Date of Report (Date of earliest event reported) April 30, 2019 | ||||||
General Electric Company | ||||||
(Exact name of registrant as specified in its charter) | ||||||
New York | 001-00035 | 14-0689340 | ||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||
41 Farnsworth Street, Boston, MA | 02210 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
Registrant's telephone number, including area code (617) 443-3000 | ||||||
(Former name or former address, if changed since last report.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). | |
Emerging growth company ¨ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ¨ |
General Electric Company | |||
(Registrant) | |||
Date: April 30, 2019 | /s/ Thomas S. Timko | ||
Thomas S. Timko Vice President, Chief Accounting Officer and Controller Principal Accounting Officer |
• | GE CFOA (GAAP) of $(884) million; adjusted GE Industrial free cash flows (non-GAAP) of $(1.2) billion |
• | Continuing EPS (GAAP) of $0.11; adjusted EPS (non-GAAP) of $0.14 |
• | Total revenues (GAAP) of $27.3 billion, down 2%; Industrial segment organic revenues (non-GAAP) of $26.2 billion, up 5% |
• | 2019 guidance remains unchanged |
Three months ended March 31 | ||||||
(Dollars in millions; per-share amounts in dollars and diluted) | 2019 | 2018 | Year on Year | |||
GAAP Metrics | ||||||
GE Cash From Operating Activities (GE CFOA) | $(884) | $(1,117) | 21 | % | ||
Continuing EPS | 0.11 | 0.03 | F | |||
Net EPS | 0.40 | (0.14) | F | |||
Total Revenues | 27,286 | 27,788 | (2 | )% | ||
GE Industrial Profit Margin | 4.8 | % | 2.3 | % | 250 bps | |
Non-GAAP Metrics | ||||||
Adjusted GE Industrial Free Cash Flows (FCF)-a) | $(1,216) | $(1,756) | 31 | % | ||
Adjusted EPS-b) | 0.14 | 0.15 | (7 | )% | ||
GE Industrial Segment Organic Revenues | 26,170 | 24,903 | 5 | % | ||
Adjusted GE Industrial Operating Profit-c) | 2,239 | 2,615 | (14 | )% | ||
Adjusted GE Industrial Operating Margin-c) | 8.8 | % | 10.0 | % | (120) bps |
-a) | Excludes deal taxes and GE Pension Plan funding, and with BHGE on a dividend basis |
-b) | Excludes non-operating benefit costs, gains (losses), restructuring and other charges, and tax reform enactment |
-c) | Excludes interest and other financial charges, non-op benefit costs, gains (losses), and restructuring & other charges |
Three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | Year on Year | |||
Orders | $4,800 | $5,562 | (14 | )% | ||
Revenues | 5,659 | 7,222 | (22 | )% | ||
Segment Profit/(Loss) | 80 | 273 | (71 | )% | ||
Segment Profit/(Loss) Margin | 1.4 | % | 3.8 | % | (240) bps |
Three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | Year on Year | |||
Orders | $2,448 | $2,423 | 1 | % | ||
Revenues | 1,604 | 1,646 | (3 | )% | ||
Segment Profit/(Loss) | (162) | 77 | U | |||
Segment Profit/(Loss) Margin | (10.1 | )% | 4.7 | % | U |
Three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | Year on Year | |||
Orders | $8,707 | $8,114 | 7 | % | ||
Revenues | 7,954 | 7,112 | 12 | % | ||
Segment Profit/(Loss) | 1,660 | 1,603 | 4 | % | ||
Segment Profit/(Loss) Margin | 20.9 | % | 22.5 | % | (160) bps |
Three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | Year on Year | |||
Orders | $5,695 | $5,232 | 9 | % | ||
Revenues | 5,616 | 5,385 | 4 | % | ||
Adjusted Segment Profit-a) | 222 | 181 | 23 | % | ||
Adjusted Segment Profit Margin-a) | 4.0 | % | 3.4 | % | 60 bps |
-a) | Excluded restructuring and other charges; O&G segment profit including these items was $163 million in 1Q'19 and $(144) million in 1Q'18. |
Three months ended March 31 | ||||||
(in millions) | 2019 | 2018 | Year on Year | |||
Orders | $4,931 | $4,731 | 4 | % | ||
Revenues | 4,683 | 4,702 | — | % | ||
Segment Profit/(Loss) | 781 | 735 | 6 | % | ||
Segment Profit/(Loss) Margin | 16.7 | % | 15.6 | % | 110 bps |
Three months ended March 31 | |||
(in millions) | 2019 | 2018 | Year on Year |
Capital continuing operations | $135 | $(215) | F |
Discontinued operations | 35 | (1,553) | F |
GE Capital Earnings | 171 | (1,768) | F |
GENERAL ELECTRIC COMPANY | ||||||||||||||||||||||||||||||||||
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | ||||||||||||||||||||||||||||||||||
Consolidated | GE(a) | Financial Services (GE Capital) | ||||||||||||||||||||||||||||||||
