NOTE 15. SHAREOWNERS’ EQUITY



	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Preferred stock issued	$	6		$	6		$	6		$	6
Common stock issued	$	702		$	702		$	702		$	702
Accumulated other comprehensive income (loss)
Beginning balance	$	(12,862	)	$	(16,766	)	$	(14,404	)	$	(18,588	)
Other comprehensive income (loss) before reclassifications
Investment securities - net of deferred taxes of $(17), $146, $48 and $159(a)	31			291			141			309
Currency translation adjustments (CTA) - net of deferred taxes of $190, $(207), $41 and $(241)	(2,049		)	482			(1,217		)	740
Cash flow hedges - net of deferred taxes of $(39), $(8), $(7) and $(2)	(131		)	44			(27		)	64
Benefit plans - net of deferred taxes of $56, $32, $55 and $133	182			25			126			499
Total	$	(1,967	)	$	843		$	(977	)	$	1,612
Reclassifications from other comprehensive income
Investment securities - net of deferred taxes of $0, $(25), $(2) and $(61)(b)	(7		)	(48		)	(16		)	(118		)
Currency translation on dispositions - net of deferred taxes of $0, $(1), $0 and $(541)(b)	380			34			378			588
Cash flow hedges - net of deferred taxes of $22, $(10), $7 and $(9)(c)	50			(54		)	—			(55		)
Benefit plans - net of deferred taxes of $218, $270 $436 and $558(d)	758			536			1,533			1,110
Total	$	1,182		$	467		$	1,895		$	1,525
Other comprehensive income (loss)	(784		)	1,310			918			3,138
Less other comprehensive income (loss) attributable to noncontrolling interests	(213		)	1			(53		)	7
Other comprehensive income (loss), net, attributable to GE	(571		)	1,309			971			3,131
Ending Balance	$	(13,432	)	$	(15,457	)	$	(13,432	)	$	(15,457	)
Other capital
Beginning balance	37,339			37,448			37,384			37,224
Gains (losses) on treasury stock dispositions and other	13			20			(32		)	244
Ending Balance	$	37,352		$	37,468		$	37,352		$	37,468
Retained earnings
Beginning balance(e)	115,477			131,544			117,245			133,856
Net earnings (loss) attributable to the Company	800			1,057			(347		)	974
Dividends and other transactions with shareowners	(1,231		)	(2,265		)	(2,309		)	(4,393		)
Redemption value adjustment on redeemable noncontrolling interests(f)	(133		)	(66		)	(176		)	(167		)
Other changes(g)	—			—			500			—
Ending Balance	$	114,913		$	130,270		$	114,913		$	130,270
Common stock held in treasury
Beginning balance	(84,697		)	(84,833		)	(84,902		)	(83,038		)
Purchases	(58		)	(1,261		)	(143		)	(3,620		)
Dispositions	284			477			574			1,041
Ending Balance	$	(84,471	)	$	(85,617	)	$	(84,471	)	$	(85,617	)
Total equity
GE shareowners' equity balance	55,069			67,372			55,069			67,372
Noncontrolling interests balance	16,685			1,634			16,685			1,634
Total equity balance at June 30	$	71,754		$	69,006		$	71,754		$	69,006

(a)

Included adjustments of $534 million and $(90) million for the three months ended June 30, 2018 and 2017 and $1,472 million and $(189) million for the six months ended June 30, 2018 and 2017, respectively, to investment contracts, insurance liabilities and annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment securities holding gains been realized. See Note 12 for further information.

(b)

Recorded in "Total revenues" and "Other income" and income taxes in "Benefit (provision) for income taxes" in our consolidated Statement of Earnings (Loss). Currency translation gains and losses on dispositions included zero and $(2) million for the three months ended June 30, 2018 and 2017, and zero and $510 million for the six months ended June 30, 2018 and 2017, respectively, in earnings (loss) from discontinued operations, net of taxes.


(c)	Cash flow hedges primarily includes impact of foreign exchange contracts and gains and losses on interest rate derivatives, primarily recorded in GE Capital revenue from services, interest and other financial charges and other costs and expenses. See Note 17 for further information.


(d)	Primarily includes amortization of actuarial gains and losses, amortization of prior service cost and curtailment gain and loss. These components are included in the computation of net periodic pension cost. See Note 13 for further information.


(e)	January 1, 2018 amount has been adjusted to reflect retrospective adoption of ASC 606 ($8,061 million) and preferable accounting change from LIFO to FIFO ($377 million).


(f)	Amount of redemption value adjustment on redeemable noncontrolling interest shown net of deferred taxes.


(g)	On January 1, 2018, we adopted several new accounting standards on a modified retrospective basis. Cumulative impact of these changes was recorded in the opening retained earnings and it increased our retained earnings by $500 million, primarily due to an increase of $464 million related to ASU 2016-16. See Note 1 for further information.

