(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||
(Address of principal executive offices) | (Zip Code) | ||||||
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) | ||
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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: January 29, 2020 | /s/ Thomas S. Timko | ||
Thomas S. Timko Vice President, Chief Accounting Officer and Controller Principal Accounting Officer |
• | Total orders $24.9B, (5)%; organic orders (3)% |
• | Total revenues (GAAP) $26.2B, (1.0)%; Industrial segment organic revenues* $24.7B, +4.6% |
• | Industrial profit margin (GAAP) of 6.4%, +460 bps; adjusted Industrial profit margin* 11.3%, +410 bps |
• | Continuing EPS (GAAP) $0.07, +17%; adjusted EPS* $0.21, +50% |
• | GE CFOA (GAAP) $4.5B; Industrial free cash flow* $3.9B |
• | Total orders $90.3B, (5)%; organic orders +1%; backlog $405B, +15% |
• | Total revenues (GAAP) $95.2B, (1.9)%; Industrial segment organic revenues* $88.1B, +5.5% |
• | Industrial profit margin (GAAP) of 2.1%, +2,520 bps; adjusted Industrial profit margin* 10.0%, +60 bps |
• | Continuing EPS (GAAP) $(0.01), +100%; adjusted EPS* $0.65, +14% |
• | GE CFOA (GAAP) $4.6B; Industrial free cash flow* $2.3B |
• | Reduced GE Industrial leverage, largely driven by reducing net debt* by $7 billion, bringing GE's net debt*/EBITDA* ratio from 4.8x in 2018 to 4.2x in 2019. Used cash from Wabtec and Baker Hughes transactions to pay down debt, including a $5 billion debt tender. Announced the sale of BioPharma to generate further cash for deleveraging as well as U.S. pension benefit changes to further reduce debt. |
• | Reduced GE Capital leverage, largely driven by reducing GE Capital debt by $7 billion, bringing GE Capital's debt-to-equity ratio from 5.7x in 2018 to 3.9x in 2019. Completed asset reductions of approximately $12 billion, exceeding the 2019 target of $10 billion and the two-year target of $25 billion. |
• | Strengthened GE's businesses. Aviation and Healthcare generated profitable growth, Power is stabilizing its businesses, Renewable Energy delivered a steep volume ramp in Onshore Wind to meet customer demand despite mixed performance overall, and GE Capital grew earnings partly through better operations. |
• | Began to drive Lean transformation and mindset throughout GE. Established common operating processes and metrics and a series of standard operational, talent, strategy, and budget reviews. Shifted decision-making and accountability to the businesses, including delayering Power and Renewable Energy. |
• | Named new leaders, including Carolina Dybeck Happe as Chief Financial Officer (to start in early 2020), Kevin Cox as Chief HR Officer, Pat Byrne as CEO of Digital, Rachel Duan as CEO of Global Growth Organization, John Godsman as VP Business Development, Steve Winoker as VP Investor Relations, and in newly created roles, Monish Patolawala as VP Operational Transformation and Chris Pereira as Chief Risk Officer. |
Three months ended December 31 | Twelve months ended December 31 | |||||||||||
Dollars in millions; per-share amounts in dollars and diluted | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||||||
GAAP Metrics | ||||||||||||
GE Cash from Operating Activities (GE CFOA) | $4,537 | $5,159 | (12 | )% | $4,614 | $701 | F | |||||
Continuing EPS | 0.07 | 0.06 | 17 | % | (0.01) | (2.47) | 100 | % | ||||
Net EPS | 0.06 | 0.07 | (14 | )% | (0.62) | (2.62) | 76 | % | ||||
Total Revenues | 26,238 | 26,499 | (1.0 | )% | 95,214 | 97,012 | (1.9 | )% | ||||
GE Industrial Profit Margin | 6.4 | % | 1.8 | % | 460 | bps | 2.1 | % | (23.1 | )% | 2,520 | bps |
Non-GAAP Metrics | ||||||||||||
GE Industrial Free Cash Flow (FCF) | $3,884 | $4,644 | (16 | )% | $2,322 | $4,341 | (47 | )% | ||||
Adjusted EPS-a) | 0.21 | 0.14 | 50 | % | 0.65 | 0.57 | 14 | % | ||||
GE Industrial Segment Organic Revenues | 24,672 | 23,598 | 4.6 | % | 88,053 | 83,432 | 5.5 | % | ||||
Adjusted GE Industrial Operating Profit-b) | 2,767 | 1,753 | 58 | % | 8,743 | 8,392 | 4 | % | ||||
Adjusted GE Industrial Profit Margin-b) | 11.3 | % | 7.2 | % | 410 | bps | 10.0 | % | 9.4 | % | 60 | bps |
Investor Outlook | 2Q Earnings | Baker Hughes | 3Q Earnings | 2019 actuals | |
March 14, 2019 | July 31, 2019 | Pro Forma-a) | October 30, 2019 | January 29, 2020 | |
Industrial Segment Organic Revenue* Growth | Low- to mid-single digits | Mid-single digits | Mid-single digits | Mid-single digits | 5.5% |
Adjusted GE Industrial Profit Margin* Expansion | ~Flat to up ~100 bps | ~Flat to up ~100 bps | ~Flat to up ~100 bps | ~Flat to up ~100 bps | 60 bps |
Adjusted EPS* | $0.50 - $0.60 | $0.55 - $0.65 | $0.50 - $0.60 | $0.55 - $0.65 | $0.65 |
Industrial Free Cash Flow* | $(2) - 0 billion | $(1) - 1 billion | $(1) - 1 billion | $0 - 2 billion | $2.3 billion |
Restructuring (Industrial): Expense | $2.4 - 2.7 billion | $1.7 - 2.0 billion | $1.5 - 1.8 billion | $1.1 - 1.4 billion | $1.3 billion |
Restructuring (Industrial): Cash Cost | $2.0+ billion | $1.5+ billion | $1.5+ billion | $1.3+ billion | $1.2 billion |
Three months ended December 31 | Twelve months ended December 31 | |||||||||||
(Dollars in millions) | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||||||
Orders | $4,457 | $6,382 | (30 | )% | $16,899 | $22,645 | (25 | )% | ||||
Revenues | 5,401 | 5,381 | — | % | 18,625 | 22,150 | (16 | %) | ||||
Segment Profit/(Loss) | 302 | (786) | F | 386 | (808) | F | ||||||
Segment Profit/(Loss) Margin | 5.6 | % | (14.6 | )% | 2,020 bps | 2.1 | % | (3.6 | )% | 570 bps |
Three months ended December 31 | Twelve months ended December 31 | |||||||||||
(Dollars in millions) | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||||||
Orders | $4,680 | $5,274 | (11 | )% | $16,884 | $15,283 | 10 | % | ||||
Revenues | 4,747 | 4,646 | 2 | % | 15,337 | 14,288 | 7 | % | ||||
Segment Profit/(Loss) | (197) | (21) | U | (666) | 292 | U | ||||||
Segment Profit/(Loss) Margin | (4.1 | )% | (0.5 | )% | (360) bps | (4.3 | )% | 2.0 | % | (630) bps |
Three months ended December 31 | Twelve months ended December 31 | |||||||||||
(Dollars in millions) | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||||||
Orders | $10,664 | $8,753 | 22 | % | $36,738 | $35,517 | 3 | % | ||||
Revenues | 8,936 | 8,456 | 6 | % | 32,875 | 30,566 | 8 | % | ||||
Segment Profit/(Loss) | 2,056 | 1,723 | 19 | % | 6,820 | 6,466 | 5 | % | ||||
Segment Profit/(Loss) Margin | 23.0 | % | 20.4 | % | 260 bps | 20.7 | % | 21.2 | % | (50) bps |
Three months ended December 31 | Twelve months ended December 31 | |||||||||||
(Dollars in millions) | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||||||
Orders | $5,896 | $5,756 | 2 | % | $21,172 | $20,897 | 1 | % | ||||
Revenues | 5,402 | 5,398 | — | % | 19,942 | 19,784 | 1 | % | ||||