Three months ended March 31 | 2019 | 2018 | V% | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||
Sales of goods and services | $ | 25,342 | $ | 26,002 | (3 | )% | $ | 25,409 | $ | 26,022 | (2 | )% | $ | 16 | $ | 32 | (49 | )% | ||||||||||||||||
GE Capital revenues from services | 1,944 | 1,786 | — | — | 2,210 | 2,141 | ||||||||||||||||||||||||||||
Total revenues | 27,286 | 27,788 | (2 | )% | 25,409 | 26,022 | (2 | )% | 2,227 | 2,173 | 2 | % | ||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||||||||
Cost of sales | 20,353 | 20,911 | 19,976 | 20,412 | 499 | 550 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 4,146 | 4,088 | 3,939 | 3,883 | 267 | 343 | ||||||||||||||||||||||||||||
Interest and other financial charges | 1,133 | 1,282 | 588 | 639 | 677 | 819 | ||||||||||||||||||||||||||||
Insurance liabilities and annuity benefits | 611 | 630 | — | — | 633 | 645 | ||||||||||||||||||||||||||||
Non-operating benefit costs | 566 | 685 | 562 | 681 | 5 | 4 | ||||||||||||||||||||||||||||
Other costs and expenses | 81 | 121 | — | — | 99 | 133 | ||||||||||||||||||||||||||||
Total costs and expenses | 26,889 | 27,716 | (3 | )% | 25,065 | 25,615 | (2 | )% | 2,180 | 2,495 | (13 | )% | ||||||||||||||||||||||
Other income | 878 | 204 | 884 | 192 | — | — | ||||||||||||||||||||||||||||
GE Capital earnings (loss) from continuing operations | — | — | 135 | (215 | ) | — | — | |||||||||||||||||||||||||||
Earnings (loss) from continuing operations | ||||||||||||||||||||||||||||||||||
before income taxes | 1,275 | 277 | F | 1,363 | 383 | F | 47 | (321 | ) | F | ||||||||||||||||||||||||
Benefit (provision) for income taxes | (222 | ) | 50 | (350 | ) | (89 | ) | 128 | 139 | |||||||||||||||||||||||||
Earnings (loss) from continuing operations | 1,053 | 328 | F | 1,013 | 295 | F | 175 | (182 | ) | F | ||||||||||||||||||||||||
Earnings (loss) from discontinued | ||||||||||||||||||||||||||||||||||
operations, net of taxes | 2,592 | (1,441 | ) | 2,592 | (1,441 | ) | 35 | (1,553 | ) | |||||||||||||||||||||||||
Net earnings (loss) | 3,645 | (1,113 | ) | F | 3,606 | (1,146 | ) | F | 210 | (1,735 | ) | F | ||||||||||||||||||||||
Less net earnings (loss) attributable to | ||||||||||||||||||||||||||||||||||
noncontrolling interests | 57 | 34 | 57 | 38 | — | (4 | ) | |||||||||||||||||||||||||||
Net earnings (loss) attributable to the Company | 3,588 | (1,147 | ) | F | 3,549 | (1,184 | ) | F | 210 | (1,731 | ) | F | ||||||||||||||||||||||
Preferred stock dividends | (40 | ) | (37 | ) | — | — | (40 | ) | (37 | ) | ||||||||||||||||||||||||
Net earnings (loss) attributable to | ||||||||||||||||||||||||||||||||||
GE common shareowners | $ | 3,549 | $ | (1,184 | ) | F | $ | 3,549 | $ | (1,184 | ) | F | $ | 171 | $ | (1,768 | ) | F | ||||||||||||||||
Amounts attributable to GE common shareowners: | ||||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 1,053 | $ | 328 | F | $ | 1,013 | $ | 295 | F | $ | 175 | $ | (182 | ) | F | ||||||||||||||||||
Less net earnings (loss) attributable | ||||||||||||||||||||||||||||||||||
to noncontrolling interests, continuing operations | 59 | 30 | 59 | 34 | — | (4 | ) | |||||||||||||||||||||||||||
Earnings (loss) from continuing operations | ||||||||||||||||||||||||||||||||||
attributable to the Company | 994 | 297 | F | 954 | 261 | F | 175 | (179 | ) | F | ||||||||||||||||||||||||
Preferred stock dividends | (40 | ) | (37 | ) | — | — | (40 | ) | (37 | ) | ||||||||||||||||||||||||
Earnings (loss) from continuing operations | ||||||||||||||||||||||||||||||||||
attributable to GE common shareowners | 954 | 261 | F | 954 | 261 | F | 135 | (215 | ) | F | ||||||||||||||||||||||||
Earnings (loss) from discontinued | ||||||||||||||||||||||||||||||||||
operations, net of taxes | 2,592 | (1,441 | ) | 2,592 | (1,441 | ) | 35 | (1,553 | ) | |||||||||||||||||||||||||
Less net earnings (loss) attributable to | ||||||||||||||||||||||||||||||||||
noncontrolling interests, discontinued operations | (2 | ) | 4 | (2 | ) | 4 | — | — | ||||||||||||||||||||||||||
Net earnings (loss) attributable to GE | ||||||||||||||||||||||||||||||||||
common shareowners | $ | 3,549 | $ | (1,184 | ) | F | $ | 3,549 | $ | (1,184 | ) | F | $ | 171 | $ | (1,768 | ) | F | ||||||||||||||||
