false--12-31FY2019false00000405458702227000870222700087022270008738434000873843400087384340001300000000070000000000.06750.1600.6500.4700.1350.0600.2100.3000.035320000005370000003100000033500000011500000029000000260000004100000035500000098000000600000032000000593987559398755939875593987559398755939875P40YP10YP20YP8YP1YP4YP20YP20YP35YP20YP40YP15YP15YP15YP15YP1Y11110000005430000002800000081000000261000000089000000400000060000008520000009000000200000011000000P3Y120000000006500000000
0000040545us-gaap:ProductMember2022-01-01ge:PerformanceObligationSatisfactionPeriodThreeMember2021-12-31

United States Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-K
☑ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 20192021
Commission file number 001-00035
ge-20211231_g1.jpg
GENERAL ELECTRIC COMPANYCOMPANY
(Exact name of registrant as specified in its charter)
New York14-0689340
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
5 Necco StreetBostonMA02210
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code) (617) (617) 443-3000

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.06$0.01 per shareGENew York Stock Exchange
Floating Rate Notes due 2020GE 20ENew York Stock Exchange
0.375% Notes due 2022GE 22ANew York Stock Exchange
1.250% Notes due 2023GE 23ENew York Stock Exchange
0.875% Notes due 2025GE 25New York Stock Exchange
1.875% Notes due 2027GE 27ENew York Stock Exchange
1.500% Notes due 2029GE 29New York Stock Exchange
7 1/2% Guaranteed Subordinated Notes due 2035GE /35New York Stock Exchange
2.125% Notes due 2037GE 37New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨Yes No þ No ¨☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No Noþ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Yesþ☑ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes Yes☑ þNo ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Non-accelerated filer Emerging growth company☐Smaller reporting company ☐
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 provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ☑
The aggregate market value of the outstanding common equity of the registrant not held by affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was at least $90.1$116.5 billion. There were 8,740,232,0001,099,321,882 shares of voting common stock with a par value of $0.06$0.01 outstanding at January 31, 2020.2022.

DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant’s Annual Meeting of Shareholders, to be held May 5, 2020,4, 2022, is incorporated by reference into Part III to the extent described therein.


TABLE OF CONTENTS
Page
TABLE OF CONTENTS
Page
About General Electric
3
4
46
Consolidated Results
47
Segment Operations
89
Corporate Items and Eliminations
2016
Other Consolidated Information
2217
Capital Resources and Liquidity
2519
Critical Accounting Estimates
3424
Other Items
3726
Non-GAAP Financial Measures
43
Non-GAAP Financial Measures
32
4935
Risk Factors
50
5735
43
5843
6247
Statement of Earnings (Loss)
6247
Statement of Financial Position
6448
Statement of Cash Flows
6649
Statement of Comprehensive Income (Loss)
6850
Statement of Changes in Shareholders' Equity
6850
Note 1 Basis of Presentation and Summary of Significant Accounting Policies
6951
Note 2 Businesses Held for Sale and Discontinued Operations
7456
Note 3 Investment Securities
7758
Note 4 Current and Long-termLong-Term Receivables
7859
Note 5 Financing Receivables and Allowances Inventories, Including Deferred Inventory Costs
8061
Note 6 Inventories
81
Note 7 Property, Plant and Equipment and Operating Leases
8161
Note 87 Goodwill and Other Intangible Assets
8261
Note 9 8Contract and Other Deferred Assets & Progress Collections and Deferred Income
8462
Note 10 9All Other Assets
8564
Note 11 10Borrowings
8664
Note 12 11Insurance Liabilities and Annuity Benefits
8765
Note 13 12Postretirement Benefit Plans
8966
Note 14 13Current and All Other Liabilities
9471
Note 15 14Income Taxes
9471
Note 16 Shareholders’15Shareholders' Equity
9874
Note 1716 Share-Based Compensation
9975
Note 18 17Earnings Per Share Information
10076
Note 19 18Other Income
10076
Note 20 19Fair Value Measurements
10177
Note 21 20Financial Instruments
10277
Note 22 21Variable Interest Entities
10479
Note 23 22Commitments, Guarantees, Product Warranties and Other Loss Contingencies
10579
Note 24 Cash Flows Information23Operating Segments
11082
Note 25 Intercompany Transactions24 Summarized Financial Information
11285
Note 26 Operating Segments25Quarterly Information
11386
Note 27 Guarantor Financial Information
Note 28 Baker Hughes Summarized Financial Information
119
Note 29 Quarterly Information (unaudited)
120
Forward-Looking Statements
121
Directors, Executive Officers and Corporate Governance
12287
Exhibits and Financial Statement Schedules
12388
126
Signatures
12791

92
ABOUT GENERAL ELECTRIC




FORWARD-LOOKING STATEMENTS. Our public communications and SEC filings may contain statements related to future, not past, events. These forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the global supply chain and world economy; our expected financial performance, including cash flows, revenues, organic growth, margins, earnings and earnings per share; macroeconomic and market conditions and volatility; planned and potential transactions, including our plan to pursue spin-offs of our Healthcare business and our combined Renewable Energy, Power and Digital businesses; our de-leveraging plans, including leverage ratios and targets, the timing and nature of actions to reduce indebtedness and our credit ratings and outlooks; our funding and liquidity; our businesses’ cost structures and plans to reduce costs; restructuring, goodwill impairment or other financial charges; or tax rates.

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
•our success in executing and completing asset dispositions or other transactions, including our plan to pursue spin-offs of our Healthcare business and our combined Renewable Energy, Power and Digital businesses, and our plans to exit our equity ownership positions in Baker Hughes and AerCap, the timing of closing for such transactions, the ability to satisfy closing conditions, and the expected proceeds, consideration and benefits to GE;
•the continuing severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic, of businesses’ and governments’ responses to the pandemic and of individual factors such as aviation passenger confidence, on our operations and personnel, on commercial activity and demand across our and our customers’ businesses, and on global supply chains;
•the extent to which the COVID-19 pandemic and related impacts, including global supply chain disruptions and price inflation, will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives;
•changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including inflation, interest rates, the value of securities and other financial assets (including our equity ownership positions in Baker Hughes and AerCap, and expected equity interest in the Healthcare business after its spin-off), oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on our financial position and businesses;
•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;
•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;
•our liquidity and the amount and timing of our cash flows and earnings, which may be impacted by customer, supplier, competitive, contractual and other dynamics and conditions;
•capital and liquidity needs associated with our financial services operations, including in connection with our run-off insurance operations and Bank BPH, the amount and timing of any required capital contributions and any strategic actions that we may pursue;
•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 sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses' global supply chains and strategies;
•market developments or customer actions that may affect demand and the financial performance of major industries and customers we serve, such as secular, cyclical and competitive pressures in our Power business; pricing, the timing of customer investment and other factors in renewable energy markets; demand for air travel and other dynamics related to the COVID-19 pandemic; conditions in key geographic markets; and other shifts in the competitive landscape for our products and services;
•operational execution by our businesses, including the success in improving operational performance at our Renewable Energy business, and the performance of our Aviation business amidst the ongoing market recovery;
•changes in law, regulation or policy that may affect our businesses, such as trade policy and tariffs, regulation and incentives related to climate change (including extension of the U.S. wind Production Tax Credit), and the effects of tax law changes;
•our decisions about investments in research and development, and 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 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, and related reputational effects;
•the impact of potential information technology, cybersecurity or data security breaches at GE or third parties; and
•the other factors that are described in "Risk Factors" in this form 10-K report.

These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.
2021 FORM 10-K 3

ABOUT GENERAL ELECTRIC
ELECTRIC.General Electric Company (General Electric, GE or the Company) is a high-tech industrial company that operates worldwide through its four industrial segments, Power,Aviation, Healthcare, Renewable Energy, Aviation and Healthcare,Power. Our products include commercial and its financial services segment, Capital. The Power segment offers technologies, solutions,military aircraft engines and services related tosystems; healthcare systems and pharmaceutical diagnostics; wind and other renewable energy production, includinggeneration equipment and grid solutions; and gas, steam, nuclear and steam turbines, generators, andother power generation services. The Renewable Energy segment provides wind turbine platforms, hardware and software, offshore wind turbines, solutions, productsequipment. We have significant global installed bases of equipment across these sectors, and services to hydropower industry, blades for onshoresupport these products are also an important part of our business alongside new equipment sales. As described further below, in November 2021 we announced a strategic plan to form three industry-leading, global, investment-grade public companies from our (i) Aviation business, (ii) Healthcare business and offshore wind turbines,(iii) combined Renewable Energy, Power and high voltage equipment. The Aviation segmentDigital businesses. This section provides jet engines and turboprops for commercial and military airframes, maintenance, component repair, and overhaul services, as well as replacement parts, additive machines and materials, and engineering services. The Healthcare segment provides healthcare technologies in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery, biopharmaceutical manufacturing technologies and performance enhancement solutions. The Capital segment leases and finances aircraft, aircraft engines and helicopters, provides financial and underwriting solutions, and manages our run-off insurance operations.an overview of GE’s business at a consolidated level. See the Consolidated ResultsSegment Operations section ofwithin Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for more details about segment-level business descriptions, product and service offerings and competitive, regulatory and other trends, dynamics and developments. See also the Consolidated Results section within MD&A and Note 2 to the consolidated financial statements for information regarding our announced and recent business portfolio actions.

We serve customers in over 170175 countries. Manufacturing and service operations are carried out at 9471 manufacturing plants located in 3026 states in the United States and Puerto Rico and at 190130 manufacturing plants located in 3733 other countries.

Over our 130-year history, GE’s innovation and technology have improved quality of life around the world. GE’s businesses today are working to adapt and innovate solutions to three of the world’s most pressing challenges: the future of smarter and more efficient flight, precision healthcare that personalizes diagnoses and treatments and the energy transition to drive decarbonization.

•Future of flight – The future of flight will be defined by how the aviation industry emerges from the current market cycle and innovates to lower emissions and improves fuel efficiency. The focus on long-term sustainability has accelerated notwithstanding the significant challenges that the industry has faced, and continues to face, with the significant disruptions and decreases in commercial air travel globally in connection with the Coronavirus Disease 2019 (COVID-19) pandemic. Our Aviation business over many decades has contributed to advances in engine architectures, aerodynamics and materials and the use of sustainable aviation fuels that have resulted in today’s aircraft engines consuming significantly less fuel with lower emissions. The Aviation business continues to invest in and work toward development of the next suite of engine technologies, including open fan architectures, hybrid electric and electrical propulsion concepts and advanced thermal management concepts, that offer the potential for future efficiency improvements and emission reductions to meet our customers’ needs and global standards governing commercial aviation.
•Precision health – The healthcare industry faces the need to address productivity challenges by improving access, enabling more precise patient diagnosis and treatment, shortening hospital stays and wait times and lowering overall costs. Amidst the limited resources and burdens on healthcare systems, both from the COVID-19 pandemic recently and from aging populations more generally, these challenges are even more pronounced. Our Healthcare business is working to help support the future of healthcare that will merge clinical medicine and data science by applying advanced analytics and artificial intelligence across the patient journey. With its products, services and digital capabilities, the Healthcare business is focused on building an intelligence-based healthcare system and a healthier world and greater access to the half of the world’s population that is underserved.
•Energy transition – Addressing climate change is an urgent global priority, and at the same time energy demand is increasing and roughly one billion people around the world are without access to reliable power. Our Renewable Energy and Power businesses play a central role in helping our customers meet this demand for electricity generation while lowering carbon intensity and making power generation more reliable, affordable and sustainable. These businesses’ technology and expertise include onshore and offshore wind turbines, gas turbines and digital controls and hardware solutions that bring more renewables onto power grids while making the grid more resilient. Increasingly there is a focus on the potential for breakthrough technologies that can help drive deeper decarbonization of the power sector in the future, such as small modular or other advanced nuclear power, hydrogen and carbon capture. Progress in significantly reducing power sector emissions in the near term, while significantly accelerating technological innovation for higher renewable penetration and lower carbon-power generation, will also enable further emission reductions of other sectors through the electrification of transportation, heat and industry.

We believe our businesses’ strategies and focus on these significant global challenges are well aligned with broader goals of sustainable development, and we approach sustainability with GE’s commitment to innovation as a central element. Sustainability priorities are embedded in our policies, leadership engagement, operating mechanisms, commitments, and, ultimately, our products. In addition to working to develop technologies that will help build a more sustainable world, we advance GE’s sustainability priorities through our own commitments to our people, communities and planet. More information that may be of interest to a variety of stakeholders about GE’s sustainability approach, priorities and performance, including about safety, greenhouse gas emission reductions for our own operations and for our products, environmental stewardship, diversity and inclusion (as also discussed further below), supply chain and human rights and other matters, can be found in our Sustainability Report.

In all of our global business activities, we encounter aggressive and able competition. In many instances, the competitive climateenvironment is characterized by changing technology that requires continuing research and development. With respect to manufacturing operations, we continue to make improvements through deployment of lean initiatives and we believe that, in general, we are one of the leading firms in most of the major industries in which we participate. The businesses in which GE Capital engages are subject to competition from various types of financial institutions.


2021 FORM 10-K 4

As a diverse global company, we are affected by economic and market developments around the world, economies,supply chain disruptions, instability in certain regions, commodity prices, foreign currency volatility and policies regarding trade and imports. See the Segment Operations section within Management's Discussion and Analysis (MD&A)MD&A for further information. Other factors impacting our business include:

•product development cycles for many of our products are long and product quality and efficiency are critical to success,success;
•research and development expenditures are important to our business,business;
•many of our products are subject to a number of regulatory standardsstandards; and
•changing end markets, including shifts in energy sources and demand related to cost, decarbonization efforts and other factors, as well as the impact of technology changes.


The strength and talent of our workforce are critical to the success of our businesses, and we continually strive to attract, develop and retain personnel commensurate with the needs of our businesses in their operating environments. The Company’s human capital management priorities are designed to support the execution of our business strategy and improve organizational effectiveness.

As we execute on the Company’s strategy in the coming years, our focus on organizational performance and talent will remain front and center. We will continue to monitor various factors across our human capital priorities, including as a part of our business operating reviews during the year and with oversight by our Board of Directors and the Board’s Management Development and Compensation Committee. The following are our human capital priorities:
•Protecting the health and safety of our workforce: GE is committed to establishing and maintaining effective health and safety standards and protocols across our businesses, making continuous process improvements and providing ongoing education. In 2021, we hired a Chief Safety Officer and launched a Safety Promotion Office to augment our safety program, leveraging lean as a critical tool to prevent injuries and incidents and drive safety as a core operational attribute for the businesses.
•Sustaining a Company culture based in leadership behaviors of humility, transparency and focus, with a commitment to unyielding integrity: GE’s organizational culture supports talent attraction, engagement and retention and promotes ways of working that are strongly connected to our goals. In late 2020, we announced the launch of a new performance management system, “People, Performance, and Growth,” in which individual performance outcomes are directly linked to incentive compensation. Supporting our culture of integrity, The Spirit & The Letter, GE’s employee code of conduct, sets forth the Company’s integrity and compliance standards.
•Developing and managing our talent to best support our organizational goals: GE’s approach to talent management aims to ensure strong individual and company performance; our employee training and development offerings are designed to support these goals. As a key pillar of our talent strategy, GE’s senior management leads an annual organization and talent review for each business. In 2020, to support our lean culture transformation, we launched two new lean leadership development programs designed to elevate high potential executive level talent who can lead us towards a more sustainable future. Developed in partnership with our existing leaders, our leadership development programs are premised upon a rigorous learning process tied directly to outcomes, with a focus on hands-on, experiential learning and building a lean mindset.
•Promoting inclusion and diversity across the enterprise: At GE, we are committed to building a more diverse workforce and a more inclusive workplace by focusing on transparency, accountability and community. We believe in the value of each person’s unique identity, background and experiences, and are committed to fostering an inclusive culture in which all employees feel empowered to do their best work because they feel accepted, respected and that they belong. In 2021, we began publishing a Diversity Annual Report to transparently share our diversity data and hold ourselves accountable for continuous improvement. To support our inclusion and diversity goals, we have a GE Chief Diversity Officer and Chief Diversity Officers in each business unit. Additionally, we have several Employee Resource Groups which have added value to our colleagues and businesses by helping to engage and develop diverse talent for nearly 30 years. These groups accelerate development through mentoring, learning, networking, organizing outreach and service activities, and they address challenges that are important to their members and the Company through targeted initiatives. These groups also support our goals to build a diverse talent pipeline through efforts such as partnering with organizations to raise money for scholarship funds and promoting professional development opportunities.

At year-end 2019,2021, General Electric Company and consolidated affiliates employed approximately 205,000168,000 people, of whom approximately 70,00055,000 were employed in the United States. Our Power,Aviation, Healthcare, Renewable Energy, Aviation, Healthcare, and CapitalPower segments employed approximately 40,000, 48,000, 38,000,, 43,000, 52,000, 56,000 and 2,00032,000 people, respectively. OurIn addition, Corporate business employed approximately 13,00011,000 employees, including legacy GE Capital employees. Compared to the year-end 2020 figure of 174,000, the number of those employed at year-end 2021 decreased primarily as a result of restructuring.


Approximately 6,750In the United States, GE and GE affiliatehas approximately 5,750 union-represented manufacturing and service employees, the majority of whom are covered by four-year collective bargaining agreements ratified in August 2019. GE’s relationship with employee-representative organizations outside the U.S. takes many forms, including in Europe where GE engages employees’ representatives’ bodies such as works councils and trade unions in accordance with local law.

We are subject to numerous U.S. federal, state and foreign laws and regulations covering a wide variety of subject matters related to our products, services and business operations, including requirements regarding the protection of human health and safety and the environment. Relevant laws and regulations can apply to our business directly and indirectly, such as through the effect that laws and regulations applicable to our customers may have in influencing the products and services they purchase from us. Like other industrial manufacturing companies that operate in the United States (U.S.)sectors we serve, which are represented for collective bargaining purposes by a union. A majority of such employees are represented by union locals that are affiliatedhigh-tech, increasingly digitally connected and global, we face significant scrutiny from both U.S. and foreign governmental authorities with the IUE-CWA, The Industrial Divisionrespect to our compliance with laws and regulations. Many of the Communication Workerssales across our businesses are also made to U.S. or foreign governments, regulated entities such as public utilities, state-owned companies or other public sector customers, and these types of America, AFL-CIO, CLC. In August 2019, mostsales often entail additional compliance obligations. For further information about government regulation applicable to our businesses, see the Segment Operations section within MD&A, Risk Factors and Note 22.
2021 FORM 10-K 5

We own, or hold licenses to use, numerous patents. New patents are continuously being obtained through our research and development activities. Patented inventions are used both within the Company and are licensed to others. GE is a trademark and service mark of GE's U.S. unions, includingGeneral Electric Company.

Because of the IUE-CWA, ratified new four-year labor agreements to replacediversity of our products and services, as well as the current agreements.wide geographic dispersion of our production facilities, we use numerous sources for the wide variety of raw materials needed for our operations.

ADDITIONAL INFORMATION ABOUT GE. General Electric’s address is 1 River Road, Schenectady, NY 12345-6999; we also maintain executive offices at 5 Necco Street, Boston, MA 02210.

GE’s Internet address at www.ge.com, Investor Relations website at www.ge.com/investor-relations and our corporate blog at www.gereports.com, as well as GE’s Facebook page, Twitter accounts and other social media, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted. Additional information on non-financial matters, including our Sustainability Report, environmental and social matters, and our integrity policies and our Diversity Annual Report, is available at www.ge.com/sustainability. Website referencessustainability and www.ge.com/about-us/diversity. All of such additional information referenced in this report are(including the information contained in, or available through, other reports and websites) is provided as a convenience and dois not constitute, and should not be viewed as, incorporationincorporated by reference of the information contained on, or available through, the websites.herein. Therefore, such information should not be considered part of this report.

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on our website, www.ge.com/investor-relations/events-reports, as soon as reasonably practicable after they are filed electronically with the U.S. Securities and Exchange Commission (SEC). Copies are also available, without charge, from GE Corporate Investor Communications. Reports filed with the SEC may be viewed at www.sec.gov.

GE2019 FORM 10-K 3
MD&A

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
. The consolidated financial statements of General Electric Company combine the industrial manufacturing and services businesses of GE with the financial services businesses of GE Capital and are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Unless otherwise noted, tables are presented in U.S. dollars in millions. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented in this report are calculated from the underlying numbers in millions. Discussions throughout this MD&A are based on continuing operations unless otherwise noted. The MD&A should be read in conjunction with the Financial Statements and Notes to the consolidated financial statements. F
or purposes
In the accompanying analysis of the financial statement display of sales and costs of salesinformation, we sometimes use information derived from consolidated financial data but not presented in our consolidated Statementfinancial statements prepared in accordance with GAAP. Certain of Earnings (Loss), “goods” is required bythese data are considered “non-GAAP financial measures” under SEC regulationsrules. See the Non-GAAP Financial Measures section for the reasons we use these non-GAAP financial measures and the reconciliations to include all salestheir most directly comparable GAAP financial measures.

CHANGES IN FINANCIAL REPORTING. On November 1, 2021, we completed the combination of tangible products, and "services" must include all other sales, including other services activities. In our MD&A sectionGE Capital Aviation Services (GECAS) business with AerCap Holdings N.V. (AerCap). Upon completion of this report,transaction, in order to focus on our core industrial businesses of Aviation, Healthcare, Renewable Energy and Power, we refervoluntarily transitioned from three-column to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.simpler one-column reporting for all periods presented.

We believe investors will gain a better understanding of our company if they understand howPreviously, we measure and talk about our results. Because of the diversity in our businesses, we presentpresented our financial statements in a three-column format, which allowsallowed investors to see our GE industrial operations separately from our financial services operations. operations (GE Capital). Moving to one-column consolidated financial statements reflects the reduction in size of our financial services portfolio as a result of various strategic actions taken over recent years.

We believealso made these related reporting changes for all periods presented:
•began presenting the results of the remainder of our former Capital segment, including Energy Financial Services (EFS) and our run-off insurance operations, within Corporate;
•reclassified amounts related to our EFS, Working Capital Solutions (WCS) and Treasury businesses from our formerly captioned GE Capital revenues from services to Other income to align with our industrial segment presentation of derivative, equity method and other investment income. There was no change to the presentation of our run-off Insurance revenues and, consequently, our run-off Insurance revenues are now presented as a separate line in our Statement of Earnings (Loss);
•reclassified our formerly captioned Financing receivables and Other GE Capital receivables to All other assets to further simplify our Statement of Financial Position given the reduction of these balances over time in relation to consolidated total assets;
•ceased referring to GE Industrial, a term formerly defined as the adding together of all industrial affiliates giving effect to the elimination of transactions among such affiliates. Therefore, all key performance indicators and non-GAAP financial metrics previously identified as pertaining to GE Industrial have been redefined to reflect total company results; and
•redefined the basis on which profit is determined for the remainder of our former Capital segment which is now reported within Corporate. Previously, Interest and other financial charges, income taxes, non-operating benefit costs and preferred stock dividends were included in determining our former Capital segment profit (which we sometimes referred to as net earnings). To align with our industrial segments, these items are now excluded in determining profit for all businesses reported within Corporate except EFS, which will continue to be reported on a net earnings basis given the integral nature of Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) in relation to its business model.


2021 FORM 10-K 6

In addition, effective December 31, 2021, we have changed the way we present sales of spare parts, upgrade equipment and other aftermarket goods that this provides useful information to investors. Whenare used in this report, unless otherwise indicatedthe provision of our services in our Statement of Earnings (Loss) to conform with the way we manage the businesses and have historically presented them in MD&A and other related notes. Specifically, we now consistently present sales of spare parts used in a service arrangement as part of Sales of services and the related costs as Costs of services sold. See Note 1 for further information.

CONSOLIDATED RESULTS
SIGNIFICANT DEVELOPMENTS. GE announced it plans to form three public companies focused on the growth sectors of aviation, healthcare and energy. In November 2021, we announced a strategic plan to form three industry-leading, global, investment-grade public companies from our (i) Aviation business, (ii) Healthcare business and (iii) Renewable Energy, Power and Digital businesses that we will combine. We intend to pursue a tax-free spin-off of Healthcare in early 2023, creating a pure play company at the center of precision health, and we expect to retain a stake of 19.9% in the new company. We intend to pursue a tax-free spin-off of the combined Renewable Energy, Power and Digital businesses in early 2024, and that new company will be positioned to lead the energy transition. Following these transactions, GE will be an aviation-focused company, shaping the future of flight. As independently run companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to deliver long-term growth and create value for customers, investors and employees. The respective capital structures, brands and leadership teams for each independent company will be determined and announced later.

