plan investments, our historical returns
earned, and our expectations about the future.
The compensation assumption is used to estimate the annual rate at which pay of plan participants will grow. If the rate of growth
assumed increases, the size of the pension obligation will increase, as will the amount recorded in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity and amortized
to earnings in subsequent periods.
Further information about our pension assumptions, including a sensitivity analysis of certain assumptions, can be found in the Critical
Accounting Estimates (cid:884) Pension Assumptions within (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) Discussion and Analysis of Financial Condition and Results of
Operations (MD&A).
Principal pension plans
2015
68,722
45,720
23,002
$
$
2014
70,735
48,280
22,455
$
$
FUNDED STATUS
December 31 (in millions)
Projected benefit obligations
Fair value of plan assets
Underfunded
168 GE 2015 FORM 10-K
168 GE 2015 FORM 10-K
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
PROJECTED BENEFIT OBLIGATIONS
(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)
Principal pension plans
2015
2014
$
$
70,735
1,424
2,778
155
902
(4,017)(a)
(3,255)
68,722
$
$
58,113
1,205
2,745
153
-
11,718 (b)
(3,199)
70,735
(a)
(b)
(c)
Principally associated with discount rate changes.
Principally associated with discount rate and mortality assumption changes.
The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was $6,099 million and $6,632 million at year-end 2015 and
2014, respectively.
THE COMPOSITION OF OUR PLAN ASSETS
The fair value of our pension plans' investments is presented below. The inputs and valuation techniques used to measure the fair
value of these assets are described in Note 1 and have been applied consistently.
December 31 (in millions)
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)
Other debt securities(c)
Private equities(a)
Real estate(a)
Other investments(d)
Total plan assets
Principal pension plans
2015
2014
$
$
12,447
9,088
3,252
5,529
5,131
4,885
3,186
2,202
45,720
$
$
12,956
9,153
4,500
5,155
5,729
5,249
3,129
2,409
48,280
(a)
(b)
(c)
(d)
Included direct investments and investment funds.
Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
Primarily represented investments in residential and commercial mortgage-backed securities, non-U.S. corporate and government bonds and
U.S. government, federal agency, state and municipal debt.
Substantially all represented hedge fund investments.
Virtually all of the private equity, real estate and other investments are considered Level 3 investments. The remaining investments are
substantially all considered Level 1 or Level 2. A description of the fair value leveling hierarchy is provided in the Accounting Principles
and Policy section of 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
Principal pension plans
2015
2014
48,280
307
233
155
(3,255)
45,720
$
$
48,297
2,793
236
153
(3,199)
48,280
$
$
GE 2015 FORM 10-K 169
GE 2015 FORM 10-K 169
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
AMOUNTS INCLUDED IN (cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:50)(cid:58)(cid:49)(cid:40)(cid:53)(cid:54)(cid:182) EQUITY
Amounts included in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity that will be amortized in future reporting periods follow.
(cid:3)
December 31 (in millions)
Prior service cost
Net actuarial loss
Total
Principal pension plans
2015
1,473
16,795
18,268
$
$
2014
881
21,105
21,986
$
$
In 2016, we estimate that we will amortize $300 million of prior service cost and $2,450 million of net actuarial loss from (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)
equity into pension cost. Comparable amounts amortized in 2015 were $205 million and $3,288 million, respectively.
OTHER PENSION AND POSTRETIREMENT PLANS
We also administer other pension plans, including legacy plans that were part of acquisitions. Other pension plans in 2015 included 53
U.S. and non-U.S. pension plans with assets or obligations greater than $50 million. These other pension plans cover 60,000 retirees
and beneficiaries, 58,000 vested former employees and 39,000 active employees. We also sponsor a number of postretirement health
and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans cover approximately 189,000 retirees and
dependents.
In June 2015, we amended our principal retiree benefit plans such that, effective January 1, 2016, our current post-65 retiree health
plans will be closed to certain production retirees, employees, and their eligible dependents. In lieu of current post-65 retiree health
benefits, current retired production participants and their eligible dependents who are 65 on or before January 1, 2018, will receive a
Retirement Reimbursement Account (RRA) to help pay for eligible expenses incurred for coverage purchased through a private
exchange. In addition, production employees eligible for current post-65 retiree healthcare benefits who retire by June 23, 2019 and
their eligible dependents will also receive the RRA when they turn age 65 and enroll in individual Medicare coverage purchased through
a private exchange. Also, in June 2015, we amended our company-provided retiree life insurance so that it will be closed to production
employees who retire after June 23, 2019. These plan amendments reduced our principal retiree benefit obligations by approximately
$3,300 million.
Summarized information about these plans follows.
COST OF BENEFIT PLANS
Other pension plans
2014
2015
Principal retiree benefit plans
2013
2015
2014
$
373
$
412 $
645 $
174 $
789 $
2013
927
Other pension plans
2015
2014
Principal retiree
benefit plans
2015
2014
$
$
21,618
17,368
4,250
$
$
15,589 $
12,386
3,203 $
6,757 $
695
6,062 $
10,703
813
9,890
(In millions)
Benefit plan cost
FUNDED STATUS
(In millions)
Benefit obligations
Fair value of plan assets
Underfunded
170 GE 2015 FORM 10-K
170 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
A L L O T H E R L I A B I L I T I E S
AMOUNTS INCLUDED IN (cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:50)(cid:58)(cid:49)(cid:40)(cid:53)(cid:54)(cid:182) EQUITY
Amounts included in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity that will be amortized in future reporting periods follow.
December 31 (In millions)
Prior service cost (credit)
Net actuarial loss (gain)
Total
Other pension plans
2015
$
$
(29)
3,080
3,051
$
$
2014
(23) $
3,533
3,510 $
Principal retiree
benefit plans
2015
(3,132) $
(464)
(3,596) $
2014
(24)
(71)
(95)
In 2016, we estimate that we will amortize $1 million of prior service cost and $275 million of net actuarial loss for the other pension
plans from (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity into pension cost. For principal retiree benefit plans, the estimated prior service credit and net actuarial
gain to be amortized in 2016 will be $165 million and $55 million, respectively. Comparable amounts amortized in 2015, respectively,
were an insignificant amount and $289 million of net actuarial loss for the other pension plans and $8 million of prior service credit and
$25 million of net actuarial gain for the principal retiree benefit plans.
OUR FUNDING POLICY
Our policy for funding the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements under employee
benefit and tax laws. We may decide to contribute additional amounts beyond this level. We did not make contributions to the GE
Pension Plan in 2015 and 2014. The minimum funding requirements under U.S. law do not require a contribution to be made in 2016.
We expect to pay approximately $250 million for benefit payments under our GE Supplementary Pension Plan and administrative
expenses of our principal pension plans and expect to contribute approximately $930 million to other pension plans in 2016. In 2015,
comparative amounts were $233 million and $549 million, respectively.
We fund retiree health benefits on a pay-as-you-go basis and the retiree life insurance trust at our discretion. We expect to contribute
approximately $490 million in 2016 to fund such benefits. In 2015, we contributed $501 million for these plans.
Further information about our pension plans and principal retiree benefit plans can be found in Note 27.
NOTE 13. ALL OTHER LIABILITIES
This caption includes liabilities for various items including deferred income, interest on tax liabilities, unrecognized tax benefits,
environmental remediation, asset retirement obligations, derivative instruments, product warranties and a variety of sundry items.
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 $1,869 million at December 31, 2015.
GE 2015 FORM 10-K 171
GE 2015 FORM 10-K 171
F I N A N C I A L S T AT E M E N T S
I N C O M E T A X E S
NOTE 14. INCOME TAXES
GE and GE Capital file a consolidated U.S. federal income tax return. This enables GE and GE Capital to use tax deductions and
credits of one member of the group to reduce the tax that otherwise would have been payable by another member of the group. The GE
Capital effective tax rate reflects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GE Capital
for tax reductions and GE Capital pays for tax increases at the time (cid:42)(cid:40)(cid:182)(cid:86) tax payments are due.
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.
THE GE CAPITAL EXIT PLAN
In conjunction with the GE Capital Exit Plan, GE Capital will significantly reduce its non-U.S. assets while continuing to operate
appropriately capitalized non-U.S. businesses with substantial assets related to GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) vertical financing businesses, Energy
Financial Services, GECAS and Healthcare Equipment Finance. As a result of the GE Capital Exit Plan, GE Capital recognized a tax
expense of $6,327 million in continuing operations during 2015. This primarily consisted of $3,548 million of tax expense related to the
repatriation of excess foreign cash and the write-off of deferred tax assets of $2,779 million that will no longer be supported under this
plan.
The repatriation of cash includes approximately $10 billion of foreign earnings that, prior to the approval of the GE Capital Exit Plan,
were indefinitely reinvested in GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) international operations. GE (cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) indefinitely reinvested earnings have also been
reduced by charges recognized in connection with the disposition of international assets. The remainder of the indefinitely reinvested
earnings will continue to be reinvested in the significant international base of assets that will remain after the GE Capital Exit Plan is
fully executed. The write-off of deferred tax assets largely relates to our Treasury operations in Ireland where the tax benefits will no
longer be apparent to be realized upon implementation of the GE Capital Exit Plan. These charges, which increase the 2015
Consolidated effective tax rate by 77.3 percentage points, are reported in the lines (cid:179)(cid:55)(cid:68)(cid:91) on global activities including (cid:72)(cid:91)(cid:83)(cid:82)(cid:85)(cid:87)(cid:86)(cid:180)(cid:15) and (cid:179)(cid:36)(cid:79)(cid:79)
other-(cid:81)(cid:72)(cid:87)(cid:180) in the Reconciliation of U.S. federal statutory income tax rate to actual income tax r(cid:68)(cid:87)(cid:72)(cid:17)(cid:180)
(BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
2015
2014
2013
GE
Current tax expense
Deferred tax expense (benefit) from temporary differences
GE Capital
Current tax expense (benefit)
Deferred tax expense (benefit) from temporary differences
Consolidated
Current tax expense
Deferred tax expense (benefit) from temporary differences
Total
$
$
3,307
(1,800)
1,506
2,796
2,183
4,979
6,103
383
6,485
$
$
2,110
(476)
1,634
(455)
(406)
(861)
1,655
(882)
773
CONSOLIDATED EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(In millions)
U.S. earnings
Non-U.S. earnings
Total
2015
(309)
8,495
8,186
2014
3,176
7,087
10,263
$
$
$
$
$
$
$
$
4,238
(2,571)
1,667
521
(969)
(448)
4,759
(3,540)
1,219
2013
6,066
3,034
9,100
172 GE 2015 FORM 10-K
172 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
I N C O M E T A X E S
CONSOLIDATED (BENEFIT) PROVISION FOR INCOME TAXES
(In millions)
U.S. Federal
Current
Deferred
Non - U.S.
Current
Deferred
Other
Total
2015
1,549
492
4,867
(121)
(302)
6,485
$
$
2014
(122)
261
2,035
(982)
(419)
773
$
$
2013
2,005
(2,571)
2,703
(1,004)
86
1,219
$
$
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE
(cid:3)
Consolidated
2014
2015
2013
2015
GE
2014
GE Capital
2013
2015
2014
2013
U.S. federal statutory income tax rate
Increase (reduction) in rate resulting from
inclusion of after-tax earnings of GE Capital in
before-tax earnings of GE
Tax on global activities including exports(a)
U.S. business credits(b)
All other (cid:177) net(c)
Actual income tax rate
35.0 % 35.0 % 35.0 % 35.0 % 35.0 % 35.0 % 35.0 % 35.0 % 35.0 %
-
54.1
(4.7)
(5.2)
44.2
79.2 %
-
(17.7)
(3.3)
(6.5)
(27.5)
-
(11.4)
(4.9)
(5.3)
(21.6)
82.4
(52.8)
(4.1)
(14.2)
11.3
(4.8)
(12.0)
(1.0)
(2.5)
(20.3)
(2.6)
(7.4)
(2.6)
(4.9)
(17.5)
-
(224.5)
9.2
(1.5)
(216.8)
-
(72.0)
(34.5)
(55.9)
(162.4)
-
(126.9)
(74.3)
(1.0)
(202.2)
7.5 % 13.4 % 46.3 % 14.7 % 17.5 % (181.8)% (127.4)% (167.2)%
(a)
(b)
(c)
Included (cid:21)(cid:17)(cid:28)(cid:8)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:21)(cid:17)(cid:26)(cid:8)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:40)(cid:15)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:68)(cid:87)(cid:85)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:182)(cid:86)(cid:3)(cid:81)(cid:82)(cid:81)-U.S. earnings in 2013.
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 and the credit for research performed in the U.S.
Included (4.2)% and (10.6)% in consolidated and GE, respectively, related to deductible stock losses in 2015. Also includes, for each period,
the (cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:11)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:180)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:69)(cid:82)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:12)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:72)(cid:86)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:22)(cid:24)(cid:8)(cid:3)(cid:73)(cid:72)deral effect.
UNRECOGNIZED TAX POSITIONS
Annually, we file over 5,500 income tax returns in over 300 global taxing jurisdictions. We are under examination or engaged in tax
litigation in many of these jurisdictions. During 2015, the Internal Revenue Service (IRS) completed the audit of our consolidated U.S.
income tax returns for 2010-2011, except for certain issues that remain under examination. During 2013, the IRS completed the audit of
our consolidated U.S. income tax returns for 2008-2009, except for certain issues that remain under examination. 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 (cid:179)(cid:88)(cid:81)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71) tax
(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:180) (cid:177) 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 2008-2011, reduced
our 2015 and 2013 consolidated income tax rates by 4.4 and 1.9 percentage points, respectively.
GE 2015 FORM 10-K 173
GE 2015 FORM 10-K 173
F I N A N C I A L S T AT E M E N T S
I N C O M E T A X 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
2015
6,778
4,723
805
98
0-700
0-200
2015
5,619
720
1,296
(754)
(70)
(33)
6,778
$
$
$
2014
5,619
4,059
807
103
0-900
0-300
2014
5,816
234
673
(761)
(305)
(38)
5,619
$
$
$
For 2015, the amount shown as (cid:179)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) for tax positions of prior (cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:180) relates primarily ($1,054 million) to the preliminary estimate of
uncertain tax liabilities for acquired Alstom businesses. Of the total 2015 additions for tax positions of prior years, $445 million relates
to amounts that would not affect tax expense if recognized.
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, 2015, 2014 and 2013, $48 million, $(68) million and $22 million of interest expense (income), respectively,
and $(4) million, $(45) million and an insignificant amount 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, 2015 and 2014, were approximately $104
billion and $119 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.
174 GE 2015 FORM 10-K
174 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
I N C O M E T A X E S
Aggregated deferred income tax amounts are summarized below.