Per-share amounts - earnings (loss) from | ||||||||||||||||||||||||||||||||||
continuing operations | ||||||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.11 | $ | 0.03 | F | |||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.11 | $ | 0.03 | F | |||||||||||||||||||||||||||||
Per-share amounts - net earnings (loss) | ||||||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.40 | $ | (0.14 | ) | F | ||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.41 | $ | (0.14 | ) | F | ||||||||||||||||||||||||||||
Total average equivalent shares | ||||||||||||||||||||||||||||||||||
Diluted | 8,726 | 8,696 | — | % | ||||||||||||||||||||||||||||||
Basic | 8,711 | 8,683 | — | % | ||||||||||||||||||||||||||||||
Dividends declared per common share | $ | 0.01 | $ | 0.12 | (92 | )% |
GENERAL ELECTRIC COMPANY | ||||||||||
SUMMARY OF OPERATING SEGMENTS (UNAUDITED) | ||||||||||
Three months ended March 31 | ||||||||||
(Dollars in millions) | 2019 | 2018 | V% | |||||||
Revenues(a) | ||||||||||
Power | $ | 5,659 | $ | 7,222 | (22 | )% | ||||
Renewable Energy | 1,604 | 1,646 | (3 | )% | ||||||
Aviation | 7,954 | 7,112 | 12 | % | ||||||
Oil & Gas | 5,616 | 5,385 | 4 | % | ||||||
Healthcare | 4,683 | 4,702 | — | % | ||||||
Total industrial segment revenues | 25,517 | 26,067 | (2 | )% | ||||||
Capital | 2,227 | 2,173 | 2 | % | ||||||
Total segment revenues | 27,743 | 28,240 | (2 | )% | ||||||
Corporate items and eliminations(a)(b) | (458 | ) | (452 | ) | (1 | )% | ||||
Consolidated revenues | $ | 27,286 | $ | 27,788 | (2 | )% | ||||
Segment profit (loss)(a) | ||||||||||
Power | $ | 80 | $ | 273 | (71 | )% | ||||
Renewable Energy | (162 | ) | 77 | U | ||||||
Aviation | 1,660 | 1,603 | 4 | % | ||||||
Oil & Gas | 163 | (144 | ) | F | ||||||
Healthcare | 781 | 735 | 6 | % | ||||||
Total industrial segment profit | 2,523 | 2,544 | (1 | )% | ||||||
Capital | 135 | (215 | ) | F | ||||||
Total segment profit (loss) | 2,658 | 2,328 | 14 | % | ||||||
Corporate items and eliminations(a)(b) | (204 | ) | (659 | ) | 69 | % | ||||
GE interest and other financial charges | (588 | ) | (639 | ) | 8 | % | ||||
GE non-operating benefit costs | (562 | ) | (681 | ) | 17 | % | ||||
GE benefit (provision) for income taxes | (350 | ) | (89 | ) | U | |||||
Earnings (loss) from continuing operations attributable to GE common shareowners | 954 | 261 | F | |||||||
Earnings (loss) from discontinued operations, net of taxes | 2,592 | (1,441 | ) | F | ||||||
Less net earnings attributable to noncontrolling interests, discontinued operations | (2 | ) | 4 | U | ||||||
Earnings (loss) from discontinued operations, net of tax and noncontrolling interests | 2,595 | (1,444 | ) | F | ||||||
Consolidated net earnings (loss) attributable to GE common shareowners | $ | 3,549 | $ | (1,184 | ) | F |
(a) | Segment revenues include sales of products and services related to the segment. Segment profit excludes results reported as discontinued operations and material accounting changes other than those applied retrospectively, restructuring and other charges (with the exception of Oil & Gas), 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, non-operating benefit costs, income taxes, and preferred stock dividends according to how a particular segment's management is measured – excluded in determining segment profit for Power, Renewable Energy, Aviation, Oil & Gas and Healthcare; included in determining segment profit, which we sometimes refer to as "net earnings," for Capital. Other income is included in segment profit for the industrial segments. 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 allocated based on each segment's relative net cost of operations. Industrial segment revenues and profit include the sum of our five industrial reporting segments without giving effect to the elimination of transactions among such segments and between these segments and our financial services segment. Total segment revenues and profit include the sum of our five industrial segments and one financial services segment, without giving effect to the elimination of transactions among such segments. We believe that this provides investors with a view as to the results of all of our segments, without inter-segment eliminations and corporate items. |