Coronavirus Disease 2019 (COVID-19) Pandemic. The COVID-19 pandemic has impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many sectors. Since the latter part of the first quarter of 2020, these factors have had a material adverse impact on our operations and financial performance, as well as on the operations and financial performance of many of the customers and suppliers in industries that we serve. While factors related directly and indirectly to the COVID-19 pandemic have been impacting operations and financial performance at varying levels across all our businesses, the most significant impact to date has been at our Aviation segment. For details about impacts related to our businesses and actions we have taken in response, as applicable, refer to the respective segment sections within MD&A. We anticipate that our operations and financial performance will continue to be impacted by the context, we use these terms to meanCOVID-19 pandemic in future periods. These impacts will ultimately depend on many factors that are not within our control, including the following:
•
Consolidated – the adding togetherseverity and duration of GE and GE Capital, giving effect to the elimination of transactions between the two. We present consolidated results in the left-side column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
•
GE – the adding together of all affiliates except GE Capital, whose continuing operations are presented on a one-line basis, giving effect to the elimination of transactions among such affiliates. As GE presents the continuing operations of GE Capital on a one-line basis, any intercompany profits resulting from transactions between GE and GE Capital are eliminated at the GE level. We present the results of GE in the center column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
•
GE Capital – the adding together of all affiliates of GE Capital giving effect to the elimination of transactions among such affiliates. We present the results of GE Capital in the right-side column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
•
GE Industrial – GE excluding the continuing operations of GE Capital. We believe that this provides investors with a view as to the results of our industrial businesses and corporate items.
•
Industrial segment – the sum of our four industrial reportable segments, without giving effect to the elimination of transactions among such segments or between these segments and our financial services segment. This provides investors with a view as to the results of our industrial segments, without inter-segment eliminations and corporate items.

This document contains “forward-looking statements” - for details about the uncertainties that could cause our actual results to be materially different than those expressedpandemic; governmental, business and individuals’ actions in our forward-looking statements, see the Risk Factors and Forward-Looking Statements sections.

CONSOLIDATED RESULTS
2019SIGNIFICANT DEVELOPMENTS.In October 2019, we announced changesresponse to the U.S. GE Pension Planpandemic; the emergence of COVID-19 virus variants; and the U.S. GE Supplementary Plan.development, availability and public acceptance of effective treatments and vaccines.

GECAS. On November 1, 2021, we completed the combination of our GECAS business with AerCap and received $22.6 billion in cash, subject to future closing adjustments, 111.5 million shares of AerCap common stock (approximately 46% ownership interest) valued at approximately $6.6 billion based on AerCap’s closing share price on October 29, 2021, and a $1.0 billion AerCap senior note. In connection with the closing of the transaction, the Company recorded a non-cash after-tax charge of $3.9 billion in discontinued operations in 2021, including a loss of $0.2 billion in the fourth quarter. Additionally, we have elected to prospectively measure our investment in AerCap at fair value and expect to have continuing involvement with AerCap, primarily through our ownership interest and ongoing sales or leases of products and services. We expect to fully monetize our stake in AerCap over time. See Notes 2 and 3 for further information.

Liability Management Actions. During 2021, we completed debt tenders to repurchase a total of $32.6 billion of debt, comprising $7.3 billion in the second quarter of 2021 and $25.3 billion in the fourth quarter of 2021. The total after-tax loss on these actions was $6.1 billion ($6.5 billion pre-tax), comprising an after-tax loss of $1.1 billion ($1.4 billion pre-tax) in the second quarter of 2021 and an after-tax loss of $5.0 billion ($5.1 billion pre-tax) in the fourth quarter of 2021. The majority of the loss relates to the present value of accelerating future interest payments associated with the debt. As a result of these actions, we recognizedexpect lower interest expense going forward.

Factoring. Effective April 1, 2021, we discontinued the majority of our factoring programs and in the fourth quarter of 2021, we subsequently discontinued our remaining unconsolidated receivables facility. For the nine months ended December 31, 2021, the adverse impact to GE businesses' cash flows from operating activities (CFOA) was $5.1 billion, including $1.6 billion related to the unconsolidated receivables facility in the fourth quarter, which primarily represents the cash that our industrial businesses would have otherwise collected in the period had customer receivables not been previously sold and is excluded from free cash flows*. The adverse CFOA impact associated with activity in factoring programs that have now been discontinued was $5.8 billion for the year ended December 31, 2021.

Reverse Stock Split. In the second quarter of 2021, we announced that we would proceed with the 1-for-8 reverse stock split, as approved by shareholders, and filed an amendment to our certificate of incorporation to effectuate the reverse stock split after the close of trading on July 30, 2021. GE common stock began trading on a pre-tax increasesplit-adjusted basis on August 2, 2021. Our shares of outstanding common stock and earnings per share calculation have been retroactively restated for all periods presented.

BK Medical. In the fourth quarter of 2021, we acquired BK Medical, a leader in surgical ultrasound imaging and guidance, from Altaris Capital Partners for a cash purchase price of $1.5 billion.




*Non-GAAP Financial Measure
2021 FORM 10-K 7

SUMMARY OF 2021 RESULTS. Total revenues were $74.2 billion, down $1.6 billion for the year, driven primarily by decreases at Aviation, Power and Healthcare.

Continuing earnings (loss) per share was $(3.25). Excluding debt extinguishment costs, gains (losses) on equity securities, non-operating benefit costs, earnings from our run-off Insurance business and restructuring and other charges, Adjusted earnings per share* was $1.71. For the year ended December 31, 2021, profit (loss) was $(3.7) billion and profit margins were (5.0)%, down $9.7 billion, primarily due to the nonrecurrence of the prior year gain on the sale of our BioPharma business of $12.4 billion and higher debt extinguishment costs of $6.2 billion, partially offset by a higher net gain on equity securities of $3.8 billion, higher segment profit of $1.9 billion, the nonrecurrence of goodwill impairments of $0.9 billion, a decrease in non-operating benefit costs of $0.6 billion, a decrease in Adjusted corporate operating costs* of $0.4 billion, higher profit on our run-off Insurance business of $0.4 billion, the nonrecurrence of Steam asset impairments in the fourth quarterprior year of 2019. See Note 13 to the consolidated financial statements for further information.

We performed this year’s premium deficiency testing in the aggregate across our run-off insurance portfolio in the third quarter of 2019. As a result of our testing, we identified a premium deficiency resulting in a $1.0$0.4 billion, pre-tax ($0.8 billion after-tax) charge to earnings. See the Other Items - Insurance section within MD&A and Note 12 to the consolidated financial statements for further information.

In the third quarter of 2019, we completed a tender offer to purchase $4.8 billion of GE senior unsecured debt. The total cash consideration paid for these purchases was $5.0 billion, resulting in a pre-tax loss of $0.3 billion (including fees and other costs associated with the tender). See Note 11 to the consolidated financial statements for further information.

In September 2019, we sold a total of 144.1 million shares in Baker Hughes for $3.0 billion in cash (net of certain deal related costs) which reduced our ownership interest from 50.2% to 36.8%. As a result, we have deconsolidated our Baker Hughes segment and reclassified its results to discontinued operations for all periods presented, and recorded a loss of $8.7 billion ($8.2 billion after-tax) in discontinued operations. See Notes 2 and 3 to the consolidated financial statements for further information.

In the second and third quarters of 2019, we recognized non-cash pre-tax impairment charges of $0.7 billion and $0.7 billion related to goodwill at our Grid Solutions equipment and services reporting unit and at our Hydro reporting unit, respectively, both within our Renewable Energy segment. These charges were recorded within earnings from continuing operations at Corporate. See Note 8 to the consolidated financial statements for further information.


GE2019 FORM 10-K 4

MD&ACONSOLIDATED RESULTS

In February 2019, we completed the spin-off and subsequent merger of our Transportation segment with Wabtec Corporation, a U.S. rail equipment manufacturer. As a result, we reclassified our Transportation segment to discontinued operations in the first quarter of 2019, for all periods presented, and recorded a gain of $3.5 billion ($2.5 billion after-tax) in discontinued operations. Total proceeds from the sale of the business, including the sale of Wabtec common stock during 2019 were $6.2 billion. See Notes 2 and 3 to the consolidated financial statements for further information.

Also in February 2019, we announced an agreement to sell our BioPharma business within our Healthcare segment to Danaher Corporation for total consideration of approximately $21.4 billion subject to certain adjustments. Correspondingly, we classified BioPharma as a business held for sale. We expect to complete the sale in the first quarter of 2020, subject to regulatory approval, providing us flexibility and optionality with respect to our remaining Healthcare businesses. See Note 2 to the consolidated financial statements for further information.

SUMMARY OF 2019 RESULTS. Consolidated revenues were $95.2 billion, down $1.8 billion (2%) for the year primarily driven by decreased Corporate revenues of $1.0 billion, largely attributable to the sale of our Current business in November 2018 and decreased GE Capital revenues of $0.8 billion. The overall foreign currency impact on consolidated revenues was a decrease of $1.4 billion. Industrial segment organic revenues* increased $4.6 billion (5.5%) driven by our Aviation, Renewable Energy and Healthcare segments, partially offset by our Power segment.

Continuing earnings per share was $(0.01). Excluding non-operating benefit costs, gains (losses) on business dispositions, restructuring and other charges, goodwill impairments, unrealized gains (losses) on investments, BioPharma deal taxes, debt extinguishment costs, U.S. tax reform enactment and an insurance premium deficiency test charge, Adjusted earnings per share* was $0.65.

For the year ended December 31, 2019, GE Industrial profit was $1.8 billion and profit margins were 2.1%, up $22.4 billion, driven by decreased non-cash goodwill impairment charges of $20.6 billion, decreased restructuring and other costs of $1.5 billion and decreasedlower interest and other financial charges of $0.3$0.2 billion, partially offset by increased non-operating benefit costsand the nonrecurrence of $0.1the legal reserves associated with the SEC investigation in the prior year of $0.2 billion. Industrial segment profit increased $0.8 billion (8%) primarily due to higher results within our Power, Healthcare and Aviation segments, partially offset by the performance of our Renewable Energy segment. Industrial segmentAdjusted organic profit* increased $1.0$2.7 billion, (11%).driven primarily by increases at Aviation, Power and Healthcare. Additionally, we continue to experience inflation pressure in our supply chain as well as delays in sourcing key materials needed for our products. The most significant impact to date has been at our Healthcare segment, which has delayed our ability to convert remaining performance obligation (RPO) to revenue. While we are taking actions to limit this pressure, we may experience a greater impact on our longer cycle businesses in future periods.

GE cashCash flows from operating activities (CFOA) from continuing operations was $4.6were $0.9 billion and $0.7$1.0 billion for the years ended December 31, 20192021 and 2018,2020, respectively. GE CFOA increaseddecreased primarily due to no GE Pension Plan contributionsan increase in 2019 compared to $6.0 billioncash collateral paid net of settlements on derivative contracts and an increase in 2018 and lower net disbursements for equipment project costs, partially offset by higher cash used for working capital, compared to 2018.partially offset by lower GE IndustrialPension Plan contributions (which are excluded from free cash flows (FCF)*) and an increase in net income (after adjusting for the gain on the sale of BioPharma, non-cash gains/losses related to our interest in Baker Hughes, non-operating benefit costs and non-operating debt extinguishment costs). FCF* were $2.3$1.9 billion and $4.3$0.6 billion for the years ended December 31, 20192021 and 2018,2020, respectively. The decrease wasFCF* increased primarily due to higheran increase in net income (after adjusting for the gain on the sale of BioPharma, non-cash gains/losses related to our interest in Baker Hughes, non-operating benefit costs and non-operating debt extinguishment costs) and an increase in cash used forfrom working capital compared(after adjusting for the impact from discontinued factoring programs and eliminations related to 2018,our receivables factoring and supply chain finance programs), partially offset by loweran increase in cash collateral paid net disbursements for equipment project costs comparedof settlements on derivative contracts. We discontinued the majority of our factoring programs in 2021. In the second, third and fourth quarters of 2021, the adverse impact to 2018.CFOA was $5.1 billion, which primarily represents the cash that our industrial businesses would have otherwise collected in the period had customer receivables not been previously sold and is excluded from FCF*. See the Capital Resources and Liquidity - Statement of Cash Flows section for further information.

Orders are contractual commitments with customers to provide specified goods or services for an agreed upon price. BacklogRPO is unfilled customer orders for products and product services (expected life of contract sales for product services).
(In billions)2019
2018
2017
    
Equipment$79.0
$77.1
$75.1
Services325.6
273.5
256.8
Total backlog$404.6
$350.6
$331.9
Equipment$45.0
$49.3
$48.8
Services45.3
45.5
46.5
Total orders$90.3
$94.8
$95.3

As of December 31, 2019, backlog increased $53.9 billion (15%) from the prior year due to an increase in services backlog of $48.4 billion at Aviation and $1.9 billion at Renewable Energy and an increase in equipment backlog of $1.9 billion at Renewable Energy.
For the year ended December 31, 2019, orders decreased $4.5 billion (5%) on a reported basis and increased $0.6 billion (1%) organically driven by an increase in services orders of $1.5 billion primarily at Aviation, partially offset by Renewable Energy, and a decrease in equipment orders of $0.9 billion, primarily at Power and Aviation, partially offset by Renewable Energy.
As of December 31, 2018, backlog increased $18.8 billion (6%), primarily due to an increase in services backlog of $16.7 billion primarily at Aviation and an increase in equipment backlog of $2.1 billion, also primarily at Aviation.
For the year ended December 31, 2018, orders decreased $0.5 billion (1%) on a reported basis and increased $2.9 billion (3%) organically driven by an increase in equipment orders of $2.5 billion, primarily at Aviation, partially offset by Power and Renewable Energy, and an increase in services orders of $0.5 billion, primarily at Aviation and Renewable Energy, partially offset by Power.





*Non-GAAP Financial Measure

GE2019 FORM 10-K 5
MD&ACONSOLIDATED RESULTS

Remaining performance obligation (RPO), a defined term under GAAP, is backlog excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty, even ifpenalty. In the likelihoodsecond quarter of cancellation is remote based on historical experience. We plan2021, we voluntarily replaced our quarterly disclosures of backlog with RPO as a key metric, one commonly used across our industries, in order to continuesimplify our reporting backlog as we believe that it is a useful metric for investors, given its relevance to total orders.and align with our peers. See Note 26 to the consolidated financial statements23 for further information.
RPO202120202019
Equipment$45,065 $45,991 $48,487 
Services194,755 184,608 196,947 
Total RPO(a)$239,820 $230,600 $245,434 
December 31, 2019 (In billions)
Equipment
Services
Total
    
Backlog$79.0
$325.6
$404.6
Adjustments(30.5)(128.7)(159.1)
Remaining performance obligation$48.5
$196.9
$245.4

Adjustments to reported backlog of $159.1 billion(a) RPO as of December 31, 2021 and December 31, 2020 excludes the BioPharma business due to its disposition in the first quarter of 2020. RPO as of December 31, 2019 included $1,227 million related to BioPharma.

As of December 31, 2021 are largely driven by adjustments of $149.5, RPO increased $9.2 billion in our(4%) from December 31, 2020, primarily at Aviation, segment: (1) backlog includes engine contracts for which we have received purchase orders that are cancelable. We have included these in backlog as our historical experience has shown no net cancellations, as any canceled engines are typically moved by the airframer to other program customers; (2) our services backlog includes contracts that are cancelable without substantive penalty, primarily time and materials contracts; (3) backlog includesfrom engines contracted under long-term service agreements even if the enginesthat have not yetnow been put into service. These adjustmentsservice; at Healthcare, from new contracts and renewals with large customers as well as supply chain challenges in converting RPO to reported backlog are expectedrevenue; and at Renewable Energy, primarily at Offshore Wind; partially offset by a decrease at Power from sales outpacing new orders in Gas Power and the continued wind down of the Steam Power new build coal business.

As of December 31, 2020, RPO decreased $14.8 billion (6%) from December 31, 2019 primarily driven by Aviation due to be satisfied beyond one year.a reduction in Commercial Services. The reduction in Commercial Services reflects lower anticipated engine utilization, the cancellation of equipment unit orders, customer fleet restructuring and contract modifications. Power decreased due to sales outpacing new orders; Healthcare decreased with the disposition of the BioPharma business of $1.2 billion; and Renewable Energy increased due to new orders outpacing sales.

REVENUES202120202019
Equipment revenues$34,200 $37,584 $42,811 
Services revenues36,890 35,385 44,608 
Insurance revenues3,106 2,865 2,802 
Total revenues$74,196 $75,833 $90,221 




*Non-GAAP Financial Measure
2021 FORM 10-K 8
(In billions)2019
2018
2017
    
Consolidated revenues$95.2
$97.0
$99.3
    
Equipment42.9
42.4
48.0
Services43.9
44.4
41.7
Industrial segment revenues$86.8
$86.8
$89.8
Corporate items and Industrial eliminations0.9
2.3
2.5
GE Industrial revenues$87.7
$89.0
$92.2
GE Capital revenues$8.7
$9.6
$9.1


For the year ended December 31, 2019, c2021onsolidated, total revenues decreased $1.8$1.6 billion (2%). Equipment revenues decreased primarily at Power, due to decreased Gas Power equipment revenues on lower turnkey sales and Steam Power equipment on the exit of new build coal; at Aviation, due to fewer commercial install and spare engine unit shipments; and at Healthcare, due to the disposition of the BioPharma business; partially offset by an increase at Renewable Energy driven by decreased Corporatehigher revenue at Offshore Wind. Services revenues of $1.0 billion, largely attributableincreased primarily at Power, due to the sale of our Current businessan increase in November 2018,Gas Power and decreased GE Capital revenues of $0.8 billion. The overall foreign currency impact on consolidated revenues wasSteam Power services revenues; at Healthcare, due to increased volume in Imaging and Ultrasound and a return to pre-pandemic volume in Pharmaceutical Diagnostics; and at Aviation, primarily due to increased shop visit volume; partially offset by a decrease of $1.4 billion.
Industrial segment revenues remained flat as a decrease at Power was offset by increases at Aviation, Renewable Energy, and Healthcare. This was driven byprimarily due to lower repower unit deliveries at Onshore Wind. Insurance revenues increased $0.2 billion (8)%. The decrease in revenues included the net effects of acquisitions of $0.1 billion, the net effects of dispositions of $3.3$1.5 billion, primarily attributable to the sales of Industrial Solutions, Value-Based Care and Distributed Power in 2018 and the effects of a stronger U.S. dollar of $1.4 billion, partially offset by the net effects of acquisitions of $0.1 billion. Industrial segment organic revenues* (excluding$1.0 billion. Excluding Insurance revenues and the effects of acquisitions, dispositions and foreign currency) increased $4.6currency, organic revenues* decreased $1.5 billion (5.5%(2%).
GE Capital, with equipment revenues decreased $0.8down $3.0 billion (8%), primarily due to volume declines and lower gains,services revenues up $1.5 billion (4%). Organic revenues* decreased at Aviation, Power and Renewable Energy, partially offset by lower impairments.an increase at Healthcare.

For the year ended December 31, 2018, c2020, onsolidatedtotal revenues decreased $2.3$14.4 billion (2%(16%),. The decrease in services revenues was primarily at Aviation, driven by lower commercial spare part shipments, decreased industrial segmentshop visits and the cumulative impact of changes in billing and cost assumptions in our long-term service agreements; and at Power, due to declines in transactional part sales and upgrades at Gas Power. The decrease in equipment revenues was primarily at Aviation, due to fewer commercial install and spare engine unit shipments; and at Healthcare, due to the disposition of $3.0 billion,the BioPharma business; partially offset by increases at Renewable Energy, primarily from Onshore Wind with more wind turbine shipments than in the prior year, and Offshore Wind; and at Gas Power, due to an increase in Heavy-Duty gas turbine unit shipments. Insurance revenues increased GE Capital$0.1 billion (2%). The decrease in revenues included the net effects of $0.5 billion. The overall foreign currency impact on consolidated revenues was $0.5 billion.
Industrial segment revenues decreased $3.0acquisitions of $0.1 billion, (3%) as a decrease at Power was partially offset by increases at Healthcare and Aviation. This decrease was driven in part by the net effects of dispositions of $3.5$3.6 billion, partially offset by and the effects of a weaker U.S. dollar of $0.5$0.3 billion. Industrial segment organic revenues* remained flat.
GE CapitalExcluding Insurance revenues increased $0.5 billion (5%) primarily due to lower impairments and volume growth, partially offset by lower gains.
(In billions; per-share amounts in dollars and diluted)2019
2018
2017
    
Continuing earnings (loss) attributable to GE common shareholders$—
$(21.4)$(8.7)
Continuing earnings (loss) per share$(0.01)$(2.47)$(1.00)

For the year ended December 31, 2019, consolidated continuing losses decreased $21.4 billion, due to decreased GE goodwill impairment charges of $20.6 billion, increased GE Industrial segment profit of $0.8 billion, decreased corporate items and eliminations of $0.6 billion and decreased GE interest and other financial charges of $0.3 billion, partially offset by increased provision for GE Industrial income taxes of $0.8 billion and increased GE non-operating benefit costs of $0.1 billion.
GE Industrial segment profit increased $0.8 billion (8%) with higher profit at Power, Aviation and Healthcare partially offset by lower profit at Renewable Energy. Industrial segment profit was also driven in part by the net effects of dispositions of $0.3 billion, primarily associated with the sales of Industrial Solutions, Value-Based Care and Distributed Power in 2018, offset by the effects of a weaker U.S. dollar of $0.1 billion. Excluding the effects of acquisitions, dispositions and foreign currency, translation, industrial segment organic profit* increased $1.0revenues* decreased $10.7 billion (11%(13%), with a decrease in services revenues of $8.8 billion (20%) and a decrease in equipment revenues of $1.9 billion (5%). Corporate itemsOrganic revenues* decreased at Aviation and eliminationsPower, partially offset by increases at Healthcare and Renewable Energy.

EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE
(Per-share in dollars and diluted)202120202019
Continuing earnings (loss) attributable to GE common shareholders$(3,562)$6,141 $(1,073)
Continuing earnings (loss) per share$(3.25)$5.46 $(0.98)

For the year ended December 31, 2021, continuing earnings decreased $0.6$9.7 billion primarily attributabledue to decreased restructuringthe nonrecurrence of the prior year gain on the sale of our BioPharma business of $12.4 billion and otherhigher debt extinguishment costs of $1.6 billion, increased net unrealized gains on investments of $0.8$6.2 billion, partially offset by decreaseda higher net gains from disposed or held for sale businessesgain on equity securities of $1.4$3.8 billion, and increased adjusted Corporatehigher segment profit of $1.9 billion, the nonrecurrence of goodwill impairments of $0.9 billion, a decrease in non-operating benefit costs of $0.6 billion, a decrease in Adjusted corporate operating costs* of $0.4 billion, higher profit at our run-off Insurance business of $0.4 billion, the nonrecurrence of Steam asset impairments in the prior year of $0.4 billion, lower interest and other financial charges of $0.2 billion and the nonrecurrence of the legal reserves associated with the SEC investigation in the prior year of $0.2 billion.

*Non-GAAP Financial Measure

GE2019 FORM 10-K 6

MD&ACONSOLIDATED RESULTS

GE Capital continuing losses were flat Adjusted earnings* was $1.9 billion, an increase of $2.0 billion. Profit margin was (5.0)%, a decrease from 7.9%, primarily due to the same net decreases as described above. Adjusted profit* was $4.6 billion, an increase of $2.7 billion organically*, due to increases at Aviation, Power and Healthcare. Adjusted profit margin* was 6.5%, an increase of 400 basis points organically*.

For the year ended December 31, 2020, continuing earnings increased $7.2 billion, driven primarily by the gain on the sale of our BioPharma business of $12.4 billion, the nonrecurrence of a $1.0 billion pre-tax charge identified through the completion of our 2019 annual insurance premium deficiency review, lower gains, lower tax benefits and volume declines, offset by lower impairments, lower excess interest costs and tax law changes. Gains were $0.7 billion and $0.8 billion in 2019 and 2018, respectively, which primarily related to sales of GE Capital Aviation Services (GECAS) aircraft and engines resulting in gains of $0.4 billion and $0.3 billion in 2019 and 2018, respectively, as well as the sale of equity method investments resulting in gains of $0.2 billion in 2019 at Energy Financial Services (EFS) and the sale of EFS’ debt origination business and equity investments resulting in gains of $0.4 billion in 2018.