Segment Profit/(Loss) | 1,183 | 1,176 | 1 | % | 3,896 | 3,698 | 5 | % | ||||
Segment Profit/(Loss) Margin | 21.9 | % | 21.8 | % | 10 bps | 19.5 | % | 18.7 | % | 80 bps |
Three months ended December 31 | Twelve months ended December 31 | |||||||
(Dollars in millions) | 2019 | 2018 | Year on Year | 2019 | 2018 | Year on Year | ||
Capital continuing operations | $69 | $(86) | F | $(530) | $(489) | (8 | )% | |
Discontinued operations | (63) | (91) | 31 | % | 192 | (1,670) | F | |
GE Capital Earnings | 6 | (177) | F | (338) | (2,159) | 84 | % |
(In billions) | December 31, 2019 | December 31, 2018 | Year on Year |
GE Capital Assets | 121.5 | 123.9 | (2.5) |
• | GE Industrial revenues* to grow organically in the low-single-digit range. |
• | Adjusted GE Industrial profit margin* to expand organically in a range from 0 to 75 basis points. |
• | Adjusted earnings per share* of $0.50 to $0.60. |
• | GE Industrial free cash flow* of $2 billion to $4 billion. |
GENERAL ELECTRIC COMPANY | ||||||||||||||||||||||||||||||
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | ||||||||||||||||||||||||||||||
Consolidated | GE(a) | Financial Services (GE Capital) | ||||||||||||||||||||||||||||
Three months ended December 31 | 2019 | 2018 | V% | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||||||||||||
Sales of goods and services | $ | 24,355 | $ | 24,336 | — | % | $ | 24,460 | $ | 24,437 | — | % | $ | 22 | $ | 21 | 5 | % | ||||||||||||
GE Capital revenues from services | 1,883 | 2,163 | — | — | 2,073 | 2,455 | ||||||||||||||||||||||||
Total revenues | 26,238 | 26,499 | (1 | )% | 24,460 | 24,437 | — | % | 2,096 | 2,476 | (15 | )% | ||||||||||||||||||
Cost of sales | 19,080 | 20,574 | 18,679 | 20,177 | 528 | 532 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 3,829 | 3,630 | 3,670 | 3,394 | 254 | 354 | ||||||||||||||||||||||||
Interest and other financial charges | 955 | 1,180 | 423 | 642 | 619 | 686 | ||||||||||||||||||||||||
Insurance liabilities and annuity benefits | 582 | 782 | — | — | 583 | 777 | ||||||||||||||||||||||||
Goodwill impairments | 2 | 162 | 2 | 162 | — | — | ||||||||||||||||||||||||
Non-operating benefit costs | 1,150 | 612 | 1,144 | 608 | 6 | 3 | ||||||||||||||||||||||||
Other costs and expenses | 120 | 160 | — | (18 | ) | 101 | 231 | |||||||||||||||||||||||
Total costs and expenses | 25,718 | 27,101 | (5 | )% | 23,917 | 24,966 | (4 | )% | 2,090 | 2,584 | (19 | )% | ||||||||||||||||||
Other income | 1,052 | 933 | 1,023 | 967 | — | — | ||||||||||||||||||||||||
GE Capital earnings (loss) from continuing operations | — | — | 69 | (86 | ) | — | — | |||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | 1,571 | 331 | F | 1,634 | 353 | F | 6 | (107 | ) | F | ||||||||||||||||||||
Benefit (provision) for income taxes | (727 | ) | 366 | (982 | ) | 157 | 255 | 209 | ||||||||||||||||||||||
Earnings (loss) from continuing operations | 845 | 697 | 21 | % | 652 | 510 | 28 | % | 262 | 102 | F | |||||||||||||||||||
Earnings (loss) from discontinued operations, net of taxes | (123 | ) | 163 | (123 | ) | 163 | (63 | ) | (91 | ) | ||||||||||||||||||||
Net earnings (loss) | 721 | 860 | (16 | )% | 529 | 673 | (21 | )% | 199 | 10 | F | |||||||||||||||||||
Less net earnings (loss) attributable to noncontrolling interests | (7 | ) | 99 | (9 | ) | 99 | 2 | — | ||||||||||||||||||||||
Net earnings (loss) attributable to the Company | 728 | 761 | (4 | )% | 538 | 574 | (6 | )% | 197 | 10 | F | |||||||||||||||||||
Preferred stock dividends | (190 | ) | (187 | ) | — | — | (190 | ) | (187 | ) | ||||||||||||||||||||
Net earnings (loss) attributable to GE common shareholders | $ | 538 | $ | 574 | (6 | )% | $ | 538 | $ | 574 | (6 | )% | $ | 6 | $ | (177 | ) | F | ||||||||||||
Amounts attributable to GE common shareholders: | ||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 845 | $ | 697 | 21 | % | $ | 652 | $ | 510 | 28 | % | $ | 262 | $ | 102 | F | |||||||||||||
Less net earnings (loss) attributable to noncontrolling interests, continuing operations | (9 | ) | 1 | (11 | ) | 1 | 2 | — | ||||||||||||||||||||||
Earnings (loss) from continuing operations attributable to the Company | 854 | 696 | 23 | % | 663 | 509 | 30 | % | 259 | 101 | F | |||||||||||||||||||
Preferred stock dividends | (190 | ) | (187 | ) | — | — | (190 | ) | (187 | ) | ||||||||||||||||||||
Earnings (loss) from continuing operations attributable to GE common shareholders | 663 | 509 | 30 | % | 663 | 509 | 30 | % | 69 | (86 | ) | F | ||||||||||||||||||
Earnings (loss) from discontinued operations, net of taxes | (123 | ) | 163 | (123 | ) | 163 | (63 | ) | (91 | ) | ||||||||||||||||||||
Less net earnings (loss) attributable to noncontrolling interests, discontinued operations | 2 | 98 | 2 | 98 | — | — | ||||||||||||||||||||||||
Net earnings (loss) attributable to GE common shareholders | $ | 538 | $ | 574 | (6 | )% | $ | 538 | $ | 574 | (6 | )% | $ | 6 | $ | (177 | ) | F | ||||||||||||
Per-share amounts - earnings (loss) from continuing operations | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.07 | $ | 0.06 | 17 | % | ||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.08 | $ | 0.06 | 33 | % | ||||||||||||||||||||||||
Per-share amounts - net earnings (loss) | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.06 | $ | 0.07 | (14 | )% | ||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.06 | $ | 0.07 | (14 | )% | ||||||||||||||||||||||||
Total average equivalent shares | ||||||||||||||||||||||||||||||
Diluted | 8,742 | 8,701 | — | % | ||||||||||||||||||||||||||
Basic | 8,736 | 8,700 | — | % | ||||||||||||||||||||||||||
Dividends declared per common share | $ | 0.01 | $ | 0.01 | — | % |
GENERAL ELECTRIC COMPANY | ||||||||||||||||||||||||||||||
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | ||||||||||||||||||||||||||||||
Consolidated | GE(a) | Financial Services (GE Capital) | ||||||||||||||||||||||||||||
Twelve months ended December 31 | 2019 | 2018 | V% | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||||||||||||
Sales of goods and services | $ | 87,487 | $ | 88,940 | (2 | )% | $ | 87,718 | $ | 89,038 | (1 | )% | $ | 79 | $ | 121 | (35 | )% | ||||||||||||
GE Capital revenues from services | 7,728 | 8,072 | — | — | 8,662 | 9,430 | ||||||||||||||||||||||||
Total revenues | 95,214 | 97,012 | (2 | )% | 87,719 | 89,038 | (1 | )% | 8,741 | 9,551 | (8 | )% | ||||||||||||||||||
Cost of sales | 70,029 | 72,818 | 68,285 | 70,875 | 2,080 | 2,183 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 13,949 | 14,643 | 13,404 | 13,851 | 931 | 1,341 | ||||||||||||||||||||||||
Interest and other financial charges | 4,227 | 4,766 | 2,115 | 2,415 | 2,532 | 2,982 | ||||||||||||||||||||||||
Insurance liabilities and annuity benefits | 3,294 | 2,790 | — | — | 3,353 | 2,849 | ||||||||||||||||||||||||