December 31 (In millions)
2015
2014
Assets
GE
GE Capital
Liabilities
GE
GE Capital
Net deferred income tax asset (liability)
COMPONENTS OF THE NET DEFERRED INCOME TAX ASSET (LIABILITY)
December 31 (In millions)
GE
Principal pension plans
Other non-current compensation and benefits
Provision for expenses
Retiree insurance plans
Non-U.S. loss carryforwards(a)
Contract assets
Intangible assets
Depreciation
Investment in global subsidiaries
Other (cid:177) net
GE Capital
Operating leases
Financing leases
Intangible assets
Non-U.S. loss carryforwards(a)
Investment in global subsidiaries
Other (cid:177) net
Net deferred income tax asset (liability)
$
$
$
$
20,539
4,643
25,182
(12,873)
(9,204)
(22,077)
3,105
2015
8,051
4,133
2,827
2,122
1,940
(5,143)
(3,192)
(1,688)
(915)
(469)
7,666
(3,863)
(1,665)
(103)
2,262
5
(1,197)
(4,561)
3,105
$
$
$
$
19,942
8,048
27,990
(11,170)
(10,638)
(21,808)
6,183
2014
7,859
3,427
2,765
3,462
738
(4,539)
(2,364)
(1,226)
(979)
(371)
8,772
(3,763)
(1,899)
(53)
2,974
2,060
(1,909)
(2,590)
6,183
(a)
Net of valuation allowances of $2,184 million and $2,015 million for GE and $109 million and $19 million for GE Capital, for 2015 and 2014,
respectively. Of the net deferred tax asset as of December 31, 2015, of $4,202 million, $10 million relates to net operating loss carryforwards
that expire in various years ending from December 31, 2016 through December 31, 2018; $472 million relates to net operating losses that
expire in various years ending from December 31, 2019 through December 31, 2035 and $3,720 million relates to net operating loss
carryforwards that may be carried forward indefinitely.
GE 2015 FORM 10-K 175
GE 2015 FORM 10-K 175
F I N A N C I A L S T AT E M E N T S
(cid:54) (cid:43) (cid:36) (cid:53) (cid:40) (cid:50) (cid:58) (cid:49) (cid:40) (cid:53) (cid:54) (cid:182) E Q U I T Y
NOTE 15. (cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:50)(cid:58)(cid:49)(cid:40)(cid:53)(cid:54)(cid:182) 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)(b)
Balance at December 31
Retained earnings
Balance at January 1
Net earnings (loss) attributable to the Company
Dividends and other transactions with shareowners
Redemption value adjustment on redeemable noncontrolling interests
Balance at December 31
Common stock held in treasury
Balance at January 1
Purchases(c)
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
2015
6
702
(18,172)
(3,312)
4,956
1,644
(16,529)
32,889
4,724
37,613
155,333
(6,126)
(9,161)
(25)
140,020
(42,593)
(23,762)
2,816
(63,539)
98,274
1,864
100,138
$
$
$
$
$
$
$
$
$
$
$
$
2014
-
702
(9,119)
(12,088)
3,035
(9,053)
(18,172)
32,494
396
32,889
149,051
15,233
(8,948)
(2)
155,333
(42,561)
(1,950)
1,917
(42,593)
128,159
8,674
136,833
$
$
$
$
$
$
$
$
$
$
$
$
2013
-
702
(20,229)
8,844
2,265
11,109
(9,119)
33,070
(576)
32,494
144,055
13,057
(8,060)
(1)
149,051
(34,571)
(10,466)
2,477
(42,561)
130,566
6,217
136,783
$
$
$
$
$
$
$
$
$
$
$
$
(a)
(b)
(c)
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.
2015 included $4,949 million related to issuance of new preferred stock in exchange for existing GE Capital preferred stock.
2015 included $(20,383) million related to the split-off of Synchrony Financial from GE, where GE shares were exchanged for shares of
Synchrony Financial.
SHARES OF GE PREFERRED STOCK
At December 31, 2014 GECC had outstanding 50,000 shares of non-cumulative A, B and C Series perpetual preferred stock at an
average dividend rate of 6.44% with a face value of $5,000 million. In connection with the GE Capital Exit Plan, on December 3, 2015,
these shares were converted into a corresponding Series A, B, and C of fixed-to-floating rate non-cumulative perpetual preferred stock
issued by GE with face value of $2,778 million, $2,073 million, $1,094 million, respectively, for a cumulative face value of $5,944 million
with terms as follows:
Series A: 2,777,625 shares bearing an initial fixed interest rate of 4.00% through June 15, 2022, and a floating rate equal to three-
month LIBOR plus 2.28% thereafter, callable on June 15, 2022.
Series B: 2,072,525 shares bearing an initial fixed interest rate of 4.10% through June 15, 2022, and a floating rate equal to three-
month LIBOR plus 2.32% thereafter, callable on December 15, 2022.
Series C: 1,094,100 shares bearing an initial fixed interest rate of 4.20% through June 15, 2022, and a floating rate equal to three-
month LIBOR plus 2.37% thereafter, callable on June 15, 2023.
The incremental shares were issued in order to compensate preferred holders for the lower dividend rate.
In conjunction with the exchange of the GE Capital Preferred stock into GE Preferred stock, GE Capital issued preferred stock to GE for
which the amount and terms mirror the GE preferred stock held by external investors ($4,949 million carrying value at exchange).
176 GE 2015 FORM 10-K
176 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
(cid:54) (cid:43) (cid:36) (cid:53) (cid:40) (cid:50) (cid:58) (cid:49) (cid:40) (cid:53) (cid:54) (cid:182) E Q U I T Y
Subsequent to the issuance of the preferred stock on December 3, 2015, in response to investor feedback, GE launched an exchange
offer on December 18, 2015 that allowed GE preferred stock investors to exchange their existing Series A, B and C preferred stock into
a Series D GE preferred stock. These Series D instruments bear an initial fixed interest rate of 5.00% through January 21, 2021, will
bear a floating rate equal to three-month LIBOR plus 3.33% thereafter and are callable on January 21, 2021. On January 20, 2016,
$2,687 million of Series A, $2,008 million of Series B and $999 million of Series C were exchanged into $5,694 million Series D GE
preferred stock. Post exchange, $91 million of Series A, $64 million of Series B and $95 million of Series C GE preferred stock remain
outstanding. The carrying value of the GE preferred stock at December 31, 2015 was $4,960 million and will increase to $5,944 million
through periodic accretion to the respective call dates of each series. Principal and accretion for the preferred stock is recorded in other
capital in the consolidated Statement of Financial Position.
On October 16, 2008, we issued 30,000 shares of 10% cumulative perpetual preferred stock and warrants to purchase 134,831,460
shares of common stock to Berkshire Hathaway Inc. (Berkshire Hathaway). On October 16, 2013, Berkshire Hathaway exercised their
warrants and 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.
GE has 50 million authorized shares of preferred stock ($1.00 par value). 5,944,250 shares were issued and outstanding as of
December 31, 2015. No shares were issued and outstanding as of December 31, 2014 and 2013.
SHARES OF GE COMMON STOCK
On April 10, 2015, the GE Board has authorized a new repurchase program of up to $50 billion in common stock, excluding the
Synchrony Financial exchange. On November 17, 2015, we completed the split-off of Synchrony Financial through which we acquired
671,366,809 shares of GE common stock from our shareholders in exchange for 705,270,833 shares of Synchrony Financial stock we
held. Under our share purchase programs, on a book basis, we repurchased shares of 109.8 million, 73.6 million and 432.6 million for a
total of $3,320 million, $1,901 million and $10,375 million for the years ended 2015, 2014 and 2013, respectively.
(cid:42)(cid:40)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:86)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:20)(cid:22)(cid:15)(cid:21)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:15)(cid:19)(cid:19)(cid:19)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:83)(cid:68)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:19)(cid:17)(cid:19)(cid:25)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:17)(cid:3)
Common shares issued and outstanding are summarized in the following table.
December 31 (In thousands)
Issued
In treasury(a)
Outstanding
2015
2014
2013
11,693,841
(2,314,553)
9,379,288
11,693,841
(1,636,461)
10,057,380
11,693,841
(1,632,960)
10,060,881
(a)
2015 included (671,366,809) shares related to the split-off of Synchrony Financial from GE, where GE shares were exchanged for shares of
Synchrony Financial.
GE 2015 FORM 10-K 177
GE 2015 FORM 10-K 177
F I N A N C I A L S T AT E M E N T S
(cid:54) (cid:43) (cid:36) (cid:53) (cid:40) (cid:50) (cid:58) (cid:49) (cid:40) (cid:53) (cid:54) (cid:182) E Q U I T Y
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(In millions)
2015
2014
2013
Investment securities
Balance at January 1
Other comprehensive income (loss) (OCI) before reclassifications (cid:177)
net of deferred taxes of $(270), $352 and $(408)(a)
Reclassifications from OCI (cid:177) net of deferred taxes
of $(36), $85 and $223
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 (cid:177) net of deferred taxes
of $1,348, $(129) and $(613)
Reclassifications from OCI (cid:177) net of deferred taxes
of $(1,489), $213 and $793
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 (cid:177) net of deferred taxes
of $(21), $22 and $251
Reclassifications from OCI (cid:177) net of deferred taxes
of $86, $34 and $(176)
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 $859, $219 and $(5)
Net actuarial gain (loss) (cid:177) net of deferred taxes
of $647, $(5,332) and $4,506
Net curtailment/settlement - net of deferred taxes
of $(42), $41 and $0
Prior service cost amortization (cid:177) net of deferred taxes
of $103, $241 and $267
Net actuarial loss amortization (cid:177) net of deferred taxes
of $1,199, $859 and $1,343
Other comprehensive income (loss)(b)
Less OCI attributable to noncontrolling interests
Balance at December 31
Accumulated other comprehensive income (loss) at December 31
$
1,013 $
307 $
677
(486)
562
(67)
(553)
(1)
460 $
146
708
2
1,013 $
(2,428) $
(4,932)
283 $
(2,600)
1,794
(3,137)
(66)
(5,499) $
(129)
(2,730)
(19)
(2,428) $
(180) $
(732)
(414) $
(609)
831
99
-
(80) $
844
234
-
(180) $
(692)
318
(374)
(4)
307
413
510
(818)
(308)
(22)
126
(722)
737
(271)
466
2
(257)
(16,578) $
(9,296) $
(20,597)
1,541
396
(6)
1,227
(9,849)
8,269
(76)
100
72
349
2,373
5,165
(3)
(11,410) $
1,753
(7,278)
3
(16,578) $
-
397
2,640
11,300
(1)
(9,296)
(16,529) $
(18,172) $
(9,119)
$
$
$
$
$
$
$
$
(a)
(b)
(c)
Included adjustments of $(611) million, $960 million and $(1,171) million in 2015, 2014 and 2013, 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.
Total other comprehensive income (loss) was $1,575 million, $(9,066) million and $11,084 million in 2015, 2014 and 2013, respectively.
Included a $157 million reclassification between 2014 opening balances in Currency Translation Adjustments and Cash Flow Hedges.
178 GE 2015 FORM 10-K
178 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
(cid:54) (cid:43) (cid:36) (cid:53) (cid:40) (cid:50) (cid:58) (cid:49) (cid:40) (cid:53) (cid:54) (cid:182) E Q U I T Y
RECLASSIFICATION OUT OF AOCI
(In millions)
2015
2014
2013
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 gain (loss)
Amortization of prior service costs
Amortization of actuarial gains (losses)
Total reclassification adjustments
$
$
$
$
$
$
$
$
$
103
(36)
67
$
$
(305) $
(1,489)
(1,794) $
(130) $
(801)
13
(918)
86
(831) $
(231)
85
(146)
(85)
213
129
(234)
(666)
22
(878)
34
(844)
$
$
$
$
$
$
(541) Total revenue and other income (a)
223 Benefit (provision) for income taxes (b)
(318) Net of tax
25 Total revenues and other income(c)
793 Benefit (provision) for income taxes(d)
818 Net of tax
(364) Interest and other financial charges
564 (e)
248 (f)
447 Total before tax
(176) Benefit (provision) for income taxes
271 Net of tax
$
118
(203)
(3,572)
(3,657)
1,260
(2,397) $
$
(113)
(590)
(2,612)
(3,315)
1,141
(2,174) $
- (g)
(664) (g)
(3,983) (g)
(4,647) Total before tax
1,610 Benefit (provision) for income taxes
(3,037) Net of tax
(4,956) $
(3,035) $
(2,266) Net of tax
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Included $61 million, an insignificant amount and $(497) million in 2015, 2014 and 2013, respectively, in earnings (loss) from discontinued
operations, net of taxes.
Included $(30) million, $3 million and $204 million in 2015, 2014 and 2013, respectively, in earnings (loss) from discontinued operations, net of
taxes.
Included $(224) million, $(51) million and $62 million in 2015, 2014 and 2013, respectively, in earnings (loss) from discontinued operations, net
of taxes.
Included $(1,506) million, $213 million and $802 million in 2015, 2014 and 2013, respectively, in earnings (loss) from discontinued operations,
net of taxes.
Included $(758) million, $(607) million and $608 million in GE Capital revenues from services and $(43) million, $(59) million and $(44) million in
interest and other financial charges in 2015, 2014 and 2013, respectively.
Primarily recorded in costs and expenses.
Curtailment gain (loss), amortization of prior service costs and actuarial gains and losses reclassified out of AOCI are included in the
computation of net periodic pension costs. See Notes 12 and 27 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.
Prior to the fourth quarter of 2015, the preferred stock issued by GECC was classified as noncontrolling interests in our consolidated
Statement of Financial Position, with dividends presented as noncontrolling interest in our consolidated Statement of Earnings. As
discussed previously in this note, this preferred stock was converted to a corresponding series of preferred stock issued by GE and on
January 20, 2016 a substantial majority of those shares were exchanged into GE Series D preferred stock. Effective with these
(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:42)(cid:40)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:73)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)of net
earnings a(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:40)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:11)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:51)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)(cid:180)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)
31, 2015 and subsequently.
GE 2015 FORM 10-K 179
GE 2015 FORM 10-K 179
F I N A N C I A L S T AT E M E N T S
(cid:54) (cid:43) (cid:36) (cid:53) (cid:40) (cid:50) (cid:58) (cid:49) (cid:40) (cid:53) (cid:54) (cid:182) E Q U I T Y
December 31 (In millions)
GECC preferred stock
Synchrony Financial
Other noncontrolling interests in consolidated affiliates(a)
Total
2015
-
-
1,864
1,864
$
$
2014
4,949
2,531
1,194
8,674
$
$
(a)
Consisted of a number of individually insignificant noncontrolling interests in partnerships and consolidated affiliates. 2015 included $695
million related to the Alstom acquisition.
CHANGES TO NONCONTROLLING INTERESTS
(In millions)
Beginning balance
Net earnings
GECC preferred stock(a)
GECC preferred stock dividend
Dividends
Dispositions
Synchrony Financial(b)
Other (including AOCI)(c)(d)
Ending balance
2015
8,674
377
(4,949)
(311)
(43)
189
(2,840)
767
1,864
$
$
$
$
2014
6,217
183
-
(322)
(74)
(81)
2,393
358
8,674
$
$
2013
5,444
312
990
(298)
(80)
(175)
-
24
6,217
(a)
(b)
(c)
(d)
2015 included $(4,949) million related to the issuance of GE preferred stock in exchange for existing GECC preferred stock. GE preferred
stock is reflected in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity in the consolidated Statement of Financial Position.
2015 related to the split-off on Synchrony Financial from GE, where GE shares were exchanged for shares of Synchrony Financial; 2014
related to the Synchrony Financial IPO.
Includes research & development partner funding arrangements, acquisitions and eliminations.
2015 included $695 million related to the Alstom acquisition.
REDEEMABLE NONCONTROLLING INTEREST
Redeemable noncontrolling interest presented in our statement of financial position includes common shares issued by our affiliates
that are redeemable at the option of the holder of those interests.