For the year ended December 31, 2018, consolidated continuing losses increased $12.7 billion driven by increased GE goodwill impairment charges of $21.0 billion, decreased GE Industrial segment profit of $1.8 billion and increased GE non-operating benefit costs of $0.3 billion, partially offset by decreased GE Capital losses of $6.3 billion, decreased provision for GE Industrial income taxes of $3.0$1.1 billion, decreased corporate items and eliminations of $1.0 billion and decreased GElower interest and other financial charges of $0.1 billion.
GE Industrial segment profit$0.8 billion, decreased $1.8goodwill impairments of $0.6 billion (16%) with decreases at Power and Renewable Energy,decreased non-operating benefit costs of $0.4 billion; partially offset by higher earnings at Aviation and Healthcare. Industrialdecreased segment profit was also drivenof $6.2 billion, an increase of $2.8 billion in part bylosses on our investment in Baker Hughes and the net effects of dispositions of $0.4 billion, primarilylegal reserves associated with the absenceSEC investigation of Water following its sale in the third quarter$0.2 billion. Adjusted earnings* was $(0.1) billion, a decrease of 2017 and Industrial Solutions following its sale in the second quarter$4.3 billion. Profit margin was 7.9%, an increase of 2018. Excluding the effects of acquisitions, dispositions and foreign currency translation, industrial segment organic profit* decreased $1.4 billion. Corporate items and eliminations decreased $1.0 billion primarily attributable to higher net gains from disposed or held for sale businesses of $0.4 billion, decreased adjusted Corporate operating costs* of $0.4 billion and decreased restructuring and other costs of $0.1 billion.
GE Capital continuing losses decreased $6.3 billion (93%)800 basis points, primarily due to the nonrecurrencesame net increases as described above. Adjusted profit* was $2.2 billion, a decrease of the 2017 charges associated with the GE Capital insurance premium deficiency review and EFS strategic actions, partially offset by the nonrecurrence of 2017 tax benefits.

GEOGRAPHIC INFORMATION.Our global activities span all geographic regions and primarily encompass manufacturing for local and export markets, import and sale of products produced in other regions, leasing of aircraft, sourcing for our plants domiciled in other global regions and provisioning of financial services within these regional economies. Thus, when countries or regions experience currency and/or economic stress, we often have increased exposure to certain risks, but also often have new opportunities that include, among other things, expansion of industrial activities through purchases of companies or assets at reduced prices and lower U.S. debt financing costs.

Financial results of our non-U.S. activities reported in U.S. dollars are affected by currency exchange. We use a number of techniques to manage the effects of currency exchange, including selective borrowings in local currencies and selective hedging of significant cross-currency transactions. Such principal currencies are the euro, the pound sterling, the Brazilian real and the Chinese renminbi.

Revenues are classified according to the region to which products and services are sold. For purposes of this analysis, the U.S. is presented separately from the remainder of the Americas.
    V%
(Dollars in billions)2019
2018
2017
2019-2018 2018-2017
       
U.S.$39.4
$40.0
$41.5
(2) % (4) %
Non-U.S.      
Europe19.1
19.8
18.7
   
Asia20.2
19.3
18.3
   
Americas6.3
7.9
7.8
   
Middle East and Africa10.3
10.1
13.0
   
Total Non-U.S.$55.8
$57.1
$57.8
(2) % (1) %
Total geographic revenues$95.2
$97.0
$99.3
(2) % (2) %
Non-U.S. revenues as a % of consolidated revenues59%59%58%   

The decrease in non-U.S. revenues in 2019 was$5.1 billion organically*, primarily due to a decrease of 20% in Americas,at Aviation, partially offset by an increase of 4% in Asia.

The decrease in non-U.S. revenues in 2018at Healthcare. Adjusted profit margin* was primarily due to3.1%, a decrease of 22% in Middle East and Africa, partially offset by increases of 6% in Europe and 5% in Asia.

The effects of currency fluctuations on reported results were as follows:
Decreased revenues by $1.4 billion in 2019, primarily driven by the euro ($0.7 billion), the Chinese renminbi ($0.2 billion), the Brazilian real ($0.1 billion), the pound sterling ($0.1 billion), and the Australian dollar ($0.1 billion)570 basis points organically*.
Increased revenues by $0.5 billion in 2018, primarily driven by the euro ($0.3 billion).





*Non-GAAP Financial Measure

GE2019 FORM 10-K 7
MD&ACONSOLIDATED RESULTS

AVIATION AND GECAS 737 MAX. Aviation develops, produces, and sells LEAP aircraft engines through CFM International (CFM), a company jointly owned by GE and Safran Aircraft Engines, a subsidiary of the Safran Group of France. The LEAP-1B engine is the exclusive engine for the Boeing 737 MAX. In March 2019, global regulatory authorities ordered a temporary fleet grounding of the Boeing 737 MAX. During the second quarter of 2019, Boeing announced a temporary reduction in the 737 MAX production rate, and CFM reduced its production rate for the LEAP-1B to meet Boeing's revised aircraft build rate. In December 2019, Boeing announced that it would temporarily suspend production of the 737 MAX beginning in January 2020. CFM is working closely with Boeing to align production rates for 2020 and ensure a successful reentry into service, with a strong commitment to safety while navigating near-term industry disruption. As a result of the 737 MAX grounding, GE CFOA was adversely affected by approximately $1.4 billion for the year ended December 31, 2019, which primarily represents the growth in receivables, net of progress collections, and lower collections on new purchase orders. Within Aviation, this effect was more than offset by: higher commercial aftermarket earnings and higher long-term service agreement billings of $0.6 billion; cash receipts from contract modifications of $0.3 billion; a new spare parts distribution deal for a legacy engine program of $0.3 billion; and lower customer allowance payments of $0.4 billion. Other Aviation working capital cash flows, excluding the impact of the 737 MAX grounding, largely offset. Any impact to GE CFOA in 2020 is dependent on the timing of the 737 MAX return to service and engine production rates.

At December 31, 2019, GECAS owned 29 737 MAX aircraft, 26 of which are contracted for lease to airlines that remain obligated to make contractual rental payments. In addition, GECAS has made pre-delivery payments to Boeing related to 144 of these aircraft on order and has made financing commitments to acquire a further 18 aircraft under purchase and leaseback contracts with airlines.

As of December 31, 2019, we have approximately $2.5 billion of net assets ($4.8 billion of assets and $2.3 billion of liabilities) related to the 737 MAX program that primarily comprise accounts receivable, pre-delivery payments and owned aircraft subject to lease offset by progress collections. No impairment charges were incurred related to the 737 MAX aircraft and related balances in 2019 as we continue to believe these assets are fully recoverable. We continue to monitor these developments with our airline customers, lessees and Boeing.

LEAP continues to be a strong engine program for us, and we delivered 1,736 LEAP engines for Boeing and Airbus platforms in the year.

SEGMENT OPERATIONS. Segment revenues include sales of productsequipment and services by the segment. Industrial segmentour segments. Segment profit is determined based on performance measures used by our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer (CEO), to assess the performance of each business in a given period. In connection with that assessment, the CEO may exclude matters, such as charges for impairments, significant, higher-cost restructuring programs, manufacturing footprint rationalization and other similar expenses, acquisition costs and other related charges, certain gains and losses from acquisitions or dispositions, and certain litigation settlements. See the GE Corporate Items and Eliminations section within MD&A for additionalfurther information about costs excluded from segment profit.

Segment profit excludes results reported as discontinued operations and 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.


*Non-GAAP Financial Measure
2021 FORM 10-K 9

Interest and other financial charges, income taxes and non-operating benefit costs are excluded in determining segment profit for the industrial segments. Interest and other financial charges, income taxes, non-operating benefit costs and GE Capital preferred stock dividends are included in determining segment profit (which we sometimes refer to as net earnings) for the Capital segment.profit. Other income is included in segment profitprofit. Interest and other financial charges and income taxes for the industrial segments.EFS are included within Corporate costs.

Certain corporate costs, such asincluding 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’susage or their relative net cost of operations.

SUMMARY OF REPORTABLE SEGMENTS202120202019
Aviation$21,310 $22,042 $32,875 
Healthcare17,725 18,009 19,942 
Renewable Energy15,697 15,666 15,337 
Power16,903 17,589 18,625 
Total segment revenues71,635 73,306 86,778 
Corporate2,561 2,528 3,442 
Total revenues$74,196 $75,833 $90,221 
Aviation$2,882 $1,229 $6,812 
Healthcare2,966 3,060 3,737 
Renewable Energy(795)(715)(791)
Power726 274 291 
Total segment profit (loss)5,778 3,848 10,049 
Corporate(a)892 8,061 (2,537)
Goodwill impairments— (877)(1,486)
Interest and other financial charges(1,813)(2,018)(2,826)
Debt extinguishment costs(6,524)(301)(256)
Non-operating benefit costs(1,782)(2,430)(2,839)
Benefit (provision) for income taxes124 333 (718)
Preferred stock dividends(237)(474)(460)
Earnings (loss) from continuing operations attributable to GE common shareholders(3,562)6,141 (1,073)
Earnings (loss) from discontinued operations attributable to GE common shareholders(3,195)(911)(4,366)
Net earnings (loss) attributable to GE common shareholders$(6,757)$5,230 $(5,439)
(a) Includes interest and other financial charges of $63 million, $50 million and $101 million and benefit for income taxes of $162 million, $154 million and $166 million related to EFS within Corporate for the years ended December 31, 2021, 2020, and 2019, respectively.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for discussions of segment results for the years ended December 31, 2020 versus 2019.

AVIATION. Aviation designs and produces commercial and military aircraft engines, integrated engine components, electric power and mechanical aircraft systems. We also provide aftermarket services to support our products.

Commercial Engines and Services – manufactures jet engines for commercial airframes. Our commercial engines power aircraft in all categories: regional, narrowbody and widebody. This includes engines and components for business aviation and aeroderivative applications as well. We also produce and market engines and aftermarket services through joint ventures with Safran Group of France (Safran) and Raytheon Technologies Corporation via their Pratt & Whitney segment. Commercial provides maintenance, component repair and overhaul services (MRO), including sales of replacement parts.
Military – manufactures jet engines for military airframes. Our military engines power a wide variety of military aircraft including fighters, bombers, tankers, helicopters and surveillance aircraft, as well as marine applications. We provide maintenance, component repair and overhaul services, including sales of replacement parts.
Systems & Other – provides avionics systems, aviation electric power systems, turboprop engines, engine gear and transmission components and services for commercial and military segments. Additionally, we provide a wide variety of products and services including additive machines, additive materials (including metal powders), and additive engineering services.

Competition & Regulation. The global businesses for aircraft jet engines, maintenance, component repair and overhaul services (including parts sales) are highly competitive. Both domestic and international markets are important to the growth and success of the business. Product development cycles are long and product quality and efficiency are critical to success. Research and development expenditures are important in this business, as are focused intellectual property strategies and protection of key aircraft engine design, manufacture, repair and product upgrade technologies. In addition, we are subject to market and regulatory dynamics related to decarbonization which will require a combination of technological innovation in the fuel efficiency of engines, expanding the use of sustainable aviation fuels and the development of electric flight and hydrogen-based aviation technologies. Aircraft engine and systems orders tend to follow civil air travel demand and military procurement cycles.

Our products, services and activities are subject to a number of global regulators such as the U.S. Federal Aviation Administration (FAA), European Union Aviation Safety Agency (EASA), Civil Aviation Administration of China (CAAC) and other regulatory bodies.
GE20192021 FORM 10-K 810

MD&ASEGMENT OPERATIONS

Significant Trends & Developments. The global COVID-19 pandemic continues to have a material adverse effect on the global airline industry, although Aviation’s results in 2021 reflect improvement in market fundamentals. A key underlying driver of Aviation’s commercial engine and services business is global commercial air traffic, which in turn is driven by economic activity and consumer and business propensity to travel. Since the beginning of the pandemic in the first quarter of 2020, we have seen varied levels of recovery in global markets. Government travel restrictions, public health advisories, individuals' propensity to travel and continued cases of the virus have all impacted the level of air travel. Aviation regularly tracks global departures, which for 2021, were approximately 30% below 2019. Global departures improved during 2021, up approximately 20% compared to 2020, but levels of recovery varied across regions due in large part to the emergence of COVID-19 virus variants. Aviation remains confident in the recovery, while actively monitoring the impact of travel restrictions, quarantine requirements, and economic and industry forecasts. We are in frequent dialogue with our airline and airframe customers about the outlook for commercial air travel, new aircraft production, fleet retirements, and after-market services, including shop visit and spare parts demand. Given current trends, we expect domestic travel routes primarily served by narrowbody aircraft to recover before long-haul, international travel routes, which are primarily served by widebody aircraft. Consistent with industry projections, Aviation continues to estimate the duration of the market recovery to be prolonged over the next couple of years, dependent on containing the spread of the virus, effective inoculation programs and government collaboration to encourage travel, particularly around reducing quarantine requirements.

Aviation has taken several actions to respond to the current adverse environment and is actively monitoring the pace of demand recovery to ensure the business is appropriately sized for the future. In addition, we continue to partner with our airline and leasing customers and collaborate with our airframe partners on production rates for 2022 and beyond.

As it relates to the military environment, Aviation continues to forecast strong military demand creating future growth opportunities for our Military business unit as the U.S. Department of Defense and foreign governments have continued flight operations, and have allocated budgets to upgrade and modernize their existing fleets. During 2021, Aviation experienced supply chain challenges impacting the delivery of military engines, which the business is actively addressing.

Total engineering, comprising company, customer and partner-funded and nonrecurring engineering costs, decreased compared to prior year in line with the changes in the commercial environment and due to the timing of planned program expenditures. Aviation continues to be committed to investment in developing and maturing technologies that enable a more sustainable future of flight. In June 2021, Aviation and Safran announced Revolutionary Innovation for Sustainable Engines (RISE), a technology development program targeting more than 20% lower fuel consumption and CO2 emissions compared to today’s engines. In September 2021, Aviation’s Catalyst engine, the first clean-sheet turboprop design entering the business and general aviation market in 50 years, completed its first flight.

Aviation is taking actions to protect its ability to serve its customers now and as the global airline industry recovers. Aviation’s deep history of innovation and technology leadership, commercial engine installed base of approximately 39,400 units, with approximately 10,800 units under long-term service agreements, and military engine installed base of approximately 26,200 units represents strong long-term fundamentals. Aviation expects to emerge from the COVID-19 pandemic well-positioned to drive long-term profitable growth and cash generation over time.

Sales in units, except where noted202120202019
Commercial Engines(a)1,487 1,720 3,048 
LEAP Engines(b)845 815 1,736 
Military Engines553 683 717 
Spare Parts Rate(c)$17.8 $18.0 $31.0 
(a) Commercial Engines now includes Business Aviation and Aeroderivative units for all periods presented.
(b) LEAP engines are subsets of commercial engines.
(c) Commercial externally shipped spare parts and spare parts used in time and material shop visits in millions of dollars per day.

RPODecember 31, 2021December 31, 2020December 31, 2019
Equipment$11,139 $10,597 $11,234 
Services114,133 103,500 112,466 
Total RPO$125,272 $114,097 $123,700 

SEGMENT REVENUES AND PROFIT202120202019
Commercial Engines & Services$14,360 $14,479 $24,769 
Military4,136 4,572 4,389 
Systems & Other2,814 2,991 3,718 
Total segment revenues$21,310 $22,042 $32,875 
Equipment$7,531 $8,582 $12,737 
Services13,780 13,460 20,138 
Total segment revenues$21,310 $22,042 $32,875 
Segment profit$2,882 $1,229 $6,812 
Segment profit margin13.5 %5.6 %20.7 %
2021 FORM 10-K 11

SUMMARY OF REPORTABLE SEGMENTS (In millions)
2019
2018
2017
    
Power$18,625
$22,150
$29,426
Renewable Energy15,337
14,288
14,321
Aviation32,875
30,566
27,013
Healthcare19,942
19,784
19,017
Total industrial segment revenues86,778
86,789
89,776
Capital8,741
9,551
9,070
Total segment revenues95,519
96,339
98,847
Corporate items and eliminations(305)673
433
Consolidated revenues$95,214
$97,012
$99,279
    
Power$386
$(808)$1,894
Renewable Energy(666)292
728
Aviation6,820
6,466
5,370
Healthcare3,896
3,698
3,488
Total industrial segment profit10,436
9,647
11,479
Capital(530)(489)(6,765)
Total segment profit9,906
9,158
4,714
Corporate items and eliminations(2,212)(2,837)(3,798)
GE goodwill impairments(1,486)(22,136)(1,165)
GE interest and other financial charges(2,115)(2,415)(2,538)
GE non-operating benefit costs(2,828)(2,740)(2,409)
GE benefit (provision) for income taxes(1,309)(467)(3,493)
Earnings (loss) from continuing operations attributable to GE common shareholders(44)(21,438)(8,689)
Earnings (loss) from discontinued operations, net of taxes(5,335)(1,363)(312)
Less net earnings (loss) attributable to noncontrolling interests, discontinued operations60
1
(81)
Earnings (loss) from discontinued operations, net of taxes and noncontrolling interests(5,395)(1,364)(231)
Consolidated net earnings (loss) attributable to GE common shareholders$(5,439)$(22,802)$(8,920)
For the year ended December 31, 2021, segment revenues were down $0.7 billion (3%) and segment profit was up $1.7 billion.

RPO as of December 31, 2021 increased $11.2 billion (10%) from December 31, 2020, due to increases in both equipment and services. Equipment increased primarily due to an increase in Military orders. Services increased primarily as a result of engines contracted under long-term service agreements that have now been put into service.
Revenues decreased $0.7 billion (3%) organically*. Commercial Engines revenues decreased, due to 233 fewer commercial install and spare engine unit shipments, including fewer engine shipments on legacy programs, partially offset by 30 more LEAP units versus the prior year. Commercial Services revenues increased, primarily due to increased shop visit volume, partially offset by lower volume on commercial spare part shipments, as prior year revenues included significant spare part shipments prior to the impact of the COVID-19 pandemic. Commercial Services revenues for the year ended December 31, 2021, included a net unfavorable change in estimated profitability of $0.3 billion for its long-term service agreements compared to a net unfavorable change of $1.1 billion for the prior year. Military revenues decreased due to lower services and 130 fewer engine shipments, partially offset by product mix.
POWERProfit increased $1.6 billion organically*, primarily due to increased shop visit volume and the receipt of a payment from a partner associated with engine program activity. Profit also increased due to lower net unfavorable changes in estimated profitability in long-term service agreements, as the prior year included charges reflecting the cumulative COVID-19 pandemic-related impacts of changes to billing and cost assumptions for certain long-term service agreements; operational cost reduction from the actions taken in 2020 and the first half of 2021; and the nonrecurrence of prior year charges related to lower commercial engine production volumes, customer credit risk and an impairment charge in a joint venture in the Systems business. These increases in profit were partially offset by an accrual for a contract in a loss position in the long-term service agreement portfolio.

HEALTHCARE. Healthcare provides essential healthcare technologies to developed and emerging markets and has expertise in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery and performance improvement solutions that are the building blocks of precision health. Products and services are sold worldwide primarily to hospitals and medical facilities.

Healthcare Systems (HCS) – develops, manufactures, markets and services a broad suite of products and solutions used in the diagnosis, treatment and monitoring of patients that is encompassed in imaging, ultrasound, life care solutions and enterprise software and solutions. Imaging includes magnetic resonance, computed tomography, molecular imaging, x-ray systems and complementary software and services, for use in general diagnostics, women’s health and image-guided therapies. Ultrasound includes high-frequency soundwave systems, and complementary software and services, for use in diagnostics tailored to a wide range of clinical settings. Life Care Solutions (LCS) includes clinical monitoring and acute care systems, and complementary software and services, for use in intensive care, anesthesia delivery, diagnostic cardiology and perinatal care. Enterprise Digital Solutions (EDS) includes enterprise digital, artificial intelligence applications, consulting and Command Center offerings designed to improve efficiency in healthcare delivery and expand global access to advanced health care.
Pharmaceutical Diagnostics (PDx) – researches, manufactures and markets innovative imaging agents used during medical scanning procedures to highlight organs, tissue and functions inside the human body, to aid physicians in the early detection, diagnosis and management of disease through advanced in-vivo diagnostics. These products include both contrast imaging and molecular imaging agents.
BioPharma – This business was sold on March 31, 2020. It delivered products, services and manufacturing solutions for drug discovery, biopharmaceutical production, and cellular and gene therapy technologies.

Competition & Services.Regulation. Healthcare competes with a variety of U.S. and non-U.S. manufacturers and services providers. Customers require products and services that allow them to provide better access to healthcare, improve the affordability of care and improve the quality of patient outcomes. Key factors affecting competition include technological innovations, productivity solutions, competitive pricing and the ability to provide lifecycle services. New technologies and solutions could make our products and services obsolete unless we continue to develop new and improved offerings. Our products are subject to regulation by numerous government agencies, as well as laws and regulations that apply to various reimbursement systems or other government funded healthcare programs.

Significant Trends & Developments. We continue to see an overall recovery in hospital spending; the expectation is that this will continue in line with the worldwide COVID-19 vaccine rollout. Both HCS and PDx demand has recovered to at or above pre-pandemic levels. Similar to many industries, we are experiencing inflation in our supply chain as well as delays in sourcing key materials needed for our products, such as electronics and resins, delaying our ability to convert RPO to revenue. We have proactively managed sourcing and logistics, material and design costs to partially mitigate supply chain impacts. In response to near-term volatility and cost pressures, we have continued to execute on structural cost reductions and cash optimization actions, in order to invest in growth and research and development.

We continue to grow and invest in precision health, with focus on creating new products and digital solutions as well as expanding uses of existing offerings that are tailored to the different needs of our global customers. We introduced the Vscan Air in over 70 countries, a cutting edge wireless pocket-sized ultrasound that is differentiated by its crystal clear image quality, whole-body scanning capabilities, and intuitive software. We continue to see the broader application of our AIR Recon DL technology, which provides best in class image quality as well as substantially reduced scan time. An example of a new product that includes AIR Recon DL is the SIGNA Hero magnetic resonance imaging system that helps accommodate more patients of all shapes and sizes, offering a 70 cm bore and detachable table for enhanced patient comfort. We introduced the Revolution APEX CT, which has a modular and scalable design to do in-room upgrades on the detector without swapping the gantry, giving customers the flexibility to right size their purchase today and be ready for the future. We remain committed to innovate and invest to create more integrated, efficient, and personalized precision healthcare.
*Non-GAAP Financial Measure
2021 FORM 10-K 12

In the fourth quarter of 2021, we acquired BK Medical, a leader in surgical ultrasound imaging and guidance, from Altaris Capital Partners for a cash purchase price of $1.5 billion.

RPODecember 31, 2021December 31, 2020December 31, 2019
Equipment$4,232 $3,465 $4,825 
Services10,375 9,458 9,249 
Total RPO(a)$14,606 $12,923 $14,073 
(a) RPO as of December 31, 2021 and December 31, 2020 excludes the BioPharma business due to its disposition in the first quarter of 2020. RPO as of December 31, 2019 included $1,227 million related to BioPharma.

SEGMENT REVENUES AND PROFIT202120202019
Healthcare Systems$15,694 $15,387 $14,648 
Pharmaceutical Diagnostics2,031 1,792 2,005 
BioPharma— 830 3,289 
Total segment revenues$17,725 $18,009 $19,942 
Equipment$9,104 $9,992 $11,585 
Services8,620 8,017 8,357 
Total segment revenues$17,725 $18,009 $19,942 
Segment profit$2,966 $3,060 $3,737 
Segment profit margin16.7 %17.0 %18.7 %

For the year ended December 31, 2021, segment revenues were down $0.3 billion (2%) and segment profit was down $0.1 billion (3%).
RPO as of December 31, 2021 increased $1.7 billion (13%) from December 31, 2020 primarily due to new service contracts and renewals with large customers and from equipment on strong orders across all regions, notably in China and the U.S., as well as supply chain challenges in converting RPO to revenues.
Revenues increased $0.2 billion (1%) organically*. Services revenues increased, driven by a return to pre-pandemic volume in PDx and the continued growth of HCS Service. Equipment revenues decreased driven by reductions in LCS for HCS products where there were more COVID-19 related product sales in 2020 as well as supply chain challenges, partially offset by increased volume in Imaging and Ultrasound.
Profit increased $0.2 billion (6%) organically*, driven by increased volume for Imaging and Ultrasound products, increases in PDx volume as well as continued cost reduction actions, partially offset by continued investment in research and development.

RENEWABLE ENERGY. We benefit from one of the broadest portfolios in the industry that uniquely positions us to lead the energy transition with products, services and integrated solutions to grow renewable energy generation, lower the cost of electricity and modernize the grid. Our portfolio of business units includes onshore and offshore wind, blade manufacturing, grid solutions, hydro, storage, hybrid renewables and digital services offerings. We have installed more than 400 gigawatts of clean renewable energy equipment and equipped more than 90 percent of transmission utilities with our grid solutions in developed and emerging markets.