Goodwill impairments | 1,486 | 22,136 | 1,486 | 22,136 | — | — | ||||||||||||||||||||||||
Non-operating benefit costs | 2,844 | 2,753 | 2,828 | 2,740 | 16 | 12 | ||||||||||||||||||||||||
Other costs and expenses | 458 | 414 | — | (51 | ) | 480 | 558 | |||||||||||||||||||||||
Total costs and expenses | 96,287 | 120,320 | (20 | )% | 88,118 | 111,967 | (21 | )% | 9,392 | 9,926 | (5 | )% | ||||||||||||||||||
Other income | 2,222 | 2,321 | 2,200 | 2,317 | — | — | ||||||||||||||||||||||||
GE Capital earnings (loss) from continuing operations | — | — | (530 | ) | (489 | ) | — | — | ||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | 1,149 | (20,987 | ) | F | 1,271 | (21,101 | ) | F | (652 | ) | (375 | ) | (74 | )% | ||||||||||||||||
Benefit (provision) for income taxes | (726 | ) | (93 | ) | (1,309 | ) | (467 | ) | 582 | 374 | ||||||||||||||||||||
Earnings (loss) from continuing operations | 423 | (21,080 | ) | F | (38 | ) | (21,568 | ) | 100 | % | (69 | ) | (1 | ) | U | |||||||||||||||
Earnings (loss) from discontinued operations, net of taxes | (5,335 | ) | (1,363 | ) | (5,335 | ) | (1,363 | ) | 192 | (1,670 | ) | |||||||||||||||||||
Net earnings (loss) | (4,912 | ) | (22,443 | ) | 78 | % | (5,373 | ) | (22,931 | ) | 77 | % | 123 | (1,672 | ) | F | ||||||||||||||
Less net earnings (loss) attributable to noncontrolling interests | 66 | (89 | ) | 66 | (129 | ) | 1 | 40 | ||||||||||||||||||||||
Net earnings (loss) attributable to the Company | (4,979 | ) | (22,355 | ) | 78 | % | (5,439 | ) | (22,802 | ) | 76 | % | 122 | (1,712 | ) | F | ||||||||||||||
Preferred stock dividends | (460 | ) | (447 | ) | — | — | (460 | ) | (447 | ) | ||||||||||||||||||||
Net earnings (loss) attributable to GE common shareholders | $ | (5,439 | ) | $ | (22,802 | ) | 76 | % | $ | (5,439 | ) | $ | (22,802 | ) | 76 | % | $ | (338 | ) | $ | (2,159 | ) | 84 | % | ||||||
Amounts attributable to GE common shareholders: | ||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 423 | $ | (21,080 | ) | F | $ | (38 | ) | $ | (21,568 | ) | 100 | % | $ | (69 | ) | $ | (1 | ) | U | |||||||||
Less net earnings (loss) attributable to noncontrolling interests, continuing operations | 7 | (90 | ) | 6 | (130 | ) | 1 | 40 | ||||||||||||||||||||||
Earnings (loss) from continuing operations attributable to the Company | 416 | (20,991 | ) | F | (44 | ) | (21,438 | ) | 100 | % | (70 | ) | (42 | ) | (67 | )% | ||||||||||||||
Preferred stock dividends | (460 | ) | (447 | ) | — | — | (460 | ) | (447 | ) | ||||||||||||||||||||
Earnings (loss) from continuing operations attributable to GE common shareholders | (44 | ) | (21,438 | ) | 100 | % | (44 | ) | (21,438 | ) | 100 | % | (530 | ) | (489 | ) | (8 | )% | ||||||||||||
Earnings (loss) from discontinued operations, net of taxes | (5,335 | ) | (1,363 | ) | (5,335 | ) | (1,363 | ) | 192 | (1,670 | ) | |||||||||||||||||||
Less net earnings (loss) attributable to noncontrolling interests, discontinued operations | 60 | 1 | 60 | 1 | — | — | ||||||||||||||||||||||||
Net earnings (loss) attributable to GE common shareholders | $ | (5,439 | ) | $ | (22,802 | ) | 76 | % | $ | (5,439 | ) | $ | (22,802 | ) | 76 | % | $ | (338 | ) | $ | (2,159 | ) | 84 | % | ||||||
Per-share amounts - earnings (loss) from continuing operations | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | (0.01 | ) | $ | (2.47 | ) | 100 | % | ||||||||||||||||||||||
Basic earnings (loss) per share | $ | (0.01 | ) | $ | (2.47 | ) | 100 | % | ||||||||||||||||||||||
Per-share amounts - net earnings (loss) | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per share | $ | (0.62 | ) | $ | (2.62 | ) | 76 | % | ||||||||||||||||||||||
Basic earnings (loss) per share | $ | (0.62 | ) | $ | (2.62 | ) | 76 | % | ||||||||||||||||||||||
Total average equivalent shares | ||||||||||||||||||||||||||||||
Diluted | 8,724 | 8,691 | — | % | ||||||||||||||||||||||||||
Basic | 8,724 | 8,691 | — | % | ||||||||||||||||||||||||||
Dividends declared per common share | $ | 0.04 | $ | 0.37 | (89 | )% |
GENERAL ELECTRIC COMPANY | |||||||||||||||||||||
SUMMARY OF OPERATING SEGMENTS (UNAUDITED) | |||||||||||||||||||||
Three months ended December 31 | Twelve months ended December 31 | ||||||||||||||||||||
(Dollars in millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||||||
Revenues(a) | |||||||||||||||||||||
Power | $ | 5,401 | $ | 5,381 | — | % | $ | 18,625 | $ | 22,150 | (16 | )% | |||||||||
Renewable Energy | 4,747 | 4,646 | 2 | % | 15,337 | 14,288 | 7 | % | |||||||||||||
Aviation | 8,936 | 8,456 | 6 | % | 32,875 | 30,566 | 8 | % | |||||||||||||
Healthcare | 5,402 | 5,398 | — | % | 19,942 | 19,784 | 1 | % | |||||||||||||
Total industrial segment revenues | 24,486 | 23,881 | 3 | % | 86,778 | 86,789 | — | % | |||||||||||||
Capital | 2,096 | 2,476 | (15 | )% | 8,741 | 9,551 | (8 | )% | |||||||||||||
Total segment revenues | 26,581 | 26,357 | 1 | % | 95,519 | 96,339 | (1 | )% | |||||||||||||
Corporate items and eliminations(a) | (343 | ) | 142 | U | (305 | ) | 673 | U | |||||||||||||
Consolidated revenues | $ | 26,238 | $ | 26,499 | (1 | )% | $ | 95,214 | $ | 97,012 | (2 | )% | |||||||||
Segment profit (loss)(a) | |||||||||||||||||||||
Power | $ | 302 | $ | (786 | ) | F | $ | 386 | $ | (808 | ) | F | |||||||||
Renewable Energy | (197 | ) | (21 | ) | U | (666 | ) | 292 | U | ||||||||||||
Aviation | 2,056 | 1,723 | 19 | % | 6,820 | 6,466 | 5 | % | |||||||||||||
Healthcare | 1,183 | 1,176 | 1 | % | 3,896 | 3,698 | 5 | % | |||||||||||||
Total industrial segment profit | 3,344 | 2,092 | 60 | % | 10,436 | 9,647 | 8 | % | |||||||||||||
Capital | 69 | (86 | ) | F | (530 | ) | (489 | ) | (8 | )% | |||||||||||
Total segment profit (loss) | 3,413 | 2,007 | 70 | % | 9,906 | 9,158 | 8 | % | |||||||||||||
Corporate items and eliminations(a) | (199 | ) | (241 | ) | 18 | % | (2,212 | ) | (2,837 | ) | 22 | % | |||||||||
GE goodwill impairments | (2 | ) | (162 | ) | 99 | % | (1,486 | ) | (22,136 | ) | 93 | % | |||||||||
GE interest and other financial charges | (423 | ) | (642 | ) | 34 | % | (2,115 | ) | (2,415 | ) | 12 | % | |||||||||
GE non-operating benefit costs | (1,144 | ) | (608 | ) | (88 | )% | (2,828 | ) | (2,740 | ) | (3 | )% | |||||||||
GE benefit (provision) for income taxes | (982 | ) | 157 | U | (1,309 | ) | (467 | ) | U | ||||||||||||
Earnings (loss) from continuing operations attributable to GE common shareholders | 663 | 509 | 30 | % | (44 | ) | (21,438 | ) | 100 | % | |||||||||||
Earnings (loss) from discontinued operations, net of taxes | (123 | ) | 163 | U | (5,335 | ) | (1,363 | ) | U | ||||||||||||
Less net earnings attributable to noncontrolling interests, discontinued operations | 2 | 98 | (98 | )% | 60 | 1 | F | ||||||||||||||
Earnings (loss) from discontinued operations, net of tax and noncontrolling interests | (125 | ) | 65 | U | (5,395 | ) | (1,364 | ) | U | ||||||||||||