(b) | Effective the first quarter of 2019, Corporate items and eliminations includes the results of our Lighting segment for all periods presented. |
GENERAL ELECTRIC COMPANY | ||||||||||||||||||||||||
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED) | ||||||||||||||||||||||||
Consolidated | GE(a) | Financial Services (GE Capital) | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||
(Dollars in billions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash, cash equivalents and restricted cash and marketable securities(b)(c) | $ | 73.2 | $ | 68.7 | $ | 24.1 | $ | 20.9 | $ | 49.2 | $ | 47.9 | ||||||||||||
Receivables | 19.5 | 19.5 | 15.9 | 15.1 | — | — | ||||||||||||||||||
Inventories | 19.4 | 18.4 | 19.4 | 18.4 | — | — | ||||||||||||||||||
GE Capital financing receivables - net | 7.1 | 7.7 | — | — | 12.0 | 13.6 | ||||||||||||||||||
Property, plant & equipment - net | 50.3 | 49.8 | 20.6 | 21.1 | 30.0 | 29.5 | ||||||||||||||||||
Operating lease right-of-use-assets | 4.0 | — | 4.3 | — | 0.3 | — | ||||||||||||||||||
Receivable from GE Capital(e)(f) | — | — | 21.7 | 22.5 | — | — | ||||||||||||||||||
Investment in GE Capital | — | — | 11.7 | 11.4 | — | — | ||||||||||||||||||
Goodwill & intangible assets | 70.2 | 76.6 | 69.1 | 75.5 | 1.1 | 1.1 | ||||||||||||||||||
Contract assets | 19.4 | 19.2 | 19.4 | 19.2 | — | — | ||||||||||||||||||
Other assets | 37.6 | 38.7 | 19.9 | 20.4 | 25.3 | 27.1 | ||||||||||||||||||
Assets of businesses held for sale | 9.9 | 1.6 | 9.6 | 1.5 | — | — | ||||||||||||||||||
Assets of discontinued operations | 4.5 | 9.3 | 0.2 | 4.6 | 4.3 | 4.6 | ||||||||||||||||||
Total assets | $ | 315.1 | $ | 309.6 | $ | 235.9 | $ | 230.5 | $ | 122.2 | $ | 123.9 | ||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Borrowings(d)(f) | $ | 107.5 | $ | 109.9 | $ | 31.7 | $ | 32.3 | $ | 41.4 | $ | 43.0 | ||||||||||||
Borrowings assumed by GE(e) | — | — | 35.4 | 36.3 | 21.7 | 22.5 | ||||||||||||||||||
Operating lease liabilities | 4.2 | — | 4.5 | — | 0.3 | — | ||||||||||||||||||
Insurance liabilities and annuity benefits | 36.8 | 35.6 | — | — | 37.3 | 36.0 | ||||||||||||||||||
Non-current compensation and benefits | 32.9 | 33.8 | 32.2 | 32.9 | 0.6 | 0.9 | ||||||||||||||||||
Other liabilities | 74.2 | 74.0 | 73.9 | 74.5 | 7.7 | 8.3 | ||||||||||||||||||
Liabilities of businesses held for sale | 1.8 | 0.7 | 1.8 | 0.7 | — | — | ||||||||||||||||||
Liabilities of discontinued operations | 1.6 | 3.7 | 0.2 | 1.9 | 1.4 | 1.8 | ||||||||||||||||||
Redeemable noncontrolling interests | 0.4 | 0.4 | 0.4 | 0.4 | — | — | ||||||||||||||||||
GE shareowners' equity | 35.2 | 31.0 | 35.2 | 31.0 | 11.7 | 11.4 | ||||||||||||||||||
Noncontrolling interests | 20.5 | 20.5 | 20.5 | 20.5 | — | — | ||||||||||||||||||
Total liabilities and equity | $ | 315.1 | $ | 309.6 | $ | 235.9 | $ | 230.5 | $ | 122.2 | $ | 123.9 |
(a) | Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis. |
(b) | At March 31, 2019, GE Capital maintained liquidity sources of $15.4 billion that consisted of cash, cash equivalents and restricted cash of $14.8 billion for continuing operations, cash equivalents and restricted cash of $0.6 billion classified as discontinued operations. Included in our credit facilities is an unused $20.0 billion back-up syndicated credit facility extended by 36 banks, expiring in 2021, and an unused $14.8 billion syndicated credit facility extended by seven banks, expiring in 2020. GE Capital has the right to compel GE to borrow under certain of these credit lines and transfer the proceeds as loans to GE Capital, which would be subject to the same terms and conditions as those between GE and the lending banks. |
(c) | Balance included consolidated restricted cash of $0.5 billion and $0.5 billion at March 31, 2019 and December 31, 2018, respectively. GE restricted cash was $0.4 billion and $0.5 billion at March 31, 2019 and December 31, 2018, respectively, and GE Capital restricted cash was an insignificant amount at March 31, 2019 and December 31, 2018, respectively. |