Onshore Wind – delivers technology and services for the onshore wind power industry by providing a large range of turbines with smart controls that are uniquely tailored for a variety of wind environments. Wind Services assist customers in improving cost, capacity and performance of their assets over the lifetime of their fleet, utilizing digital infrastructure to monitor, predict and optimize wind farm energy performance. Our Onshore Wind business supports a turbine installed base of approximately 52,000 units, of which, approximately half are under service agreements. For reporting purposes, Onshore Wind includes the operations of our blade manufacturer, LM Wind.
Grid Solutions Equipment and Services (Grid) – enables power utilities and industries worldwide to effectively manage electricity from the point of generation to the point of consumption, helping to maximize the reliability, efficiency and resiliency of the grid. Service offerings include a comprehensive portfolio of equipment, hardware, protection and control, automation and digital services. Grid is also addressing the challenges of the energy transition by safely and reliably connecting intermittent renewable energy generation to transmission networks.
Hydro Solutions – has equipped more than 25 percent of the global hydro installed base and provides a portfolio of solutions and services for hydropower generation, including the design, management, construction, installation, maintenance and operation of both large hydropower plants and small hydropower solutions, as well as offering a comprehensive asset management program to hydropower plant operators.
Offshore Wind – leads the industry in offshore wind power technologies and offshore wind farm development with the Haliade-X, the industry's first 14MW offshore wind turbine.
Hybrid Solutions – provides reliable, affordable and dispatchable integration of renewable energies that drive vital stability to the grid and includes unique applications to integrate storage and renewable energy generation sources, such as wind, hydropower and solar.



*Non-GAAP Financial Measure
2021 FORM 10-K 13

Competition & Regulation. While many factors, including government incentives and specific market rules, affect how renewable energy can deliver outcomes for customers in a given region, renewable energy has become competitive with fossil fuels in terms of levelized cost of electricity. We continue to invest in generating wind turbine product improvements, including larger rotors, taller towers and higher nameplate ratings that continue to drive down the cost of onshore and offshore wind energy, to develop more efficient production processes for key components and to explore ways to further improve the efficiency and flexibility of our hydropower technology with new innovative turbine designs and digital solutions. As industry models continue to evolve, our digital strategy and investments in technical innovation will position us to add value for customers looking for clean, renewable energy.

Significant Trends & Developments. While we continue to expect long term growth in U.S onshore wind, the expiry of U.S. Production Tax Credits (PTC) in 2021 has created uncertainty resulting in project delays and deferral of customer investments. We are monitoring policy proposals where a strong and diverse interest in tax credits promoting new wind generation continues to exist. The latest Wood Mackenzie equipment and repower forecast expects U.S onshore wind to decline from 15 gigawatts of new installations in 2021 to approximately 10 gigawatts in 2022. Despite the market uncertainty, we have maintained our leading position in the U.S. The offshore wind industry continues to experience strong global market momentum and we have received customer commitments for the Haliade-X spanning across Europe, North America and Asia. Customer preference continues to shift to larger, more efficient units to drive down costs and compete with other power generation options. The Grid and Hydro business units are executing their turnaround plans that include increased project selectivity discipline, cost reduction and investment in more profitable segments. We are monitoring the impact across our industries from rising inflationary costs of transportation and commodities, broader supply chain and permitting process challenges across the onshore and offshore wind industry.

New product introductions remain important to our onshore and offshore customers who are demonstrating the willingness to adopt the new technology of larger turbines that decrease the levelized cost of energy. We have observed significant market demand for our 5-6 MW Cypress and 3-4 MW Sierra Onshore units and our 12-14 MW Haliade-X Offshore units. Our Haliade-X prototype unit is currently operating at 14MW. Preparing for large scale production, while reducing the cost of these new product platforms and blade technologies remains a key priority. At Grid Solutions, new technology such as flexible transformers and g³ switchgears are solving for a more resilient and efficient electric grid and lower greenhouse gas emissions, respectively.

Onshore and Offshore sales in units202120202019
Wind Turbines3,590 3,744 3,424 
Wind Turbine Gigawatts11.7 10.8 9.5 
Repower units561 1,022 1,057 

RPODecember 31, 2021December 31, 2020December 31, 2019
Equipment$18,639 $18,273 $17,203 
Services12,872 12,531 11,233 
Total RPO$31,511 $30,804 $28,436 

SEGMENT REVENUES AND PROFIT202120202019
Onshore Wind$11,026 $10,881 $10,421 
Grid Solutions equipment and services3,207 3,585 4,016 
Hydro, Offshore Wind and Hybrid Solutions1,464 1,200 900 
Total segment revenues$15,697 $15,666 $15,337 
Equipment$13,224 $12,859 $12,267 
Services2,473 2,807 3,069 
Total segment revenues$15,697 $15,666 $15,337 
Segment profit (loss)$(795)$(715)$(791)
Segment profit margin(5.1)%(4.6)%(5.2)%

For the year ended December 31, 2021, segment revenues were flat and segment losses were up $0.1 billion (11%).
RPO as of December 31, 2021 increased $0.7 billion (2%) from December 31, 2020 primarily driven by the Offshore Vineyard Wind (U.S) and Dogger Bank (U.K.) wind farms and from higher Onshore Wind services, partially offset by equipment sales exceeding new orders at Onshore and Grid and the impact from a stronger U.S. dollar. The decrease at Onshore Wind is largely driven by PTC uncertainty delaying investment in North America, while at Grid is primarily due to increased commercial selectivity in certain product lines.
Revenues decreased $0.4 billion (2%) organically*, primarily from lower revenue at Grid due to increased commercial selectivity and fewer wind turbine and repower deliveries at Onshore Wind, partially offset by higher revenue at Offshore Wind’s legacy EDF project.
Segment losses increased 6% organically*, primarily from lower repower volume at Onshore Wind, lower volume at Grid and lower margins on new product introductions at Onshore Wind, partially offset by the favorable impact of cost reduction actions and lower project related charges.


*Non-GAAP Financial Measure
2021 FORM 10-K 14

POWER. Power serves power generation, industrial, government and other customers worldwide with products and services related to energy production. Our products and technologies harness resources such as oil, gas, fossil, diesel nuclear and waternuclear to produce electric power and include gas and steam turbines, full balance of plant, upgrade and service solutions, as well as data-leveraging software.

In 2019, we reorganized We have organized the businesses within our Power segment into Gas Power, Steam, Power Conversion and Power Portfolio,Nuclear and we completed the reorganization of our Grid Solutions equipment and services business into our Renewable Energy segment and our Grid Solutions software and Power Digital businesses into Corporate for all periods presented. Power Portfolio's 2018 and 2017 results also include our former Industrial Solutions and Distributed Power businesses which were sold in June 2018 and November 2018, respectively.other.

Gas Power– – offers a wide spectrum of heavy-duty and aeroderivative gas turbines for utilities, independent power producers and numerous industrial applications, ranging from small, mobile power to utility scale power plants. Gas Power also delivers maintenance service and upgradeservice solutions across total plant assets and over their operational lifecycle. Our gas turbine installed base was approximately 7,700 units as of December 31, 2019.
Steam Power Portfolio – offers steama broad portfolio of technologies and services predominately for nuclear and fossil power technology for fossil and nuclear applications including boilers, generators, steam turbines and Air Quality Control Systems (AQCS)plants to help efficiently producecustomers deliver reliable power as they transition to a lower carbon future.
Power Conversion, Nuclear and provide performance over the life of a power plant. Power Portfolio alsoother - applies the science and systems of power conversion to provide motors, generators, automation and control equipment and drives for energy intensive industries such as marine, oil and gas, renewable energy, mining, rail, metals and test systems and water. Itsystems. Through joint ventures with Hitachi, it also offers advanced reactor technologiesprovides nuclear technology solutions including reactors, fuels and support services for boiling water reactors through joint ventures with Hitachiincluding reactor design, reactor fuel and Toshiba for nuclear fleets.support services.

Competition & Regulation. Worldwide competition for power generation products and services is intense. Demand for power generation is global, and as a result, is sensitive to the economic and political environments of each country in which we do business. Our products and services sold to end customers are often subject to many regulatory requirements and performance standards under different federal, state, foreign and energy industry standards. In addition, we are subject to market and other dynamics related to decarbonization, where it will remain important to lower greenhouse gas emissions for decades to come, which will likely depend in part on technologies that are not yet deployed or widely adopted today, but may become more important over time (such as hydrogen-based power generation, carbon capture and sequestration technologies or small modular or other advanced nuclear power).

Significant Trends & Developments. ThePower continues to streamline its business to better align with market demand and drive its business units with an operational rigor and discipline that is focused on its customers’ lifecycle experience. We remain focused on our underwriting discipline, commercial selectivity and risk management to ensure we are securing deals that meet our financial hurdles and we have a high confidence to deliver for our customers.

During the current period, global gas generation was down low-single-digits due to higher gas prices. However, GE gas turbine utilization continues to be resilient as megawatt hours grew high-single-digits from incremental HA gas turbine units coming online running baseload power. Looking ahead, we anticipate the power market as well as its operating environmentto continue to be challenging. Over the past several quarters, our outlook for Power was drivenimpacted by the significant overcapacity in the industry, increasedcontinued price pressure from competition on servicing the installed base, and the uncertain timing of deal closures due to financing and the complexities of working in emerging markets. Market factors such as increasing energy efficiency and renewable energy penetration, the growth in global supply of liquefied natural gas,markets, as well as the cost-competitivenessongoing impacts of different sourcesCOVID-19. Although market factors related to the energy transition such as greater renewable energy penetration and the adoption of power generationclimate change-related policies continue to impact howlong-term demand (and related financing), to differing degrees across markets globally, we evaluate long-termexpect the gas market demand.to remain stable through the next decade with gas generation continuing to grow low-single-digits. We believe gas will play a critical role in the energy transition and are encouraged by the growth in Gas Power Services.



As separately announced on February 10, 2022, we signed a non-binding memorandum of understanding for GE2019 FORM 10-K 9
MD&ASEGMENT OPERATIONS

We have Steam Power to sell a portion of its business to Électricité de France S.A. (EDF), which will result in a reclassification of that business to held for sale in the first quarter of 2022. A non-cash, pre-tax impairment charge will be taken related to the remaining business intangible and will continuefixed assets of approximately $0.7 to take actions$0.8 billion. The sale transaction is expected to right size our business forbe finalized in the current marketfirst half of 2023, subject to completion of the parties’ respective information and consultation processes and satisfaction of certain conditions, and our long-term outlook, including restructuring our operationsclosing the transaction is expected to dispose of non-core businesses, resizing our remaining businesses to better align with market demand and driving these businesses with an operational rigor and discipline that is focused on our customers’ lifecycle experience. We are building a cost structure to support an average 25 to 30 gigawatt new unit gas turbine market; however, actual ordersresult in a given year can vary. As a result of these actions and overall market conditions, we believe the business is showing early signs of stabilization. We expect incremental improvements in 2020 with further acceleration in 2021 and beyond.significant gain.

We continue to invest in new product development, such as our HA-Turbines and Nuclear small modular reactors. Our fundamentals remain strong with approximately $68.7 billion in RPO and a gas turbine installed base greater than 7,000 units, including upgrades, as these are critical to our customers and theapproximately 1,800 units under long-term strategy of the business.service agreements.

Sales in units202120202019
GE Gas Turbines62 71 53 
Heavy-Duty Gas Turbines(a)43 51 38 
HA-Turbines(b)13 21 11 
Aeroderivatives(a)19 20 15 
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines.

RPODecember 31, 2021December 31, 2020December 31, 2019
Equipment$12,169 $14,991 $15,225 
Services56,569 58,318 62,815 
Total RPO$68,738 $73,308 $78,040 

 Orders Sales
(In units)2019
2018
 2019
2018
      
GE Gas Turbines74
52
 53
59
Heavy-Duty Gas Turbines(a)63
43
 38
42
HA-Turbines(b)18
10
 11
12
Aeroderivatives(a)11
9
 15
17
GE Gas Turbine Gigawatts(c)13.6
8.0
   
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines.
(c) Gigawatts reported associated with financial orders in the periods presented.
(Dollars in billions)2019
2018
2017
    
Equipment$17.7
$18.8
$19.3
Services67.6
66.2
70.4
Total backlog$85.3
$85.0
$89.7
    
Equipment$5.2
$9.3
$13.0
Services11.7
13.3
17.0
Total orders$16.9
$22.6
$30.0
Gas Power$13.1
$13.3
$17.1
Power Portfolio5.5
8.9
12.3
Total segment revenues$18.6
$22.1
$29.4
U.S.$6.0
$7.5
$9.9
Non-U.S.   
Europe3.1
4.5
5.1
Asia4.0
4.1
5.0
Americas1.9
2.5
2.6
Middle East and Africa3.6
3.5
6.8
Total Non-U.S.$12.6
$14.7
$19.5
Total segment revenues$18.6
$22.1
$29.4
Non-U.S. revenues as a % of segment revenues68%66%66%
Equipment$6.2
$8.1
$12.9
Services12.4
14.1
16.5
Total segment revenues(a)$18.6
$22.1
$29.4
    
Segment profit(b)$0.4
$(0.8)$1.9
Segment profit margin2.1%(3.6)%6.4%
(a) Power segment revenues represent 21% and 19% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2019.
(b) Power segment profit represents 4% of total industrial segment profit for the year ended December 31, 2019.


GE20192021 FORM 10-K 1015

MD&ASEGMENT OPERATIONS

SEGMENT REVENUES AND PROFIT202120202019
Gas Power$12,080 $12,655 $13,122 
Steam Power3,241 3,557 4,021 
Power Conversion, Nuclear and other1,582 1,378 1,482 
Total segment revenues$16,903 $17,589 $18,625 
Equipment$5,035 $6,707 $6,247 
Services11,868 10,883 12,378 
Total segment revenues$16,903 $17,589 $18,625 
Segment profit (loss)$726 $274 $291 
Segment profit margin4.3 %1.6 %1.6 %

For the year ended December 31, 2019, segment orders were down $5.7 billion (25%),2021, segment revenues were down $3.5 billion (16%) and segment profit was up $1.2 billion.
Backlog as of December 31, 2019 increased $0.3 billion from December 31, 2018, primarily due to an increase in services backlog of $1.4 billion attributable to Gas Power, partially offset by a decrease in equipment backlog of $1.1 billion from both Gas Power and Power Portfolio.
Orders decreased $2.5 billion (13%) organically mainly due to a decrease in Steam orders at Power Portfolio, partially offset by 20 more heavy duty gas turbine orders.
Revenues decreased $0.2 billion (1%) organically* primarily due to a decrease in services revenue at Power Portfolio.
Profit increased $1.4 billion organically* due to improved variable cost productivity driven by the absence of significant warranty and project cost updates, as well as liquidated damages recognized in 2018.

For the year ended December 31, 2018, segment orders were down $7.4 billion (25%), segment revenues were down $7.3 billion (25%) and segment profit was down $2.7 billion.
Backlog as of December 31, 2018 decreased $4.7 billion (5%) primarily due to a reduction in services backlog of $4.2 billion attributable to Gas Power and due to the absence of our Distributed Power and Industrial Solutions businesses in Power Portfolio.
Orders decreased $4.0 billion (15%) organically mainly due to Gas Power lower gas turbine and services orders.
Revenues decreased $4.5 billion (17%) organically*. Equipment revenues decreased primarily at Gas Power, due to lower unit sales, including 60 fewer gas turbines, 26 fewer Heat Recovery Steam Generators and 23 fewer aeroderivative units. Services revenues also decreased primarily due to 27 fewer AGP upgrades.
Profit decreased $2.4 billion organically* due to negative variable cost productivity driven by warranty, project cost updates as well as liquidated damages, and various assumption updates for unfavorable pricing, lower utilization, and cost updates on our long-term service agreements recognized by Gas Power.

RENEWABLE ENERGY
Products & Services. Renewable Energy engineers and manufactures energy equipment and projects, grid solutions and digital services that create industry-leading value for our customers globally. Combining onshore and offshore wind, blades, hydro and grid solutions, as well as hybrid renewables and digital services offerings, we have installed more than 400 gigawatts of clean renewable energy equipment and more than 90 percent of utilities worldwide with our grid solutions.

Onshore Wind –delivers technology and services for the onshore wind power industry by providing smart turbines that are uniquely situated for a variety of wind environments. Wind services help customers improve availability and value of their assets over the lifetime of the fleet. The Digital Wind Farm is a site level solution, creating a dynamic, connected and adaptable ecosystem that improves our customers’ fleet operations. Our Onshore Wind turbine installed base was approximately 45,000 units as of December 31, 2019.
Offshore Wind–leads the industry in offshore wind power technologies to be used in offshore wind farm development with the Haliade X-12MW prototype, the most powerful offshore wind turbine in the world.
Grid Solutions Equipment and Services (Grid) – equips power utilities and industries worldwide to bring power reliably and efficiently from the point of generation to end customers through offering products, such as high voltage equipment, power electronics, automation and protection equipment, and servicing the generation, transmission, distribution, oil and gas, telecommunication, mining and water industries. In the second quarter of 2019, we completed the reorganization of our Grid business into our Renewable Energy segment for all periods presented.
Hydro – represents more than 25 percent of the total installed hydropower capacity worldwide through a portfolio of solutions and services, including the design, management, construction, installation, maintenance and operation of both large hydropower plants and small hydropower solutions, as well as offering a comprehensive asset management program to hydro power plant operators.

Competition & Regulation. While many factors, including government incentives and specific market rules, affect how renewable energy can deliver outcomes for customers in a given region, renewable energy is increasingly able to compete with fossil fuels in terms of levelized cost of electricity. However, continued competitive pressure from other wind and hydro turbine manufacturers as well as from other energy sources, such as solar photovoltaic, reinforced by a general move to electricity auction mechanisms, have increased price pressure and the need for innovation.

We continue to invest in exploring new ways of further improving the efficiency and flexibility of our hydropower technology with digital solutions and in generating wind turbine product improvements, including larger rotors, taller towers and higher nameplate ratings that continue to drive down the cost of wind energy. As industry models continue to evolve, our digital strategy and investments in technical innovation will position us to add value for customers looking for clean, renewable energy.

Significant Trends & Developments. Renewable energy is in a rapid transition period and now competing in the marketplace against existing and new conventional energy sources. Wind energy is currently the second-largest contributor to renewable capacity growth with hydropower projected to remain the largest renewable electricity source through 2023.




*Non-GAAP Financial Measure

GE2019 FORM 10-K 11
MD&ASEGMENT OPERATIONS | RENEWABLE ENERGY

During 2019, the onshore wind market in the U.S. continued to see the positive impact from the Production Tax Credit (PTC) cycle and customer preference shifting to larger, more efficient units to drive down costs and compete with other power generation options. Despite the competitive nature of the market, onshore wind order pricing stabilized in 2019 due to demand caused by the progressive phase-down of PTCs in the U.S. starting in 2020 and auction stabilization in international markets. The phase-down of PTCs in the U.S. has recently been extended by a year such that certain projects completed through 2024 could qualify for these credits and we expect to continue high levels of production for 2020 deliveries at Onshore Wind. We will continue to closely monitor our execution during this period including risks of delivery delays due to customer site readiness issues and possible project postponements.

We expect additional opportunities to repower existing wind turbines. Repowering allows customers to increase the annual energy output of their installed base, provides more competitively priced energy and extends the life of their assets. The repower market remains robust, and we expect continued strong demand in 2020 and beyond.

The grid market continues to be challenging as we have experienced current year order declines in the High Voltage Direct Current (HVDC) and High Voltage (HV) product lines. Given price pressure, the need for grid flexibility to accommodate more renewable energy, and the diversification of energy players, the hydropower industry continues to maximize value with new small-scale and pumped storage projects to support both wind and solar expansion. The Grid and Hydro businesses are executing their turnaround plans and we are expecting improvements in contribution margin in 2020.

New product introductions continue to be important to our customers who are demonstrating the willingness to adopt the new technology of larger turbines that decrease the levelized cost of energy. We continue to focus on cost reduction initiatives of our products, in-sourcing blade production and developing larger, more efficient turbines like the Haliade-X (Offshore Wind) and Cypress (Onshore Wind). During 2019, we signed our largest Cypress order to date, and were selected as the preferred supplier for two Offshore wind projects in the U.S. and United Kingdom (U.K.), an important commercial milestone for the Haliade-X. In October 2019, the prototype for the Haliade-X was successfully installed with final certification expected by the middle of 2020.
 Orders Sales
(In units)2019
2018
 2019
2018
      
Wind Turbines4,325
3,198
 3,424
2,491
Wind Turbine Megawatts12,758
8,591
 9,525
6,823
Repower1,269
1,621
 1,057
1,160
(Dollars in billions)2019
2018
2017
    
Equipment$16.3
$14.4
$15.0
Services11.2
9.3
7.4
Total backlog$27.5
$23.7
$22.5
    
Equipment$14.0
$11.8
$12.8
Services2.9
3.5
2.6
Total orders$16.9
$15.3
$15.4
Onshore Wind$10.4
$8.2
$8.1
Grid Solutions equipment and services4.1
4.8
5.1
Other0.9
1.3
1.1
Total segment revenues$15.3
$14.3
$14.3
U.S.$7.4
$4.9
$5.6
Non-U.S.   
Europe2.9
3.2
3.0
Asia2.7
2.9
2.1
Americas1.1
2.2
2.4
Middle East and Africa1.2
1.1
1.2
Total Non-U.S.$7.9
$9.4
$8.7
Total segment revenues$15.3
$14.3
$14.3
    
Non-U.S. revenues as a % of segment revenues52%66%61%










GE2019 FORM 10-K 12

MD&ASEGMENT OPERATIONS | RENEWABLE ENERGY

(Dollars in billions)2019
2018
2017
    
Equipment$12.3
$11.4
$14.0
Services3.1
2.9
0.4
Total segment revenues(a)$15.3
$14.3
$14.3
Segment profit(b)$(0.7)$0.3
$0.7
Segment profit margin(4.3)%2.0%5.1%
(a)Renewable Energy segment revenues represent 18% and 16% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2019.
(b)Renewable Energy segment profit represents (6)% of total industrial segment profit for the year ended December 31, 2019.

For the year ended December 31, 2019, segment orders were up $1.6 billion (10%), segment revenues were up $1.0 billion (7%) and segment profit was down $1.0 billion.
Backlog as of December 31, 2019 increased $3.9 billion (16%) primarily driven by increases at Onshore Wind of $3.0 billion due to increased demand in anticipation of the U.S. PTC phase-down, increased services backlog due to the larger installed equipment base and a large scale 6MW turbine order in Offshore Wind.
Orders increased $1.9 billion (12%) organically due to increased demand in domestic and international Onshore Wind markets, partially offset by lower repower unit orders and lower orders at Grid and Hydro.
Revenues increased $1.6 billion (11%) organically*. Equipment revenues increased due to 933 more wind turbine units shipped, or 40% more megawatts, than in the prior year, partially offset by decreases in Offshore Wind due to the nonrecurrence of a project completed in the prior year and due to lower HVDC and Automated Control Systems (ACS) project revenues and HV product shipments at Grid. Services revenues increased primarily due to an increase in repower units pricing and volume at Onshore Wind.
Profit decreased $1.0 billion organically* due to $0.3 billion higher losses in Grid, Hydro and Offshore Wind resulting from no longer allocating losses to noncontrolling interest holders following the buy-out of those joint venture interests from Alstom in the fourth quarter of 2018. The lower profit was also due to $0.2 billion related to project execution challenges, primarily on legacy contracts as well as price pressure and execution challenges at Grid, increased research and development spend, depreciation on capitalized expenditures for Haliade-X and Cypress and the impact of U.S.-China tariffs.

For the year ended December 31, 2018, segment orders were down $0.1 billion (1%), segment revenues were flat and segment profit was down $0.4 billion (60%).
Backlog increased $1.2 billion (5%) primarily driven by Onshore Wind due to increased demand associated with U.S. PTCs, partially offset by a decrease in Grid ACS and HVDC and non-repeat of a 6MW turbine order in Offshore Wind.
Orders decreased $0.2 billion (1%) organically due to lower ACS and HVDC orders at Grid, partially offset by an increase in Onshore Wind due to the U.S. PTC cycle compared to the prior year.
Revenues were flat organically*. Services volume increased due to a larger installed base and more repower units than in the prior year. Equipment volume decreased driven by lower Grid ACS and HVDC activity.
Profit decreased $0.4 billion (60%) organically* due to pricing pressure, unfavorable business mix as well as liquidated damages related to partner execution and project delays, and higher losses in Hydro and Offshore as we began fully consolidating these entities in the fourth quarter, partially offset by materials deflation and positive base cost productivity.

AVIATION
Products & Services. Aviation designs and produces commercial and military aircraft engines, integrated digital components, electric power and mechanical aircraft systems. We also provide aftermarket services to support our products.

Commercial – manufactures jet engines for commercial airframes. Our commercial engines power aircraft in all categories; regional, narrowbody and widebody. We also produce and market engines through joint ventures with Safran Group of France and United Technologies Corporation. Commercial provides maintenance, component repair and overhaul services (MRO), including sales of replacement parts. Our commercial engine installed base was approximately 37,800 units as of December 31, 2019.
Military – manufactures jet engines for military airframes. Our military engines power a wide variety of military aircraft including fighters, bombers, tankers, helicopters and surveillance aircraft, as well as marine applications. We provide maintenance, component repair and overhaul services, including sales of replacement parts. Our military engine installed base was approximately 26,600 units as of December 31, 2019.
Systems& Other – provides engines components, systems and services for commercial and military segments. This includes engines and components for business and general aviation segments, along with avionics systems, aviation electric power systems, flight efficiency and intelligent operation services, aircraft structures and Avio Aero. Additionally, we provide a wide variety of products and services including additive machines from Concept Laser and Arcam EBM, additive materials (including metal powders from AP&C), and additive engineering services through our consultancy brand AddWorksTM. 