As part of the Alstom acquisition, we formed three joint ventures in which the noncontrolling interests hold certain redemption rights.
These joint ventures and the associated redemption rights are discussed in Note 8. Our retained earnings will be adjusted for
subsequent changes in the redemption value of the noncontrolling interest in these entities to the extent that the redemption value
exceeds the carrying amount of the noncontrolling interest.
(In millions)
Beginning balance
Net earnings
Dividends
Dispositions
Redemption value adjustment
Other(a)
Ending balance
2015
98
(46)
(11)
1
25
2,905
2,972
$
$
$
$
2014
178 $
(71)
(12)
-
2
1
98 $
2013
214
(14)
(14)
-
1
(8)
178
(a)
2015 included $2,875 million related to joint ventures formed by GE and Alstom as part of the Alstom acquisition.
OTHER
Common dividends from GE Capital totaled $4,311 million, $2,000 million and $1,930 million to GE during 2015, 2014 and 2013,
respectively. GE Capital did not pay any special dividends to GE during 2015. GE Capital paid special dividends of $1,000 million and
$4,055 million to GE during 2014 and 2013, respectively.
180 GE 2015 FORM 10-K
180 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
O T H E R S T O C K - R E L A T E D I N F O R M AT I O N
NOTE 16. OTHER STOCK-RELATED INFORMATION
SHARE-BASED COMPENSATION
We grant stock options, restricted stock units and performance share units to employees under the 2007 Long-Term Incentive Plan.
Grants made under all plans must be approved by the Management Development and Compensation Committee of (cid:42)(cid:40)(cid:182)(cid:86) Board of
Directors, which is composed entirely of independent directors.
STOCK OPTIONS
Under our stock option program, an employee receives an award that provides the opportunity in the future to purchase GE shares at
the market price of our stock on the date the award is granted (the strike price). The options become exercisable in equal amounts over
a five-year vesting period and expire 10 years from the grant date if they are not exercised. Stock options have no financial statement
effect on the date they are granted but rather are reflected over time through recording compensation expense and increasing
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity. We record compensation expense based on the estimated fair value of the awards expected to vest, and that
amount is amortized as compensation expense on a straight-line basis over the five-year vesting period. Accordingly, total expense
related to the award is reduced by the fair value of options that are expected to be forfeited by employees that leave GE prior to vesting.
We estimate forfeitures based on our experience and adjust the expense to reflect actual forfeitures over the vesting period. The offset
to the expense we record is reflected as an increase in the (cid:179)(cid:50)(cid:87)her (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:180) component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity.
(In millions, after tax)
Compensation Expense
2015
2014
$
234
$
215
$
2013
231
We estimate the fair value of each stock option award on the date of grant using a Black-Scholes option pricing model. The table below
provides the weighted average grant date fair values, key assumptions and other inputs into the pricing model. With the exception of
the dividend yield assumption, an increase in any individual assumption will increase the estimated fair value of the option, all other
things being equal.
Weighted average grant-date fair value of stock options
$
4.64
$
5.26
$
2015
2014
Stock Option Valuation Assumptions:
Risk-free interest rate
Dividend yield
Expected volatility
Expected option life (in years)
2.0 %
3.4 %
25.0 %
6.8
2.3%
3.1%
26.0%
7.3
2013
4.52
2.5%
4.0%
28.0%
7.5
Other pricing model inputs:
Weighted average grant-date market price of GE stock (strike price)
$
25.79
$
26.11
$
23.80
GE 2015 FORM 10-K 181
GE 2015 FORM 10-K 181
F I N A N C I A L S T AT E M E N T S
O T H E R S T O C K - R E L A T E D I N F O R M AT I O N
The table below shows the amount and weighted average strike price of options granted during 2015, as well as those outstanding and
exercisable at year-end 2015.
As of December 31, 2015 unless, otherwise stated (in thousands, except per share data)
Stock options granted during 2015
Weighted average strike price of awards granted in 2015
Stock options outstanding
Weighted average strike price of stock options outstanding
Stock options exercisable
Weighted average strike price of stock options exercisable
$
$
$
52,561
25.79
467,922
21.72
298,199
20.14
When an employee exercises an option, we issue treasury shares to satisfy the requirements of the option.
2015
2014
Stock options exercised (in thousands)
Cash received from stock options exercised (in millions)
$
65,764
1,098
$
30,433
439
$
2013
36,191
490
Outstanding stock option awards may be dilutive to earnings per share when they are in the money (the market price of GE stock is
greater than the strike price of the option). When an option is dilutive, it increases the number of shares used in the diluted earnings per
share calculation, which will decrease earnings per share. However, the effect stock options have on the number of shares added to the
diluted earnings per share calculation is not one for one. The average amount of unrecognized compensation expense (the portion of
the fair value of these option awards not yet amortized), potential option-related excess tax benefits and the market price of GE stock
during the reporting period affect how many of these potential shares are included in the calculation. The calculation assumes that the
proceeds received from the exercise, the unrecognized compensation expense and any potential excess tax benefits are used to buy
back shares, which reduces the dilutive impact.
As of December 31, 2015, there was $628 million of unrecognized compensation expense related to unvested options, which will be
amortized over the remaining vesting period (the weighted average period is approximately 2 years). Of that total, approximately $159
million, after tax, is estimated to be recorded as compensation expense in 2016.
The dilutive effect of in the money options on our earnings per share from continuing operations has been $0.01 or less per share (1%
or less) for the last three years. For additional information about earnings per share see Note 18.
RESTRICTED STOCK
A restricted stock award provides an employee with the right to receive shares of GE stock when the restrictions lapse, which occurs in
equal amounts over the vesting period. Upon vesting, each unit of restricted stock is converted into GE common stock on a one for one
basis using treasury stock shares. The expense to be recognized on restricted stock is based upon the market price on the grant date
(which is its fair value) times the number of units expected to vest. Accordingly, total expense related to the award is reduced by the fair
value of restricted stock units that are expected to be forfeited by employees that leave GE prior to lapse of the restrictions. That
amount is amortized as compensation expense on a straight-line basis over the five-year vesting period. We estimate forfeitures based
on our experience and adjust the expense to reflect actual forfeitures over the vesting period. The offset to compensation expense is an
increase in the (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:180) component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity.
(In millions, after tax)
Compensation expense(a)
2015
2014
$
72
$
56
$
2013
62
(a)
Includes $5.7 million of compensation expense related to performance share units.
182 GE 2015 FORM 10-K
182 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
O T H E R S T O C K - R E L A T E D I N F O R M AT I O N
The fair value of a restricted stock unit at the grant date is equal to the market price of our stock on the grant date.
2015
2014
Weighted average grant-date fair value of restricted stock awards
$
26.74
$
26.08
$
2013
24.54
As of December 31, 2015, unless otherwise stated (in thousands, except per share data)
Restricted stock granted during 2015
Non-vested restricted stock outstanding
Weighted average fair value at grant date of non-vested stock
3,756
13,941
25.05
$
The table below provides information about the units of restricted stock that vested for each of the years presented.
(In thousands)
Restricted stock vested during the year ended
2015
3,899
2014
3,305
2013
4,583
As of December 31, 2015, there was $221 million of total unrecognized compensation expense related to unvested restricted stock,
which will be amortized over the remaining vesting period (the weighted average period is approximately 2 years). Of that total,
approximately $55 million, after tax, is estimated to be recorded as compensation expense in 2016.
OTHER INFORMATION
When options are exercised and restricted stock vests, we issue shares from treasury stock, which increases shares outstanding. The
(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:180) component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity is adjusted for differences between the strike price of GE stock and the average cost
of our treasury stock. We also record the difference between the tax benefits assumed (based on the fair value of the award on the
grant date) and the actual tax benefit in the (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) (cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:180) component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity. Any excess tax benefit is recorded as a
cash flow from financing activities in our statement of cash flows. The table below provides information about tax benefits related to all
share-based compensation arrangements.
(In millions)
Income tax benefit recognized in earnings
Excess of actual tax deductions over amounts assumed recognized in equity
$
2015
148
167
$
2014
147
86
$
2013
145
86
Share based compensation programs serve as a means to attract and retain talented employees and are an important element of their
total compensation. The intrinsic value of a stock option award is the amount by which the award is in the money and represents the
potential value to the employee upon exercise of the option. The intrinsic value of restricted stock is the value of the shares awarded at
the current market price. The table below provides information about the intrinsic value of option and restricted stock awards.
As of December 31, 2015, unless otherwise stated (in millions)
Stock options outstanding
Stock options exercised in 2015
Non-vested restricted stock outstanding
Restricted stock vested in 2015
$
Aggregate
intrinsic
value
4,534
746
434
102
GE 2015 FORM 10-K 183
GE 2015 FORM 10-K 183
F I N A N C I A L S T AT E M E N T S
O T H E R I N C O M E & E A R N I N G S P E R S H A R E
NOTE 17. OTHER INCOME
(In millions)
GE
Purchases and sales of business interests(a)
Licensing and royalty income
Associated companies
Net interest and investment income(b)
Other items(c)
Eliminations
Total
2015
2014
2013
$
$
1,020 $
168
45
65
868
2,165
62
2,227 $
188 $
288
176
(77)
132
707
71
778 $
1,750
320
40
116
660
2,886
221
3,107
(a)
(b)
(c)
Included a pre-tax gain of $623 million on the sale of our Signaling business in 2015 and 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 other-than-temporary impairments on investment securities of $(217) million in 2014.
Included the $450 million NBCU tax settlement and the $175 million break-up fee from Electrolux in 2015. Included net gains on asset sales of
$90 million, $127 million and $357 million in 2015, 2014 and 2013, respectively.
NOTE 18. EARNINGS PER SHARE INFORMATION
(In millions; per-share amounts in dollars)
2015
2014
2013
Diluted
Basic
Diluted
Basic
Diluted
Basic
Amounts attributable to the Company:
Consolidated
Earnings (loss) from continuing operations for
per-share calculation(a)
Preferred stock dividends declared
Earnings (loss) 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 (loss) 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 (loss) from continuing operations
Earnings (loss) from discontinued operations
Net earnings (loss)
1,680
(18)
$
1,679
(18)
$
9,523
-
$
9,523
-
$
7,596
-
$
7,609
-
1,662
$
1,661
$
9,523
$
9,523
$
7,596
$
7,609
(7,795)
(7,795)
5,691
5,691
5,420
5,432
(6,135)
$
(6,135)
$ 15,213
$ 15,212
$ 13,028
$ 13,040
9,944
9,944
10,045
10,045
10,222
10,222
72
10,016
-
9,944
78
10,123
-
10,045
67
10,289
-
10,222
$
$
0.17
(0.78)
(0.61)
0.17
(0.78)
(0.62)
$
0.94
0.56
1.50
$
$
0.95
0.57
1.51
$
0.74
0.53
1.27
0.74
0.53
1.28
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 had an insignificant
effect.
(a)
(b)
Included an insignificant amount of dividend equivalents in each of the three years presented.
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, 2015, 2014 and 2013, there were approximately 97 million, 98 million and 121 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.
184 GE 2015 FORM 10-K
184 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
F AI R V A L U E M E A S U R E M E N T S
NOTE 19. 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 derivatives.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
(In millions)
December 31, 2015
Assets
Investment securities
Debt
U.S. corporate
State and municipal
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
Government (cid:177) non-U.S.
U.S. government and federal agency
Equity
Derivatives(c)
Other(d)
Total
Liabilities
Derivatives
Other(e)
Total
December 31, 2014
Assets
Investment securities
Debt
U.S. corporate
State and municipal
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
Government (cid:177) non-U.S.
U.S. government and federal agency
Equity
Derivatives(c)
Other(d)
Total
Liabilities
Derivatives
Other(e)
Total
$
$
$
$
$
$
$
$
Level 1 (a)
Level 2 (a)
Level 3
Netting
adjustment(b)
Net balance
-
-
-
12
5
49
194
-
-
260
-
-
-
-
-
-
-
-
-
176
-
-
176
-
-
-
$
$
$
$
$
$
$
$
19,351
4,215
3,084
544
410
404
9
7,312
-
35,331
5,677
1,182
6,860
20,651
4,560
4,632
615
489
496
16
9,881
-
41,340
4,840
1,179
6,018
$
$
$
$
$
$
$
$
3,006
30
32
290
-
323
13
79
259
4,033
4
-
4
3,053
58
146
337
2
266
9
30
277
4,177
11
-
11
$
$
$
$
$
$
$
$
-
-
-
-
-
-
-
(6,110)
-
(6,110)
(4,968)
-
(4,968)
-
-
-
-
-
-
-
(7,570)
-
(7,570)
(4,337)
-
(4,337)
$
$
$
$
$
$
$
$
22,358
4,245
3,116
847
415
776
216
1,281
259
33,512
713
1,182
1,895
23,704
4,618
4,777
953
491
761
201
2,341
277
38,122
514
1,179
1,692
(a)
(b)
(c)
(d)
(e)
There were no securities transferred between Level 1 and Level 2 for the years ended December 31, 2015 and 2014.
The netting of derivative receivables and payables (including the effects of any collateral posted or received) is permitted when a legally
enforceable master netting agreement exists.
The fair value of derivatives includes an adjustment for non-performance risk. At December 31, 2015 and 2014, the cumulative adjustment for
non-performance risk was insignificant and $16 million, respectively. See Notes 20 and 27 for additional information on the composition of our
derivative portfolio.
Includes private equity investments.
Primarily represented the liability associated with certain of our deferred incentive compensation plans.
GE 2015 FORM 10-K 185
GE 2015 FORM 10-K 185
F I N A N C I A L S T AT E M E N T S
F AI R V A L U E M E A S 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 (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity.
CHANGES IN LEVEL 3 INSTRUMENTS FOR THE YEARS ENDED DECEMBER 31
Net
realized/
Net
realized/
unrealized unrealized
gains
(losses)
included
in AOCI
gains
(losses)
Balance at
included in
January 1 earnings(a)
Net
change in
unrealized
gains
(losses)
relating to
instruments
still held at
Level 3(b) Level 3(b) December 31 December 31(c)
Transfers
into
Transfers
out of
Balance at
Purchases
Sales
Settlements
$ 3,053 $
58
146
337
2
266
9
29
277
$ 4,175 $
$ 2,787 $
50
238
515
30
225
11
11
201
$ 4,068 $
3 $
-
(165) $
(2)
$
362
-
(80) $
-
(137) $
(9)
- $
-
(30) $
(17)
3,006 $
30
(19)
-
-
-
2
25
8
19 $
(9)
(6)
-
58
(5)
-
-
(128) $
-
9
-
(32)
(49)
-
(4)
(1)
-
-
-
-
-
-
-
-
370
-
-
-
(26)
$ (187) $
(1)
(4)
(6)
-
(161) $
-
10
40
-
51 $
(49)
-
(2)
-
-
-
-
(98) $
18 $
-
131 $
6
3
64
-
-
-
13
85
182 $
6
4
-
34
-
-
-
181 $
541
3
-
167
-
$ (227) $
-
(212) $
(1)
(16)
(248)
-
(31)
(149)
-
-
2
(1)
33
744
-
(2)
-
(41)
$ (534) $
-
-
3
-
(390) $
175 $ (159) $
-
2
1
2
9
-
3
-
-
(57)
(19)
(30)
(2)
(2)
(1)
-
192 $ (269) $
32
290
-
323
13
88
259
4,042 $
3,053 $
58
146
337
2
266
9
29
277
4,175 $
-
-
-
-
-
-
-
22
5
27
-
-
-
-
-
-
-
12
73
85
(In millions)
2015
Investment securities
Debt
U.S. corporate
State and municipal
Mortgage and
asset-backed
Corporate (cid:177) non-U.S.