Consolidated net earnings (loss) attributable to GE common shareholders | $ | 538 | $ | 574 | (6 | )% | $ | (5,439 | ) | $ | (22,802 | ) | 76 | % |
(a) | Segment revenues include sales of products and services related to the segment. Segment profit excludes results reported as discontinued operations, restructuring and other charges, 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 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 those related to 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 four 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 four 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. |
GENERAL ELECTRIC COMPANY | ||||||||||||||||||||||||
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED) | ||||||||||||||||||||||||
Consolidated | GE(a) | Financial Services (GE Capital) | ||||||||||||||||||||||
December 31 | December 31 | December 31 | December 31 | December 31 | December 31 | |||||||||||||||||||
(Dollars in billions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash, cash equivalents and restricted cash and marketable securities(b)(c) | $ | 84.9 | $ | 64.6 | $ | 27.6 | $ | 16.8 | $ | 57.3 | $ | 47.9 | ||||||||||||
Current receivables | 16.8 | 14.6 | 13.9 | 10.3 | — | — | ||||||||||||||||||
Financing receivables – net | 3.1 | 7.7 | — | — | 7.0 | 13.6 | ||||||||||||||||||
Inventories | 14.1 | 13.8 | 14.1 | 13.8 | — | — | ||||||||||||||||||
Property, plant & equipment - net | 43.3 | 43.6 | 14.4 | 14.8 | 29.6 | 29.5 | ||||||||||||||||||
Operating lease right-of-use-assets | 2.9 | — | 3.1 | — | 0.2 | — | ||||||||||||||||||
Receivable from GE Capital(e)(f) | — | — | 19.1 | 22.5 | — | — | ||||||||||||||||||
Investment in GE Capital | — | — | 15.3 | 11.4 | — | — | ||||||||||||||||||
Goodwill & intangible assets | 37.4 | 46.2 | 36.4 | 45.0 | 1.0 | 1.1 | ||||||||||||||||||
Contract assets and other deferred assets | 16.8 | 17.4 | 16.8 | 17.4 | — | — | ||||||||||||||||||
Other assets | 33.5 | 37.6 | 16.6 | 18.8 | 22.1 | 27.2 | ||||||||||||||||||
Assets of businesses held for sale | 9.1 | 1.6 | 8.6 | 1.5 | 0.2 | — | ||||||||||||||||||
Assets of discontinued operations | 4.1 | 63.9 | 0.2 | 59.2 | 3.9 | 4.6 | ||||||||||||||||||
Total assets | $ | 266.0 | $ | 311.1 | $ | 186.1 | $ | 231.5 | $ | 121.5 | $ | 123.9 | ||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Borrowings(d)(f) | $ | 90.9 | $ | 103.6 | $ | 20.7 | $ | 26.0 | $ | 39.9 | $ | 43.0 | ||||||||||||
Borrowings assumed by GE(e) | — | — | 31.4 | 36.3 | 19.1 | 22.5 | ||||||||||||||||||
Operating lease liabilities | 3.2 | — | 3.4 | — | 0.2 | — | ||||||||||||||||||
Insurance liabilities and annuity benefits | 39.8 | 35.6 | — | — | 40.2 | 36.0 | ||||||||||||||||||
Non-current compensation and benefits | 31.7 | 31.9 | 31.2 | 31.5 | 0.5 | 0.5 | ||||||||||||||||||
Other liabilities | 68.8 | 68.5 | 68.0 | 68.1 | 5.9 | 8.7 | ||||||||||||||||||
Liabilities of businesses held for sale | 1.7 | 0.7 | 1.6 | 0.7 | 0.1 | — | ||||||||||||||||||
Liabilities of discontinued operations | 0.2 | 19.3 | 0.1 | 17.5 | 0.1 | 1.8 | ||||||||||||||||||
GE shareholders' equity | 28.3 | 31.0 | 28.3 | 31.0 | 15.3 | 11.4 | ||||||||||||||||||
Noncontrolling interests | 1.5 | 20.5 | 1.4 | 20.5 | 0.1 | — | ||||||||||||||||||
Total liabilities and equity | $ | 266.0 | $ | 311.1 | $ | 186.1 | $ | 231.5 | $ | 121.5 | $ | 123.9 |
(a) | Represents the adding together of all GE Industrial affiliates and GE Capital continuing operations on a one-line basis. See Note 1 to the 2018 consolidated financial statements at www.ge.com/ar2018 for further information about consolidation matters. |
(b) | GE Capital cash, cash equivalents and restricted cash totaled $18.8 billion at December 31, 2019, including $0.9 billion which was subject to regulatory restrictions, primarily in insurance entities. 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 six banks, expiring in 2020. The commitments under these syndicated credit facilities may be reduced by up to $6.7 billion due to offset provisions for any bank that holds a commitment to lend under both facilities. 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 $0.6 billion and $0.4 billion at December, 2019 and December 31, 2018, respectively. GE restricted cash was $0.5 billion and $0.4 billion at December 31, 2019 and December 31, 2018, respectively, and GE Capital restricted cash was $0.1 billion and an insignificant amount at December 31, 2019 and December 31, 2018, respectively. |
(d) | GE borrowings includes commercial paper of $3.0 billion at both December 31, 2019 and December 31, 2018. GE Capital borrowings includes commercial paper of zero and an insignificant amount at December 31, 2019 and December 31, 2018, respectively. |
(e) | At December 31, 2019, the remaining GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was $31.4 billion, for which GE has an offsetting receivable from GE Capital of $19.1 billion. The difference of $12.2 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 December 31, 2019, total GE borrowings is comprised of GE-issued borrowings of $20.7 billion and the $12.2 billion of borrowings from GE Capital as described in note (e) above for a total of $32.9 billion. |
GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) | |||||||||||||||||||||||||||||
Revenues | Segment profit (loss) | Profit margin | |||||||||||||||||||||||||||
Three months ended December 31 (In millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | 2019 | 2018 | V pts | ||||||||||||||||||||
Power (GAAP) | $ | 5,401 | $ | 5,381 | — | % | $ | 302 | $ | (786 | ) | F | 5.6 | % | (14.6 | )% | 20.2pts | ||||||||||||
Less: acquisitions | 3 | — | 1 | — | |||||||||||||||||||||||||
Less: business dispositions | — | 184 | — | 11 | |||||||||||||||||||||||||
Less: foreign currency effect | (65 | ) | — | 10 | — | ||||||||||||||||||||||||
Power organic (Non-GAAP) | $ | 5,462 | $ | 5,198 | 5 | % | $ | 290 | $ | (797 | ) | F | 5.3 | % | (15.3 | )% | 20.6pts | ||||||||||||
Renewable Energy (GAAP) | $ | 4,747 | $ | 4,646 | 2 | % | $ | (197 | ) | $ | (21 | ) | U | (4.1 | )% | (0.5 | )% | (3.6)pts | |||||||||||
Less: acquisitions | — | — | — | — | |||||||||||||||||||||||||
Less: business dispositions | — | — | — | — | |||||||||||||||||||||||||
Less: foreign currency effect | (95 | ) | — | 6 | — | ||||||||||||||||||||||||
Renewable Energy organic (Non-GAAP) | $ | 4,842 | $ | 4,646 | 4 | % | $ | (203 | ) | $ | (21 | ) | U | (4.2 | )% | (0.5 | )% | (3.7)pts | |||||||||||
Aviation (GAAP) | $ | 8,936 | $ | 8,456 | 6 | % | $ | 2,056 | $ | 1,723 | 19 | % | 23.0 | % | 20.4 | % | 2.6pts | ||||||||||||
Less: acquisitions | — | — | — | — | |||||||||||||||||||||||||
Less: business dispositions | — | 95 | — | 7 | |||||||||||||||||||||||||