*Non-GAAP Financial Measure

GE2019 FORM 10-K 13
MD&ASEGMENT OPERATIONS

Competition & Regulation. The global businesses for aircraft jet engines, maintenance component repair and overhaul services (including parts sales) are highly competitive. Both U.S. and non-U.S. markets are important to the growth and success of the business. Product development cycles are long and product quality and efficiency are critical to success. Research and development expenditures are important in this business, as are focused intellectual property strategies and protection of key aircraft engine design, manufacture, repair and product upgrade technologies. Aircraft engine orders and systems tend to follow civil air travel and demand and military procurement cycles.

Our product, services and activities are subject to a number of regulators such as the U.S. Federal Aviation Administration (FAA), European Aviation Safety Agency (EASA) and other regulatory bodies.

Significant Trends & Developments. Global passenger air travel continued to grow (measured in revenue passenger kilometers (RPK)) at 4.2%* in the current year. Oil prices remained stable, and global traffic growth was broad-based across global regions. We expect this trend to drive continued demand in the installed base of commercial engines and increased focus on newer, more fuel-efficient aircraft. Industry-load factors for airlines remain at all-time high levels above 80%*. Air freight volume decreased, particularly in international markets driven by economic conditions and slowing global trade.

As it relates to the military environment, the U.S. Department of Defense has increased its budget and foreign governments have increased spending to upgrade and modernize their existing fleets, creating future opportunities. Military shipments grew to 717 engines in 2019 from 674 engines in 2018. In 2019, the United States Army awarded Aviation a contract for its T901 engine as the replacement engine for the Army's Apache and Black Hawk helicopters, and in 2018 the United States Air Force selected Boeing as the contractor to produce 351 new advanced T-7A Red Hawk trainer aircraft powered by Aviation's F404 engine.

The installed base continues to grow with new product launches. We announced record commercial wins at the Paris Air Show in June 2019, some of which contributed to backlog growth of 22% from December 31, 2018. We continue to expect future orders as a result of these wins. In 2018, we shipped the first Passport engines, powering the Bombardier Global 7000 business jet. We are also continuing development on the Advanced Turbo Prop program and the GE9X engine, incorporating the latest technologies for application in the widebody aircraft space.

Total engineering, comprised of both company and customer funded spending, remained consistent with 2018. Company funded research and development spend has decreased compared to prior year. However, customer funded engineering efforts, primarily in our Military business, continue to increase. Our digital initiatives, including analytics on flight operations, technical operations, and advanced manufacturing, are enabling our customers, internal operations and suppliers to reduce costs, cycle time and improve quality.

LEAP continues to be a strong engine program for us, and we delivered 1,736 LEAP engines for Boeing and Airbus platforms in the year.

Refer to the Aviation and GECAS 737 MAX discussion in Consolidated Results for information regarding the Company's exposure related to the temporary fleet grounding of the Boeing 737 MAX.

 Orders Sales
(In units, except where noted)2019
2018
 2019
2018
      
Commercial Engines2,390
4,772
 2,863
2,825
GEnx Engines(a)164
407
 296
251
LEAP Engines(a)1,568
3,637
 1,736
1,118
Military Engines801
751
 717
674
Spares Rate(b)   $31.0
$27.5
(a) GEnx and LEAP engines are subsets of Commercial Engines
(b) Commercial externally shipped spares and spares used in time & material shop visits in millions of dollars per day.
(In billions)2019
2018
2017
    
Equipment$39.1
$37.8
$34.1
Services234.1
185.7
166.1
Total backlog$273.2
$223.5
$200.2
    
Equipment$14.5
$15.3
$10.6
Services22.3
20.2
18.5
Total orders$36.7
$35.5
$29.1
Commercial$24.2
$22.7
$19.7
Military4.4
4.1
4.0
Systems & Other4.3
3.7
3.3
Total segment revenues$32.9
$30.6
$27.0

* Based on the latest available information from the International Air Transport Association

GE2019 FORM 10-K 14

MD&ASEGMENT OPERATIONS

(Dollars in billions)201920182017
    
U.S.$13.4
$12.5
$10.8
Non-U.S.   
Europe7.5
7.0
6.3
Asia6.6
5.8
5.2
Americas1.6
1.5
1.1
Middle East and Africa3.8
3.8
3.6
Total Non-U.S.$19.5
$18.0
$16.3
Total segment revenues$32.9
$30.6
$27.0
    
Non-U.S. revenues as a % of segment revenues59%59%60%
Equipment$12.8
$11.5
$10.2
Services20.1
19.1
16.8
Total segment revenues(a)$32.9
$30.6
$27.0
Segment profit(b)$6.8
$6.5
$5.4
Segment profit margin20.7%21.2%19.9%
(a)Aviation segment revenues represent 38% and 34% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2019.
(b)Aviation segment profit represents 65% of total industrial segment profit for the year ended December 31, 2019.

For the year ended December 31, 2019, segment orders were up $1.2 billion (3%), segment revenues were up $2.3 billion (8%) and segment profit was up $0.4 billion (5%).
Backlog as of December 31, 2019 increased $49.7 billion (22%) primarily due to an increase in long-term service agreements.
Orders increased $1.4 billion (4%) organically primarily driven by $1.9 billion of orders in the fourth quarter of 2019 for our newly formed Aeroderivatives joint venture between GE Power and Baker Hughes. Excluding the Aeroderivatives orders, total orders decreased $0.9 billion mainly due to a decline in LEAP engine orders as a result of the 737 MAX grounding, partially offset by services orders with continued strength in materials.
Revenues increased $2.6 billion (9%) organically*. Equipment revenues increased primarily due to 43 more military engine shipments and 38 more commercial units, including 618 more LEAP units, versus the prior year, partially offset by lower legacy commercial output in the CFM product line. Services revenues also increased primarily due to increased price, a higher commercial spare parts shipment rate and increased revenues on long-term service agreements.
Profit increased $0.4 billion (6%) organically* mainly due to services increased volume and increased price on commercial spare parts, and increased profitability on long-term service agreements. Profit also increased due to higher volume of commercial spares engines, including LEAP 1-B spare engines sold to our GECAS business to have an appropriate level of spare engines available in the market to meet customer needs in anticipation of the Boeing 737 MAX aircraft recertification, partially offset by continued negative mix from commercial engines, primarily the CFM to LEAP engine transition and Passport engine shipments. Additionally, we recorded a charge during the year related to the uncertainty of collection for an airline customer in a challenging financial position.

For the year ended December 31, 2018, segment orders were up $6.4 billion (22%), segment revenues were up $3.6 billion (13%) and segment profit was up $1.1 billion (20%).
Backlog as of December 31, 2018 increased $23.4 billion (12%) primarily due to an increase in services backlog of $19.6 billion.
Orders increased $6.4 billion (22%) organically mainly due to an increase in commercial and military equipment orders of $4.7 billion.
Revenues increased $3.5 billion (13%) organically*. Services revenues increased primarily due to a higher commercial spares shipment rate, as well as increased price. Equipment revenues increased primarily due to 57 more military engine shipments and 195 more commercial units, including 659 more LEAP units, versus the prior year, partially offset by lower legacy commercial output in the CFM and GE90 product lines.
Profit increased $1.1 billion (21%) organically* mainly due to increased price, increased volume, higher spare engine shipments and product and base cost productivity. These increases were partially offset by an unfavorable business mix driven by negative LEAP margin as well as higher overhaul shop costs due to increased volume and mix.











*Non-GAAP Financial Measure

GE2019 FORM 10-K 15
MD&ASEGMENT OPERATIONS

HEALTHCARE
Products & Services. Healthcare provides essential healthcare technologies to developed and emerging markets and has expertise in medical imaging, digital solutions, patient monitoring and diagnostics, drug discovery, biopharmaceutical manufacturing technologies and performance improvement solutions that are the building blocks of precision health. Products and services are sold worldwide primarily to hospitals, medical facilities, pharmaceutical and biotechnology companies, and to the life science research market.

Healthcare Systems – develops, manufactures, markets and services a broad suite of products and solutions used in the diagnosis, treatment and monitoring of patients that is encompassed in imaging, ultrasound, life care solutions and enterprise software and solutions. Imaging includes magnetic resonance, computed tomography, molecular imaging, x-ray systems and complementary software and services, for use in general diagnostics, Women’s Health and image-guided therapies. Ultrasound includes high-frequency soundwave systems, and complementary software and services, for use in diagnostics tailored to a wide range of clinical settings. Life Care Solutions (LCS) includes clinical monitoring and acute care systems, and complementary software and services, for use in intensive care, anesthesia delivery, diagnostic cardiology and perinatal care. Enterprise Software & Solutions (ESS) includes enterprise digital, consulting and healthcare technology management offerings designed to improve efficiency in healthcare delivery and expand global access to advanced health care.
Life Sciences – delivers products, services and manufacturing solutions for drug discovery, the biopharmaceutical industry, and cellular and gene therapy technologies, so that scientists and specialists can discover new ways to predict, diagnose and treat disease. It also researches, manufactures and markets innovative imaging agents used during medical scanning procedures to highlight organs, tissue and functions inside the human body, to aid physicians in the early detection, diagnosis and management of disease through advanced in-vivo diagnostics.

Competition & Regulation. Healthcare competes with a variety of U.S. and non-U.S. manufacturers and services providers. Customers require products and services that allow them to provide better access to healthcare, improve the affordability of care and improve the quality of patient outcomes. Technology and solution innovation to provide products that meet these customer requirements and competitive pricing are among the key factors affecting competition for these products and services. New technologies and solutions could make our products and services obsolete unless we continue to develop new and improved offerings.

Our products are subject to regulation by numerous government agencies, as well as laws and regulations that apply to various reimbursement schemes or other government funded healthcare programs.

Significant Trends & Developments. In February 2019, we announced an agreement to sell our BioPharma business to Danaher Corporation for total consideration of approximately $21.4 billion subject to certain adjustments. In the first quarter of 2019, we classified BioPharma as a business held for sale. We expect to complete the sale in the first quarter of 2020, subject to regulatory approval, providing us flexibility and optionality with respect to our remaining Healthcare businesses.

Effective January 1, 2019, the Healthcare Equipment Finance (HEF) financing business within our Capital segment was transferred to our Healthcare segment and is presented within Healthcare Systems.

The global healthcare market has continued to expand, driven by macro trends relating to growing and aging populations, increasing chronic and lifestyle-related disease, accelerating demand for healthcare in emerging markets, increasing demand for biologic drugs and insulin, and increasing use of diagnostic imaging. Technological innovation that makes it possible to address an increasing number of diseases, conditions and patients in a more cost-effective manner has also driven growth across each of our global markets.

The China market was a source of growth in 2018 in both the public market and private markets. Dynamics related to tariffs tempered this growth in 2019. The impact of tariffs on certain types of medical equipment and components that we import from China resulted in increased product costs. We continue to take mitigating actions including moving our sourcing and manufacturing for these parts outside of China. In the U.S., the underlying market remains stable, with a trend toward customers looking for more complete solutions that offer greater capacity and productivity. However, the market continues to face uncertainties driven by the increasing cost of providing healthcare that has led to a trend of increasing hospital and provider consolidation.

The Healthcare Systems equipment market continues to expand at low single-digit rates or better, while demand continues for services on new equipment as well as on our existing installed base. However, there is short-term variation driven by market-specific political and economic cycles. Growth in emerging markets is driven by long-term trends of expanding demand and access to healthcare. Developed markets are expected to remain steady in the near term driven by macro trends in the healthcare industry.

The Life Sciences market, which encompasses Bioprocess and Pharmaceutical diagnostics, continues to be strong. The Bioprocess market is growing at a high single-digit rate, driven by growth in biologic drugs. The Pharmaceutical diagnostics business is positioned in the contrast agent and nuclear tracer markets. This market is expected to grow, driven by continued diagnostic imaging procedure growth and increasing contrast and tracer-enhancement of these same procedures, as these products help to increase the precision of the diagnostic information provided to clinicians.







GE2019 FORM 10-K 16

MD&ASEGMENT OPERATIONS

We continue focusing on creating new products and solutions as well as expanding uses of existing offerings that are tailored to the different needs of our global customers. We strive to introduce technology innovation that enables our customers to improve their patient and operational outcomes as they diagnose, treat and monitor an increasing number of medical conditions and patients. GE Senographe Pristina with Dueta was named to TIME magazine’s list of 2019’s Best Inventions for its patient-assisted mammography exam feature. Additionally, we launched Revolution Maxima CT, the latest addition to the GE Revolution family of intelligent CT scanners during the quarter. Designed to maximize productivity in the CT workflow, Revolution Maxima offers a variety of applications and services to improve efficiency, including its new, AI-based Auto Positioning solution (cleared for sale in all planned major worldwide markets in January 2020).
(Dollars in billions)2019
2018
2017
    
Equipment$7.0
$6.3
$6.4
Services11.5
11.2
11.7
Total backlog$18.5
$17.4
$18.1
    
Equipment$13.0
$12.6
$12.2
Services8.2
8.3
8.2
Total orders$21.2
$20.9
$20.4
Healthcare Systems$14.6
$14.9
$14.5
Life Sciences5.3
4.9
4.6
Total segment revenues$19.9
$19.8
$19.0
U.S.$8.5
$8.6
$8.4
Non-U.S.   
Europe4.1
4.2
3.9
Asia5.4
5.2
4.9
Americas1.1
1.0
1.0
Middle East and Africa0.8
0.8
0.9
Total Non-U.S.$11.4
$11.2
$10.6
Total segment revenues$19.9
$19.8
$19.0
    
Non-U.S. revenues as a % of segment revenues57%57%56%
Equipment$11.6
$11.4
$10.8
Services8.4
8.4
8.2
Total segment revenues(a)$19.9
$19.8
$19.0
Segment profit(b)$3.9
$3.7
$3.5
Segment profit margin19.5%18.7%18.3%
(a)Healthcare segment revenues represent 23% and 21% of total industrial segment revenues and total segment revenues, respectively, for the year ended December 31, 2019.
(b)Healthcare segment profit represents 37% of total industrial segment profit for the year ended December 31, 2019.

For the year ended December 31, 2019, segment orders were up $0.3 billion (1%), segment revenues were up $0.2 billion (1%) and segment profit was up $0.2 billion (5%).
Backlog as of December 31, 2019 increased $1.0 billion (6%) primarily due to an increase in equipment backlog of $0.7 billion primarily driven by Healthcare Systems.
Orders increased $0.9 billion (4%) organically, primarily attributable to continued strength in Life Sciences.
Revenues increased $0.7 billion (3%) organically* due to higher volume in Life Sciences, driven by BioPharma and Pharmaceutical Diagnostics, as well as higher volume in Healthcare Systems.
Profit increased $0.3 billion (7%) organically* primarily driven by volume growth and cost productivity due to cost reduction actions, including sourcing and logistic initiatives, design engineering and restructuring actions. These increases were partially offset by inflation, the impact of U.S.-China tariffs, and investments in programs including digital product innovations and Healthcare Systems new product introductions.









*Non-GAAP Financial Measure

GE2019 FORM 10-K 17
MD&ASEGMENT OPERATIONS

For the year ended December 31, 2018, segment orders were up $0.5 billion (2%), segment revenues were up $0.8 billion (4%) and segment profit was up $0.2 billion (6%).$0.5 billion.
BacklogRPO as of December 31, 20182021 decreased $4.6 billion (6%) from December 31, 2020, primarily driven by the continued wind down of the Steam Power new build coal business, sales outpacing new orders in Gas Power contractual services, and a significant Gas Power equipment order from the prior year that did not repeat.
Revenues decreased $0.7 billion (4%) organically*, primarily due to a decreasedecreased Gas Power equipment revenues on lower turnkey sales and Steam Power equipment on the exit of new build coal, partially offset by an increase in Gas Power and Steam Power services backlog ofrevenues.
Profit increased $0.5 billion.
Orders increased $0.6 billion (3%) organically, primarily due to Life Sciences up 8%, while Healthcare Systems was up 1%.
Revenues increased $0.9 billion (5%) organically* due to higher volumeincreases in Healthcare Systems, attributableGas Power services revenues and margins, predominately in the long-term services portfolio, and aeroderivative sales and continued efforts to global growth in Imaging and Ultrasound in both developed regions such asstreamline the U.S. and Europe as well as developing regions such as China and emerging markets. Volume also increased in Life Sciences, driven by Bioprocess and Pharmaceutical Diagnostics,businesses, partially offset by price pressure at Healthcare Systems.
Profit increased $0.3 billion (8%) organically*, primarily driven by volume growth and cost productivitydecreases due to cost reduction actions, including sourcing and logistic initiatives, design engineering and restructuring actions. These increases were partially offset by price pressure at Healthcare Systems, inflation, investments in programs including digital product innovations and Healthcare Systems new product introductions and the nonrecurrence of a small gain on the disposition of a non-strategic operation in Life Sciences.

CAPITAL
Products & Services. Capital is the financial services division of GE focused on customers and markets aligned with GE’s industrial businesses across developed and emerging markets. We provide financial products and services around the globe that build on GE’s industry specific expertise in aviation, power, renewables, healthcare and other activities to capitalize on market-specific opportunities. While there are customer benefits and knowledge sharing advantages linking GE’s industrial and capital businesses, the financial and operational relationships are maintained with arms-length terms as though the businesses were independent.

GE Capital Aviation Services (GECAS) - is an aviation lessor and financier with over 50 years of experience. GECAS provides a wide range of assets including narrow- or widebody aircraft, regional jets, turboprops, freighters, engines, helicopters, financing and materials. GECAS offers a broad array of financing products and services on these assets including operating leases, sale-leasebacks, asset trading and servicing, and airframe parts management. GECAS owns, services or has on order more than 1,700 aircraft and serves approximately 225 customers in 75 countries from a network of 20 offices around the world.
Energy Financial Services (EFS) - a global energy investor that provides financial solutions and underwriting capabilities forGas Power and Renewable Energy to meet rising demandSteam Power equipment revenues and sustainability imperatives.contract and legal charges.

Industrial Finance (IF) - its Working Capital Solutions (WCS) business provides working capital services to GE and through December 31, 2018, it also provided healthcare equipment financing.
Insurance -CORPORATE. Refer to the Other Items - Insurance section within MD&A for a detailed business description.

Competition & Regulation. The businesses in which we engage are highly competitive and are subject to competition from various types of financial institutions including banks, equity investors, leasing companies, finance companies associated with manufacturers and insurance and reinsurance companies. For our GECAS operations, competition is based on lease rate financing terms, aircraft delivery dates, condition and availability, as well as available capital demand for financing. For our EFS operations, competition is primarily based on deal structure and terms. As we compete globally, EFS’ success is sensitive to project execution and merchant electricity prices, as well as the economic and political environment of each country in which we do business.

The businesses in which we engage are subject to a variety of U.S. federal and state laws and regulations. Our insurance operations are regulated by the insurance departments in the states in which they are domiciled or licensed, with the Kansas Insurance Department (KID) being our primary state regulator.

Significant Trends & Developments. In 2018, we announced plans to take actions to make GE Capital smaller and more focused, including a substantial reduction in the size of GE Capital’s EFS and IF businesses. With respect to this announcement, we completed $15 billion of asset reductions during 2018 and approximately $12 billion of asset reductions during 2019, including approximately $8 billion during the fourth quarter of 2019. In August 2019, we announced that we entered into a definitive agreement for Apollo Global Management, LLC and Athene Holding Ltd. to purchase PK AirFinance, an aviation lending business, from GECAS and we completed the sale of a substantial portion of the business for a small premium in the fourth quarter of 2019. We expect to complete the sale of the remaining assets in the first half of 2020. We continue to evaluate strategic options to accelerate the further reduction in the size of GE Capital, some of which could have a material financial charge depending on the timing, negotiated terms and conditions of any ultimate arrangements.

GE Capital received $1.5 billion and $2.5 billion in capital contributions from GE in the second quarter and fourth quarter of 2019, respectively.

We annually perform premium deficiency testing in the aggregate across our run-off insurance portfolio. We performed this year's testing in the third quarter of 2019, and, as a result, identified a premium deficiency resulting in a $1.0 billion pre-tax ($0.8 billion after-tax) charge to earnings. See the Other Items - Insurance section within MD&A and Note 12 to the consolidated financial statements for further information.

GE Capital made capital contributions to its insurance subsidiaries of $2.0 billion and $1.9 billion in the first quarters of 2020 and 2019, respectively, and expects to provide further capital contributions of approximately $7 billion through 2024. See the Capital Resources and Liquidity section within MD&A for further information.
*Non-GAAP Financial Measure

GE2019 FORM 10-K 18

MD&ASEGMENT OPERATIONS

Effective January 1, 2019, the HEF business was transferred from our Capital segment to our Healthcare segment.

Refer to the Aviation and GECAS 737 MAX discussion in Consolidated Results within MD&A for information regarding the Company's exposure related to the temporary fleet grounding of the Boeing 737 MAX.
(Dollars in billions)2019
2018
   
GECAS$38.0
$41.7
EFS1.8
3.0
IF and WCS9.0
15.8
Insurance46.3
40.3
Other continuing operations22.5
18.6
Total segment assets$117.5
$119.3
GE Capital debt to equity ratio3.86:15.74:1
(In billions)2019
2018
2017
    
GECAS$4.9
$4.9
$5.1
EFS0.1
0.1
(0.5)
IF and WCS0.8
1.5
1.5
Insurance2.9
2.9
2.9
Other continuing operations—
0.1
—
Total segment revenues(a)$8.7
$9.6
$9.1
    
GECAS$1.0
$1.2
$2.1
EFS0.1
0.1
(1.5)
IF and WCS0.2
0.3
0.5
Insurance(0.6)(0.2)(7.2)
Other continuing operations(b)(1.3)(1.9)(0.7)
Total segment profit$(0.5)$(0.5)$(6.8)
(a)
Capital segment revenues represent 9% of total segment revenues for the year ended December 31, 2019.
(b)Other continuing operations primarily comprised excess interest costs from debt previously allocated to assets that have been sold as part of the GE Capital Exit Plan, preferred stock dividend costs and interest costs not allocated to GE Capital segments, which are driven by GE Capital’s interest allocation process. Interest costs are allocated to GE Capital segments based on the tenor of their assets using the market rate at the time of origination, which differs from the asset profile when the debt was originated. As a result, actual interest expense is higher than interest expense allocated to the remaining GE Capital segments. Substantially all preferred stock dividend costs will become a GE obligation in January 2021. See Note 16 to the consolidated financial statements for further information. The excess interest costs from debt previously allocated to assets that have been sold are expected to run off by 2020. In addition, we anticipate unallocated interest costs to gradually decline as debt matures and/or is refinanced.
(Dollars in billions)2019
2018
2017
    
U.S.$4.1
$5.3
$4.4
Non-U.S.   
Europe1.6
1.4
1.5
Asia1.5
1.4
1.4
Americas0.7
0.6
0.8
Middle East and Africa0.8
0.9
1.0
Total Non-U.S.4.6
4.3
4.7
Total segment revenues$8.7
$9.6
$9.1
    
Non-U.S. revenues as a % of segment revenues53%45%52%

For the year ended December 31, 2019, segment revenues decreased $0.8 billion (8%) and segment losses were flat.
Capital revenues decreased primarily due to volume declines and lower gains, partially offset by lower impairments. Capital losses were flat primarily due to a $1.0 billion pre-tax charge identified through the completion of our annual insurance premium deficiency review, lower gains, lower tax benefits and volume declines, offset by lower impairments, lower excess interest costs and tax law changes. Gains were $0.7 billion and $0.8 billion in 2019 and 2018, respectively, which primarily related to sales of certain GECAS aircraft and engines resulting in gains of $0.4 billion and $0.3 billion in 2019 and 2018, respectively, as well as the sale of equity method investments resulting in gains of $0.2 billion in 2019 at EFS and the sale of EFS’ debt origination business and equity investments resulting in gains of $0.4 billion in 2018.


GE2019 FORM 10-K 19
MD&ASEGMENT OPERATIONS

For the year ended December 31, 2018, segment revenues increased $0.5 billion (5%) and segment losses decreased $6.3 billion (93%).
Capital revenues increased primarily due to lower impairments and volume growth, partially offset by lower gains. Capital losses decreased primarily due to the nonrecurrence of the 2017 charges associated with the GE Capital insurance premium deficiency review and EFS strategic actions, partially offset by the nonrecurrence of 2017 tax benefits.