(d) | GE borrowings includes commercial paper of $3 billion at both March 31, 2019 and December 31, 2018. GE Capital borrowings includes commercial paper of zero and an insignificant amount at March 31, 2019 and December 31, 2018, respectively. |
(e) | At March 31, 2019, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was $35.4 billion, for which GE has an offsetting receivable from GE Capital of $21.7 billion. The difference of $13.7 billion represents the amount of borrowings GE Capital has funded with available cash to GE via an intercompany loan in lieu of issuing borrowings externally. |
(f) | At March 31, 2019, total GE borrowings is comprised of GE-issued borrowings of $31.7 billion and the $13.7 billion of borrowings from GE Capital as described in note (e) above for a total of $45.5 billion (including $6.3 billion BHGE borrowings). |
• | Adjusted earnings (loss) |
• | Adjusted earnings (loss) per share (EPS) |
• | Adjusted GE Industrial profit and profit margin (excluding certain items) |
• | GE Industrial segment organic revenues |
• | Organic revenues by segment |
• | Adjusted Oil & Gas segment profit and profit margin |
• | GE Industrial free cash flows (FCF) and adjusted GE Industrial FCF |
ADJUSTED EARNINGS (LOSS) (NON-GAAP) | Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | V% | |||||
Consolidated earnings (loss) from continuing operations attributable to GE common shareowners (GAAP) | $ | 954 | $ | 261 | F | |||
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP) | 135 | (215 | ) | |||||
GE Industrial earnings (loss) (Non-GAAP) | 819 | 476 | 72 | % | ||||
Non-operating benefits costs (pre-tax) (GAAP) | (562 | ) | (681 | ) | ||||
Tax effect on non-operating benefit costs | 118 | 143 | ||||||
Less: non-operating benefit costs (net of tax) | (444 | ) | (538 | ) | ||||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) | 365 | (67 | ) | |||||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(a) | 35 | 24 | ||||||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) | 400 | (43 | ) | |||||
Restructuring & other (pre-tax) | (298 | ) | (529 | ) | ||||
Tax effect on restructuring & other(a) | 57 | 134 | ||||||
Less: restructuring & other (net of tax) | (242 | ) | (395 | ) | ||||
Unrealized gains (losses) | 13 | — | ||||||
Tax on unrealized gains (losses) | (3 | ) | — | |||||
Less: unrealized gains (losses) | 10 | — | ||||||
Less: GE Industrial U.S. tax reform enactment adjustment | (101 | ) | (31 | ) | ||||
Adjusted GE Industrial earnings (loss) (Non-GAAP) | $ | 1,195 | $ | 1,483 | (19 | )% | ||
GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP) | 135 | (215 | ) | F | ||||
Less: GE Capital U.S. tax reform enactment adjustment | 99 | (45 | ) | |||||
Adjusted GE Capital earnings (loss) (Non-GAAP) | $ | 36 | $ | (170 | ) | F | ||
Adjusted GE Industrial earnings (loss) (Non-GAAP) | $ | 1,195 | $ | 1,483 | (19 | )% | ||
Add: Adjusted GE Capital earnings (loss) (Non-GAAP) | 36 | (170 | ) | F | ||||
Adjusted earnings (loss) (Non-GAAP) | $ | 1,231 | $ | 1,313 | (6 | )% | ||
(a) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges. | ||||||||
Adjusted earnings (loss)* excludes non-operating benefit costs, gains (losses) and impairments for disposed or held for sale businesses, restructuring & other, unrealized gains (losses), after-tax, excluding the effects of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings*, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. We believe that the retained costs in Adjusted earnings (loss)* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We believe that presenting Adjusted Industrial earnings (loss)* separately for our financial services 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. |
ADJUSTED EARNINGS (LOSS) PER SHARE (EPS) (NON-GAAP) | Three months ended March 31 | |||||||
2019 | 2018 | V% | ||||||
Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP) | $ | 0.11 | $ | 0.03 | F | |||
Less: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP) | 0.02 | (0.02 | ) | |||||
GE Industrial EPS (Non-GAAP) | $ | 0.09 | $ | 0.05 | 80 | % | ||
Non-operating benefits costs (pre-tax) (GAAP) | (0.06 | ) | (0.08 | ) | ||||
Tax effect on non-operating benefit costs | 0.01 | 0.02 | ||||||