Government (cid:177) non-
U.S. government and
federal agency
Equity
Derivatives(d)(e)
Other
Total
2014
Investment securities
Debt
U.S. corporate
State and municipal
Mortgage and
asset-backed
Corporate (cid:177) non-U.S.
Government (cid:177) non-
U.S. government and
federal agency
Equity
Derivatives(d)(e)
Other
Total
(a)
(b)
(c)
(d)
(e)
(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:180) captions in the
Statement of Earnings.
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.
Represents the amount of unrealized gains or losses for the period included in earnings.
Represents derivative assets net of derivative liabilities and included cash accruals of $13 million and $9 million not reflected in the fair value
hierarchy table during 2015 and 2014, respectively.
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 Notes 20 and 27.
186 GE 2015 FORM 10-K
186 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
F AI R V A L U E M E A S U R E M E N T S
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, 2015 and 2014.
(In millions)
Level 2
Level 3
Level 2
Level 3
Financing receivables and financing receivables held for sale
Cost and equity method investments
Long-lived assets
Total
$
$
- $
1
2
3 $
154
436
882
1,471
$
$
1
-
102
103
$
$
8
346
689
1,044
Remeasured during the years ended December 31
2014
2015
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, 2015 and 2014.
(In millions)
Financing receivables and financing receivables held for sale
Cost and equity method investments
Long-lived assets
Total
Years ended December 31
2015
(69)
(506)
(1,603)
(2,177)
$
$
2014
(16)
(286)
(427)
(729)
$
$
GE 2015 FORM 10-K 187
GE 2015 FORM 10-K 187
F I N A N C I A L S T AT E M E N T S
F AI R V A L U E M E A S U R E M E N T S
LEVEL 3 MEASUREMENTS - SIGNIFICANT UNOBSERVABLE INPUTS
(Dollars in millions)
(cid:3)
December 31, 2015
Recurring fair value measurements
Investment securities (cid:177) Debt
U.S. corporate
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
Other financial assets
Non-recurring fair value measurements
Financing receivables and
financing receivables held for sale
Fair value
Valuation technique
Unobservable inputs
Range
(weighted average)
$
834
31
236
259
Income approach
Income approach
Income approach
Income approach,
Market comparables
Discount rate(a)
Discount rate(a)
Discount rate(a)
EBITDA multiple
Capitalization rate
1.7%-14.1% (8.6%)
5.0%-12.0% (10.5%)
6.5%-14.0% (7.5%)
6.1X-15.0X (9.9X)
7.8%-7.8% (7.8%)
$
146
Income approach
Discount rate(a)
6.5%-30.0% (10.7%)
Cost and equity method investments
293
Income approach
Discount rate(a)
9.5%-35.0% (14.4%)
Long-lived assets
830
Income approach
Discount rate(a)
1.8%-11.7% (10.5%)
December 31, 2014
Recurring fair value measurements
Investment securities (cid:177) Debt
U.S. corporate
State and municipal
Mortgage and asset-backed
Corporate (cid:177) non-U.S.
Other financial assets
$
917
17
102
278
117
Income approach
Income approach
Income approach
Income approach
Income approach,
Market comparables
Discount rate(a)
Discount rate(a)
Discount rate(a)
Discount rate(a)
EBITDA multiple
Capitalization rate
1.5%-14.8% (6.6%)
4.9%-4.9% (4.9%)
4.3%-9.0% (5.6%)
3.3%-14.0% (6.5%)
5.4X-9.1X (7.7X)
6.5%-7.8% (7.7%)
Non-recurring fair value measurements
Cost and equity method investments
$
309
Income approach,
Market comparables
Discount rate(a)
EBITDA multiple
8.0%-10.0% (9.4%)
1.8X-5.2X (4.8X)
Long-lived assets
664
Income approach
Discount rate(a)
2.0%-10.8% (6.7%)
(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.
At December 31, 2015 and 2014, other Level 3 recurring fair value measurements of $2,637 million and $2,532 million, respectively,
and non-recurring measurements of $122 million and $55 million, respectively, are valued using non-binding broker quotes or other
third-party sources. At December 31, 2015 and 2014, other recurring fair value measurements of $32 million and $203 million,
respectively, and non-recurring fair value measurements of $80 million and $16 million, respectively, were individually insignificant and
utilize a number of different unobservable inputs not subject to meaningful aggregation.
188 GE 2015 FORM 10-K
188 GE 2015 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 A L I N S T R U M E N T S
NOTE 20. 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
(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:182) fair value can be determined based on significant observable inputs and thus considered Level 2. For those instruments that
are not actively traded 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(a)(b)
Borrowings (debt assumed)(a)(c)
GE Capital
Assets
Loans
Time deposits(d)
Other commercial mortgages
Loans held for sale
Other financial instruments(e)
Liabilities
Borrowings(a)(f)(g)(h)
Investment contracts
2015
Assets (liabilities)
Carrying
amount
(net)
Estimated
fair value
2014
Assets (liabilities)
Carrying
amount
(net)
Estimated
fair value
$
1,104 $
1,174 $
502 $
551
(18,455)
(85,114)
(19,011)
(92,641)
(16,340)
-
(17,503)
-
20,061
10,386
1,381
342
94
(95,681)
(2,955)
19,774
10,386
1,447
342
110
20,153
-
1,427
419
103
20,182
-
1,508
419
113
(99,602)
(3,441)
(245,993)
(3,970)
(261,569)
(4,596)
(a)
(b) Included $116 million and $94 million of accrued interest in estimated fair value at December 31, 2015 and December 31, 2014, respectively.
See Note 10.
(c)
(d)
(e)
(f)
(g)
(h)
Included $1,006 million of accrued interest in estimated fair value at December 31, 2015.
Balances at December 31, 2015 included $10,386 million of high quality interest bearing deposits with European branches of global banks,
predominantly in the UK, that mature in April 2016.
Principally comprises cost method investments.
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, 2015 and 2014 would have been reduced by $3,001 million and $5,020 million, respectively.
Included $1,103 million and $2,888 million of accrued interest in estimated fair value at December 31, 2015 and 2014, respectively.
Excluded $85,114 million of intercompany payable to GE related to the debt assumption at December 31, 2015.
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. Based on valuation methodologies using current market interest rate data that are comparable to market quotes adjusted
for our non-performance risk.
Investment contracts. Based on expected future cash flows, discounted at currently offered rates for immediate annuity contracts or
the income approach for single premium deferred annuities.
Time deposits. Carrying value approximates fair value as these financial instruments have limited credit risk, short-term maturities and
interest rates that approximate market.
All other instruments. Based on observable market transaction and/or valuation methodologies using current market interest rate data
adjusted for inherent credit risk.
GE 2015 FORM 10-K 189
GE 2015 FORM 10-K 189
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 A L I N S T R U M E N T S
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 Commercial
$
2015
531
279
$
2014
762
282
(a)
Excluded investment commitments of $782 million and $812 million at December 31, 2015 and 2014, respectively.
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. Any such agreements are 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. At
December 31, 2015, we were party to no repurchase agreements.
We also enter into reverse securities repurchase agreements, primarily for short-term investment with maturities of 90 days or less. At
December 31, 2015, we were party to reverse repurchase agreements totaling $11.3 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. (cid:3)
DERIVATIVES AND HEDGING
In this section, we explain how we use derivatives to manage our risks and how these financial instruments are reflected in our financial
statements. Our use of derivatives relates solely to risk management; we do not use derivatives for speculation. As discussed
elsewhere in this report, we are executing a plan to reduce the size and scope of our financial services business, with the intention of
principally retaining those activities that support our industrial businesses. The affected businesses have either been sold or are held for
sale and are presented as discontinued operations in our financial statements as of December 31, 2015. As a result of these actions,
the significance of financial services hedging activity will diminish significantly in the future.
RISK MANAGEMENT STRATEGY
In our industrial businesses, we buy, manufacture and sell components and products across global markets. These activities expose us
to changes in foreign currency exchange rates and commodity prices, which can adversely affect revenues earned and costs of
operating our industrial businesses. When the currency in which we sell equipment differs from the primary currency of one of our
industrial businesses (known as its functional currency) and the exchange rate fluctuates, it will affect the revenue we earn on the sale.
These sales and purchase transactions also create receivables and payables denominated in foreign currencies, which expose us to
foreign currency gains and losses based on changes in exchange rates. Changes in the price of a raw material that we use in
manufacturing can affect the cost of manufacturing. We use derivatives to mitigate or eliminate these exposures.
With respect to our ongoing financial services activities, our key exposures relate to interest rate and currency risk. To the extent
feasible, we seek to ensure that the characteristics of the debt we have issued align with the assets being funded. The form (fixed rate
or floating rate) and currency denomination of the debt we issue depends on a number of considerations, the most important of which
are market factors (demand, pricing, etc.) that affect the economics of the issuance. If the form and currency denomination of the debt
does not match the assets being funded, we typically execute derivatives to meet this objective within defined limits.
190 GE 2015 FORM 10-K
190 GE 2015 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 A L I N S T R U M E N T S
FORMS OF HEDGING
In this section we explain the hedging methods we use and their effects on our financial statements.
Cash flow hedges (cid:177) We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on
purchase and sale contracts in our industrial businesses and to convert foreign currency debt that we have issued in our financial
services business back to our functional currency. Accordingly, the vast majority of our derivative activity in this category consists of
currency exchange contracts. As a result of acquisitions in our industrial businesses, we expect to significantly expand our foreign
currency hedging activity related to long-term contracts. We also use commodity derivatives to reduce or eliminate price risk on raw
materials purchased for use in manufacturing.
Under hedge accounting, the derivative carrying amount is measured at fair value each period and any resulting gain or loss is
recorded in a separate component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity. Differences between the derivative and the hedged item may cause changes
in their fair values to not offset completely, which is referred to as ineffectiveness. When the hedged transaction occurs, these amounts
are released from (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity, in order that the transaction will be reflected in earnings at the rate locked in by the derivative.
The effect of the hedge is reported in the same financial statement line item as the earnings effects of the hedged transaction. The table
below summarizes how the derivative is reflected in the balance sheet and in earnings under hedge accounting. The effect of the
hedged forecasted transaction is not presented in this table but offsets the earnings effect of the derivative.
FINANCIAL STATEMENT EFFECTS - CASH FLOW HEDGES
(In millions)
Balance sheet changes
Fair value of derivatives increase (decrease)
Shareowners' equity (increase) decrease
Earnings (loss) related to ineffectiveness
Earnings (loss) effect of derivatives(a)
(a) Offsets earnings effect of the hedged forecasted transaction
(cid:3)
(cid:3)
$
$
2015
(cid:3)
(911)
913
2
(918)
2014
(546)
546
1
(878)
The following table explains the effect of changes in market rates on the fair value of derivatives we use most commonly in cash flow
hedging arrangements.
Interest rate forwards/swaps
Pay fixed rate/receive floating rate
Currency forwards/swaps
Pay U.S. dollars/receive foreign currency
Commodity derivatives
Receive commodity/ pay fixed price
Interest rate increases
Fair value increases
U.S. dollar strengthens
Fair value decreases
Price increases
Fair value increases
Interest rate decreases
Fair value decreases
U.S. dollar weakens
Fair value increases
Price decreases
Fair value decreases
Fair value hedges (cid:177) These derivatives are used to hedge the effects of interest rate and currency exchange rate changes on debt that
we have issued. We have issued mostly fixed rate debt that is used to fund both fixed and floating rate assets. In instances where fixed
rate debt is funding floating rate assets, we have an exposure to changes in interest rates. We enter into interest rate swaps that
receive a fixed rate and pay a floating rate of interest to align with that portion of our debt which funds floating rate assets. These swaps
typically match the maturity of the associated debt being hedged.
Under hedge accounting, the derivative is measured at fair value and the carrying amount of the hedged debt is adjusted for the change
in value related to the exposure being hedged, with both adjustments offset to earnings as interest expense. For example, the earnings
effect of an increase in the fair value of the derivative will be largely offset by the earnings effect of an increase in the carrying amount
of the hedged debt. Differences between the terms of the derivative and the hedged debt may cause changes in their fair values to not
offset completely, which is referred to as ineffectiveness. The table below summarizes how the derivative and the hedged debt are
reflected in the balance sheet and in earnings under hedge accounting. The effect on interest expense of changing from the fixed rate
on the debt to the floating rate on the swap is not shown in this table.
GE 2015 FORM 10-K 191
GE 2015 FORM 10-K 191
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 A L I N S T R U M E N T S
FINANCIAL STATEMENT EFFECTS - FAIR VALUE HEDGES
(In millions)
Balance sheet changes
Fair value of derivative increase (decrease)
Adjustment to carrying amount of hedged debt (increase) decrease
Earnings (loss) related to hedge ineffectiveness
(cid:3)
(cid:3)
$
2015
(cid:3)
(151)
75
(75)
$
2014
3,863
(3,939)
(76)
The effect of changes in market interest rates on the fair value of derivatives we use most commonly in fair value hedging
arrangements is presented below.
Interest rate forwards/swaps
Pay floating rate/receive fixed rate
Interest rate increases
Fair value decreases
Interest rate decreases
Fair value increases
Net investment hedges (cid:177) We invest in foreign operations that conduct their financial services activities in currencies other than the US
dollar. We hedge the currency risk associated with those investments primarily using short-term currency exchange contracts under
which we receive US dollars and pay foreign currency and non-derivatives instruments such as debt denominated in a foreign currency.
Under hedge accounting, the portion of the fair value change of the derivative or debt instrument that relates to changes in spot
currency exchange rates is offset in a separate component of (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity. For example, an increase in the fair value of the
derivative related to changes in spot exchange rates will be offset by a corresponding increase in the currency translation component of
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity. The portion of the fair value change of the derivative related to differences between spot and forward rates, which
primarily relates to the interest component, is recorded in earnings each period as interest expense. As a result of this hedging strategy,
the investments in foreign operations of our financial services business are largely unaffected by changes in currency exchange rates.
The amounts recorded in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity only affect earnings if the hedged investment is sold, substantially liquidated, or control is
lost.
FINANCIAL STATEMENT EFFECTS - NET INVESTMENT HEDGES
(In millions)
Balance sheet changes
Fair value of derivatives increase (decrease)
Fair value of non-derivatives (increase) decrease
Shareowners' equity (increase) decrease
Earnings (loss) related to spot-forward differences
Earnings (loss) related to reclassification upon sale or liquidation(a)
(cid:3)
(cid:3)
$
$
2015
(cid:3)
4,871
(849)
(4,131)
(109)
4,547
2014
5,192
-
(5,741)
(549)
88
(a)
Included $4,549 million gain and $88 million gain recorded in discontinued operations in 2015 and 2014, respectively.
The effect of changes in currency exchange rates on the fair value of derivatives we use in net investment hedging arrangements is
presented below.