CORPORATE ITEMS AND ELIMINATIONS. Corporate Items and Eliminations is a caption used in the Segment Operations – Summary of Reportable Segments table to reconcile the aggregated results of our segments to the consolidated results of the Company. The Corporate Items and Eliminations amounts related to revenues and earnings include the results of disposed businesses, certain amounts not included in industrial operating segment results because they are excluded from measurement of their operating performance for internal and external purposes and the elimination of inter-segmentintersegment activities. In addition, the Corporate Items and Eliminations amounts related to earnings include certain costs of our principal retirement plans, significant, higher-cost restructuring programs and other costs reported in Corporate, and the unallocated portion of certain corporate costs (such as research and development spending and costs related to our Global Growth Organization).Corporate.

Corporate items and eliminations includes the results of our Lighting segment andthe GE Digital business, for all periods presented.
(In millions)2019
2018
2017
    
Revenues   
Corporate revenues$1,791
$2,783
$2,897
Eliminations and other(2,096)(2,110)(2,464)
Total Corporate Items and Eliminations$(305)$673
$433
    
Operating profit (cost)   
Gains (losses) on disposals and held for sale businesses$4
$1,370
$926
Restructuring and other charges(1,315)(2,952)(3,023)
Unrealized gains (losses)(a)793
—
—
Goodwill impairments (Note 8)(1,486)(22,136)(1,165)
Adjusted total corporate operating costs (Non-GAAP)(1,693)(1,255)(1,701)
Total Corporate Items and Eliminations (GAAP)$(3,698)$(24,973)$(4,963)
Less: gains (losses), impairments and restructuring & other(2,004)(23,719)(3,262)
Adjusted total corporate operating costs (Non-GAAP)$(1,693)$(1,255)$(1,701)
(a) Related to mark-to-market impact on our Baker Hughes shares for 2019. See Notes 2, 3 and 19 to the consolidated financial statementsremaining GE Capital businesses including our run-off Insurance business (see Other Items - Insurance for further information.information), and the Lighting segment through its disposition in the second quarter of 2020.

REVENUES AND OPERATING PROFIT (COST)REVENUES AND OPERATING PROFIT (COST)202120202019
Corporate revenuesCorporate revenues$945 $1,313 $1,791 
Insurance revenuesInsurance revenues3,106 2,865 2,802 
Eliminations and otherEliminations and other(1,490)(1,650)(1,151)
Total Corporate revenuesTotal Corporate revenues$2,561 $2,528 $3,442 
Gains (losses) on purchases and sales of business interestsGains (losses) on purchases and sales of business interests$(44)$12,452 $(135)
Gains (losses) on equity securitiesGains (losses) on equity securities1,921 (1,891)933 
Restructuring and other chargesRestructuring and other charges(380)(680)(886)
Steam asset impairments, net of noncontrolling interests of $65 million (Notes 6 & 7)Steam asset impairments, net of noncontrolling interests of $65 million (Notes 6 & 7)— (363)— 
SEC settlement chargeSEC settlement charge— (200)— 
Goodwill impairments, net of noncontrolling interests of $149 million in 2020 (Note 7)Goodwill impairments, net of noncontrolling interests of $149 million in 2020 (Note 7)— (728)(1,486)
Insurance profit (loss) (Note 11)Insurance profit (loss) (Note 11)566 197 (821)
Adjusted total corporate operating costs (Non-GAAP)Adjusted total corporate operating costs (Non-GAAP)(1,170)(1,602)(1,628)
Total Corporate operating profit (cost) (GAAP)Total Corporate operating profit (cost) (GAAP)$892 $7,184 $(4,023)
Less: gains (losses), impairments, Insurance, and restructuring & otherLess: gains (losses), impairments, Insurance, and restructuring & other2,062 8,786 (2,395)
Adjusted total corporate operating costs (Non-GAAP)Adjusted total corporate operating costs (Non-GAAP)$(1,170)$(1,602)$(1,628)
Functions & operations$(1,252)$(1,362)$(2,007)Functions & operations$(848)$(1,303)$(1,186)
Environmental, health and safety (EHS) and other itemsEnvironmental, health and safety (EHS) and other items(302)(104)(258)
Eliminations(184)(61)9
Eliminations(20)(195)(184)
Environmental, health & safety (EHS) and other items(258)$169
$297
Adjusted total corporate operating costs (Non-GAAP)$(1,693)$(1,255)$(1,701)Adjusted total corporate operating costs (Non-GAAP)$(1,170)$(1,602)$(1,628)

Adjusted total corporate operating costs* excludes gains (losses) on disposalspurchases and held for sale businesses,sales of business interests, significant, higher-cost restructuring and other charges, unrealizedprograms, gains (losses) on equity securities, goodwill impairments and goodwill impairments.our run-off Insurance business profit. We believe that adjusting corporate costs to exclude the effects of items that are not closely associated with ongoing corporate operations provides management and investors with a meaningful measure that increases the period-to-period comparability of our ongoing corporate costs.



*Non-GAAP Financial Measure
2021 FORM 10-K 16

For the year ended December 31, 20192021, revenues decreased by $1.0 billion,remained relatively flat primarily as the result of $0.3 billion lower revenue due to the sale of our CurrentLighting business in April 2019.
Corporate costs decreasedJune 2020 offset by $21.3$0.2 billion of higher revenue primarily as the result of $20.6strong investment results in our run-off Insurance business and $0.2 billion of lower goodwill impairment charges (see Note 8 to the consolidated financial statements).intersegment eliminations. Corporate costs alsooperating profit decreased by $6.3 billion due to $0.8$12.5 billion of higher net unrealizedlower gains on purchases and sales of business interests primarily due to our mark-to-market impact on our Baker Hughes shares in 2019 and $1.6 billion of lower restructuring costs in 2019. These decreases were partially offset by $1.4 billion of lower net gains from disposed or held for sale businesses, which was primarily related to a $0.7$12.4 billion gain from the sale of our Value-Based CareBioPharma business in 2018, a $0.7 billion gain from the sale of our Distributed Power business in 2018, $0.3 billion gain from the sale of our Industrial Solutions business in 2018 and a $0.2 billion gain from the sale of our Pivotal Software investment in 2018. These realized gains were partially offset by $0.3 billion of lower held for sale losses in 2019 primarily related to our Lighting and Aviation segments and a $0.2 billion gain from the sale of our Digital ServiceMax business in 2019.
Adjusted total corporate operating costs* increased by $0.4 billion in 2019 primarily as a result of a $0.2 billion increase in costs associated with existing environmental, health and safety matters in 2019 and $0.2 billion due to the non-recurrence of gains associated with the sale of intangible assets in 2018. In addition, there2020. This decrease was $0.1 billion of higher intercompany profit eliminations primarily as the result of $0.2 billion higher volume of spare LEAP 1-B engines sold from our Aviation segment to our GECAS business to provide an appropriate level of spare engines available in the market to meet customer needs in anticipation of the Boeing 737 MAX aircraft recertification. These increases were partially offset by $0.1 billion of lower costs due to restructuring and cost out actions in our functions and operating businesses.

*Non-GAAP Financial Measure

GE2019 FORM 10-K 20

MD&ACORPORATE ITEMS AND ELIMINATIONS

For the year ended December 31, 2018, revenues increased by $0.2 billion, primarily as a result of a $0.4 billion decrease in inter-segment eliminations partially offset by a $0.1$3.8 billion decreasechange in Corporate revenuesgains (losses) on equity securities primarily related to our Current & Lighting segment.
Corporate costs increased by $20.0$2.9 billion primarily as a result of $21.0and $0.7 billion of higher goodwill impairment charges (see Note 8 to the consolidated financial statements). These increases were partially offset by $0.4 billion of higher net gains from disposed or held for sale businesses, which is primarily related to the $0.7 billion gain from the sale ofmark-to-market activity on our Distributed Power business in 2018, a $0.7 billion gain from the sale of our Value-Based Care business in 2018, a $0.3 billion gain from the sale of our Industrial Solutions business in 2018, a $0.2 billion gain from the sale of our Pivotal Software investment in 2018Baker Hughes and $0.4 billion of lower held for sales losses in 2018 primarily related to our Lighting and Aviation segments. These realized gains were partially offset by a $1.9 billion gain from the sale of our Water business in 2017.AerCap shares respectively. In addition, Corporate costs further decreasedoperating profit increased due to $0.1 billion of lower restructuring and other charges.charges primarily at Aviation and Corporate, partially offset by Power, and nonrecurrence of non-cash impairment charges and settlement of the SEC investigation in 2020, and higher income in our run-off Insurance business primarily driven by strong investment results and lower claims.
Adjusted total corporate operating costs* decreased by $0.4 billion primarily as the result of $0.6$0.5 billion of lower costs due to restructuring and cost out actionsreductions in our functions and operating businesses.Corporate functions. In addition, corporate cost decreased by $0.2 billion as the result of lower intercompany elimination activity from project financing investments associated with wind energy projects in our Renewable Energy segment, lower intersegment eliminations, partially offset by higher spare engine sales from our Aviation segment to our GECAS business before its combination with AerCap in November 2021. These decreases were partlypartially offset by $0.1$0.2 billion of higher intercompany profitcosts associated with EHS and other items.

For the year ended December 31, 2020, revenues decreased by $0.9 billion, primarily as a result of a $0.5 billion decrease in revenues due to the sale of our Current and Lighting businesses in April 2019 and June 2020, respectively, $0.5 billion of higher inter-segment eliminations, andpartially offset by $0.1 billion of higher revenue in our run-off Insurance business. Corporate operating profit increased by $11.2 billion due to $12.6 billion of higher gains on purchases and sales of business interests primarily due to a $12.4 billion gain from the sale of our BioPharma business in 2020, partially offset by a $2.8 billion change in gains (losses) on equity securities primarily related to mark-to-market activity on our Baker Hughes shares. Corporate operating profit also increased due to lower restructuring and other charges, primarily at Corporate and Power, partially offset by higher charges at Aviation, lower non-cash impairment charges, partially offset by $0.2 billion for the settlement of the SEC investigation in 2020. In addition, Corporate profit increased by $1.0 billion due to the nonrecurrence of $1.0 billion pre-tax charge identified through our annual insurance premium deficiency review in our run-off Insurance business in 2019.
Adjusted total corporate operating costs* remained relatively flat in 2020 due to $0.2 billion of lower EHS and other items, $0.3 billion of cost reductions in 2018.our Digital business and Corporate functions, offset by $0.4 billion of higher costs in our GE Capital businesses primarily due to lower gains from the sale of equity method investments at EFS, higher marks and volume decline. Overall, eliminations were relatively flat due to higher intercompany elimination activity from project financing investments associated with wind energy projects in our Renewable Energy segment, higher intersegment eliminations, offset by lower spare engine sales from our Aviation segment to our previously owned GECAS business.


OTHER CONSOLIDATED INFORMATION
RESTRUCTURING. Restructuring actionsThis table is inclusive of all restructuring charges in our segments and at Corporate, and the charges are essential toshown below for the business where they originated. Separately, in our cost improvement effortsreported segment results, significant, higher-cost restructuring programs are excluded from measurement of segment operating performance for both existing operationsinternal and external purposes; those recently acquired.excluded amounts are reported in Restructuring and other charges relate primarily to workforce reductions, facility exit costsfor Corporate (see the Corporate section).

RESTRUCTURING AND OTHER CHARGES202120202019
Workforce reductions$695 $856 $823 
Plant closures & associated costs and other asset write-downs145 332 349 
Acquisition/disposition net charges and other(21)66 171 
Total restructuring and other charges$819 $1,254 $1,343 
Cost of equipment/services$394 $570 $386 
Selling, general and administrative expenses499 697 993 
Other income(75)(13)(36)
Total restructuring and other charges$819 $1,254 $1,343 
Aviation$70 $397 $8 
Healthcare155 137 201 
Renewable Energy204 213 176 
Power369 236 402 
Corporate20 270 557 
Total restructuring and other charges$819 $1,254 $1,343 
Restructuring and other charges cash expenditures$781 $1,175 $1,209 

Liabilities associated with the consolidation of sales, service and manufacturing facilities, the integration of acquisitions, and certain other asset write-downs such as those associated with product line exits. We continue to closely monitor the economic environment and expect to undertake further restructuring actions to more closely align our cost structure with earnings goals.
(In billions)2019
2018
2017
    
Workforce reductions$0.8
$0.9
$1.0
Plant closures & associated costs and other asset write-downs0.3
1.4
1.5
Acquisition/disposition net charges0.2
0.6
0.5
Other—
—
0.1
Total restructuring and other charges$1.3
$3.0
$3.0
Cost of product/services$0.4
$1.1
$1.8
Selling, general and administrative expenses1.0
1.7
1.2
Other income—
0.1
0.1
Total restructuring and other charges$1.3
$3.0
$3.0
Power$0.4
$1.3
$0.9
Renewable Energy0.2
0.3
0.3
Aviation—
—
0.1
Healthcare0.2
0.2
0.3
Corporate0.6
1.1
1.5
Total restructuring and other charges by business$1.3
$3.0
$3.0

Cash expenditures for restructuring and other chargesactivities were approximately $1.2$1.0 billion, $1.5$1.3 billion, and $1.5$1.7 billion including actuarial determined post-employment severance benefits of $0.5 billion, $0.7 billion, and $1.0 billion as of December 31, 2021, 2020, and 2019, respectively.




*Non-GAAP Financial Measure
2021 FORM 10-K 17

INTEREST AND OTHER FINANCIAL CHARGES were $1.9 billion, $2.1 billion and $2.9 billion for the years ended December 31, 2021, 2020 and 2019, 2018respectively. The decreases for the years ended December 31, 2021 and 2017, respectively.

COSTS AND GAINS NOT INCLUDED IN SEGMENT RESULTS.As discussed2020 were primarily due to lower average borrowings balances, partially offset by a lower allocation of interest expense to discontinued operations. Inclusive of interest expense in the Segment Operations section within MD&A, certain amounts are not included in industrial segment results because they are excluded from measurement of their operating performance for internal and external purposes. These costs relate primarily to goodwill impairment charges, restructuring and acquisition and disposition activities.
 Costs Gains (Losses)
(In billions)2019
 2018
 2017
 2019
 2018
 2017
            
Power$0.4
 $20.5
 $2.0
 $—
 $1.0
 $1.9
Renewable Energy1.7
 3.3
 0.3
 —
 —
 —
Aviation—
 —
 0.1
 —
 (0.1) (0.3)
Healthcare0.2
 0.2
 0.3
 —
 0.8
 —
Total segments$2.2
 $24.0
 $2.7
 $—
 $1.7
 $1.6
Corporate Items and Eliminations0.6
 1.1
 1.5
 0.8
 (0.3) (0.7)
Total Industrial$2.8
 $25.1
 $4.2
 $0.8
 $1.4
 $0.9




*Non-GAAP Financial Measure

GE2019 FORM 10-K 21
MD&AOTHER CONSOLIDATED INFORMATION

OTHER CONSOLIDATED INFORMATION
INTEREST AND OTHER FINANCIAL CHARGES (In billions)
2019
2018
2017
    
GE$2.1
$2.4
$2.5
GE Capital2.5
3.0
3.1
Consolidated$4.2
$4.8
$4.7

The decrease in GEdiscontinued operations, total interest and other financial charges were $2.5 billion, $3.0 billion and $4.2 billion for the yearyears ended December 31, 2021, 2020 and 2019, wasrespectively. The decreases for the years ended December 31, 2021 and 2020 were driven primarily by lower expenses on sales of GE current and long-term receivables as well as the reversal of $0.1 billion of accrued interest on tax liabilities due to the completion of the 2012-2013 Internal Revenue Service (IRS) audit in June 2019, partially offset by the $0.3 billion loss resulting from the completion of a tender offer to purchase GE senior notes (including fees and other costs associated with the tender).average borrowings balances. The primary components of GE interest and other financial charges are interest on short- and long-term borrowings and financing costsborrowings. See Note 10 for further information about average interest rates on sales of receivables. Total GE interest and other financial charges of $1.3borrowings.

DEBT EXTINGUISHMENT COSTS were $6.5 billion, $0.3 billion and $1.5$0.3 billion were recorded at Corporate and $0.8 billion and $0.9 billion were recorded by GE segments for the years ended December 31, 2021, 2020 and 2019, respectively. During 2021, we executed debt tenders in the second and 2018, respectively.

The decrease in GE Capital interestfourth quarters and other financial charges for the year ended December 31, 2019 were primarily due to lower average borrowings balances due to maturities and lower net interest on assumedincurred debt resulting from an increase in intercompany loans to GE which bear the rightextinguishment costs of offset (see the Borrowings section of Capital Resources and Liquidity within MD&A for an explanation of assumed debt and right-of-offset loans), partially offset by an increase in average interest rates due to changes in market rates. GE Capital average borrowings were $61.8 billion, $78.7 billion and $103.8$1.4 billion in 2019, 2018the second quarter and 2017, respectively.$5.1 billion in the fourth quarter. The GE Capital average composite effectivemajority of these costs relate to the present value of accelerating future interest rate (includingpayments associated with the debt. As a result of these actions, we expect lower interest allocated to discontinued operations) was 4.2%, 3.9% and 3.1% in 2019, 2018 and 2017, respectively.expense going forward.

POSTRETIREMENT BENEFIT PLANS.The Employee Retirement Income Security Act (ERISA) determines minimum pension funding requirements in the U.S. We made $6.0 billion in contributionsRefer to the GE Pension Plan in 2018. On an ERISA basis, our preliminary estimate is that the GE Pension Plan was approximately 93% funded at January 1, 2020. The ERISA funded status is higher than the GAAP funded status (81% funded) primarily because the ERISA prescribed interest rate is calculated using an average interest rate. As a result, the ERISA interest rate is higher than the year-end GAAP discount rate. The higher ERISA interest rate lowers pension liabilitiesNote 12 for ERISA funding purposes. Our 2018 contributions satisfied our minimum ERISA funding requirement of $1.5 billion and the remaining $4.5 billion was a voluntary contribution to the plan. This voluntary contribution is sufficient to satisfy our minimum ERISA funding requirement for 2019 and 2020. In October 2019, we announced our intent to contribute approximately $4 to $5 billion to the GE Pension Plan in 2020. We expect this amount to equal our estimated future minimum ERISA funding requirements at least through 2022.

We expect 2020 postretirement benefit plans cost to be about $3.2 billion, which is a decrease of approximately $0.6 billion from 2019.

We expect to contribute in 2020 approximately $0.5 billion and $0.4 billion to our other pension plans and principal retiree benefit plans, respectively.

The funded status of our postretirement benefit plans and future effects on operating results depend on economic conditions, interest rates and investment performance. See the Critical Accounting Estimates section within MD&A and Note 13 to the consolidated financial statements for further information about our pension and retiree benefit plans, pension actions and the effects of this activity on our financial statements.

plans.
INCOME TAXES
CONSOLIDATED (Dollars in billions)
2019
2018
2017
 
INCOME TAXESINCOME TAXES202120202019
Effective tax rate (ETR)63.2%(0.4)%24.8%Effective tax rate (ETR)7.8 %(8.2)%(1,022.2)%
Provision (benefit) for income taxes$0.7
$0.1
$(2.8)Provision (benefit) for income taxes$(286)$(487)$552 
Cash income taxes paid(a)2.2
1.9
2.4
Cash income taxes paid(a)1,330 1,291 2,228 
(a) Included taxes paid related to discontinued operations.

For the year endedDecember 31, 2019, the consolidated income tax provision was $0.7 billion. The increase in the tax provision for 2019 was primarily due to tax expense associated with the preparatory internal restructuring for the planned BioPharma sale and the effect of higher pre-tax income excluding non-deductible impairment charges, partially offset by the benefit from the completion of the IRS audit of the 2012-2013 consolidated U.S. income tax returns.

In June 2019, the IRS completed the audit of our consolidated U.S. income tax returns for 2012-2013, which resulted in a decrease in our balance of unrecognized tax benefits (i.e., the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements). The Company recognized a resulting non-cash continuing operations tax benefit of $0.4 billion plus an additional net interest benefit of $0.1 billion. Of these amounts, GE recorded $0.4 billion of tax benefits and $0.1 billion of net interest benefits, and GE Capital recorded insignificant amounts of tax and net interest benefits. GE Capital also recorded a non-cash benefit in discontinued operations of $0.3 billion of tax benefits and an insignificant amount of net interest benefits. See Notes 2 and 15 to the consolidated financial statements for further information.

GE2019 FORM 10-K 22

MD&AOTHER CONSOLIDATED INFORMATION

For the year ended December 31, 20182021, the consolidated income tax rate was 7.8% compared to (8.2)% for the year ended December 31, 2020. The tax rate for 2021 reflects a tax benefit on a pre-tax loss. The negative tax rate for 2020 reflects a tax benefit on pre-tax income.

The consolidated benefit for income taxes was $(0.3) billion and $(0.5) billion for the years ended December 31, 2021 and 2020, respectively. The benefit decreased due to tax associated with the increase in pre-tax income excluding the gain from the sale of our BioPharma business and debt extinguishment costs ($2.0 billion) and from the nonrecurrence of the tax benefit recognized in 2020 for the completion of the Internal Revenue Service (IRS) audit for 2014-2015 ($0.1 billion). The increase in pre-tax income includes realized and unrealized gain on our remaining interest in Baker Hughes in 2021, compared to realized and unrealized loss in 2020. Partially offsetting these items was the nonrecurrence of the tax expense in 2020 associated with the disposition of the BioPharma business ($1.1 billion), the tax benefit on the debt extinguishment costs ($0.4 billion) as well as tax benefits associated with internal restructurings to recognize deductible stock and loan losses ($0.4 billion).

For the year ended December 31, 2020, the consolidated income tax provision benefit was $0.1$0.5 billion. The effectivechange in tax rate was negative for 2018 reflectingfrom a tax expense onprovision of $0.6 billion in 2019 to a consolidated pre-tax loss. The increase in the consolidated provisiontax benefit for income taxes for 20182020 was primarily attributabledue to the decrease in benefitpre-tax income excluding the gain from global operations including an increasethe sale of our BioPharma business and non-deductible goodwill impairment charges ($1.5 billion) and a decrease in valuation allowances on non-U.S. deferred tax assets and($0.2 billion) partially offset by the decreaseincrease in pre-tax loss (excluding non-deductible goodwill impairments)tax expense associated with a tax benefit above the average tax rate. Partially offsetting this increase was the decrease in the consolidated provision for income taxes attributable to an insignificant charge in 2018 to adjust the provisional estimatedisposition of the impact of the 2017 enactment of U.S. tax reformBioPharma business in 2020 compared to the $4.5 billion charge in 2017amount recognized on preparatory steps for the estimated impactplanned disposition in 2019 ($0.5 billion) and a decrease in benefit from the completion of enactment.IRS audits ($0.2 billion).

Absent the effectsadditional taxes enacted as part of U.S. tax reform and non-U.S. losses without a tax benefit, our consolidated income tax provision is generally reduced because of the benefits of lower-taxed global operations. The benefit from non-U.S. rates below the U.S. statutory rate was significant prior to the decrease in the U.S. statutory rate to 21% beginning in 2018. While reduced, there is still generally a benefitoperations as certain non-U.S. income is subject to local country tax rates that are below the new U.S. statutory tax rate.

The rate of tax on our profitable non-U.S. earnings is below the U.S. statutory tax rate because we have significant business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate and because GE funds certain non-U.S. operations through foreign companies that are subject to low foreign taxes. Most of these earnings have been reinvested in active non-U.S. business operations and as of December 31, 2019,2021, we have not decided to repatriate these earnings to the U.S. Given U.S. tax reform, substantially all of our net prior unrepatriated earnings were subject to U.S. tax and accordingly we generally expect to have the ability to repatriate available non-U.S. cash without additional U.S. federal tax cost and any foreign withholding taxes on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit. In December 2021, the Company announced plans to form three public companies focused on aviation, healthcare and energy. Planning for and execution of this separation will result in tax including potentially tax on changes in indefinite reinvestment outside the U.S. The impact of a change in reinvestment will be recorded when there is a specific change in ability and intent to reinvest earnings.

A substantial portion of the benefit for lower-taxed non-U.S. earnings related to business operations subject to tax in countries where the tax on that income is lower than the U.S. statutory rate is derived from our GECAS aircraft leasingAviation operations located in IrelandSingapore where the earnings are primarily taxed at 12.5%, froma rate of 8% and our Power operations located in Switzerland where the earnings are taxed at between 9% and 18.6%, and our Healthcare operations in Europe where tax deductions are allowed for certain intangible assets and earnings are taxed below the historic U.S. statutory rate..

2021 FORM 10-K 18

The rate of tax on non-U.S. operations is increased, however, because we also incur losses in foreign jurisdictions where it is not likely that the losses can be utilized and no tax benefit is provided for those losses and valuation allowances against loss carryforwards are provided when it is no longer likely that the losses can be utilized. Non-U.S. losses also limit our ability to claim U.S. foreign tax credits on certain operations, further increasing the rate of tax on non-U.S. operations. In addition, as part of U.S. tax reform, the U.S. has enacted a tax on “base eroding” payments from the U.S. We are continuing to undertakehave taken restructuring actions to mitigate the impact from this provision. The U.S. has also enacted a minimum tax on foreign earnings (global intangible low tax income). Because we have tangible assets outside the U.S. and pay significant foreign taxes, we generally do not expect a significant increase in tax liability from this new U.S. minimum tax. Overall, these newly enacted provisions increase the rate of tax on our non-U.S. operations.