Less: foreign currency effect | (5 | ) | — | 6 | — | ||||||||||||||||||||||||
Aviation organic (Non-GAAP) | $ | 8,941 | $ | 8,361 | 7 | % | $ | 2,050 | $ | 1,716 | 19 | % | 22.9 | % | 20.5 | % | 2.4pts | ||||||||||||
Healthcare (GAAP) | $ | 5,402 | $ | 5,398 | — | % | $ | 1,183 | $ | 1,176 | 1 | % | 21.9 | % | 21.8 | % | 0.1pts | ||||||||||||
Less: acquisitions | 21 | — | (1 | ) | — | ||||||||||||||||||||||||
Less: business dispositions | — | 4 | — | (20 | ) | ||||||||||||||||||||||||
Less: foreign currency effect | (46 | ) | — | (10 | ) | — | |||||||||||||||||||||||
Healthcare organic (Non-GAAP) | $ | 5,427 | $ | 5,393 | 1 | % | $ | 1,194 | $ | 1,196 | — | % | 22.0 | % | 22.2 | % | (0.2)pts | ||||||||||||
GE Industrial segment (GAAP) | $ | 24,486 | $ | 23,881 | 3 | % | $ | 3,344 | $ | 2,092 | 60 | % | 13.7 | % | 8.8 | % | 4.9pts | ||||||||||||
Less: acquisitions | 24 | — | — | — | |||||||||||||||||||||||||
Less: business dispositions | — | 283 | — | (2 | ) | ||||||||||||||||||||||||
Less: foreign currency effect | (211 | ) | — | 13 | — | ||||||||||||||||||||||||
GE Industrial segment organic (Non-GAAP) | $ | 24,672 | $ | 23,598 | 4.6 | % | $ | 3,331 | $ | 2,094 | 59 | % | 13.5 | % | 8.9 | % | 4.6pts | ||||||||||||
We believe 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 foreign currency, as these activities can obscure underlying trends. We also believe presenting organic revenues* and organic profit* 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 companies. | |||||||||||||||||||||||||||||
When comparing revenues and profit growth between periods excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. Revenues and profit from acquisitions are considered inorganic from the date we complete an acquisition through the end of the fourth quarter following the acquisition and are therefore reflected as adjustments to reported revenues and profit to derive organic revenues and profit for the period following the acquisition. In subsequent periods, the revenues and profit from the acquisition become organic as these revenues and profit are included for all periods presented. |
GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) | |||||||||||||||||||||||||||||
Revenues | Segment profit (loss) | Profit margin | |||||||||||||||||||||||||||
Twelve months ended December 31 (In millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | 2019 | 2018 | V pts | ||||||||||||||||||||
Power (GAAP) | $ | 18,625 | $ | 22,150 | (16 | )% | $ | 386 | $ | (808 | ) | F | 2.1 | % | (3.6 | )% | 5.7pts | ||||||||||||
Less: acquisitions | 25 | — | (1 | ) | — | ||||||||||||||||||||||||
Less: business dispositions | 10 | 2,805 | (2 | ) | 237 | ||||||||||||||||||||||||
Less: foreign currency effect | (508 | ) | — | 47 | — | ||||||||||||||||||||||||
Power organic (Non-GAAP) | $ | 19,098 | $ | 19,345 | (1 | )% | $ | 342 | $ | (1,046 | ) | F | 1.8 | % | (5.4 | )% | 7.2pts | ||||||||||||
Renewable Energy (GAAP) | $ | 15,337 | $ | 14,288 | 7 | % | $ | (666 | ) | $ | 292 | U | (4.3 | )% | 2.0 | % | (6.3)pts | ||||||||||||
Less: acquisitions | 3 | — | 6 | — | |||||||||||||||||||||||||
Less: business dispositions | — | — | — | (2 | ) | ||||||||||||||||||||||||
Less: foreign currency effect | (532 | ) | — | 60 | — | ||||||||||||||||||||||||
Renewable Energy organic (Non-GAAP) | $ | 15,866 | $ | 14,288 | 11 | % | $ | (731 | ) | $ | 294 | U | (4.6 | )% | 2.1 | % | (6.7)pts | ||||||||||||
Aviation (GAAP) | $ | 32,875 | $ | 30,566 | 8 | % | $ | 6,820 | $ | 6,466 | 5 | % | 20.7 | % | 21.2 | % | (0.5)pts | ||||||||||||
Less: acquisitions | — | — | — | — | |||||||||||||||||||||||||
Less: business dispositions | 25 | 317 | 6 | 39 | |||||||||||||||||||||||||
Less: foreign currency effect | (24 | ) | — | 30 | — | ||||||||||||||||||||||||
Aviation organic (Non-GAAP) | $ | 32,874 | $ | 30,250 | 9 | % | $ | 6,784 | $ | 6,427 | 6 | % | 20.6 | % | 21.2 | % | (0.6)pts | ||||||||||||
Healthcare (GAAP) | $ | 19,942 | $ | 19,784 | 1 | % | $ | 3,896 | $ | 3,698 | 5 | % | 19.5 | % | 18.7 | % | 0.8pts | ||||||||||||
Less: acquisitions | 83 | — | (19 | ) | — | ||||||||||||||||||||||||
Less: business dispositions | 2 | 235 | (27 | ) | 22 | ||||||||||||||||||||||||
Less: foreign currency effect | (359 | ) | — | (1 | ) | — | |||||||||||||||||||||||
Healthcare organic (Non-GAAP) | $ | 20,216 | $ | 19,549 | 3 | % | $ | 3,944 | $ | 3,676 | 7 | % | 19.5 | % | 18.8 | % | 0.7pts | ||||||||||||
GE Industrial segment (GAAP) | $ | 86,778 | $ | 86,789 | — | % | $ | 10,436 | $ | 9,647 | 8 | % | 12.0 | % | 11.1 | % | 0.9pts | ||||||||||||
Less: acquisitions | 111 | — | (15 | ) | — | ||||||||||||||||||||||||
Less: business dispositions | 38 | 3,357 | (24 | ) | 295 | ||||||||||||||||||||||||
Less: foreign currency effect | (1,424 | ) | — | 136 | — | ||||||||||||||||||||||||
GE Industrial segment organic (Non-GAAP) | $ | 88,053 | $ | 83,432 | 5.5 | % | $ | 10,338 | $ | 9,351 | 11 | % | 11.7 | % | 11.2 | % | 0.5pts | ||||||||||||
We believe 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 foreign currency, as these activities can obscure underlying trends. We also believe presenting organic revenues* and organic profit* 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 companies. | |||||||||||||||||||||||||||||
When comparing revenues and profit growth between periods excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. Revenues and profit from acquisitions are considered inorganic from the date we complete an acquisition through the end of the fourth quarter following the acquisition and are therefore reflected as adjustments to reported revenues and profit to derive organic revenues and profit for the period following the acquisition. In subsequent periods, the revenues and profit from the acquisition become organic as these revenues and profit are included for all periods presented. |
GAS POWER ORGANIC REVENUES (NON-GAAP) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(Dollars in millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
Gas Power revenues (GAAP) | $ | 3,880 | $ | 3,578 | 8 | % | $ | 13,122 | $ | 13,296 | (1 | )% | |||||
Adjustments: | |||||||||||||||||
Less: acquisitions | — | — | — | — | |||||||||||||
Less: business dispositions | — | 4 | 1 | 7 | |||||||||||||
Less: foreign currency effect | (30 | ) | — | (239 | ) | — | |||||||||||
Gas Power organic revenues (Non-GAAP) | $ | 3,910 | $ | 3,574 | 9 | % | $ | 13,360 | $ | 13,290 | 1 | % |
POWER PORTFOLIO ORGANIC REVENUES (NON-GAAP) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(Dollars in millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
Power Portfolio revenues (GAAP) | $ | 1,521 | $ | 1,804 | (16 | )% | $ | 5,503 | $ | 8,853 | (38 | )% | |||||
Adjustments: | |||||||||||||||||
Less: acquisitions | 3 | — | 25 | — | |||||||||||||