Currency forwards/swaps
Receive U.S. dollars/pay foreign currency
U.S. dollar strengthens
Fair value increases
U.S. dollar weakens
Fair value decreases
192 GE 2015 FORM 10-K
192 GE 2015 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 A L I N S T R U M E N T S
Economic Hedges - These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply
hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. Economic
hedges are used when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the
derivative, making hedge accounting unnecessary. For example, in our Industrial businesses we record the effects of spot exchange
rate changes on our foreign currency payables and receivables in earnings each period along with the fair value changes on the foreign
currency forward contracts used as economic hedges. In these cases, the earnings effects of the derivative and hedged item largely
offset. We also use economic hedges when we have exposures to currency exchange risk for which we are unable to meet the
requirements for hedge accounting. For example, we use currency forwards as an economic hedge of forecasted foreign currency cash
flows under long-term contracts. In this case, the forecast period is so long that it is difficult to meet the hedge accounting requirement
that the occurrence of the hedged transactions is probable. For these types of economic hedges, changes in the fair value of the
derivative are recorded in earnings currently but changes in the value of the forecasted foreign currency cash flows are only recognized
in earnings when they occur. As a result, even though the derivative is an effective economic hedge, there is a net effect on earnings in
each period due to differences in the timing of earnings recognition between the derivative and the hedged item.
The table below provides information about the earnings effects of all derivatives that serve as economic hedges. These derivatives are
marked to fair value through earnings each period. For our financial services business, these gains and losses are reported in (cid:179)(cid:42)(cid:40)
Capital revenues from (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:17) For our industrial businesses, the effects are reported in (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:180) or (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) costs and
(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:180)(cid:17) The offsetting earnings effects associated with hedged assets and liabilities are also displayed in the table below. In
general, the earnings effects of the hedged item are recorded in the same financial statement line as the derivative. The earnings effect
of economic hedges, after considering offsets related to earnings effects of hedged assets and liabilities, is substantially offset by
changes in the fair value of forecasted transactions that have not yet affected earnings.
FINANCIAL STATEMENT EFFECTS - ECONOMIC HEDGES
(In millions)
Balance sheet changes
Change in fair value of economic hedge increase (decrease)
Change in carrying amount of item being hedged increase (decrease)
Earnings (loss) effect of economic hedges(a)
(a)
Offset by the future earnings effects of economically hedged item.
(cid:3)
(cid:3)
$
2015
(cid:3)
(2,720)
2,543
(177)
$
2014
(2,198)
2,083
(116)
The table below explains the effects of market rate changes on the fair value of derivatives we use most commonly as economic
hedges.
Interest rate forwards/swaps interest rate
Pay floating rate/receive fixed rate
Currency forwards/swaps
Pay U.S. dollars/receive foreign currency
Receive U.S. dollars/pay foreign currency
Commodity derivatives
Receive commodity/ pay fixed price
Interest rate increases
Fair value decreases
U.S. dollar strengthens
Fair value decreases
Fair value increases
Price increases
Fair value increases
Interest rate decreases
Fair value increases
U.S. dollar weakens
Fair value increases
Fair value decreases
Price decreases
Fair value decreases
GE 2015 FORM 10-K 193
GE 2015 FORM 10-K 193
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 A L I N S T R U M E N T S
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is the number of units of the underlying (for example, the notional principal amount of the debt in an
interest rate swap). The notional amount is used to compute interest or other payment streams to be made under the contract and is a
measure of our level of activity. We generally disclose derivative notional amounts on a gross basis. A substantial majority of the
outstanding notional amount of $245 billion at December 31, 2015 is related to managing interest rate and currency risk between
financial assets and liabilities in our financial services business. The remaining derivative notional primarily relates to hedges of
anticipated sales and purchases in foreign currency, commodity purchases and contractual terms in contracts that are considered
embedded derivatives.
The table below provides additional information about how derivatives are reflected in our financial statements. Derivative assets and
liabilities are recorded at fair value exclusive of interest earned or owed on interest rate derivatives, which is presented separately on
our balance sheet. Cash collateral and securities held as collateral represent assets that have been provided by our derivative
counterparties as security for amounts they owe us (derivatives that are in an asset position).
CARRYING AMOUNTS RELATED TO DERIVATIVES
(cid:3)
December 31 (in millions)
Derivative assets
Derivative liabilities
Accrued interest
Cash collateral & credit valuation adjustment
Net Derivatives
Securities held as collateral
Net carrying amount
EFFECTS OF DERIVATIVES ON EARNINGS
2015
7,391
(5,681)
1,014
(1,141)
1,583
(1,277)
306
$
$
2014
9,911
(4,851)
1,419
(3,233)
3,246
(3,114)
132
$
$
All derivatives are marked to fair value on our balance sheet, whether they are designated in a hedging relationship for accounting
purposes or are used as economic hedges. As discussed in the previous sections, each type of hedge affects the financial statements
differently. In fair value and economic hedges, both the hedged item and the hedging derivative largely offset in earnings each period.
In cash flow and net investment hedges, the effective portion of the hedging derivative is offset in separate components of
shareowners(cid:182) equity and ineffectiveness is recognized in earnings. The table below summarizes these offsets and the net effect on
earnings.
(In millions)
2015
Cash flow hedges
Fair value hedges
Net investment hedges(a)
Economic hedges(b)
Total
2014
Cash flow hedges
Fair value hedges
Net investment hedges(a)
Economic hedges(b)
Total
Effect on hedging instrument
Effect on underlying
Effect on earnings
(cid:3)
(cid:3)
$
(cid:3)
(cid:3)
$
$
$
(911)
(151)
4,022
(2,720)
(546)
3,863
5,192
(2,198)
(cid:3)
913
75
(4,131)
2,543
(cid:3)
546
(3,939)
(5,741)
2,083
(cid:3)
$
$
(cid:3)
$
$
2
(75)
(109)
(177)
(359)
1
(76)
(549)
(116)
(740)
The amounts in the table above generally do not include associated derivative accruals in income or expense.
(a) Both derivatives and non-derivatives hedging instruments are included.
(b) Net effect is substantially offset by the change in fair value of the hedged item that will affect earnings in future periods.
Note 15 provides additional information about changes in (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182) equity related to hedging and amounts released to earnings.
Other supplemental information about derivatives and hedging can be found in Note 27.
194 GE 2015 FORM 10-K
194 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
V AR I A B L E I N T E R E S T E N T I T I E S
NOTE 21. 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. 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 2015 or 2014.
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-
(cid:80)(cid:68)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:82)(cid:79)(cid:72)(cid:15)(cid:3)(cid:76)(cid:73)(cid:3)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)economic
interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the
(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:77)(cid:88)(cid:71)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:71)(cid:72)(cid:70)(cid:76)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:71)(cid:72)(cid:70)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)-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
(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:68)(cid:85)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:85)(cid:72)(cid:79)(cid:72)(cid:89)(cid:68)(cid:81)(cid:87)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:29)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:68)(cid:83)ital 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.
CONSOLIDATED VARIABLE INTEREST ENTITIES
Our most significant consolidated VIEs are the three joint ventures we formed with Alstom to facilitate the Alstom acquisition. These
joint ventures include grid technology, renewable energy, and global nuclear and French steam power. The assets, liabilities and
redeemable non-controlling interest in the joint ventures as of December 31, 2015 was $11,536 million, $8,739 million and $2,859
million, respectively. Further information about the formation of the Alstom joint ventures is provided in Note 8. These joint ventures are
VIEs due to the nature of the exit mechanisms held by Alstom and are consolidated by GE because we control all significant activities
of the joint ventures. As these joint ventures are businesses, would otherwise be consolidated under the voting model and their assets
can be used for purposes other than settlement of (cid:87)(cid:75)(cid:72)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:89)(cid:72)(cid:81)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:182) obligations, there is no continuing VIE disclosure requirement for
these consolidated joint ventures.
The Consolidated VIEs for which we have continuing disclosure requirements fall into three main groups. We consolidate VIEs because
(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:57)(cid:44)(cid:40)(cid:182)(cid:86)(cid:3)(cid:72)(cid:70)onomic performance, typically because of our role as either
servicer or manager for the VIE, 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 GE Capital 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 GE Capital(cid:182)(cid:86)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:81)(cid:74)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)
investment contracts, insurance liabilities and insurance annuity benefits.
(cid:120) A Securitization Entity was created to facilitate securitization of trade receivables that serve as an alternative funding source by
providing access to variable funding notes and term markets. The securitization transactions executed with this entity are similar to
those used by many financial institutions and all are non-recourse. We provide servicing for substantially all of the assets in this
entity.
The trade receivables in this entity have similar risks and characteristics to our other trade receivables and were underwritten to the
same standard. Accordingly, the performance of these assets has been similar to our other trade receivables; however, the
blended performance of the pools of receivables in this entity reflects the eligibility criteria that we apply to determine which
receivables are selected for transfer. Contractually the cash flows from these trade 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 this entity have no
claim on other assets of GE.
GE 2015 FORM 10-K 195
GE 2015 FORM 10-K 195
F I N A N C I A L S T AT E M E N T S
V AR I A B L E I N T E R E S T E N T I T I E S
(cid:120) Other remaining assets and liabilities of consolidated VIEs relate primarily to three categories of entities: (1) joint ventures that
lease equipment with $821 million of assets and $818 million of liabilities; (2) other entities that are involved in power generating
and leasing activities with $1,151 million of assets and $1,079 million of liabilities; and (3) insurance entities that, among other lines
(cid:82)(cid:73)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:83)(cid:72)(cid:85)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:88)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:42)(cid:40)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:7)(cid:20)(cid:15)(cid:20)(cid:20)(cid:23)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:7)(cid:24)(cid:22)(cid:21)(cid:3)
million of liabilities.
ASSETS AND LIABILITIES OF CONSOLIDATED VIEs
(cid:3)
(cid:3)
(In millions)
December 31, 2015
Assets(c)
Financing receivables, net
Current receivables
Investment securities
Other assets
Total
Liabilities(c)
Borrowings
Non-recourse borrowings
Other liabilities
Total
December 31, 2014
Assets(c)
Financing receivables, net
Current receivables
Investment securities
Other assets
Total
Liabilities(c)
Borrowings
Non-recourse borrowings
Other liabilities
Total
Trade
receivables
securitization(b)
Trinity(a)
Other
Total
$
$
$
$
$
$
$
$
-
-
409
46
455
-
-
184
184
-
-
2,369
17
2,386
-
-
1,022
1,022
$
$
$
$
$
$
$
$
$
-
3,506 (d)
-
24
3,530
$
-
3,022
34
3,056
$
$
$
-
3,028 (d)
-
2
3,030
$
-
2,692
26
2,718
$
$
882
361
995
2,934
5,172
1,297
61
1,654
3,012
1,030
278
1,005
2,259
4,572
517
436
1,325
2,278
$
$
$
$
$
$
$
$
882
3,867
1,404
3,004
9,157
1,297
3,083
1,872
6,252
1,030
3,306
3,374
2,278
9,988
517
3,128
2,373
6,018
(a)
(b)
(c)
(d)
Excluded intercompany advances from GE Capital to Trinity, which were eliminated in consolidation of $30 million and $1,565 million at
December 31, 2015 and 2014, respectively.
We provide servicing to the trade receivable securitization (TRS) and are contractually permitted to commingle cash collected from customers
on financing receivables sold to the TRS investors with our own cash prior to payment to the TRS, provided our short-term credit rating does
not fall below A-1/P-1. The TRS also owes us amounts for purchased financial assets and scheduled interest and principal payments. At
December 31, 2015 and 2014, the amounts of commingled cash owed to the TRS were $1,093 million and $856 million, respectively, and the
amounts owed to us by the TRS were $7 million and $2 million, respectively.
Asset amounts exclude intercompany receivables for cash collected on behalf of the entities by GE Capital as servicer, which are eliminated in
(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:54)(cid:88)(cid:70)(cid:75)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:68)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:182)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:44)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:76)ncluded in the table
above, assets would be higher. In addition, other assets, borrowings and other liabilities exclude intercompany balances that are eliminated in
consolidation.
Included $737 million and $686 million of receivables at December 31, 2015 and 2014, respectively, 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 $1,638 million, $1,457 million and $994 million in 2015, 2014 and 2013, respectively.
Related expenses consisted primarily of cost of goods and services of $1,232 million, $823 million and $675 million in 2015, 2014 and
2013, respectively. These amounts do not include intercompany revenues and costs, which are eliminated in consolidation.
196 GE 2015 FORM 10-K
196 GE 2015 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 , G U A R A N T E E S A N D P R O D U C T W AR R A N T I 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.
The classification of our variable interests in these entities in our financial statements is based on the nature of the entity and the
characteristics of the investment we hold.
INVESTMENTS IN UNCONSOLIDATED VIEs
December 31 (In millions)
Other assets and investment securities
Financing receivables (cid:177) net
Total investments
Contractual obligations to fund investments, guarantees or revolving lines of credit
Total
$
$
2015
745
13
758
29
787
$
$
2014
704
109
813
11
824
In addition to the entities included in the table above, we also hold passive investments in investment securities 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 22. COMMITMENTS, GUARANTEES AND PRODUCT WARRANTIES
COMMITMENTS
The GECAS business in Capital had placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list
prices approximating $27,115 million and secondary orders with airlines for used aircraft of approximately $766 million at December 31,
2015. In our Aviation segment, we had committed to provide financing assistance on $2,565 million of future customer acquisitions of
aircraft equipped with our engines, including commitments made to airlines in 2015 for future sales under our GE90 and GEnx engine
campaigns.
GUARANTEES
Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic, liquidity and
credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a significant adverse
effect on our financial position, results of operations or liquidity. We record liabilities for guarantees at estimated fair value, generally the
amount of the premium received, or if we do not receive a premium, the amount based on appraisal, observed market values or
discounted cash flows. Any associated expected recoveries from third parties are recorded as other receivables, not netted against the
liabilities.
At December 31, 2015, we were committed under the following guarantee arrangements beyond those provided on behalf of VIEs. See
Note 21.
Credit Support. We have provided $816 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 $36 million at December 31, 2015.
GE 2015 FORM 10-K 197
GE 2015 FORM 10-K 197
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 , G U A R A N T E E S A N D P R O D U C T W AR R A N T I E S
Indemnification Agreements. We have agreements that require us to fund up to $23 million at December 31, 2015 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, 2015.
At December 31, 2015, we also had $449 million of other indemnification commitments, substantially all of which relate to
representations and warranties in sales of businesses or assets. The liability for these indemnification commitments was $347 million at
December 31, 2015.
Contingent Consideration. These are agreements to provide additional consideration to a buyer or seller in a business combination if
contractually specified conditions related to the acquisition or disposition are achieved. Amount of contingent consideration was
insignificant at December 31, 2015.
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 (cid:177) mostly historical claims experience (cid:177) 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 (a)
Balance at December 31
(a)
2015 included $634 million related to Alstom acquisition.
2015
1,199
649
(718)
593
1,723
$
$
2014
1,370
593
(714)
(50)
1,199
$
$
2013
1,429
798
(867)
10
1,370
$
$
198 GE 2015 FORM 10-K
198 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
I N T E R C O M P A N Y T R A N S AC T I O N S
NOTE 23. INTERCOMPANY TRANSACTIONS
Transactions between related companies are made on an arms-length basis, are eliminated and consist primarily of GE Capital
dividends to GE; GE customer receivables sold to GE Capital; GE Capital services for trade receivables management and material
procurement; buildings and equipment leased between GE and GE Capital; information technology (IT) and other services sold to
GE Capital by GE; aircraft engines manufactured by GE that are installed on aircraft purchased by GE Capital from third-party
producers for lease to others; expenses related to parent-subsidiary pension plans, and various investments, loans and allocations
of GE corporate overhead costs.