BENEFIT/(EXPENSE) FROM GLOBAL OPERATIONS (In billions)
2019
2018
2017
    
Benefit/(expense) of foreign tax rate difference on non-U.S. earnings$—
$(0.3)$0.5
Benefit of audit resolutions0.1
0.2
—
Other(1.1)(0.9)2.9
Total benefit/(expense)$(1.0)$(1.0)$3.4
(BENEFIT)/EXPENSE FROM GLOBAL OPERATIONS202120202019
Foreign tax rate difference on non-U.S. earnings$137 $(104)$65 
Audit resolutions(81)(129)(86)
Other99 186 526 
Total (benefit)/expense$155 $(47)$505 

The amounts reported above exclude the impact of U.S. tax reform which is reported as a separate line in the reconciliation of the U.S. federal statutory income tax rate to the actual tax rate in Note 15 to the consolidated financial statements.

For the year ended December 31, 20192021,, the increasechange from a benefit from global operations in 2020 to an expense from global operations in 2021 reflects the tax expenselower benefits associated with legacy financial services operations.

For the preparatory internal restructuring for year ended December 31, 2020, the planned BioPharma sale andchange from an increaseexpense from global operations in 2019 to a benefit from global operations in 2020 primarily reflects decrease in valuation allowances on non-U.S. deferred tax assets offset by a benefit from change in foreign rate and by a tax benefit from additional guidance on provisions enacted as part of U.S. tax reform.assets.

For the year ended December 31, 2018, the decrease in benefit from lower-taxed global operations reflects the lower U.S. statutory tax rate and losses without tax benefit. The decrease in other benefits reflects increases in incremental valuation allowances on non-U.S. deferred tax assets and for 2018 newly enacted taxes on non-U.S. earnings and the nonrecurrence of 2017 benefits associated with repatriation of foreign earnings.

A more detailed analysis of differences between the U.S. federal statutory rate and the consolidated effective rate, as well as other information about our income tax provisions, is provided in the Critical Accounting Estimates section within MD&A and Note 15 to the consolidated financial statements. The nature of business activities and associated income taxes differ for GE and for GE Capital; therefore, a separate analysis of each is presented in the paragraphs that follow.

GE2019 FORM 10-K 23
MD&AOTHER CONSOLIDATED INFORMATION

GE EFFECTIVE TAX RATE (EXCLUDING GE CAPITAL EARNINGS) (Dollars in billions)
2019
2018
2017
    
GE ETR, excluding GE Capital earnings*72.7%(2.3)%271.0%
GE provision for income taxes$1.3
$0.5
$3.5

14.
For the year ended December 31, 2019
, the GE provision for income taxes increased compared to 2018 primarily due to tax expense associated with the preparatory internal restructuring for the planned BioPharma sale and the effect of higher pre-tax income excluding non-deductible impairment charges, partially offset by the benefit from the completion of the IRS audit of the 2012-2013 consolidated U.S. income tax returns.

For the year ended December 31, 2018, the GE provision for income taxes decreased compared to 2017 because of the nonrecurrence of the $4.9 billion charge for the provisional charge associated with the enactment of U.S. tax reform. Excluding the 2017 charge associated with U.S. tax reform, the GE tax provision increased by $1.9 billion. The increase was primarily due to the decrease in benefit from global operations including an increase in valuation allowances on non-U.S. deferred tax assets partially offset by the effect of lower pretax income excluding non-deductible impairment charges.
GE CAPITAL EFFECTIVE TAX RATE (Dollars in billions)
2019
2018
2017
    
GE Capital ETR89.3%99.7%49.9%
GE Capital provision (benefit) for income taxes$(0.6)$(0.4)$(6.3)

For the year ended December 31, 2019,the increase in the tax benefit at GE Capital from a benefit of $0.4 billion in 2018 to a benefit of $0.6 billion in 2019 is primarily due to a benefit from additional guidance on the transition tax on historic foreign earnings enacted as part of U.S. tax reform, compared to a charge associated with the enactment of U.S. tax reform during 2018.

For the year ended December 31, 2018, the decrease in the tax benefit at GE Capital from a benefit of $6.3 billion in 2017 to a benefit of $0.4 billion in 2018 is primarily due to the decrease in the pre-tax loss with a tax benefit above the average tax rate including the nonrecurrence of the one-time charge to revalue insurance reserves.

RESEARCH AND DEVELOPMENT. We conduct research and development (R&D) activities to continually enhance our existing products and services, develop new products and services to meet our customers’ changing needs and requirements, and address new market opportunities. R&D expenses are classified in cost of goods and services sold in our consolidated Statement of Earnings (Loss). In addition to funding R&D internally, we also receive funding externally from our customers principallyand partners, which contributes to the U.S. government, is recorded as an offset to such costs.overall R&D for the company. 
GE fundedCustomer and Partner funded(b)Total R&D
202120202019202120202019202120202019
Aviation$664 $707 $906 $972 $1,090 $911 $1,637 $1,797 $1,817 
Healthcare816 845 994 32 27 25 847 872 1,019 
Renewable Energy546 466 522 15 19 9 561 485 531 
Power294 317 314 34 13 13 329 330 327 
Corporate(a)177 231 382 134 106 89 311 336 471 
Total$2,497 $2,565 $3,118 $1,187 $1,255 $1,046 $3,685 $3,820 $4,164 
 GE fundedCustomer and Partner funded(b)Total R&D
(In millions)2019
2018
2017
2019
2018
2017
2019
2018
2017
          
Power$310
$407
$641
$16
$7
$35
$327
$414
$676
Renewable Energy522
413
448
9
11
3
531
424
451
Aviation906
950
907
911
564
586
1,817
1,514
1,492
Healthcare994
968
908
25
23
26
1,019
991
934
Corporate(a)382
675
1,271
89
48
65
471
722
1,336
Total$3,115
$3,414
$4,175
$1,049
$652
$715
$4,164
$4,065
$4,890
(a) Includes Global Research Center and Digital.Digital business.
(b) Customer funded is principally U.S. Government funded in our Aviation segment. R&D funded through consolidated partnerships was immaterial for all periods presented.

DISCONTINUED OPERATIONS.OPERATIONS Discontinued operations primarily includecomprise our Baker Hughes and Transportation segments,GE Capital Aviation Services (GECAS) business, discontinued in 2021, our mortgage portfolio in Poland, residualand other trailing assets and liabilities related to our exited U.S. mortgage business (WMC), as discussed in Notes 2 and 23 to the consolidated financial statements, and trailing liabilities associated with the saleprior dispositions. Results of our GE Capital businesses.

In September 2019, we sold a total of 144.1 million shares in Baker Hughesoperations, financial position and cash flows for $3.0 billion in cash (net of certain deal related costs) which reduced our ownership interest from 50.2% to 36.8%. As a result, we have deconsolidated our Baker Hughes segment and reclassified its results tothese businesses are reported as discontinued operations for all periods presented. In addition, as disclosed in prior filings, including our 2018 Form 10-K, we expectedpresented and the notes to recordthe financial statements have been adjusted on a significant loss upon deconsolidation. In 2019, we recorded a loss of $8.7 billion ($8.2 billion after-tax) in discontinued operations.

In February 2019, as a result of the spin-off and subsequent merger of our Transportation business with Wabtec, we reclassified our Transportation segment to discontinued operations for all periods presented. In the first quarter of 2019, we recorded a gain of $3.5 billion ($2.5 billion after-tax) in discontinued operations.retrospective basis. See Notes 2 and 3 to the consolidated financial statements for further information.



*Non-GAAP Financial Measure

GE2019 FORM 10-K 24

MD&AOTHER CONSOLIDATED INFORMATION

In June 2019, GE Capital recorded $0.3 billion of tax benefits and an insignificant amount of net interest benefits due to a decrease in our balance of unrecognized tax benefits. See the Consolidated Income Tax section above and Note 15 to the consolidated financial statements for further information.

In January 2019, we announced an agreement in principle with the United States to settle the investigation by the U.S. Department of Justice (DOJ) regarding potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of $1.5 billion. See Note 23 to the consolidated financial statements for further information.

The mortgage portfolio in Poland (Bank BPH) comprises floating rate residential mortgages, with approximately 86% of the portfolio indexed to or denominated in foreign currencies (primarily Swiss francs) and the remaining 14% denominated in the local currency in Poland. At December 31, 2019, the total portfolio had a carrying value of $2.5 billion with a 1.4% 90-day delinquency rate and an average loan to value ratio of approximately 65%. The portfolio is recorded at fair value less cost to sell and includes a $0.3 billion impairment, which reflects our best estimate of the effects of potential legislative relief to borrowers and of ongoing litigation in Poland related to foreign currency-denominated mortgages. Future adverse developments in the potential for legislative relief or in litigation across the Polish banking industry could result in further impairment or other losses related to these loans in future reporting periods. See Note 23 to the consolidated financial statements for further information.
FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS (In billions)
2019
2018
2017
    
Earnings (loss) of discontinued operations, net of taxes$0.3
$(1.4)$(0.4)
Gain (loss) on disposal, net of taxes(5.7)—
0.1
Earnings (loss) from discontinued operations, net of taxes$(5.3)$(1.4)$(0.3)

See Note 2 to the consolidated financial statements22 for further information forregarding our businesses in discontinued operations.

CAPITAL RESOURCES AND LIQUIDITY
FINANCIAL POLICY.POLICY. We intend to maintain a disciplined financial policy targetingwith a sustainable investment-grade long-term credit rating inrating. In the Single-A range with a GE Industrial net debt*-to-EBITDA ratiofourth quarter of less than 2.5x and a dividend in line with our peers over time, as well as a less than 4-to-1 debt-to-equity ratio for GE Capital. Both GE and GE Capital are on track to meet their respective leverage goals in 2020. In addition to net debt*-to-EBITDA, we also evaluate other measures, including gross debt-to-EBITDA, and we will ultimately size our deleveraging actions across a range of measures to ensure we are operating2021, the Company based on a strong balance sheet. Weannounced plans to form three industry-leading, global, investment-grade companies, each of which will evaluate additional potential actions based on deleveraging impact, economics, risk mitigationdetermine their own financial policies, including capital allocation, dividend, mergers and target capital structure while also monitoring key risks.acquisitions and buy back decisions.

LIQUIDITY POLICY. We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our business needs and financial obligations under both normal and stressed conditions. At both GEWe believe that our consolidated liquidity and GE Capital, we manageavailability under our liquidity to provide access torevolving credit facilities will be sufficient funding to meet our business needs and financial obligations, as well as capital allocation and growth objectives, throughout business cycles.liquidity needs.

CONSOLIDATED LIQUIDITY. Following is a summaryOur primary sources of liquidity consist of cash and cash equivalents, free cash flows* from our operating businesses, cash generated from asset sales and dispositions, and short-term borrowing facilities, including revolving credit facilities. Cash generation can be subject to variability based on many factors, including seasonality, receipt of down payments on large equipment orders, timing of billings on long-term contracts, market conditions and our ability to execute dispositions. Total cash, cash equivalents and restricted cash was $15.8 billion at December 31, 2019.2021, of which $6.4 billion was held in the U.S. and $9.4 billion was held outside the U.S.


*Non-GAAP Financial Measure
2021 FORM 10-K 19
(In billions)December 31, 2019
  December 31, 2019
     
GE$17.6
 U.S.$14.9
GE Capital18.8
 Non-U.S.21.4
Consolidated$36.4
 Consolidated$36.4


Cash held in non-U.S. entities has generally been reinvested in active foreign business operations; however, substantially all of our unrepatriated earnings were subject to U.S. federal tax and, if there is a change in reinvestment, we would expect to be able to repatriate available cash (excluding amounts held in countries with currency controls) without additional federal tax cost. Any foreign withholding tax on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit.

Following With regards to our announcement to form three public companies, we expect that planning for and execution of this separation will impact indefinite reinvestment. The impact of that change will be recorded when there is an overview of the primary sources of liquidity for GEa specific change in ability and GE Capital. See the Statement of Cash Flows section within MD&A for information regarding GE and GE Capital cash flow results.

intent to reinvest earnings.
GE LIQUIDITY.GE's primary sources of liquidity consist of cash and cash equivalents, free cash flows from our operating businesses, monetization of receivables, proceeds from announced dispositions, and short-term borrowing facilities. Cash generation can be subject to variability based on many factors, including seasonality, receipt of down payments on large equipment orders, timing of billings on long-term contracts, the effects of changes in end markets and our ability to execute dispositions.

GE also has available short-term borrowing facilities to fund its operations, including a commercial paper program, revolving credit facilities and short-term intercompany loans from GE Capital, which are generally repaid within the same quarter. See the Borrowings section for details of our credit facilities and borrowing activity in our external short-term borrowing facilities.
*Non-GAAP Financial Measure

GE2019 FORM 10-K 25
MD&ACAPITAL RESOURCES AND LIQUIDITY

GE cash,Cash, cash equivalents and restricted cash totaled $17.6 billion at December 31, 2019, including $2.62021 included $2.0 billion of cash held in countries with currency control restrictions and $0.5$0.3 billion of restricted use cash. Cash held in countries with currency controls represents amounts held in countries whichthat may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. Restricted use cash represents amounts that are not available to fund operations, and primarily comprised collateral for receivables sold and funds restricted in connection with certain ongoing litigation matters.

GE realized a total of approximately $10.3 Excluded from cash, cash equivalents and restricted cash was $0.4 billion of dispositioncash in our run-off Insurance business, which was classified as All other assets in the Statement of Financial Position.

In connection with the program we launched in 2020 to fully monetize our Baker Hughes position over approximately three years, we received total proceeds for the year ended December 31, 2019, comprising $4.7of $4.1 billion in 2021, including $1.2 billion in the thirdfourth quarter of 2019, primarily from the sale of a portion of our stake in Baker Hughes and our remaining stake in Wabtec, $2.2 billion in the second quarter of 2019 primarily from the sale of a portion of our stake in Wabtec, and $3.42021. In addition, we received $1.3 billion in the first quarter of 2019 primarily from the completion of the merger of2022. In addition, we expect to fully monetize our Transportation business with Wabtec and the sale of our Digital ServiceMax business.

In the first quarter of 2020, GE expects to receive approximately $20 billion of proceeds from the sale of our BioPharma business within our Healthcare segment, subject to regulatory approval. GE expects to use these proceeds as well as existing liquidity to repay the remaining $12.2 billion of intercompany loans from GE Capital, to contribute approximately $4 to $5 billion to the GE Pension Plan, which will equal our future minimum ERISA funding requirements through at least 2022, and to execute additional deleveraging actions of approximately $5 billion. Additionally, GE expects to receive proceeds from an orderly sale of our remaining stake in Baker Hughes.

AerCap over time.
GE CAPITAL LIQUIDITY.GE Capital’s primary sources of liquidity consist of cash and cash equivalents, cash generated from asset sales and cash flows from our businesses. Based on asset and liability management actions we have taken, GE Capital does not plan to issue any incremental GE Capital senior unsecured term debt until at least 2021. We expect to maintain an adequate liquidity position to fund our insurance obligations and debt maturities primarily as a result of cash flows from our businesses, GE repayments of intercompany loans and capital contributions from GE. See the Segment Operations - Capital section within MD&A for further information regarding allocation of GE Capital interest expense to the GE Capital businesses.

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.

GE Capital generated proceeds of approximately $12 billion from asset reductions for the year ended December 31, 2019, including $3.6 billion from the sale of a substantial portion of the assets and liabilities of PK AirFinance in the fourth quarter of 2019, exceeding our plan to execute total asset reductions of approximately $10 billion in 2019 and our overall $25 billion target, and completing our asset reduction plan. GE Capital also received an additional capital contribution of $2.5 billion from GE in the fourth quarter of 2019, totaling $4.0 billion for 2019.

GE CapitalWe provided capital contributions to itsour insurance subsidiaries of $2.0 billion, $2.0 billion, $1.9 billion and $3.5 billion in the first quarters of 2021, 2020, 2019 and 2018, respectively, and expectsexpect to provide further capital contributions of approximately $7$5.5 billion through 2024.2024, including approximately $2.0 billion in the first quarter of 2022, pending completion of our December 31, 2021 statutory reporting process, which includes asset adequacy testing. These contributions are subject to ongoing monitoring by KID,the Kansas Insurance Department (KID), and the total amount to be contributed could increase or decrease, or the timing could be accelerated, based upon the results of reserve adequacy testing or a decision by KID to modify the schedule of contributions set forth in January 2018. GE maintainsWe are required to maintain specified capital levels at these insurance subsidiaries under capital maintenance agreements. Going forward, we anticipate funding any capital needs for insurance through a combination of GE Capital liquidity, GE Capital asset sales, GE Capital future earnings and capital contributions from GE.

BORROWINGS. Consolidated total borrowings were $90.9$35.2 billion and $103.6$74.9 billion at December 31, 20192021 and December 31, 2018, respectively.2020, respectively, a decrease of $39.7 billion. The reduction in borrowings was driven primarily by completiondebt repurchases of a tender offer to purchase GE long-term$32.6 billion, net repayments and maturities of debt of $4.8$4.6 billion, and net repayments of GE Capital debt of $9.5 billion (including $9.3$1.7 billion of long-term debt maturities), partially offset by an increase of $0.8 billion in fair value adjustments for GE Capital debt in fair value hedge relationships, as a result of lower interest rates.and $0.8 billion related to changes in foreign exchange rates and other amortization.

GE Industrial net debt* was $47.9 billion and $55.1We have in place committed revolving credit facilities totaling $14.4 billion at December 31, 2019 and 2018, respectively. The reduction was driven primarily by the completion2021, comprised of a tender offer to purchase GE long-term debt of $4.8$10.0 billion in the third quarter of 2019 and total repayments of $1.5 billion of intercompany loans from GE Capital, as well as a higher ending cash balance.

In 2015, senior unsecured notes and commercial paper were assumed by GE upon its merger with GE Capital. Under the conditions of the 2015 assumed debt agreement, GE Capital agreed to continue making required principal and interest payments on behalf of GE, resulting in the establishment of an intercompany receivable and payable between GE and GE Capital. In addition, GE Capital has periodically made intercompany loans to GE with maturity terms that mirror the assumed debt. As these loans qualify for right-of-offset presentation, they reduce the assumed debt intercompany receivable and payable between GE and GE Capital, as noted in the table below.









*Non-GAAP Financial Measure

GE2019 FORM 10-K 26

MD&ACAPITAL RESOURCES AND LIQUIDITY

The following table provides a reconciliation of total short- and long-term borrowings as reported on the respective GE and GE Capital Statements of Financial Position to borrowings adjusted for assumed debt and intercompany loans:
December 31, 2019 (In billions)
GE
GE Capital
Consolidated(a)
    
Total short- and long-term borrowings$52.1
$39.9
$90.9
    
Debt assumed by GE from GE Capital(31.4)31.4
—
Intercompany loans with right of offset12.2
(12.2)—
Total intercompany payable (receivable) between GE and GE Capital(19.1)19.1
—
    
Total borrowings adjusted for assumed debt and intercompany loans$32.9
$59.0
$90.9
(a)Included elimination of other GE borrowings from GE Capital, primarily related to timing of cash settlements associated with GE receivables monetization programs.

When measuring the individual financial positions of GE and GE Capital, assumed debt should be considered a GE Capital debt obligation, and the intercompany loans with the right of offset mentioned above should be considered a GE debt obligation and a reduction of GE Capital’s total debt obligations. The following table illustrates the primary components of GE and GE Capital borrowings, adjusted for assumed debt and intercompany loans.
GE (In billions)
December 31, 2019
December 31,
2018
 
GE Capital (In billions)
December 31, 2019
December 31, 2018
Commercial paper$3.0
$3.0
 Commercial paper$—
$—
GE senior notes15.5
20.4
 Senior and subordinated notes36.5
39.1
Intercompany loans from
GE Capital
12.2
13.7
 Senior and subordinated notes assumed by GE31.4
36.3
Other GE borrowings2.2
2.6
 Intercompany loans to GE(12.2)(13.7)
    Other GE Capital borrowings(a)3.4
3.9
    Total GE Capital  
Total GE adjusted borrowings$32.9
$39.7
 adjusted borrowings$59.0
$65.5
(a) Included $1.7 billion and $1.9 billion at December 31, 2019 and December 31, 2018, respectively, of non-recourse borrowings of consolidated securitization entities where GE Capital has securitized financial assets as an alternative source of funding.

The intercompany loans from GE Capital to GE bear the right of offset against amounts owed by GE Capital to GE under the assumed debt agreement and can be prepaid by GE at any time, in whole or in part, without premium or penalty. These loans are priced at market terms and have a collective weighted average interest rate of 3.5% and term of approximately 11.7 years at December 31, 2019. In 2019, GE repaid a total of $1.5 billion of intercompany loans from GE Capital.

GE has in place committed credit lines which it may use from time to time to meet its short-term liquidity needs. The following table provides a summary of committed and available credit lines.
GE COMMITTED AND AVAILABLE CREDIT FACILITIES (In billions)
December 31, 2019December 31, 2018
   
Unused back-up revolving credit facility$20.0
$20.0
Revolving credit facilities (exceeding one year)18.9
23.9
Bilateral revolving credit facilities (364-day)3.1
3.6
Total committed credit facilities$42.0
$47.5
Less offset provisions6.7
6.7
Total net available credit facilities$35.3
$40.8

Included in our credit facilities is an unused $20.0 billion back-up revolving syndicated credit facility extended by 36 banks, expiring in 2021, and an unused $14.8a total of $4.4 billion revolving syndicated credit facility extended by six banks, expiring on December 31, 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.


GE2019 FORM 10-K 27
MD&ACAPITAL RESOURCES AND LIQUIDITY

The amount committed and available under the syndicated credit facility expiring on December 31, 2020 will periodically be reduced by the greater of specified contractual commitment reductions or calculated commitment reductions, which is determined based on any potential specified issuances of equity and incurrences of incremental debt by GE or its subsidiaries, as well as a portion of industrial business disposition proceeds. In the first quarter of 2019, the amount committed and available under this facility was reduced by the calculated commitment reduction of $5.0 billion to $14.8 billion. Pursuant to an amendment entered into in the first quarter 2019, further commitment reductions (other than those related to incremental debt issuances or equity issuances) are deferred until the earlier of the closing of the BioPharma transaction or September 30, 2020. If the BioPharma transaction closes prior to June 30, 2020, the commitments under the facility are reduced by the greater of $7.4 billion or the calculated commitment reductions through the BioPharma closing date (including all deferred reductions). If the BioPharma transaction closes on or after June 30, 2020, the commitments under the facility are reduced by the greater of $9.9 billion or the calculated commitment reductions through the BioPharma closing date (including all deferred reductions). The $20.0 billion syndicated back-up revolving credit facility expiring in 2021 does not contain any contractual commitment reduction features.

Under the terms of an agreement between GE Capital and GE, GE Capital has the right to compel GE to borrow under all credit facilities except the syndicated facility expiring on December 31, 2020 and transfer the proceeds to GE Capital as intercompany loans, which would be subject to the same terms and conditions as those between GE and the lending banks. GE Capital has not exercised this right.

The following table provides a summary of the activity in the primary external sources of short-term borrowings for GE in the fourth quarters of 2019 and 2018.
(In billions)GE Commercial Paper
Revolving Credit Facilities
Total
    
2019   
Average borrowings during the fourth quarter$3.0
$1.3
$4.3
Maximum borrowings outstanding during the fourth quarter3.2
1.5
4.7
Ending balance at December 313.0
—
3.0
    
2018   
Average borrowings during the fourth quarter$7.9
$2.5
$10.4
Maximum borrowings outstanding during the fourth quarter10.7
5.1
14.8
Ending balance at December 313.0
—
3.0

Total average and maximum borrowings in the table above are calculated based on the daily outstanding balance of the sum of commercial paper andbilateral revolving credit facilities.

The reductionLiability Management Actions. During 2021, we completed debt tenders to repurchase a total of $32.6 billion of debt, comprising $7.3 billion in total GE averagethe second quarter of 2021 and maximum short-term borrowings during$25.3 billion in the fourth quarter of 2019 compared to the fourth quarter of 2018 was driven by holding higher cash balances and improvements in our global funding and cash management operations.2021. See Note 10 for further information.

In addition to its external liquidity sources, GE may from time to time enter into short-term intercompany loans from GE Capital to utilize GE Capital’s excess cash as an efficient source of liquidity. These loans are repaid within the same quarter. No such loans were made in 2019. GE Capital did not issue any commercial paper or draw on any revolving credit facilities in 2019.