Less: business dispositions | — | 180 | 9 | 2,798 | |||||||||||||
Less: foreign currency effect | (35 | ) | — | (269 | ) | — | |||||||||||
Power Portfolio organic revenues (Non-GAAP) | $ | 1,553 | $ | 1,623 | (4 | )% | $ | 5,738 | $ | 6,055 | (5 | )% | |||||
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 foreign currency, as these activities can obscure underlying trends. |
ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(NON-GAAP) (Dollars in millions) | 2019 | 2018 | 2019 | 2018 | |||||||||||||
GE total revenues (GAAP) | $ | 24,460 | $ | 24,437 | — | % | $ | 87,719 | $ | 89,038 | (1 | )% | |||||
Costs | |||||||||||||||||
GE total costs and expenses (GAAP) | $ | 23,917 | $ | 24,966 | (4 | )% | $ | 88,118 | $ | 111,967 | (21 | )% | |||||
Less: GE interest and other financial charges | 423 | 642 | 2,115 | 2,415 | |||||||||||||
Less: non-operating benefit costs | 1,144 | 608 | 2,828 | 2,740 | |||||||||||||
Less: restructuring & other | 418 | 601 | 1,351 | 2,832 | |||||||||||||
Less: goodwill impairments | 2 | 162 | 1,486 | 22,136 | |||||||||||||
Add: noncontrolling interests | (11 | ) | 1 | 6 | (130 | ) | |||||||||||
Adjusted GE Industrial costs (Non-GAAP) | $ | 21,920 | $ | 22,952 | (4 | )% | $ | 80,343 | $ | 81,714 | (2 | )% | |||||
Other Income | |||||||||||||||||
GE other income (GAAP) | $ | 1,023 | $ | 967 | 6 | % | $ | 2,200 | $ | 2,317 | (5 | )% | |||||
Less: unrealized gains (losses) | 917 | (193 | ) | 793 | — | ||||||||||||
Less: restructuring & other | 27 | (7 | ) | 36 | (120 | ) | |||||||||||
Less: gains (losses) and impairments for disposed or held for sale businesses | (148 | ) | 900 | 4 | 1,370 | ||||||||||||
Adjusted GE other income (Non-GAAP) | $ | 227 | $ | 268 | (15 | )% | $ | 1,367 | $ | 1,068 | 28 | % | |||||
GE Industrial profit (GAAP) | $ | 1,565 | $ | 438 | F | $ | 1,801 | $ | (20,612 | ) | F | ||||||
GE Industrial profit margin (GAAP) | 6.4 | % | 1.8 | % | 460 bps | 2.1 | % | (23.1 | )% | 2,520 bps | |||||||
Adjusted GE Industrial profit (Non-GAAP) | $ | 2,767 | $ | 1,753 | 58 | % | $ | 8,743 | $ | 8,392 | 4 | % | |||||
Adjusted GE Industrial profit margin (Non-GAAP) | 11.3 | % | 7.2 | % | 410 bps | 10.0 | % | 9.4 | % | 60 bps | |||||||
We believe GE Industrial profit and profit margins adjusted for the items included in the above reconciliation are meaningful measures because they increase the comparability of period-to-period results. |
GE INDUSTRIAL ORGANIC REVENUES (NON-GAAP) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(In millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
GE Industrial revenues (GAAP) | $ | 24,460 | $ | 24,437 | — | % | $ | 87,719 | $ | 89,038 | (1 | )% | |||||
Adjustments: | |||||||||||||||||
Less: acquisitions | 24 | — | 111 | — | |||||||||||||
Less: business dispositions | — | 536 | 45 | 4,233 | |||||||||||||
Less: foreign currency effect | (216 | ) | — | (1,442 | ) | — | |||||||||||
GE Industrial organic revenues (Non-GAAP) | $ | 24,651 | $ | 23,901 | 3 | % | $ | 89,004 | $ | 84,805 | 5 | % | |||||
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 foreign currency, as these activities can obscure underlying trends. |
ADJUSTED GE INDUSTRIAL ORGANIC PROFIT | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(NON-GAAP) Dollars in millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
Adjusted GE Industrial profit (Non-GAAP) | $ | 2,767 | $ | 1,753 | 58 | % | $ | 8,743 | $ | 8,392 | 4 | % | |||||
Adjustments: | |||||||||||||||||
Less: acquisitions | — | — | (15 | ) | — | ||||||||||||
Less: business dispositions | — | 1 | (32 | ) | 284 | ||||||||||||
Less: foreign currency effect | 8 | — | 144 | — | |||||||||||||
Adjusted GE Industrial organic profit (Non-GAAP) | $ | 2,759 | $ | 1,752 | 57 | % | $ | 8,646 | $ | 8,107 | 7 | % | |||||
Adjusted GE Industrial profit margin (Non-GAAP) | 11.3 | % | 7.2 | % | 410 bps | 10.0 | % | 9.4 | % | 60 bps | |||||||
Adjusted GE Industrial organic profit margin (Non-GAAP) | 11.2 | % | 7.3 | % | 390 bps | 9.7 | % | 9.6 | % | 10 bps | |||||||
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 foreign currency, as these activities can obscure underlying trends. |
ADJUSTED EARNINGS (LOSS) (NON-GAAP) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(Dollars in millions) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
Consolidated earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) | $ | 663 | $ | 509 | 30 | % | $ | (44 | ) | $ | (21,438 | ) | F | ||||
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) | 69 | (86 | ) | F | (530 | ) | (489 | ) | (8 | )% | |||||||
GE Industrial earnings (loss) (Non-GAAP) | 594 | 595 | — | % | 486 | (20,949 | ) | F | |||||||||
Non-operating benefits costs (pre-tax) (GAAP) | (1,144 | ) | (608 | ) | (2,828 | ) | (2,740 | ) | |||||||||
Tax effect on non-operating benefit costs | 240 | 128 | 594 | 575 | |||||||||||||
Less: non-operating benefit costs (net of tax) | (904 | ) | (481 | ) | (2,234 | ) | (2,165 | ) | |||||||||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) | (148 | ) | 900 | 4 | 1,370 | ||||||||||||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses | 31 | (186 | ) | 34 | (380 | ) | |||||||||||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) | (117 | ) | 714 | 39 | 990 | ||||||||||||
Restructuring & other (pre-tax) | (391 | ) | (609 | ) | (1,315 | ) | (2,952 | ) | |||||||||
Tax effect on restructuring & other | 85 | 66 | 277 | 338 | |||||||||||||
Less: restructuring & other (net of tax) | (306 | ) | (543 | ) | (1,039 | ) | (2,614 | ) | |||||||||
Goodwill impairments (pre-tax) | (2 | ) | (162 | ) | (1,486 | ) | (22,136 | ) | |||||||||
Tax effect on goodwill impairments | — | 11 | (55 | ) | (235 | ) | |||||||||||
Less: goodwill impairments (net of tax) | (2 | ) | (151 | ) | (1,541 | ) | (22,371 | ) | |||||||||
Unrealized gains (losses) (pre-tax) | 917 | (193 | ) | 793 | — | ||||||||||||
Tax on unrealized gains (losses) | (140 | ) | 41 | (114 | ) | — | |||||||||||
Less: unrealized gains (losses) | 777 | (153 | ) | 679 | — | ||||||||||||
Debt extinguishment costs | — | — | (255 | ) | — | ||||||||||||
Tax effect on debt extinguishment costs | — | — | 53 | — | |||||||||||||
Less: debt extinguishment costs (net of tax) | — | — | (201 | ) | — | ||||||||||||
BioPharma deal expense (pre-tax) | — | — | — | — | |||||||||||||
Tax on BioPharma deal expense | (633 | ) | — | (647 | ) | — | |||||||||||
Less: BioPharma deal expense (net of tax) | (633 | ) | — | (647 | ) | — | |||||||||||
Less: GE Industrial U.S. tax reform enactment adjustment | — | 17 | (101 | ) | (38 | ) | |||||||||||
Adjusted GE Industrial earnings (loss) (Non-GAAP) | $ | 1,779 | $ | 1,192 | 49 | % | $ | 5,531 | $ | 5,249 | 5 | % | |||||
GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP) | $ | 69 | $ | (86 | ) | F | $ | (530 | ) | $ | (489 | ) | (8 | )% | |||