These intercompany transactions are reported in the GE and GE Capital 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 $(6,035) million, $2,097 million and $3,937 million in the twelve months ended December 31,
2015, and $(5,404) million, $1,978 million and $3,426 million in the twelve months ended December 31, 2014, $(5,088) million,
$492 million and $4,690 million for 2013, respectively. Details of these eliminations are shown below.
(In millions)
2015
2014
2013
Cash from (used for) operating activities-continuing operations
Combined
GE customer receivables sold to GE Capital
GE Capital dividends to GE
Other reclassifications and eliminations
Cash from (used for) investing activities-continuing operations
Combined
GE customer receivables sold to GE Capital
Other reclassifications and eliminations
Cash from (used for) financing activities-continuing operations
Combined
GE customer receivables sold to GE Capital
GE Capital dividends to GE
Other reclassifications and eliminations
$
$
$
$
$
$
17,891
(914)
(4,300)
(821)
11,856
59,516
1,319
778
61,613
(73,484)
(405)
4,300
42
(69,547)
$
$
$
$
$
$
21,434
(1,918)
(3,000)
(486)
16,033
17,252
1,766
212
19,229
(44,340)
152
3,000
274
(40,912)
$
$
$
$
$
$
19,487
360
(5,985)
537
14,398
43,666
262
230
44,159
(51,502)
(622)
5,985
(673)
(46,813)
GE 2015 FORM 10-K 199
GE 2015 FORM 10-K 199
F I N A N C I A L S T AT E M E N T S
O P E R A T I N G S E G M E N T S
NOTE 24. 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 and referenced in Note 1. Segment results for our financial services businesses reflect the discrete tax effect of transactions.
Results of 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, 2015, can be found below, and details of segment profit by operating
segment can be found in the Summary of Operating Segments table in (cid:179)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) Discussion and Analysis of Financial Condition
and Results of Operations(cid:180) section in this Form 10-K Report.
POWER
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. Water treatment services and equipment include specialty chemical treatment programs, water
purification equipment, mobile treatment systems and desalination processes.
RENEWABLE ENERGY
Renewable Energy makes power from renewable sources affordable, accessible, and reliable for the benefit of people everywhere.
With one of the broadest technology portfolios in the industry, Renewable Energy creates value for customers by providing technology
and services in the Onshore Wind Power industry, high-yield offshore wind turbines as well as a full range of solutions, products and
services to serve the hydropower industry, from initial design to final commissioning.
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 (cid:42)(cid:40)(cid:182)(cid:86) 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, renewable energy, 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.
200 GE 2015 FORM 10-K
200 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
O P E R A T 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, surgical & interventional imaging, 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 manufactures, sources and sells a
variety of energy-efficient solutions for commercial, industrial, municipal and consumer applications, utilizing light-emitting diode (LED),
fluorescent, halogen and high-intensity discharge (HID) technologies. Products and services are sold in North America and in global
markets under various GE and private-label brands.
CAPITAL
(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86) continuing financial services businesses and products are geared to utilize (cid:42)(cid:40)(cid:182)(cid:86) industry-specific expertise in aviation, energy,
infrastructure and healthcare to capitalize on market-specific opportunities. In addition, we continue to operate our run-off insurance
activities as part of our continuing operations. Products and services are primarily offered in North America and in global markets
through its Vertical financing businesses.
REVENUES
(In millions)
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Total industrial
Capital
Corporate items
and eliminations(c)
Total
$
Total revenues(a)
2014
2015
21,490 $
6,273
16,450
7,600
24,660
17,639
5,933
8,751
108,796
10,801
20,580 $
6,399
19,085
7,319
23,990
18,299
5,650
8,404
109,727
11,320
2013
19,315 $
4,824
17,341
7,569
21,911
18,200
5,885
8,338
103,383
11,267
Intersegment revenues(b)
2015
2014
762 $
12
387
1,000
418
7
1
22
2,608
1,151
778 $
14
402
890
692
6
(2)
22
2,801
1,037
2013
700 $
17
371
848
500
14
12
25
2,486
841
External revenues
2014
2015
20,728 $
6,261
16,063
6,600
24,242
17,633
5,932
8,729
106,188
9,650
19,802 $
6,386
18,683
6,429
23,298
18,293
5,652
8,383
106,926
10,283
2013
18,615
4,807
16,970
6,720
21,411
18,186
5,874
8,313
100,896
10,427
(2,211)
(3,863)
(1,405)
(3,759)
(3,838)
$ 117,386 $ 117,184 $ 113,245 $
- $
- $
(3,327)
1,922
- $ 117,386 $ 117,184 $ 113,245
1,548
(25)
(a)
(b)
(c)
Revenues of GE businesses include income from sales of goods and services to customers and other income.
Sales from one component to another generally are priced at equivalent commercial selling prices.
Includes the results of our former equity method investment in NBCUniversal LLC.
GE 2015 FORM 10-K 201
GE 2015 FORM 10-K 201
F I N A N C I A L S T AT E M E N T S
O P E R A T I N G S E G M E N T S
Revenues from customers located in the United States were $53,238 million, $51,147 million and $49,356 million in 2015, 2014 and
2013, respectively. Revenues from customers located outside the United States were $64,148 million, $66,038 million and $63,888
million in 2015, 2014 and 2013, respectively.
Assets(a)(b)
At December 31
2014
2015
Property, plant and
equipment additions(c)
For the years ended December 31
Depreciation and amortization
For the years ended December 31
2013
2015
2014
2013
2015
2014
2013
$
51,674 $
8,726
26,126
16,808
34,524
28,162
4,368
4,702
316,686
26,698 $
3,572
27,329
10,976
33,716
29,227
4,449
4,560
503,179
26,168 $
3,269
26,250
10,305
32,273
27,858
4,418
4,306
520,399
2,122 $
999
422
1,073
1,260
284
202
275
7,570
578 $
41
656
176
1,197
405
128
359
3,818
685 $
23
1,191
137
1,178
316
282
405
3,274
712 $
116
596
322
855
799
179
103
2,584
563 $
113
585
313
824
843
169
235
2,612
916
$
492,692 $
11,249
654,954 $
8,001
663,247 $
(297)
13,911 $
(111)
7,247 $
194
7,685 $
231
6,499 $
164
6,421 $
593
73
481
323
677
861
166
300
2,847
258
6,581
(In millions)
Power
Renewable Energy
Oil & Gas
Energy Management
Aviation
Healthcare
Transportation
Appliances & Lighting
Capital(d)
Corporate items
and eliminations(e)
Total
(a) Assets of industrial 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, Renewable Energy, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting and
Capital operating segments at December 31, 2015, include investment in and advances to associated companies of $469 million, $36 million, $143
million, $743 million, $1,400 million, $571 million, $6 million, $59 million and $7,546 million, respectively. Investments in and advances to
associated companies contributed approximately $31 million, $(1) million, $7 million, $17 million, $88 million, $(43) million, $60 million and $347
million to segment pre-tax income of Power, Renewable Energy, Oil & Gas, Energy Management, Aviation, Healthcare, Appliances & Lighting and
Capital operating segments, respectively, and Transportation an insignificant amount, for the year ended December 31, 2015.
(c) Additions to property, plant and equipment include amounts relating to principal businesses purchased.
(d)
Includes Capital discontinued operations
(e)
Includes deferred income taxes that are presented as assets for purposes of our consolidating balance sheet presentation.
(In millions)
Capital
Corporate items and eliminations(a)
Total
$
$
Interest and other financial charges
Provision (benefit) for income taxes
2015
2,301 $
1,162
3,463 $
2014
2013
1,638 $
1,085
2,723 $
2,021 $
849
2,870 $
2015
4,979 $
1,506
6,485 $
2014
(861) $
1,634
773 $
2013
(448)
1,667
1,219
(a)
Included amounts for Power, Renewable Energy, 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 (cid:177) net associated with operations based in the United States were $14,273 million, $9,868 million and
$10,065 million at year-end 2015, 2014 and 2013, respectively. Property, plant and equipment (cid:177) net associated with operations based
outside the United States were $39,822 million, $38,202 million and $40,165 million at year-end 2015, 2014 and 2013, respectively.
202 GE 2015 FORM 10-K
202 GE 2015 FORM 10-K
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C AS H F L O W S I N F O R M A T I O N
NOTE 25. CASH FLOWS INFORMATION
Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.
Amounts reported in the (cid:179)(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86) from sales of discontinued (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180) and (cid:179)(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86) from principal business (cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180) lines in
the Statement of Cash Flows are net of cash disposed and included certain deal-related costs. Amounts reported in the (cid:179)(cid:49)(cid:72)(cid:87) cash from
(payments for) principal businesses (cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:71)(cid:180) line is net of cash acquired and included certain deal-related costs and debt assumed
and immediately repaid in acquisitions. Amounts reported in the (cid:179)(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86) from sale of equity interest in NBCU (cid:47)(cid:47)(cid:38)(cid:180) line included
certain deal-related costs.
Amounts reported in the (cid:179)(cid:36)(cid:79)(cid:79) other operating (cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180) 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. Certain supplemental information related to our
cash flows is shown below.
For the years ended December 31 (In millions)
2015
2014
2013
GE
Net dispositions (purchases) of GE shares for treasury
Open market purchases under share repurchase program
Other purchases
Dispositions
GE Capital
All other operating activities
Cash collateral on derivative contracts
Increase (decrease) in other liabilities
Other
Net decrease (increase) in GE Capital financing receivables
Increase in loans to customers
Principal collections from customers - loans
Investment in equipment for financing leases
Principal collections from customers - financing leases
Sales of financing receivables
All other investing activities
Purchases of investment securities
Dispositions and maturities of investment securities
Decrease (increase) in other assets - investments
Other(a)
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
$
$
$
$
$
$
$
$
$
$
$
(2,709)
(58)
1,668
(1,099)
(1,936)
4,860
2,163
5,087
(65,306)
60,292
(417)
734
4,923
226
(7,790)
9,587
(1,439)
(5,048)
(4,690)
(42,110)
(2,455)
(283)
(44,848)
163
(1,235)
(290)
(1,362)
$
$
$
$
$
$
$
$
$
$
$
(2,211)
(49)
1042
(1,218)
738
(3,331)
5,073
2,480
(64,843)
60,764
(535)
841
3,612
(161)
(2,008)
2,723
(287)
24,146
24,574
(36,919)
(864)
(304)
(38,087)
322
(1,113)
112
(679)
$
$
$
$
$
$
$
$
$
$
$
(10,225)
(91)
1,038
(9,278)
(2,285)
1,886
2,995
2,596
(58,535)
58,667
(592)
1,335
2,147
3,022
(3,293)
7,360
183
31,506
35,756
(44,296)
(3,862)
(434)
(48,592)
491
(980)
(389)
(878)
(a)
Other primarily included net activity related to settlements between our continuing operations (primarily our treasury operations) and
businesses in discontinued operations.
GE 2015 FORM 10-K 203
GE 2015 FORM 10-K 203
F I N A N C I A L S T AT E M E N T S
C O S T I N F O R M AT I O N
NOTE 26. 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 (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86) changing needs and requirements, and address new market opportunities.
Research and development expenses are classified in cost of goods and services 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 such costs. We also
enter into research and development arrangements with unrelated investors, which are generally formed through partnerships and
consolidated within (cid:42)(cid:40)(cid:182)(cid:86) financial statements. Research and development funded through consolidated partnerships 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
$
$
2015
5,278
(803)
(226)
4,249
$
$
2014
5,273
(721)
(319)
4,233
$
$
2013
5,461
(711)
(107)
4,643
COLLABORATIVE ARRANGEMENTS
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. (cid:42)(cid:40)(cid:182)(cid:86) payments
to participants are recorded as cost of services sold ($788 million, $873 million and $820 million for the years 2015, 2014 and 2013,
respectively) or as cost of goods sold ($2,736 million, $2,660 million and $2,613 million for the years 2015, 2014 and 2013,
respectively).
RENTAL EXPENSE
Rental expense under operating leases is shown below.
(In millions)
GE
GE Capital
Eliminations
Total
$
$
2015
1,258
107
1,365
(169)
1,196
$
$
2014
1,356
123
1,479
(223)
1,256
$
$
2013
1,380
124
1,504
(198)
1,306
At December 31, 2015, minimum rental commitments under noncancellable operating leases aggregated $4,946 million and $310
million for GE and GE Capital, respectively. Amounts payable over the next five years follow.
(In millions)
GE
GE Capital
Eliminations
Total
2016
909
29
938
(144)
794
$
$
2017
819
24
843
(136)
707
$
$
2018
699
20
719
(128)
591
$
$
2019
615
19
634
(115)
519
$
$
2020
547
18
565
(109)
456
$
$
204 GE 2015 FORM 10-K
204 GE 2015 FORM 10-K
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NOTE 27. SUPPLEMENTAL INFORMATION
POSTRETIREMENT BENEFIT PLANS
As discussed in Note 12, we sponsor a number of pension plans which consist of the two principal pension plans for certain U.S.
employees as well as other affiliate pension plans. In addition, we sponsor a number of postretirement health and life insurance benefit
plans (retiree benefit plans).
The accounting requirements and concepts discussed in Note 12 Postretirement Benefit Plans are the same for other pension plans
and principal retiree benefit plans and are consistently applied.
The following disclosures provide additional information with respect to our pension plans and principal retiree benefit plans.
Other pension plans in 2015 included 53 U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million.
Principal Retiree Benefit Plans provide health and life insurance benefits to eligible participants and these participants share in the
cost of healthcare benefits.
COST OF BENEFIT PLANS
(In millions)
Service cost for benefits earned
Prior service cost (credit) amortization
Expected return on plan assets
Interest cost on benefit obligations
Net actuarial loss (gain) amortization
Curtailment loss (gain)
Benefit plans cost
Other pension plans
2014
2015
$
$
416 $
-
(881)
555
289
(6)
373 $
403 $
6
(789)
587
205
-
412 $
2013
435 $
7
(663)
523
343
-
645 $
Principal retiree benefit plans
2015
2014
$
145
(8)
(48)
335
(25)
(225)(a)
174
$
164 $
353
(50)
424
(150)
48
789 $
2013
229
393
(60)
410
(45)
-
927
(a)
Gain principally resulting from life insurance amendment.
ASSUMPTION USED IN BENEFIT CALCULATIONS
The accounting assumptions in the table below are those that are significant to the measurement of our benefit obligations.
ASSUMPTIONS USED TO MEASURE BENEFIT OBLIGATIONS
December 31
Discount rate
Compensation increases
Initial healthcare trend rate
Other pension plans (weighted average)
2013
2014
2015
3.33%
3.32
N/A
3.53 %
3.60
N/A
4.39 %
3.76
N/A
Principal retiree benefit plans
2015
3.93%
3.80
6.00(a)
2014
3.89%
4.10
6.00
2013
4.61%
4.00
6.00
(a)
For 2015, ultimately declining to 5% for 2030 and thereafter.
The healthcare trend assumptions for 2015 apply to our pre-65 retiree medical plans. Our post-65 retiree plan has a fixed subsidy and
therefore is not subject to healthcare inflation.
The discount rate used to measure the benefit obligation at the end of the year is also used to measure benefit cost in the following
year. The assumptions used to measure benefit cost follow.
