Acquisitions, Goodwill and Other Intangibles Assets

3 Months Ended

Mar. 31, 2017

Acquisitions, Goodwill and Intangible Assets Disclosure [Abstract]

Acquisitions, Goodwill and Other Intangible Assets

NOTE 8. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Acquisitions

On October 11, 2016, we announced a plan to acquire LM Wind Power, the Danish maker of rotor blades for approximately $1,700 million. The transaction closed on April 20, 2017.

In the first quarter of 2017, we acquired the remaining 96% of ServiceMax, a leader in cloud-based field service management solutions, for $866 million, net of cash acquired of approximately $91 million. Upon gaining control, we fair valued the business including our previously held 4% equity interest. The preliminary purchase price allocation resulted in goodwill of approximately $670 million and amortizable intangible assets of approximately $280 million. The allocation of the purchase price will be finalized upon completion of post-closing procedures.

On October 31, 2016, we announced an agreement with Baker Hughes Incorporated (Baker Hughes) to combine GE’s Oil & Gas business and Baker Hughes to create a new company. The transaction will be executed using a partnership structure, pursuant to which GE Oil & Gas and Baker Hughes will each contribute their operating assets to a newly formed partnership. GE will have a 62.5% interest in this partnership and existing Baker Hughes shareholders will have a 37.5% interest through a newly NYSE listed corporation. Baker Hughes shareholders will also receive a special one-time cash dividend of $17.50 per share at closing. GE will contribute $7.4 billon to the new partnership to fund the cash dividend to existing Baker Hughes shareholders. The transaction is subject to the approval of Baker Hughes shareholders, regulatory approvals and other customary closing conditions. The deal is expected to close mid-2017.

On May 10, 2016, we announced the pending acquisition of the heat recovery steam generator (HRSG) business from Doosan Engineering & Construction (Doosan) for $250 million. On August 16, 2016, we acquired 80% of the HRSG business for approximately $220 million. The remaining 20% of the HRSG business continues to be subject to local regulatory requirements and we expect a staggered close beginning in the second quarter of 2017 and completed by the end of 2017. The preliminary purchase price allocation resulted in goodwill of approximately $170 million and amortizable intangible assets of approximately $35 million. The allocation of the purchase price will be finalized upon completion of post-closing procedures.

GOODWILL

CHANGES IN GOODWILL BALANCES


					Dispositions,
					currency
	Balance at				exchange		Balance at
(In millions)	January 1, 2017		Acquisitions		and other		March 31, 2017

Power	$	19,816	$	(6)	$	(14)	$	19,796
Renewable Energy		2,507		-		63		2,571
Oil & Gas		10,363		-		6		10,369
Aviation		9,455		10		114		9,578
Healthcare		17,424		37		(4)		17,457
Transportation		899		-		7		906
Energy Connections & Lighting		6,868		-		(1,046)		5,822
Capital		2,368		-		-		2,368
Corporate		739		689		19		1,446
Total	$	70,438	$	731	$	(856)	$	70,313

Goodwill balances decreased by $125 million in 2017, primarily as a result of the reclassification of goodwill associated with Industrial Solutions to assets of businesses held for sale, partially offset by the acquisition of ServiceMax and the currency exchange effects of a weaker U.S. dollar against other major currencies.

OTHER INTANGIBLE ASSETS

OTHER INTANGIBLE ASSETS - NET

(In millions)	March 31, 2017		December 31, 2016

Intangible assets subject to amortization	$	16,417	$	16,336
Indefinite-lived intangible assets(a)		98		100
Total	$	16,515	$	16,436

(a) Indefinite-lived intangible assets principally comprise trademarks and in-process research and development.

INTANGIBLE ASSETS SUBJECT TO AMORTIZATION

	March 31, 2017						December 31, 2016
	Gross						Gross
	carrying		Accumulated				carrying		Accumulated
(In millions)	amount		amortization		Net		amount		amortization		Net

Customer-related	$	9,238	$	(2,533)	$	6,706	$	9,172	$	(2,408)	$	6,764
Patents and technology		8,965		(3,383)		5,582		8,693		(3,325)		5,368
Capitalized software		7,654		(4,601)		3,053		7,652		(4,538)		3,114
Trademarks		1,175		(333)		842		1,165		(307)		858
Lease valuations		143		(64)		79		143		(59)		84
Present value of future profits(a)		693		(693)		-		684		(684)		-
All other		277		(123)		154		273		(124)		149
Total	$	28,145	$	(11,729)	$	16,417	$	27,781	$	(11,444)	$	16,336

(a) Balances at March 31, 2017 and December 31, 2016 reflect adjustments of $234 million and $241 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 net gains actually been realized.

Intangible assets subject to amortization increased by $81 million in the three months ended March 31, 2017, primarily as a result of the acquisition of ServiceMax, partially offset by amortization.

GE amortization expense related to intangible assets subject to amortization was $404 million and $445 million in the three months ended March 31, 2017 and 2016, respectively. GE Capital amortization expense related to intangible assets subject to amortization was $20 million and $33 million in the three months ended March 31, 2017 and 2016, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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