Insurance premium deficiency test charge (pre-tax) | — | — | (972 | ) | — | ||||||||||||
Tax effect on insurance premium deficiency test charge | — | — | 204 | — | |||||||||||||
Less: Insurance premium deficiency test charge (net of tax) | — | — | (768 | ) | — | ||||||||||||
Less: GE Capital U.S. tax reform enactment adjustment | — | (128 | ) | 99 | (173 | ) | |||||||||||
Adjusted GE Capital earnings (loss) (Non-GAAP) | $ | 69 | $ | 43 | 60 | % | $ | 139 | $ | (316 | ) | F | |||||
Adjusted GE Industrial earnings (loss) (Non-GAAP) | $ | 1,779 | $ | 1,192 | 49 | % | $ | 5,531 | $ | 5,249 | 5 | % | |||||
Add: Adjusted GE Capital earnings (loss) (Non-GAAP) | 69 | 43 | 60 | % | 139 | (316 | ) | F | |||||||||
Adjusted earnings (loss) (Non-GAAP) | $ | 1,848 | $ | 1,234 | 50 | % | $ | 5,671 | $ | 4,933 | 15 | % | |||||
The service cost for 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. We believe the retained costs in Adjusted earnings and 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 presenting Adjusted Industrial earnings and 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 EARNINGS (LOSS) PER SHARE (EPS) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||||||
(NON-GAAP) | 2019 | 2018 | V% | 2019 | 2018 | V% | |||||||||||
Consolidated EPS from continuing operations attributable to GE common shareholders (GAAP) | $ | 0.07 | $ | 0.06 | 17 | % | $ | (0.01 | ) | $ | (2.47 | ) | 100 | % | |||
Less: GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP) | 0.01 | (0.01 | ) | F | (0.06 | ) | (0.06 | ) | — | % | |||||||
GE Industrial EPS (Non-GAAP) | $ | 0.07 | $ | 0.07 | — | % | $ | 0.06 | $ | (2.41 | ) | F | |||||
Non-operating benefits costs (pre-tax) (GAAP) | (0.13 | ) | (0.07 | ) | (0.32 | ) | (0.32 | ) | |||||||||
Tax effect on non-operating benefit costs | 0.03 | 0.01 | 0.07 | 0.07 | |||||||||||||
Less: non-operating benefit costs (net of tax) | (0.10 | ) | (0.06 | ) | (0.26 | ) | (0.25 | ) | |||||||||
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax) | (0.02 | ) | 0.10 | — | 0.16 | ||||||||||||
Tax effect on gains (losses) and impairments for disposed or held for sale businesses | — | (0.02 | ) | — | (0.04 | ) | |||||||||||
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax) | (0.01 | ) | 0.08 | — | 0.11 | ||||||||||||
Restructuring & other (pre-tax) | (0.04 | ) | (0.07 | ) | (0.15 | ) | (0.34 | ) | |||||||||
Tax effect on restructuring & other | 0.01 | 0.01 | 0.03 | 0.04 | |||||||||||||
Less: restructuring & other (net of tax) | (0.03 | ) | (0.06 | ) | (0.12 | ) | (0.30 | ) | |||||||||
Goodwill impairments (pre-tax) | — | (0.02 | ) | (0.17 | ) | (2.55 | ) | ||||||||||
Tax effect on goodwill impairments | — | — | (0.01 | ) | (0.03 | ) | |||||||||||
Less: goodwill impairments (net of tax) | — | (0.02 | ) | (0.18 | ) | (2.57 | ) | ||||||||||
Unrealized gains (losses) | 0.10 | (0.02 | ) | 0.09 | — | ||||||||||||
Tax on unrealized gains (losses) | (0.02 | ) | — | (0.01 | ) | — | |||||||||||
Less: unrealized gains (losses) (net of tax) | 0.09 | (0.02 | ) | 0.08 | — | ||||||||||||
Debt extinguishment costs | — | — | (0.03 | ) | — | ||||||||||||
Tax effect on debt extinguishment costs | — | — | 0.01 | — | |||||||||||||
Less: debt extinguishment costs (net of tax) | — | — | (0.02 | ) | — | ||||||||||||
BioPharma deal expense (pre-tax) | — | — | — | — | |||||||||||||
Tax on BioPharma deal expense | (0.07 | ) | — | (0.07 | ) | — | |||||||||||
Less: BioPharma deal expense (net of tax) | (0.07 | ) | — | (0.07 | ) | — | |||||||||||
Less: GE Industrial U.S. tax reform enactment adjustment | — | — | (0.01 | ) | — | ||||||||||||
Adjusted GE Industrial EPS (Non-GAAP) | $ | 0.20 | $ | 0.14 | 43 | % | $ | 0.63 | $ | 0.60 | 5 | % | |||||
GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP) | $ | 0.01 | $ | (0.01 | ) | F | $ | (0.06 | ) | $ | (0.06 | ) | — | % | |||
Insurance premium deficiency test charge (pre-tax) | — | — | (0.11 | ) | — | ||||||||||||
Tax effect on insurance premium deficiency test charge | — | — | 0.02 | — | |||||||||||||
Less: Insurance premium deficiency test charge (net of tax) | — | — | (0.09 | ) | — | ||||||||||||
Less: GE Capital U.S. tax reform enactment adjustment | — | (0.01 | ) | 0.01 | (0.02 | ) | |||||||||||
Adjusted GE Capital EPS (Non-GAAP) | $ | 0.01 | $ | — | F | $ | 0.02 | $ | (0.04 | ) | F | ||||||
Adjusted GE Industrial EPS (Non-GAAP) | $ | 0.20 | $ | 0.14 | 43 | % | $ | 0.63 | $ | 0.60 | 5 | % | |||||
Add: Adjusted GE Capital EPS (Non-GAAP) | 0.01 | — | F | 0.02 | (0.04 | ) | F | ||||||||||
Adjusted EPS (Non-GAAP) | $ | 0.21 | $ | 0.14 | 50 | % | $ | 0.65 | $ | 0.57 | 14 | % | |||||
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total. | |||||||||||||||||
The service cost for 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. We believe the retained costs in Adjusted earnings and 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 presenting Adjusted Industrial earnings and 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. |
GE INDUSTRIAL FREE CASH FLOW (FCF) (NON-GAAP) | Three months ended December 31 | Twelve months ended December 31 | |||||||||||
(In millions) | 2019 | 2018 | 2019 | 2018 | |||||||||
GE CFOA (GAAP) | $ | 4,537 | $ | 5,159 | $ | 4,614 | $ | 701 | |||||
Add: gross additions to property, plant and equipment | (620 | ) | (532 | ) | (2,216 | ) | (2,234 | ) | |||||
Add: gross additions to internal-use software | (71 | ) | (73 | ) | (274 | ) | (306 | ) | |||||
Less: GE Pension Plan funding | — | — | — | (6,000 | ) | ||||||||
Less: taxes related to business sales | (38 | ) | (90 | ) | (198 | ) | (180 | ) | |||||
GE Industrial free cash flow (Non-GAAP) | $ | 3,884 | $ | 4,644 | $ | 2,322 | $ | 4,341 | |||||
BIOPHARMA FREE CASH FLOW (FCF) (NON-GAAP) (In millions) | Twelve months ended December 31, 2019 | |||
CFOA (GAAP) | $ | 1,446 | ||
Add: gross additions to property, plant and equipment | (123 | ) | ||
Add: gross additions to internal-use software | (11 | ) | ||
Biopharma free cash flow (Non-GAAP) | 1,312 | |||
We believe investors may find it useful to compare GE's Industrial free cash flow* performance without the effects of cash used for taxes related to business sales and contributions to the GE Pension Plan. We believe this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flow. |
GE INDUSTRIAL NET DEBT (NON-GAAP) (In millions) | December 31, 2019 | December 31, 2018 | ||||
Total GE short- and long-term borrowings (GAAP) | $ | 52,059 | $ | 62,212 | ||
Less: GE Capital short- and long-term debt assumed by GE | 31,368 | 36,262 | ||||
Add: intercompany loans from GE Capital | 12,226 | 13,749 | ||||
Total adjusted GE borrowings | $ | 32,917 | $ | 39,700 | ||
Total pension and principal retiree benefit plan liabilities (pre-tax)(a) | 27,773 | 26,836 | ||||