GE 2015 FORM 10-K 205
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ASSUMPTIONS USED TO MEASURE BENEFIT COST
December 31
Discount rate
Expected return on assets
Other pension plans (weighted average)
2013
2015
2014
Principal retiree benefit plans
2014
2015
2013
3.53 %
6.95
4.39 %
6.92
3.92 %
6.82
3.89% (a)
7.00
4.61% (a)
7.00
3.74 % (a)
7.00
(a)
Weighted average discount rates of 3.92%, 4.47% and 3.77% were used for determination of costs in 2015, 2014 and 2013, respectively.
The Society of Actuaries issued new mortality tables in 2014 projecting longer life expectancies that resulted in higher postretirement
obligations for U.S. companies. We updated our mortality assumptions as of December 31, 2014, which resulted in an increase of $612
million in our principal retiree benefit obligations.
BENEFIT OBLIGATIONS
(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(e)
$
$
Other pension plans
Principal retiree benefit plans
2015
2014
2015
2014
$
15,589
416
555
15
(12)
(406) (b)
(576)
6,859 (d)
(822)
21,618
$
$
13,535
403
587
9
(29)
2,170 (b)
(493)
48
(641)
15,589
$
$
10,703
145
335
50
(3,291)(a)
(444)(b)
(691)
(50)
-
6,757
$
9,913
164
424
52
(586)
1,440 (c)
(704)
-
-
10,703
(a)
(b)
(c)
(d)
Principally related to plan amendments affecting post-65 retiree health and retiree life insurance for certain production participants.
Primarily associated with discount rate changes.
Principally associated with discount rate and mortality assumption changes.
Substantially all related to Alstom acquisition.
The benefit obligation for retiree health plans was $4,838 million and $8,445 million at December 31, 2015 and 2014, respectively.
(e)
(cid:3)
THE COMPOSITION OF OUR PLAN ASSETS
The fair value of other pension plans' and principal retiree benefit (cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:182) 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.
December 31 (in millions)
Equity securities
U.S. equity securities
Non-U.S. equity securities
Debt securities
Fixed income and cash investment funds
U.S. corporate
Other debt securities
Private equities
Real estate
Other investments
Total plan assets
Other pension plans
Principal retiree benefit plans
2015
2014
2015
2014
$
$
667 $
6,323
6,258
242
551
703
1,358
1,266
17,368 $
635
5,285
$
4,071
222
365
262
690
856
12,386
$
203 $
162
84
52
93
75
6
20
695 $
205
125
133
47
103
94
64
42
813
Virtually all of the private equity, real estate and the majority of other investments are considered level 3 investments. The remaining
investments are substantially all considered level 1 or level 2. A description of the fair value leveling hierarchy is provided in the
Accounting Principles and Policy section of Note 1.
206 GE 2015 FORM 10-K
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F I N A N C I A L S T AT E M E N T S
S U P P L E M E N T A L I N F O R M AT I O N
FAIR VALUE OF PLAN ASSETS
Other pension plans
Principal retiree benefit plans
(In millions)
2015
2014
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
$
$
12,386
381
549
15
(576)
5,207 (a)
(594)
17,368
$
$
11,059
1,537
726
9
(493)
-
(452)
12,386
$
$
2015
813
22
501
50
(691)
-
-
695
$
$
2014
903
44
518
52
(704)
-
-
813
(a)
Substantially all related to Alstom acquisition.
ASSET ALLOCATION
December 31
Principal pension plans
2015
Target
allocation
2015
Actual
allocation
Other pension plans
(weighted average)
2015
Target
allocation
2015
Actual
allocation
Principal retiree
benefit plans
2015
Target
allocation
2015
Actual
allocation
Equity securities
Debt securities (including cash equivalents)
Private equities
Real estate
Other investments
17 - 57%
13 - 53
8 - 18
2 - 12
3 - 13
47 %
29
11
7
6
37 %
37
5
9
12
40 %
40
4
8
8
35 - 75%
11 - 46
0 - 25
0 - 12
0 - 10
59 %
27
11
1
2
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 and setting long-term strategic targets. The primary strategic investment
objectives are balancing investment risk and return and monitoring the (cid:83)(cid:79)(cid:68)(cid:81)(cid:182)(cid:86) 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.
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 3.7% and 3.8% of the
GE Pension Trust assets at year-end 2015 and 2014, 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, 2015, no sector concentration of assets exceeded
15% of total GE Pension Plan assets.
The following tables present the changes in Level 3 investments for the GE Pension Plan.
(cid:3)
CHANGES IN LEVEL 3 INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2015
(cid:3)
(cid:3)
(cid:3)
(In millions)
Debt securities
Private equities
Real estate
Other investments
January 1,
2015
Net realized
gains (losses)
Net unrealized
gains (losses)
$
$
6 $
5,217
3,129
2,248
10,600 $
(3) $
432
122
22
573 $
3 $
189
246
(52)
386 $
Purchases,
issuances
and
settlements
(3) $
(968)
(360)
71
(1,260) $
Transfers
in and/or
out of
Level 3
(1) $
-
49
6
54 $
December 31,
2015
2
4,870
3,186
2,295
10,353
GE 2015 FORM 10-K 207
GE 2015 FORM 10-K 207
F I N A N C I A L S T AT E M E N T S
S U P P L E M E N T A L I N F O R M AT I O N
CHANGES IN LEVEL 3 INVESTMENTS FOR THE YEAR ENDED DECEMBER 31, 2014
6
5,217
3,129
2,248
10,600
2021 -
2025
20,145
4,835
2,500
Principal
retiree
benefit
plans
(cid:3)
(cid:3)
(cid:3)
(In millions)
Debt securities
Private equities
Real estate
Other investments
January 1,
2014
Net realized
gains (losses)
Net unrealized
gains (losses)
Purchases,
issuances
and
settlements
Transfers
in and/or
out of
Level 3
December 31,
2014
$
$
- $
6,269
3,354
1,622
11,245 $
(9) $
592
36
47
666 $
11 $
(54)
334
86
377 $
4 $
(1,565)
(595)
194
(1,962) $
- $
(25)
-
299
274 $
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions)
Principal pension plans
Other pension plans
Principal retiree benefit plans
$
2016
3,395 $
855
625
2017
3,485 $
870
600
2018
3,610 $
875
590
2019
3,705 $
885
575
2020
3,785 $
905
560
2015 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
(cid:3)
(cid:3)
(cid:3)
(In millions)
Total
postretirement
benefit plans
Principal
pension
plans
Other
pension
plans
Cost of postretirement benefit plans
Changes in other comprehensive income
Prior service cost (credit) (cid:177) current year
Net actuarial loss (gain) (cid:177) current year
Net curtailment/gain (loss)
Prior service credit (cost) amortization
Net actuarial gain (loss) amortization
Total changes in other comprehensive income
Cost of postretirement benefit plans and
changes in other comprehensive income
$
5,045
$
4,498
$
373
$
174
(2,401)
(1,604)
76
(197)
(3,552)
(7,678)
902
(1,022)
(105)
(205)
(3,288)
(3,718)
(12)
(164)
6
-
(289)
(459)
(3,291)
(418)
175
8
25
(3,501)
$
(2,633)
$
780
$
(86)
$
(3,327)
208 GE 2015 FORM 10-K
208 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
S U P P L E M E N T A L I N F O R M AT I O N
DERIVATIVES AND HEDGING
Note 20 provides the primary information related to our derivatives and hedging activity. This section provides certain supplemental
information about this topic.
As described in Note 20, changes in the fair value of derivatives are recorded in a separate component of equity (referred to below as
Accumulated Other Comprehensive Income, or AOCI) and are recorded in earnings in the period in which the hedged transaction
occurs. The table below summarizes this activity by hedging instrument.
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)
2015
Assets
Liabilities
2014
Assets
Liabilities
$
4,132
1,109
-
5,241
119
1,715
315
2,149
7,391
1,001
8,392
(4,326)
(1,784)
(6,110)
$
158
1,383
-
1,541
44
4,048
49
4,141
5,681
(13)
5,668
(4,326)
(642)
(4,968)
$
5,835
2,579
-
8,414
79
1,182
237
1,498
9,911
1,389
11,300
(3,875)
(3,695)
(7,570)
2,282
700
3,731
(1,277)
-
(3,114)
461
884
2
1,347
24
3,439
40
3,503
4,851
(30)
4,821
(3,892)
(445)
(4,337)
485
-
485
Net amount
$
1,005
$
700
$
617
$
Derivatives are classified in the captions (cid:179)(cid:36)(cid:79)(cid:79) other (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180) and (cid:179)(cid:36)(cid:79)(cid:79) other (cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180) and the related accrued interest is classified in (cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85) GE Capital
(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:180) and (cid:179)(cid:36)(cid:79)(cid:79) other (cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180) 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, 2015 and 2014, the cumulative adjustment
for non-performance risk was insignificant and $16 million, respectively.
(b) Excluded excess cash collateral received and posted of $48 million and $379 million at December 31, 2015, respectively, and $63 million and
$195 million at December 31, 2014, respectively.
(c) Excluded excess securities collateral received of $107 million and $471 million at December 31, 2015 and 2014, respectively.
GE 2015 FORM 10-K 209
GE 2015 FORM 10-K 209
F I N A N C I A L S T AT E M E N T S
S U P P L E M E N T A L I N F O R M AT I O N
CASH FLOW HEDGE ACTIVITY
(cid:3)
(In millions)
Interest rate contracts
Currency exchange contracts
Commodity contracts
Total(a)
Gain (loss) recognized in AOCI
2015
(1)
(907)
(5)
(913)
$
$
2014
(1)
(541)
(4)
(546)
$
$
$
$
Gain (loss) reclassified
from AOCI into earnings
2015
(130)
(784)
(4)
(918)
$
$
2014
(234)
(641)
(3)
(878)
(a)
Gain (loss) is recorded in GE Capital 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 $49 million loss at December 31, 2015.
We expect to transfer $134 million to earnings as an expense in the next 12 months contemporaneously with the earnings effects of the
related forecasted transactions. In both 2015 and 2014, 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, 2015 and 2014, the
maximum term of derivative instruments that hedge forecasted transactions was 17 years and 18 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.
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 $3,061 million at December 31, 2015, of which $1,784 million was cash and $1,277
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 $642 million at December 31, 2015. At December 31, 2015,
our exposure to counterparties (including accrued interest), net of collateral we hold, was $836 million. This excludes exposure related
to embedded derivatives.
Additionally, our master agreements typically contain mutual downgrade provisions that provide the ability of each party to require
termination if the long-term credit rating of the counterparty were to fall below A-/A3 or other ratings levels agreed upon with the
counterparty. In certain of these master agreements, each party also has the ability to require termination if the short-term rating of the
counterparty were to fall below A-1/P-1. Our master agreements also typically contain provisions that provide termination rights upon
the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated
under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into
account any collateral posted. The net amount of our derivative liability, after consideration of collateral posted by us and outstanding
interest payments was $690 million at December 31, 2015. This excludes embedded derivatives.
210 GE 2015 FORM 10-K
210 GE 2015 FORM 10-K
F I N A N C I A L S T AT E M E N T S
Q U A R T E R L Y I N F O R M A T I O N
NOTE 28. QUARTERLY INFORMATION (UNAUDITED)
(In millions; per-share amounts in dollars)
First quarter
2015
Second quarter
2014
2015
2014
Third quarter
2015
Fourth quarter
2014
2015
2014
Consolidated operations
Earnings (loss) from continuing operations $
Earnings (loss) from discontinued
operations
Net earnings (loss)
Less net earnings (loss) attributable to
noncontrolling interests
Net earnings (loss) attributable to
the Company
Per-share amounts (cid:177) earnings (loss) from
continuing operations
Diluted earnings (loss) per share
Basic earnings (loss) per share
Per-share amounts (cid:177) earnings (loss)
from discontinued operations
Diluted earnings (loss) per share
Basic earnings (loss) per share
Per-share amounts (cid:177) net earnings (loss)
Diluted earnings (loss) per share
Basic earnings (loss) per share
$
$
(4,673) $
1,491 $
1,813 $
2,180 $ 1,915 $
2,130 $
2,645 $
3,690
(8,936)
(13,608)
1,461
2,952
(2,947)
(1,134)
1,367
3,546
629
2,545
1,378
3,508
3,758
6,403
1,649
5,339
(35)
(47)
225
-
39
(29)
103
187
(13,573) $
2,999 $
(1,360) $
3,546 $ 2,506 $
3,536 $
6,301 $
5,152
(0.45) $
(0.45)
0.15 $
0.15
0.17 $
0.17
0.22 $
0.22
0.19 $
0.19
0.22 $
0.22
0.26 $
0.26
0.35
0.36
(0.90)
(0.90)
(1.35)
(1.35)
0.14
0.14
0.30
0.30
(0.30)
(0.30)
(0.13)
(0.13)
0.13
0.14
0.35
0.35
0.05
0.05
0.25
0.25
0.13
0.13
0.35
0.35
0.38
0.38
0.64
0.64
0.15
0.16
0.51
0.51
Selected data
GE
Sales of goods and services
Gross profit from sales
GE Capital
Total revenues
Earnings (loss) from continuing
attributable to the Company
$
23,839
5,514
$ 24,011
5,327
$ 26,141
6,033
$ 26,225
6,089
$ 25,612
6,275
$ 26,025
6,146
$ 30,614
7,556
$ 31,046
7,870
2,866
2,963
2,690
2,676
2,660
2,763
2,585
2,919
(5,721)
489
(332)
468
(154)
226
(1,447)
348
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 (loss) from continuing operations, earnings (loss)
from discontinued operations and net earnings. As a result, the sum of each (cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:182)(cid:86) 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 (loss) for the respective quarters.
GE 2015 FORM 10-K 211
GE 2015 FORM 10-K 211
O T H E R I N F O R M A T I O N
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Executive Officers of the Registrant (As of February 1, 2016)
Name
Position
Jeffrey R. Immelt
Jeffrey S. Bornstein
Elizabeth J. Comstock
Alexander Dimitrief
Jan R. Hauser
Susan P. Peters
John G. Rice
Keith S. Sherin
Chairman of the Board & Chief Executive Officer
Senior Vice President & Chief Financial Officer
Vice Chairman, Business Innovations
Senior Vice President, General Counsel & Secretary
Vice President, Controller & Chief Accounting Officer
Senior Vice President, Human Resources
Vice Chairman of General Electric Company;
President & CEO, Global Growth Organization
Vice Chairman of General Electric Company; CEO,
GE Capital
Date assumed
Executive
Age
Officer Position
59
50
55
57
56
62
59
January 1997
July 2013
April 2013
November 2015
April 2013
August 2013
September 1997
57
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 April 2013, Ms. Hauser served as a partner, Accounting Services, National Professional Services Group
at PricewaterhouseCoopers LLP.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:68)(cid:79)(cid:79)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:15)(cid:180)(cid:3)(cid:179)(cid:54)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:20)(cid:25)(cid:11)(cid:68)(cid:12)(cid:3)(cid:37)(cid:72)(cid:81)eficial
(cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:15)(cid:180)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:83)roxy
statement for our 2016 Annual Meeting of Shareowners to be held April 27, 2016, which will be filed within 120 days of the end of our
fiscal year ended December 31, 2015 (the 2016 Proxy Statement).