Less: non-operating benefit costs (net of tax) | (0.05 | ) | (0.06 | ) | ||||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) | 0.04 | (0.01 | ) | |||||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(a) | — | — | ||||||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) | 0.04 | — | ||||||
Restructuring & other (pre-tax) | (0.03 | ) | (0.06 | ) | ||||
Tax effect on restructuring & other(a) | 0.01 | 0.02 | ||||||
Less: restructuring & other (net of tax) | (0.03 | ) | (0.05 | ) | ||||
Unrealized gains (losses) | — | — | ||||||
Tax on unrealized gains (losses)(a) | — | — | ||||||
Less: unrealized gains (losses) | — | — | ||||||
Less: GE Industrial U.S. tax reform enactment adjustment | (0.01 | ) | — | |||||
Adjusted GE Industrial EPS (Non-GAAP) | $ | 0.13 | $ | 0.17 | (24 | )% | ||
GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP) | 0.02 | (0.02 | ) | F | ||||
Less: GE Capital U.S. tax reform enactment adjustment | 0.01 | (0.01 | ) | |||||
Adjusted GE Capital EPS (Non-GAAP) | $ | — | $ | (0.02 | ) | F | ||
Adjusted GE Industrial EPS (Non-GAAP) | $ | 0.13 | $ | 0.17 | (24 | )% | ||
Add: Adjusted GE Capital EPS (Non-GAAP) | — | (0.02 | ) | F | ||||
Adjusted EPS (Non-GAAP)(b) | $ | 0.14 | $ | 0.15 | (7 | )% | ||
(a) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges. | ||||||||
(b) Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total. | ||||||||
Adjusted EPS* excludes non-operating benefit costs, gains (losses) and impairments for disposed or held for sale businesses, restructuring & other, unrealized gains (losses), after-tax, excluding the effects of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings*, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. We believe that the retained costs in Adjusted EPS* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We also use Adjusted EPS* as a performance metric at the company level for our annual executive incentive plan for 2019. We believe that presenting Adjusted Industrial EPS* separately for our financial services 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. |
ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) (NON-GAAP) | Three months ended March 31 | |||||
(Dollars in millions) | 2019 | 2018 | ||||
GE total revenues (GAAP) | $ | 25,409 | $ | 26,022 | ||
Costs | ||||||
GE total costs and expenses (GAAP) | $ | 25,065 | $ | 25,615 | ||
Less: GE interest and other financial charges | 588 | 639 | ||||
Less: non-operating benefit costs | 562 | 681 | ||||
Less: restructuring & other | 308 | 660 | ||||
Add: noncontrolling interests | 59 | 34 | ||||
Adjusted GE Industrial costs (Non-GAAP) | $ | 23,667 | $ | 23,669 | ||
Other Income | ||||||
GE other income (GAAP) | $ | 884 | $ | 192 | ||
Less: unrealized gains (losses) | 13 | — | ||||
Less: restructuring & other | 9 | (3 | ) | |||
Less: gains (losses) and impairments for disposed or held for sale businesses | 365 | (67 | ) | |||
Adjusted GE other income (Non-GAAP) | $ | 496 | $ | 262 | ||
GE Industrial profit (GAAP) | $ | 1,228 | $ | 599 | ||
GE Industrial profit margin (GAAP) | 4.8 | % | 2.3 | % | ||
Adjusted GE Industrial profit (Non-GAAP) | $ | 2,239 | $ | 2,615 | ||
Adjusted GE Industrial profit margin (Non-GAAP) | 8.8 | % | 10.0 | % | ||
We have presented our Adjusted GE Industrial profit* and profit margin* excluding interest and other financial charges, non-operating benefit costs, restructuring & other, non-controlling interests, unrealized gains (loss) and impairments for disposed or held for sale businesses. We believe that GE Industrial profit and profit margins adjusted for these items are meaningful measures because they increase the comparability of period-to-period results. |
GE INDUSTRIAL SEGMENT ORGANIC REVENUES (NON-GAAP) | Three months ended March 31 | |||||||
(Dollars in millions) | 2019 | 2018 | V% | |||||
GE Industrial segment revenues (GAAP) | $ | 25,517 | $ | 26,067 | (2 | )% | ||
Adjustments: | ||||||||
Less: acquisitions | 21 | — | ||||||
Less: business dispositions (other than dispositions acquired for investment) | 9 | 1,164 | ||||||
Less: currency exchange rate(a) | (685 | ) | — | |||||
GE Industrial segment organic revenues (Non-GAAP) | $ | 26,170 | $ | 24,903 | 5 | % | ||
(a) Translational foreign exchange |
ORGANIC REVENUES BY SEGMENT (NON-GAAP) | Three months ended March 31 | |||||