Less: taxes at 21% | 5,832 | 5,636 | ||||
Total pension and principal retiree benefit plan liabilities (net of tax) | $ | 21,941 | $ | 21,200 | ||
GE operating lease liabilities | 3,369 | 3,868 | ||||
GE preferred stock | 5,738 | 5,573 | ||||
Less: 50% of GE preferred stock | 2,869 | 2,787 | ||||
50% of preferred stock | $ | 2,869 | $ | 2,787 | ||
Deduction for total GE cash, cash equivalents and restricted cash | (17,613 | ) | (16,632 | ) | ||
Less: 25% of GE cash, cash equivalents and restricted cash | (4,403 | ) | (4,158 | ) | ||
Deduction for 75% of GE cash, cash equivalents and restricted cash | $ | (13,210 | ) | $ | (12,474 | ) |
Total GE Industrial net debt (Non-GAAP) | $ | 47,886 | $ | 55,081 | ||
(a) Represents the total net deficit status of principal pension plans, other pension plans and retiree benefit plans. | ||||||
In this document we use GE Industrial net debt*, which is calculated based on rating agency methodologies. We are including the calculation of GE industrial net debt* to provide investors more clarity regarding how the credit rating agencies measure GE Industrial leverage. |
GE INDUSTRIAL LEVERAGE EBITDA (NON-GAAP) | Twelve months ended December 31 | |||||
(In millions) | 2019 | 2018 | ||||
GE earnings (loss) from continuing operations before income taxes (GAAP) | $ | 1,271 | $ | (21,100 | ) | |
Less: interest and other financial charges | (2,115 | ) | (2,415 | ) | ||
Less: depreciation and amortization of PP&E and amortization of intangible assets | (3,513 | ) | (4,399 | ) | ||
Less: GE Capital earnings (loss) from continuing operations | (530 | ) | (489 | ) | ||
Less: non-operating benefit costs | (2,828 | ) | (2,740 | ) | ||
Less: goodwill impairments | (1,486 | ) | (22,136 | ) | ||
Less: other items(a) | 739 | 815 | ||||
Add: disposition related adjustments(b) | 282 | 1,303 | ||||
Total GE Industrial leverage EBITDA (Non-GAAP) | $ | 11,286 | $ | 11,567 | ||
(a) Other items is mainly comprised of adjustments for other income, long-term fixed operating lease expense and stock-related compensation expense | ||||||
(b) Includes Transportation’s EBITDA in 2018 and the Baker Hughes dividend in both 2018 and 2019. | ||||||
In this document we use GE Industrial leverage EBITDA*, which is calculated based on rating agency methodologies. We are including the calculation of GE Industrial leverage EBITDA* to provide investors more clarity regarding how the credit rating agencies measure GE Industrial leverage. |
GE INDUSTRIAL NET DEBT/EBITDA RATIO (NON-GAAP) ( Dollars in millions) | December 31, 2019 | December 31, 2018 | ||||
Total GE Industrial net debt (Non-GAAP) | $ | 47,886 | $ | 55,081 | ||
Total GE Industrial leverage EBITDA (Non-GAAP) | 11,286 | 11,567 | ||||
GE Industrial net debt/EBITDA ratio (Non-GAAP) | 4.2x | 4.8x |
2020 OPERATING FRAMEWORK: 2020 ADJUSTED EPS (NON-GAAP) | ||||||
We cannot provide a reconciliation of the differences between the non-GAAP expectations and corresponding GAAP measure for Adjusted EPS* in 2020 without unreasonable effort due to the uncertainty of timing of any gains or losses related to acquisitions & dispositions including our agreement to sell our BioPharma business, the timing and magnitude of the financial impact related to the mark-to-market of our remaining investment in Baker Hughes, and the timing and magnitude of restructuring expenses. Although we have attempted to estimate the amount of gains and restructuring charges for the purpose of explaining the probable significance of these components, this calculation involves a number of unknown variables, resulting in a GAAP range that we believe is too large and variable to be meaningful. |
2020 OPERATING FRAMEWORK: 2020 GE INDUSTRIAL FREE CASH FLOW (NON-GAAP) | |||||
We cannot provide a reconciliation of the differences between the non-GAAP expectations and corresponding GAAP measure for GE Industrial Free Cash flow* in 2020 without unreasonable effort due to the uncertainty of timing of deal taxes related to business sales. |
• | 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 plan to exit our equity ownership position in Baker Hughes, the timing of closing for those transactions and the expected proceeds and benefits to GE; |
• | our de-leveraging and capital allocation plans, including with respect to actions to reduce our indebtedness, 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 and discontinued operations; the amount and timing of required capital contributions to the insurance operations and related strategic actions that we may pursue; the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets; the availability and cost of funding; and GE Capital's exposure to particular counterparties and markets; |
• | global economic trends, competition and geopolitical risks, including changes in the rates of investment or economic growth in key markets we serve, or an escalation of trade tensions such as those between the U.S. and China; |
• | changes in macroeconomic conditions, particularly interest rates as it relates to our pension and run-off insurance liabilities, as well as the value of stocks and other financial assets (including our equity ownership position in Baker Hughes), oil and other commodity prices and exchange rates; |
• | market developments or customer actions that may affect levels of demand and the financial performance of the major industries and customers we serve, such as secular, cyclical and competitive pressures in our Power business, pricing and other pressures in the renewable energy market, levels of demand for air travel and other customer dynamics such as early aircraft retirements, conditions in key geographic markets and other shifts in the competitive landscape for our products and services; |
• | operational execution by our businesses, including our ability to improve the operations and execution of our Power and Renewable Energy businesses, and the continued strength of our Aviation business; |
• | changes in law, regulation or policy that may affect our businesses, such as trade policy and tariffs, regulation related to climate change, and the effects of U.S. tax reform and other tax law changes; |
• | 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 Alstom, SEC and other investigative and legal proceedings; |
• | the impact of actual or potential failures of our products or third-party products with which our products are integrated, such as the fleet grounding of the Boeing 737 MAX and the timing of its return to service, and related reputational effects; |
• | the impact of potential information technology, cybersecurity or data security breaches, 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. |
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