212 GE 2015 FORM 10-K
212 GE 2015 FORM 10-K
O T H E R I N F O R M A T I O N
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
(a)1. Financial Statements
(cid:44)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:88)(cid:83)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:85)(cid:92)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)(cid:180)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:29)
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:50)(cid:89)(cid:72)(cid:85)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)
Report of Independent Registered Public Accounting Firm
Statement of Earnings for the years ended December 31, 2015, 2014 and 2013
Consolidated Statement of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)5, 2014 and 2013
Statement of Financial Position at December 31, 2015 and 2014
Statement of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Notes to consolidated financial statements
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)ion 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 Description
2(a)
3(i)
3(ii)
4(a)
4(b)
4(c)
4(d)
Master Agreement dated as of December 3, 2009 by and among General Electric Company, NBC Universal, Inc.,
Comcast Corporation and Navy, LLC. (Incorporated by referenc(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:21)(cid:11)(cid:68)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)
Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2009).
The Restated Certificate of Incorporation of General Electric Company (Incorporated by reference to Exhibit 3(i) to
(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the fiscal year ended December 31, 2013), as amended by the
(cid:38)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:80)(cid:72)(cid:81)(cid:71)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:24)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:22)(cid:17)(cid:20)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)
Report on Form 8-K, dated December 3, 2015), and as further amended by the Certificate of Amendment, dated January
(cid:20)(cid:28)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:22)(cid:17)(cid:20)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:27)-K, dated January 20,
2016) (in each case, under Commission file number 001-00035).
The By-(cid:47)(cid:68)(cid:90)(cid:86)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:15)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:22)(cid:11)(cid:76)(cid:76)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)
Current Report on Form 8-K dated February 11, 2015 (Commission file number 001-00035)).
Amended and Restated General Electric Capital Corporation Standard Global Multiple Series Indenture Provisions dated
(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:20)(cid:28)(cid:28)(cid:26)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:68)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
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 General Electric Capital Corporation and
The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit 4(c) to General Electric Capital
(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:54)-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
(cid:82)(cid:73)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:20)(cid:28)(cid:28)(cid:26)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:71)(cid:71)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:51)(cid:82)(cid:86)(cid:87)-Effective
Amendment No. 1 to Registration Statement on Form S-3, File No. 333-76479 (Commission file number 001-06461)).
Second Supplemental Indenture dated as of July 2, 2001, supplemental to Third Amended and Restated Indenture dated
(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:20)(cid:28)(cid:28)(cid:26)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:73)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:51)(cid:82)(cid:86)(cid:87)-Effective
Amendment No.1 to Registration Statement on Form S-3, File No. 333-40880 (Commission file number 001-06461)).
GE 2015 FORM 10-K 213
GE 2015 FORM 10-K 213
O T H E R I N F O R M A T I O N
4(e)
4(f)
4(g)
4(h)
4 (i)
4(j)
4(k)
Third Supplemental Indenture dated as of November 22, 2002, supplemental to Third Amended and Restated Indenture
dated as of Febr(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:20)(cid:28)(cid:28)(cid:26)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:70)(cid:70)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:51)(cid:82)(cid:86)(cid:87)-
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
(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:20)(cid:28)(cid:28)(cid:26)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:74)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)
Registration Statement on Form S-3, File number 333-156929 (Commission file number 001-06461)).
Letter from the Senior Vice President and Chief Financial Officer of General Electric to General Electric Capital
Corporation dated September 15, 2006, with respect to returning dividends, distributions or other payments to General
Electric Capital Corporation in certain circumstances described in the Indenture for Subordinated Debentures dated
September 1, 2006, between General Electric Capital Corporation and the Bank of New York, as successor trustee
(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:23)(cid:11)(cid:70)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:51)(cid:82)(cid:86)(cid:87)-Effective Amendment No. 2 to
Registration Statement on Form S-3, File No. 333-132807 (Commission file number 001-06461)).
Indenture dated as of October 26, 2015, among GE Capital International Funding Company, as issuer, General Electric
Company and General Electric Capital Corporation, as guarantors and The Bank of New York Mellon, as trustee
(Incorporated by reference to Exhibit 99 to General E(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:27)-K filed on October 26, 2015
(Commission file number 001-00035)).
Global Supplemental Indenture dated as of April 10, 2015, among General Electric Capital Corporation, General Electric
Company and The Bank of New York Mellon, as trustee.*
Second Global Supplemental Indenture dated as of December 2, 2015, among General Electric Capital Corporation,
General Electric Company and The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit
(cid:23)(cid:17)(cid:21)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:27)-K filed on December 3, 2015 (Commission file number 001-00035)).
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.*
(10)
Except for 10(v), (w) and (x) below, all of the following exhibits consist of Executive Compensation Plans or Arrangements:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
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).
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).
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).
G(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:38)(cid:75)(cid:68)(cid:85)(cid:76)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:42)(cid:76)(cid:73)(cid:87)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:21)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)
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).
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).
General Electric Supplementary Pension Plan, as amended effective July 1, 2015. *
General Electric 2003 Non-Employee Director Compensation Plan, Amended and Restated as of December 12,
2014 (Incorporated by reference to Exhibit 10(h) (cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K (Commission
file number 000-00035) for the fiscal year ended December 31, 2014).
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).
214 GE 2015 FORM 10-K
214 GE 2015 FORM 10-K
O T H E R I N F O R M A T I O N
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
GE Retirement for the Good of the Company Program, as amended effective January 1, 2009 (Incorporated by
(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:77)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K (Commission file number 001-00035)
for the fiscal year ended December 31, 2008.
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).
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).
General Electric Company 2007 Long-Term Incentive Plan (as amended and restated April 25, 2012)
(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:28)(cid:28)(cid:17)(cid:20)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:54)-8, dated May
4, 2012, File number 333-181177 (Commission file number 001-00035)).
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).
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(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarter ended March 31, 2014 (Commission
file number 001-00035)).
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
(cid:20)(cid:19)(cid:11)(cid:69)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarter ended March 31, 2014 (Commission
file number 001-00035)).
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
(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:68)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarter ended June 30, 2013
(Commission file number 001-00035)).
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 (a) of (cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)
on Form 10-Q for the quarter ended June 30, 2015 (Commission file number 001-00035)).
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)).
Time Sharing Agreement dated November 22, 2010 between General Electric Company and Jeffrey R. Immelt
((cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:93)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the fiscal year
ended December 31, 2010 (Commission file number 001-00035)).
Non-Competition Agreement between General Electric Company and John Krenicki effective July 24, 2012
(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:68)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarter
ended September 30, 2012 (Commission file number 001-00035)).
Time Sharing Agreement dated March 13, 2013 between General Electric Company and Brackett B. Denniston
(cid:44)(cid:44)(cid:44)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:69)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarter
ended March 31, 2013 (Commission file number 001-00035)).
Amended and Restated Agreement, dated April 10, 2015, between General Electric Company and General
(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:38)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)
Form 8-K, dated April 10, 2015 (Commission file number 001-00035)).
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 referenc(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:68)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for
the quarter ended March 31, 2013 (Commission file number 001-00035)).
GE 2015 FORM 10-K 215
GE 2015 FORM 10-K 215
O T H E R I N F O R M A T I O N
(x)
(y)
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
(cid:20)(cid:19)(cid:11)(cid:70)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:52)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)10-Q for the quarter ended March 31, 2013(Commission file
number 001-00035)).
Time Sharing Agreement dated April 30, 2014 between General Electric Company and Keith S. Sherin
(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:19)(cid:11)(cid:68)(cid:12)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)ly Report on Form 10-Q for the quarter
ended June 30, 2014 ( Commission File number 001-00035)).
(11)
Statement re Computation of Per Share Earnings.**
12(a)
Computation of Ratio of Earnings to Fixed Charges.*
12(b)
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.*
(21)
(23)
(24)
Subsidiaries of Registrant.*
Consent of Independent Registered Public Accounting Firm.*
Power of Attorney.*
31(a)
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
31(b)
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
(32)
Certification Pursuant to 18 U.S.C. Section 1350.*
99(a)
99(b)
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).
(cid:38)(cid:82)(cid:80)(cid:83)(cid:88)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:53)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:82)(cid:73)(cid:3)(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:41)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:3)(cid:11)(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:91)(cid:75)(cid:76)(cid:69)(cid:76)(cid:87)(cid:3)(cid:20)(cid:21)(cid:11)(cid:68)(cid:12)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:40)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)
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,
2015, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings for the years ended
December 31, 2015, 2014 and 2013, (ii) Consolidated Statement of Comprehensive Income for the years ended
December 31, 2015, 2014 and 2013, (iii) Consolidated Statement of Changes in Shareowners' Equity for the years ended
December 31, 2015, 2014 and 2013, (iv) Statement of Financial Position at December 31, 2015 and 2014, (v) Statement
of Cash Flows for the years ended December 31, 2015, 2014 and 2013, and (vi) the Notes to Consolidated Financial
Statements.*
*
**
Filed electronically herewith.
Information required to be presented in Exhibit 11 is provided in Note 18 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.
216 GE 2015 FORM 10-K
216 GE 2015 FORM 10-K
O T H E R I N F O R M A T I O N
FORM 10-K CROSS REFERENCE INDEX
Item Number
Part I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Part II
Item 5.
Mine Safety Disclosures
(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)older Matters and Issuer Purchases of
Equity Securities
Item 6.
Selected Financial Data
Item 7.
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Page(s)
19-22, 35-69, 76-77, 93-94, 110
116-120
Not applicable
21
121-122
Not applicable
28, 109
108
23-107
81, 111-115
125-211
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable
Item 9A.
Controls and Procedures
Item 9B.
Part III
Item 10.
Other Information
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
Item 14.
Part IV
Item 15.
Signatures
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
124
Not applicable
212
(a)
(b), Note 16
(c)
(d)
213-216
218
(a)
(b)
(c)
(d)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3)in the 2016 Proxy Statement.
(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)2016 Proxy Statement.
Inco(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:51)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:43)(cid:82)(cid:90)(cid:3)(cid:58)(cid:72)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:44)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:21)(cid:19)(cid:20)6 Proxy Statement.
(cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:44)(cid:81)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:21)(cid:19)(cid:20)6 Proxy Statement.
GE 2015 FORM 10-K 217
GE 2015 FORM 10-K 217
O T H E R I N F O R M A T I O N
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, 2015, 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 26th day of February 2016.
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
Principal Financial Officer
February 26, 2016
Principal Accounting Officer
February 26, 2016
Principal Executive Officer
February 26, 2016
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
/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
W. Geoffrey Beattie*
John J. Brennan*
James I. Cash, Jr.*
(cid:41)(cid:85)(cid:68)(cid:81)(cid:70)(cid:76)(cid:86)(cid:70)(cid:82)(cid:3)(cid:39)(cid:182)(cid:54)(cid:82)(cid:88)(cid:93)(cid:68)(cid:13)
Marijn E. Dekkers*
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*
A majority of the Board of Directors
*By
/s/ Christoph A. Pereira
Christoph A. Pereira
Attorney-in-fact
February 26, 2016
218 GE 2015 FORM 10-K
218 GE 2015 FORM 10-K
O T H E R I N F O R M A T I O N
Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended
Exhibit 31(a)
I, Jeffrey R. Immelt, certify that:
1. I have reviewed this annual report on Form 10-K of General Electric Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. (cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)g disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the re(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d) Disclos(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:12)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)ted, or is
(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
5. (cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:15)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)financial
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:11)(cid:82)(cid:85)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74) the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:86)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:76)(cid:93)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81); and
b) Any fraud, whether or not material, that involves management or other em(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:90)(cid:75)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:85)(cid:82)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
internal control over financial reporting.
Date: February 26, 2016
/s/ Jeffrey R. Immelt
Jeffrey R. Immelt
Chief Executive Officer
GE 2015 FORM 10-K 219
GE 2015 FORM 10-K 219
O T H E R I N F O R M A T I O N
Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended
Exhibit 31(b)
I, Jeffrey S. Bornstein, certify that:
1. I have reviewed this annual report on Form 10-K of General Electric Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. (cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)edures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) (cid:40)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:82)ns
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) (cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:12)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)ted, or is
(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
5. The reg(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:15)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)al
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:11)(cid:82)(cid:85)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:81)(cid:74) the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:86)(cid:88)(cid:80)marize and report financial information;
and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant(cid:182)(cid:86)(cid:3)
internal control over financial reporting.
Date: February 26, 2016
/s/ Jeffrey S. Bornstein
Jeffrey S. Bornstein
Chief Financial Officer
220 GE 2015 FORM 10-K
220 GE 2015 FORM 10-K
O T H E R I N F O R M A T I O N
Certification Pursuant to
18 U.S.C. Section 1350
Exhibit 32
(cid:44)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:180)(cid:12)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the period ended December 31,
(cid:21)(cid:19)(cid:20)(cid:24)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:82)(cid:73)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:180)(cid:12)(cid:15)(cid:3)(cid:90)(cid:72)(cid:15)(cid:3)(cid:45)(cid:72)(cid:73)(cid:73)(cid:85)(cid:72)(cid:92)(cid:3)(cid:53)(cid:17)(cid:3)(cid:44)(cid:80)(cid:80)(cid:72)(cid:79)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:45)(cid:72)(cid:73)(cid:73)(cid:85)ey S.
Bornstein, Chief Executive Officer and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, that
to our knowledge:
(1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended; and
(2) The information contained in the report fairly presents, in all material respects, the financial condition and results
of operations of the registrant.
February 26, 2016
/s/ Jeffrey R. Immelt
Jeffrey R. Immelt
Chief Executive Officer
/s/ Jeffrey S. Bornstein
Jeffrey S. Bornstein
Chief Financial Officer
GE 2015 FORM 10-K 221
GE 2015 FORM 10-K 221
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
General Electric Company
3135 Easton Turnpike, Fairfield, CT 06828
(203) 373-2211
ANNUAL MEETING
GE’s 2016 Annual Meeting of Shareowners will be held
on Wednesday, April 27, 2016, at the Prime F. Osborn III
Convention Center in Jacksonville, Florida.
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 2015 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 2016 also contains additional information includ-
ing exhibits. 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.
The GE Form 10-K can be viewed at gereports.com/
ar2015 and is also available, without charge, from GE
Corporate Investor Communications, 3135 Easton Turnpike,
Fairfield CT 06828.
INTERNET ADDRESS INFORMATION
The 2015 GE Annual Report is available online at gereports.
com/ar2015. 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
organization, 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 con-
cern 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.
©2016 General Electric Company. Printed in U.S.A.
GE,
, Ecomagination, healthymagination and Imagination at Work
are trademarks and service marks of the General Electric Company.
Other marks used throughout are trademarks and service marks of
their respective owners.
In 2015, patent applications and other applications protecting the
Company’s technology were filed by GE in 78 countries.
GE IS TRANSFORMING INTO
THE WORLD’S LARGEST DIGITAL
INDUSTRIAL COMPANY.
FOLLOW OUR STORY EACH
STEP OF THE WAY—FROM ALL
AROUND THE WORLD.
VISIT GEREPORTS.COM
FOR DAILY INDUSTRY NEWS,
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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.
Visit our interactive online annual report
at www.ge.com/annualreport
Thanks to the customers, partners and GE employees
who appear in this annual report for contributing their
time and support.
General Electric Company
Fairfield, Connecticut 06828
www.ge.com
3.EPC055148101A.105