(Dollars in millions) | 2019 | 2018 | V% | |||
Power segment revenues (GAAP) | 5,659 | 7,222 | (22 | )% | ||
Less: acquisitions | — | — | ||||
Less: business dispositions (other than dispositions acquired for investment) | 9 | 1,012 | ||||
Less: currency exchange rate(a) | (291 | ) | ||||
Power organic segment revenues (Non-GAAP) | 5,941 | 6,210 | (4 | )% | ||
Renewable Energy segment revenues (GAAP) | 1,604 | 1,646 | (3 | )% | ||
Less: acquisitions | 1 | — | ||||
Less: business dispositions (other than dispositions acquired for investment) | — | — | ||||
Less: currency exchange rate(a) | (97 | ) | ||||
Renewable Energy organic segment revenues (Non-GAAP) | 1,701 | 1,646 | 3 | % | ||
Aviation segment revenues (GAAP) | 7,954 | 7,112 | 12 | % | ||
Less: acquisitions | — | — | ||||
Less: business dispositions (other than dispositions acquired for investment) | — | — | ||||
Less: currency exchange rate(a) | (7 | ) | ||||
Aviation organic segment revenues (Non-GAAP) | 7,961 | 7,112 | 12 | % | ||
Oil & Gas segment revenues (GAAP) | 5,616 | 5,385 | 4 | % | ||
Less: acquisitions | — | — | ||||
Less: business dispositions (other than dispositions acquired for investment) | — | 44 | ||||
Less: currency exchange rate(a) | (155 | ) | ||||
Adjusted Oil & Gas organic segment revenues (Non-GAAP) | 5,771 | 5,341 | 8 | % | ||
Healthcare segment revenues (GAAP) | 4,683 | 4,702 | — | % | ||
Less: acquisitions | 21 | — | ||||
Less: business dispositions (other than dispositions acquired for investment) | — | 109 | ||||
Less: currency exchange rate(a) | (134 | ) | ||||
Healthcare organic segment revenues (Non-GAAP) | 4,796 | 4,593 | 4 | % | ||
(a) Translational foreign exchange | ||||||
Organic revenues* measure revenues 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 revenues* 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 revenues" 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. |
ADJUSTED OIL & GAS SEGMENT PROFIT AND PROFIT MARGIN (NON-GAAP) | Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | V% | |||||
Reported Oil & Gas segment profit (GAAP) | $ | 163 | $ | (144 | ) | F | ||
Less: restructuring & other (GE share) | (59 | ) | (324 | ) | ||||
Adjusted Oil & Gas segment profit (Non-GAAP) | $ | 222 | $ | 181 | 23 | % | ||
Reported Oil & Gas profit margin (GAAP) | 2.9 | % | (2.7 | )% | 5.6pts | |||
Adjusted Oil & Gas profit margin (Non-GAAP) | 4.0 | % | 3.4 | % | 0.6pts | |||
Adjusted GE Oil & Gas segment profit* measures Oil & Gas reported segment profit excluding the effects of restructuring and other charges. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations of our Oil & Gas segment. |
GE INDUSTRIAL FREE CASH FLOWS (FCF) AND ADJUSTED GE INDUSTRIAL FCF (NON-GAAP) | Three months ended March 31 | ||||||||
(Dollars in millions) | 2019 | 2018 | V$ | ||||||
GE CFOA (GAAP) | $ | (884 | ) | $ | (1,117 | ) | $ | 233 | |
Add: gross additions to property, plant and equipment | (837 | ) | (854 | ) | |||||
Add: gross additions to internal-use software | (74 | ) | (89 | ) | |||||
Less: GE Pension Plan funding | — | (287 | ) | ||||||
Less: taxes related to business sales | (8 | ) | — | ||||||
GE Industrial Free Cash Flows (Non-GAAP) | $ | (1,786 | ) | $ | (1,774 | ) | $ | (13 | ) |
Less: Oil & Gas CFOA | (184 | ) | 291 | ||||||
Less: Oil & Gas gross additions to property, plant and equipment | (286 | ) | (173 | ) | |||||
Less: Oil & Gas gross additions to internal-use software | (8 | ) | (9 | ) | |||||
Add: BHGE Class B shareholder dividend | 94 | 127 | |||||||
Adjusted GE Industrial Free Cash Flows (Non-GAAP) | $ | (1,216 | ) | $ | (1,756 | ) | $ | 540 | |
In 2018, GE transitioned from reporting an Adjusted GE Industrial CFOA metric to measuring itself on a GE Industrial Free Cash Flows basis*. This metric includes GE CFOA plus investments in property, plant and equipment and additions to internal-use software; this metric excludes any dividends received from GE Capital and any cash received from dispositions of property, plant and equipment. | |||||||||