SHARES OF GE PREFERRED STOCK

On January 20, 2016, we issued $5,694 million of GE Series D preferred stock following an exchange offer for existing GE series A, B and C. The Series D preferred stock bear a fixed interest rate of 5.00% through January 21, 2021 and floating rate equal to three-month LIBOR plus 3.33% thereafter. The Series D preferred stock are callable on January 21, 2021. Following the exchange offer, $250 million of GE Series A, B and C preferred stock still remain outstanding with an initial average fixed dividend rate of 4.07%. The total carrying value of GE preferred stock at June 30, 2018 was $5,495 million and will increase to $5,944 million through periodic accretion. Dividends on GE preferred stock are payable semi-annually, in June and December and accretion is recorded on a quarterly basis. Dividends on GE preferred stock totaled $185 million, including cash dividends of $147 million, and $182 million, including cash dividends of $147 million, in the three months ended June 30, 2018 and 2017, respectively and $222 million, including cash dividends of $147 million, and $216 million, including cash dividends of $147 million, in the six months ending June 30, 2018 and 2017, respectively.

In conjunction with the 2016 exchange of the GE Capital preferred stock into GE preferred stock and the exchange of Series A, B and C preferred stock into Series D preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirrored the GE preferred stock held by external investors ($5,495 million carrying value at June 30, 2018). On July 1, 2018, GE Capital and GE exchanged the existing Series D preferred stock issued to GE for new Series D preferred stock which is mandatorily convertible into GE Capital common stock on January 21, 2021. The cash dividend on the new GE Capital preferred stock will equal the cash dividend and accretion on the GE Series D preferred stock through January 21, 2021, at which time the GE Capital preferred stock will convert to GE Capital common stock. The exchange of GE Capital Series D preferred stock has no impact on the GE Series D preferred stock, which remains callable for $5,694 million on January 21, 2021 or thereafter on dividend payment dates. Additionally, there were no changes to the existing Series A, B or C preferred stock issued to GE.

NONCONTROLLING INTERESTS

Noncontrolling interests in equity of consolidated affiliates include common shares in consolidated affiliates and preferred stock issued by our affiliates.



CHANGES TO NONCONTROLLING INTERESTS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Beginning balance	$	17,228		$	1,639		$	17,468		$	1,663
Net earnings (loss)	(15		)	14			52			20
Dividends	(81		)	(22		)	(164		)	(31		)
Other(a)	(446		)	2			(669		)	(18		)
Ending balance at June 30	$	16,685		$	1,634		$	16,685		$	1,634


(a)	Includes impact of AOCI, acquisitions, dispositions and BHGE stock repurchases.

REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests presented in our Statement of Financial Position include common shares issued by our affiliates that are redeemable at the option of the holder of those interests.

As part of the Alstom acquisition in 2015, we formed three joint ventures in grid technology, renewable energy, and global nuclear and French steam power. Noncontrolling interests in these joint ventures hold certain redemption rights. Our retained earnings is 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.

Alstom holds redemption rights with respect to its interest in the grid technology and renewable energy joint ventures, which, if exercised, would require us to purchase all of their interest during September 2018 or September 2019. Alstom also holds similar redemption rights for the global nuclear and French steam power joint venture that are exercisable during the first quarter of 2021 or the first quarter of 2022. The redemption price would generally be equal to Alstom's 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 Alstom's initial investment plus annual accretion of 3% during the month of May in the years 2017 through 2019 and also upon a decision to IPO the joint venture.

GE holds a call option on Alstom's interest in the global nuclear and French steam power joint venture at the same amount as Alstom's 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 Alstom's 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.

In January 2018, Alstom informed us that they intend to exercise their redemption rights with respect to the grid technology and renewable energy joint ventures in September 2018. Pursuant to an agreement signed between Alstom and GE in May 2018, if Alstom exercises its redemption rights in September 2018 with respect to the grid technology and renewable energy joint ventures, GE will be deemed to have exercised its option to acquire Alstom’s interest in the nuclear and French steam power joint venture. The price that GE would be required to pay, would be €1,832 million for the grid technology joint venture, €638 million for the renewable energy joint venture, and €125 million for the nuclear and French steam power joint venture. The transfer of all interests would occur in October 2018.



CHANGES TO REDEEMABLE NONCONTROLLING INTERESTS
	Three months ended June 30						Six months ended June 30
(In millions)	2018			2017			2018			2017

Beginning balance	$	3,549		$	3,046		$	3,391		$	3,017
Net earnings (loss)	(116		)	(53		)	(149		)	(162		)
Dividends	(6		)	—			(19		)	(11		)
Redemption value adjustment	133			67			198			167
Other	(184		)	125			(45		)	175
Balance at June 30(a)	$	3,376		$	3,185		$	3,376		$	3,185


(a)	Included $3,019 million and $2,894 million related to the Alstom joint ventures at June 30, 2018 and 2017, respectively.

OTHER

Common dividends from GE Capital to GE were zero and $2,105 million, including cash dividends of $2,016 million in the three months ended June 30, 2018 and 2017, respectively, and zero and $4,105 million, including cash dividends of $4,016 million for the six months ended June 30, 2018 and 2017, respectively.