We believe that investors may also find it useful to compare GE’s Industrial free cash flows* performance without the effects of cash used for taxes related to business sales and contributions to the GE Pension Plan. We believe that this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows. In addition, we report Adjusted GE Industrial Free Cash Flows* in order to provide a more fair representation of the cash that we are entitled to utilize in a given period. We also use Adjusted GE Industrial Free Cash Flows* as a performance metric at the company-wide level for our annual executive incentive plan. | |||||||||
Management recognizes that the term free cash flows 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. |
• | our success in executing and completing, including obtaining regulatory approvals and satisfying other closing conditions for, announced GE Industrial and GE Capital business or asset dispositions or other transactions, including the planned sale of our BioPharma business within our Healthcare segment and plans to exit our equity ownership positions in BHGE and Wabtec, the timing of closing for those transactions and the expected proceeds and benefits to GE; |
• | our strategy and plans for the remaining portion of GE Healthcare, including the structure, form, timing and nature of potential actions with respect to that business in the future and the characteristics of the business going forward; |
• | our capital allocation plans, as such plans may change including with respect to de-leveraging actions, the timing and amount of GE dividends, organic investments, and other priorities; |
• | further downgrades of our current short- and long-term credit ratings or ratings outlooks, or changes in rating application or methodology, and the related impact on our liquidity, funding profile, costs and competitive position; |
• | GE’s liquidity and the amount and timing of our GE Industrial cash flows and earnings, which may be impacted by customer, competitive, contractual and other dynamics and conditions; |
• | GE Capital's capital and liquidity needs, including in connection with GE Capital’s run-off insurance operations, the amount and timing of required capital contributions, strategic actions that we may pursue, WMC-related claims, liabilities and payments, the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets, GE Capital’s leverage and credit ratings, the availability and cost of GE Capital funding and GE Capital's exposure to counterparties; |
• | customer actions or market developments such as secular and cyclical pressures in our Power business, pricing and other pressures in the renewable energy market, other shifts in the competitive landscape for our products and services, changes in economic conditions, including oil prices, early aircraft retirements, aircraft fleeting groundings and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; |
• | operational execution by our businesses, including our ability to improve the operations and execution of our Power business, and the continued strength of our Aviation business; |
• | changes in law, economic and financial conditions, including the effect of enactment of U.S. tax reform or other tax law changes, trade policy and tariffs, interest and exchange rate volatility, commodity and equity prices and the value of financial assets; |
• | our decisions about investments in new products, services and platforms, and our ability to launch new products in a cost-effective manner; |
• | our ability to increase margins through implementation of operational changes, restructuring and other cost reduction measures; |
• | the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of WMC, Alstom, SEC and other investigative and legal proceedings; |
• | our success in integrating acquired businesses and operating joint ventures, and our ability to realize revenue and cost synergies from announced transactions, acquired businesses and joint ventures; |
• | the impact of potential product failures and related reputational effects; |
• | the impact of potential information technology, cybersecurity or data security breaches; |
• | the other factors that are described in "Forward-Looking Statements" in BHGE’s most recent earnings release or SEC filings; and |
• | the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2018, as updated in our Quarterly Reports on Form 10-Q. |