CREDIT RATINGS AND CONDITIONS. We have relied, and may continue to rely, on the short- and long-term debt capital markets to fund, among other things, a significant portion of our operations. The cost and availability of debt financing is influenced by our credit ratings. Moody’s Investors Service (Moody’s), Standard and Poor’s Global Ratings (S&P), and Fitch Ratings (Fitch) currently issue ratings on GE and GE Capitalour short- and long-term debt. TheAs a result of our transition to one-column financial statement reporting in the fourth quarter of 2021, we are now presenting our credit ratings of GE and GE Capitalon a consolidated basis for the Company. Our credit ratings as of the date of this filing are set forth in the table below.
Moody'sS&PFitch
OutlookNegativeCreditWatch NegativeStable
GEShort termP-2A-2F3
OutlookStableStableNegative
Short termP-2A-2F2
Long termBaa1BBB+BBB+
GE Capital
OutlookStableStableNegative
Short termP-2A-2F2
Long termBaa1BBB+BBB+BBB

There were no changes in GE or GE Capital ratings fromIn the endfourth quarter of 2021, upon the completion of the first quarter of 2019 through the date of this filing.GECAS transaction, Moody’s and Fitch affirmed our credit rating and outlook, and S&P resolved our CreditWatch designation with no change to our rating. Upon our subsequent announcement to form three independent companies, Moody’s and Fitch affirmed their respective credit ratings and outlooks, and S&P placed us on CreditWatch with negative implications.

We are disclosing our credit ratings and any current quarter updates to these ratings to enhance understanding of our sources of liquidity and the effects of our ratings on our costs of funds.funds and access to liquidity. Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. For a description of some of the potential consequences of a reduction in our credit ratings, see the Financial Risks section of Risk Factors in this report.

GE2019 FORM 10-K 28
Substantially all of the Company's debt agreements in place at December 31, 2021 do not contain material credit rating covenants. Our unused back-up revolving syndicated credit facility and certain of our bilateral revolving credit facilities contain a customary net debt-to-EBITDA financial covenant, which we satisfied at December 31, 2021.

MD&ACAPITAL RESOURCES AND LIQUIDITY

The Company may from time to time enter into agreements that contain minimum ratings requirements. The following table provides a summary of the maximum estimated potential liquidity impact in the event of further downgrades with regards to thebelow each stated ratings level.

2021 FORM 10-K 20

Triggers BelowAt December 31, 2021
BBB+/A-2/P-2$34 
BBB/A-3/P-3176 
BBB-1,015 
BB+ and below469 
Our most significant contractual credit ratings conditions of the Company based on their proximityrequirements are related to our current ratings.
(In billions)Triggers BelowAt December 31, 2019
   
Derivatives  
TerminationsBBB/Baa2$(0.2)
Cash margin postingBBB/Baa2(0.5)
Receivables Sales Programs  
Loss of cash comminglingA-2/P-2/F2$(0.3)
Alternative funding sourcesA-2/P-2/F2(1.1)

ordinary course commercial activities. The timing within the quarter of the potential liquidity impact of these areas may differ, as described incan the following sections which provide additional details regarding the significant credit rating conditionsremedies to resolving any potential breaches of the Company.

required ratings levels.
DEBT CONDITIONS.
Substantially all of our debt agreements do not contain material credit rating covenants. If our short-term credit ratings were to fall below A-2/P-2/F2, it is possible that we would lose all or part of our access to the tier-2 commercial paper markets, which would reduce our borrowing capacity in those markets. This may result in increased utilization of our revolving credit facilities to fund our intra-quarter operations.

DERIVATIVE CONDITIONS.Swap, forward and option contracts are executed under standard master agreements that typically contain mutual downgrade provisions that provide the ability of the counterparty to require termination if the credit ratings of the applicable GE entity were to fall below specified ratings levels agreed upon with the counterparty, primarily BBB/Baa2. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into account any collateral posted. The net amount of our derivative liability subject to such termination provisions, after consideration of collateral posted by us and outstanding interest payments was $0.2 billion at December 31, 2019. This excludes exposure related to embedded derivatives, which are not subject to these provisions.

In addition, certain of our derivatives, primarily interest rate swaps, are subject to additional cash margin posting requirements if our credit ratings were to fall below BBB/Baa2. The amount of additional margin will vary based on, among other factors, market movements and changes in our positions. At December 31, 2019, the amount of additional margin that we could be required to post if we fell below these ratings levels was approximately $0.5 billion.

See Note 21 to the consolidated financial statements for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.

OTHER CONDITIONS.Where we provide servicing for third-party investors under certain of our receivable sales programs, GE is contractually permitted to commingle cash collected from customers on financing receivables sold to third-party investors with our own cash prior to payment to third-party investors, provided our short-term credit rating does not fall below A-2/P-2/F2. In the event any of our ratings were to fall below such levels, we may be required to segregate certain of these cash collections owed to third-party investors into restricted bank accounts and would lose the short-term liquidity benefit of commingling with respect to such collections. The financial impact to our intra-quarter liquidity would vary based on collections activity for a given quarter and may result in increased utilization of our revolving credit facilities. The loss of cash commingling would have resulted in an estimated maximum reduction of approximately $0.3 billion to GE intra-quarter liquidity during the fourth quarter of 2019.

In addition, we have relied, and may continue to rely, on securitization programs to provide alternative funding for sales of GE receivables to third-party investors. If any of our short-term credit ratings were to fall below A-2/P-2/F2, the timing or amount of liquidity generated by these programs could be adversely impacted. In the fourth quarter of 2019, the estimated maximum reduction to our ending liquidity had our credit ratings fallen below these levels was approximately $1.1 billion.

FOREIGN EXCHANGE AND INTEREST RATE RISKS. As a result of our global operations, we generate and incur a significant portion of our revenues and expenses in currencies other than the U.S. dollar. Such principal currencies include the euro, the Australian dollar,Chinese renminbi, the Brazilian realIndian rupee and the Chinese renminbi,Japanese yen, among others. The effects of foreign currency fluctuations on earnings, excluding the earnings impact of the underlying hedged item, was less than $0.1 billion $0.3 billion, and $0.1 billion for the years ended December 31, 2019, 20182021 , 2020 and 2017, respectively.2019. This analysis excludes any offsetting effect from the forecasted future transactions that are economically hedged. See Note 20 for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.


GE2019 FORM 10-K 29
MD&ACAPITAL RESOURCES AND LIQUIDITY

Exchange rate and interest rate risks are managed with a variety of techniques, including selective use of derivatives. We apply policies to manage each of these risks, including prohibitions on speculative activities. FollowingIt is an analysisour policy to minimize currency exposures and to conduct operations either within functional currencies or using the protection of hedge strategies. To test the potential effectseffectiveness of changes inour hedging actions, for interest rate risk we assumed that, on January 1, 2022, interest rates decreased by 100 basis points and the decrease remained in place for the next 12 months and for currency risk of assets and liabilities denominated in other than their functional currencies, we evaluated the effect of a 10% shift in exchange rates.rates against the U.S. dollar (USD). The analyses indicated that our 2021 consolidated net earnings would decline by $0.1 billion for interest rate risk and less than $0.1 billion for foreign exchange risk.
•
It is our policy

to minimize exposure to interest rate changes and their impact to interest and other financial charges. We fund our financial investments using a combination of debt and hedging instruments so that the interest rates of our borrowings match the expected interest rate profile on our assets. It is our policy to minimize currency exposures and to conduct operations either within functional currencies or using the protection of hedge strategies. To test the effectiveness of our hedging actions, for interest rate risk we assumed that, on January 1, 2020, interest rates decreased by 100 basis points and the decrease remained in place for the next 12 months and for currency risk of assets and liabilities denominated in other than their functional currencies, we evaluated the effect of a 10% shift in exchange rates against the U.S. dollar. The analyses indicated that our 2019 consolidated net earnings would decline by less than $0.1 billion for interest rate risk and approximately $0.1 billion for foreign exchange risk.

LIBOR REFORM. In connection with the potential transition away from the use of the London interbank offered rate (LIBOR) as an interest rate benchmark, we are currently in the process of identifying and managingICE Benchmark Administration Limited (IBA) plans to cease the potential impact toremaining USD LIBOR settings immediately following the Company.LIBOR publication on June 30, 2023. The majority of the Company’s exposuremost significant exposures to LIBOR relatesrelate to preferred stock and certain floating-rate debt securities issued by GE Capital,the Company, which use USD LIBOR. Such preferred stock and floating rate debt are governed by New York law.

On April 6, 2021, New York State legislation addressing the cessation of USD LIBOR was signed into law, which provides a statutory remedy for whichcontracts that include contractual fallback language exists,that requires the selection of a benchmark replacement rate based on USD LIBOR, such as well asour floating rate debt and preferred stock. On the date USD LIBOR permanently ceases to be published or is announced to no longer be representative, our floating rate debt and preferred stock issuedwill be deemed to be replaced by GE, substantially all ofthe “recommended benchmark replacement”, which converts to LIBOR in January 2021. is the Secured Overnight Financing Rate (SOFR) plus a spread adjustment.

Additionally, with respect to our derivatives portfolio, we will revieware managing the transition from LIBOR based on industry-wide LIBOR reform efforts, including the LIBOR protocols issued by the International Swaps and expect that such efforts will provide guidance on how to manageDerivatives Association.

We are in the process of managing the transition, from LIBORand any financial impact will be accounted for derivatives.under Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

STATEMENT OF CASH FLOWS – OVERVIEW FROM 2017 THROUGH 2019. We manage the cash flow performance of our industrial and financial services businesses separately. We therefore believe it is useful to report separate GE and GE Capital columns in our Statement of Cash Flows because it enables us and our investors to evaluate the cash from operating activities of our industrial businesses (the principal source of cash generation for our industrial businesses) separately from the cash flows of our financial services business, as well as to evaluate the cash flows between our industrial businesses and GE Capital.

In preparing our Statement of Cash Flows, we make certain adjustments to reflect cash flows that cannot otherwise be calculated by changes in our Statement of Financial Position. These adjustments may include, but are not limited to, the effects of currency exchange, acquisitions and dispositions of businesses, businesses classified as held for sale, the timing of settlements to suppliers for property, plant and equipment, non-cash gains/losses and other balance sheet reclassifications.

All other operating activities reflect cash sources and uses as well as non-cash adjustments to net earnings (loss). See Note 24 to the consolidated financial statements for further information regarding All other operating activities, All other investing activities and All other financing activities for both GE and GE Capital.

The following investing and financing activities affected recognized assets or liabilities but did not result in cash receipts or payments in 2019: the ownership interest received and tax benefits receivable as a result of the spin-off and subsequent merger of our Transportation segment with Wabtec; our retained ownership interest in Baker Hughes; additional non-cash deferred purchase price received by GE Capital related to sales of current receivables; and right-of-use assets obtained in operating leases. See Notes 2, 4 and 7, respectively, to the consolidated financial statements.

See the Intercompany Transactions between GE and GE Capital section within MD&A and Notes 4 and 25 to the consolidated financial statements for further information regarding certain transactions affecting our consolidated Statement of Cash Flows.

GE CASH FLOWS FROM CONTINUING OPERATIONS. The most significant source of cash in GE CFOA is customer-related activities, the largest of which is collecting cash resulting from productequipment or services sales. The most significant operating use of cash is to pay our suppliers, employees, tax authorities, contribute toand post retirement plans and pay others for a wide range of material, services and taxes.

plans. GE measures 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 usedflows for taxes related to business sales, and contributions to the GE Pension Plan.Plan, discontinued factoring programs, operating activities related to our run-off Insurance business and eliminations related to our receivables factoring and supply chain finance programs. We believe that this measure will better allowsallow management and investors to evaluate the capacity of our industrial operations to generate free cash flows.


The CFOA impact from factoring programs discontinued in 2021 of $(5,108) million represents the cash that our industrial businesses would have otherwise collected in the nine months ended December 31, 2021 had customer receivables not been previously sold to WCS or third parties in those discontinued programs. The CFOA impact associated with this activity in factoring programs that have now been discontinued was $(5,847) million and $(3,361) million in the year ended December 31, 2021 and 2020, respectively, an increase of $(2,487) million. The CFOA impact for the three months ended December 31, 2020 was $(1,377) million. The CFOA impact from receivables factoring and supply chain finance eliminations represents activity related to those internal programs previously facilitated for our industrial segments by our Working Capital Solutions business. We completed the exit from all internal factoring and supply chain finance programs in 2021 and therefore expect no future elimination activity related to these programs.









*Non-GAAP Financial Measure

GE20192021 FORM 10-K 3021

MD&ACAPITAL RESOURCES AND LIQUIDITY


2019 CFOA (GAAP) AND FREE CASH FLOWS (FCF) BY SEGMENT (NON-GAAP)   
(In millions) Power Renewable Energy Aviation Healthcare Corporate & Eliminations GE Industrial
             
CFOA (GAAP) $(1,200) $(512) $5,552
 $3,024
 $(2,250) $4,614
Add: gross additions to property, plant and equipment (277) (455) (1,031) (395) (59) (2,216)
Add: gross additions to internal-use software (46) (14) (107) (79) (28) (274)
Less: GE Pension Plan funding —
 —
 —
 —
 —
 —
Less: taxes related to business sales —
 —
 —
 —
 (198) (198)
Free cash flows (Non-GAAP) $(1,523) $(980) $4,415
 $2,550
 $(2,139) $2,322
2018 CFOA (GAAP) AND FREE CASH FLOWS (FCF) BY SEGMENT (NON-GAAP)   
(In millions) Power Renewable Energy Aviation Healthcare Corporate & Eliminations GE Industrial
             
CFOA (GAAP) $(1,849) $406
 $5,373
 $3,485
 $(6,714) $701
Add: gross additions to property, plant and equipment (358) (297) (1,070) (378) (131) (2,234)
Add: gross additions to internal-use software (66) (11) (73) (90) (67) (306)
Less: GE Pension Plan funding —
 —
 —
 —
 (6,000) (6,000)
Less: taxes related to business sales —
 —
 —
 —
 (180) (180)
Free cash flows (Non-GAAP) $(2,273) $98
 $4,230
 $3,018
 $(731) $4,341

CFOA (GAAP) AND FREE CASH FLOWS (FCF) BY SEGMENT (NON-GAAP)
For the year ended December 31, 2021AviationHealthcareRenewable EnergyPowerCorporateTotal
CFOA (GAAP)$2,815 $1,471 $(1,576)$24 $(1,846)$888 
Less: Insurance CFOA— — — — 86 86 
CFOA excl. Insurance (Non-GAAP)$2,815 $1,471 $(1,576)$24 $(1,933)$802 
Add: gross additions to property, plant and equipment(445)(242)(349)(189)(25)(1,250)
Add: gross additions to internal-use software(61)(6)(9)(23)(13)(111)
Less: CFOA impact from factoring programs discontinued in 2021(2,006)(1,481)(539)(1,117)35 (5,108)
Less: CFOA impact from receivables factoring and supply chain finance eliminations— — — — 2,666 2,666 
Less: taxes related to business sales— — — — (6)(6)
Free cash flows (Non-GAAP)$4,315 $2,705 $(1,395)$929 $(4,665)$1,889 
GE cash
For the year ended December 31, 2020
CFOA (GAAP)$763 $3,143 $(328)$285 $(2,838)$1,025 
Less: Insurance CFOA— — — — (80)(80)
CFOA excl. Insurance (Non-GAAP)$763 $3,143 $(328)$285 $(2,757)$1,105 
Add: gross additions to property, plant and equipment(737)(256)(302)(245)(40)(1,579)
Add: gross additions to internal-use software(61)(24)(11)(25)(30)(151)
Less: GE Pension Plan funding— — — — (2,500)(2,500)
Less: CFOA impact from receivables factoring and supply chain finance eliminations— — — — 1,419 1,419 
Less: taxes related to business sales— — — — (178)(178)
Free cash flows (Non-GAAP)$(34)$2,863 $(641)$15 $(1,569)$635 

For the year ended December 31, 2019
CFOA (GAAP)$5,552 $3,024 $(512)$(1,200)$1,974 $8,838 
Less: Insurance CFOA— — — — 394 394 
CFOA excl. Insurance (Non-GAAP)$5,552 $3,024 $(512)$(1,200)$1,580 $8,444 
Add: gross additions to property, plant and equipment(1,031)(395)(455)(277)(58)(2,216)
Add: gross additions to internal-use software(107)(79)(14)(46)(37)(282)
Less: CFOA impact from receivables factoring and supply chain finance eliminations— — — — 3,999 3,999 
Less: taxes related to business sales— — — — (198)(198)
Free cash flows (Non-GAAP)$4,415 $2,550 $(980)$(1,523)$(2,315)$2,145 

Cash from operating activities was $4.6$0.9 billion in 20192021, a decrease of $0.1 billion compared with $0.7 billion in 2018 (including $0.3 billion and $0.5 billion cash received for Baker Hughes Class B shareholder dividends in 2019 and 2018, respectively). The $3.9 billion increase was2020, primarily due to: the nonrecurrence of GE Pension Plan contributions of $6.0 billion in 2018 (which are excluded from GE Industrial free cash flows*); a decrease in payments of equipment project cost accruals of $0.6 billion; a net decrease in payments of Aviation-related customer allowance accruals of $0.4 billion; and an increase in financial services-related cash generated from contract & other deferred assetscollateral paid net of $0.1settlements on derivative contracts of $3.0 billion, primarily duewhich is a standard market practice to higher billings on our long-term service agreements, partially offset by lower liquidations of deferred inventory.

These increases in cash were partially offset by:minimize derivative counterparty exposures; an increase in cash used for working capital of $2.6$1.5 billion; a decrease in employee benefit liabilities (a component of All other operating activities) of $0.3 billion; partially offset by lower GE Pension Plan contributions (which are excluded from free cash flows*) of $2.5 billion; and an increase in cash paidnet income (after adjusting for the gain on the sale of BioPharma, non-cash losses related to our interest in Baker Hughes, goodwill impairments, provision for income taxes, non-operating benefit costs and non-operating debt extinguishment costs) primarily due to COVID-19 pandemic impacts in our Aviation segment in 2020. There was a $0.5 billion and $0.6 billion increase in Aviation-related customer allowance accruals in 2021 and 2020, respectively.

We utilized the provision of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which allows employers to defer the payment of Social Security taxes and, as a result, we deferred $0.3 billion as of December 31, 2020. In accordance with the underlying terms, the company paid 50% of this balance during the fourth quarter of 2021. The remaining 50% is expected to be paid in 2022.



*Non-GAAP Financial Measure
2021 FORM 10-K 22

Changes in working capital compared to prior year were as follows: current receivables of $1.1 billion, driven by a lower decrease in sales of receivables to third parties of $0.9 billion; inventories, including deferred inventory, of $(1.8) billion, driven by higher material purchases and lower liquidations; current contract assets of $(0.6) billion, driven by lower net unfavorable changes in estimated profitability at Aviation partially offset by the timing of revenue recognition relative to billings and collections on our long-term equipment contracts; accounts payable and equipment project accruals of $0.6 billion. billion, driven by lower disbursements related to purchases of materials in prior periods; progress collections and current deferred income of $(0.8) billion, driven by higher net liquidations. Progress collections and current deferred income included lower early payments received at our Aviation Military equipment business of $0.3 billion from a foreign government in 2021 compared to $0.7 billion from the U.S. Department of Defense in 2020.


TheCash from investing activities was $23.7 billion in 2021, an increase in cash used for working capital wasof $4.4 billion compared with 2020, primarily due to: an increase in cash used for current receivablesproceeds of $2.9$3.7 billion primarily driven by lowerfrom the sales of receivables and receivables growth resulting from the 737 MAX grounding; a decreaseour retained ownership interest in cash from accounts payable of $0.9 billion; and higher inventory build of $0.5 billion, mainly as a result of the expected timing of deliveriesBaker Hughes; an increase in 2020. These increases in cash used for working capital were partially offset by higher progress collectionsproceeds of $1.8 billion mainly as a resultfrom business dispositions ($22.4 billion from the combination of higher utilization of collectionsour GECAS business with AerCap in 2018, including the impact of the timing of progress collections received in the fourth quarter of 2017.

As discussed in the Aviation and GECAS 737 MAX section within the Consolidated Results section of MD&A, the 737 MAX grounding had an adverse net effect on GE CFOA of approximately $1.4 billion in 2019. Within Aviation, this effect was more than offset by: higher commercial aftermarket earnings and higher long-term service agreement billings of $0.6 billion; cash receipts from contract modifications of $0.3 billion; a new spare parts distribution deal for a legacy engine program of $0.3 billion; and lower customer allowance payments of $0.4 billion as discussed above. Other Aviation working capital cash flows, excluding the impact of the 737 MAX grounding, largely offset.

GE cash from investing activities was $4.1 billion in 20192021, compared with $3.1$20.5 billion in 2018. The $0.9 billion increase was primarily due to: proceeds from the spin-off of our Transportation business of $6.2 billion (including the secondary offerings of Wabtec common stock shares in the second and third quarters of 2019), the sale of a portion of our stake in Baker Hughes of $3.0 billion and from other business dispositions in Aviation, Corporate and Power (net of cash transferred) of $1.1 billion in 2019, compared with total proceeds of $6.0 billion in 2018, primarily from the sale of businesses at Power and Healthcare; a decreaseour BioPharma business in net cash paid for settlements of derivative hedges of $0.9 billion; the nonrecurrence of the purchase of an aviation technology joint venture of $0.6 billion in 2018;2020); partially offset by the 2019 capital contribution to GE Capitalacquisition of $4.0 billion; business acquisitions of $0.4 billion, primarily related to the transfer of the HEF business from GE Capital toBK Medical by our Healthcare segment in 2019; and an increase in cash used related to net settlements between our continuing operations and discontinued operationsbusiness of $0.4$1.5 billion. Cash used for additions to property, plant and equipment and internal-use software, which is a componentare components of GE Industrial free cash flows*, was $2.5$1.4 billion in both 20192021, down $0.4 billion compared with 2020. Cash received related to net settlements between our continuing operations and 2018.  businesses in discontinued operations (primarily GECAS) was $1.6 billion and $1.7 billion in 2021 and 2020, respectively, and is a component of All other investing activities.





*Non-GAAP Financial Measure

GE2019 FORM 10-K 31
MD&ACAPITAL RESOURCES AND LIQUIDITY

GE cashCash used for financing activities was $7.7$45.3 billion in 20192021, an increase of $25.5 billion compared with cash from financing activities of $1.5 billion in 2018. The $9.1 billion increase in cash used was2020, primarily due to: the nonrecurrencehigher payments for debt extinguishments of intercompany loans from GE Capital to GE$22.7 billion; higher other net debt maturities of $6.5$5.3billion; lower cash settlements of $0.7 billion in 2018 (including $6.0 billion to fund contributions to the GE Pension Plan); completion of a tender offer to purchase GE long-termon derivatives hedging foreign currency debtof $4.8 billion in 2019; the nonrecurrence of dispositions of noncontrolling interests in Baker Hughes of $4.4 billion in 2018; the repayment of GE Capital intercompany loans by GE of $1.5 billion in 2019; partially offset by a decrease in common dividends paid to shareholders of $3.8 billion; and the nonrecurrence of the acquisitionrepayments of Alstom's interest in grid technology, renewable energy, and global nuclear and French steam power joint ventures for $3.1commercial paper of $3.0 billion in 2018.2020. We paid cash to repurchase long term debt of $39.2 billion and $16.5 billion, including debt extinguishment costs of $7.2 billion and $0.3 billion, excluding a non-cash debt basis adjustment of $0.6 billion and an insignificant amount in 2021 and 2020, respectively.

GE cashCash from operating activities was $0.7$1.0 billion in 20182020, a decrease of $7.8 billion compared with $11.5 billion in 20172019, (including $0.5 billion and $0.3 billion cash received for Baker Hughes Class B shareholder dividends in 2018 and 2017, respectively). The $10.8 billion decrease was primarily due to: an increasea general decrease in net income (after adjusting for the gain on the sale of BioPharma, non-cash losses related to our interest in Baker Hughes, goodwill impairments, provision for income taxes, non-operating benefit costs, non-operating debt extinguishment costs and a non-cash charge related to our premium deficiency testing in 2019, which is a component of All other operating activities), primarily due to COVID-19 impacts in our Aviation segment; GE Pension Plan contributions (which are excluded from GE Industrial free cash flows*) of $4.3$2.5 billion; the nonrecurrence of common dividends received from GE Capital (which are excluded from GE Industrial free cash flows*) of $4.0 billion in 2017; anpartially offset by increase in financial services-related cash used for working capitalcollateral received net of $3.4settlements on derivative contracts of $0.6 billion; and an increase in payments of equipment project cost accruals of $0.7 billion.

These decreases in cash were partially offset by: a decrease in cash used for contract & other deferred assets of $1.2 billion, primarily due to the timing of revenue recognized relative to the timing of billings and collections on our long-term equipment agreements and lower cash used for deferred inventory; and a decrease in cash paid for income taxes of $0.8$0.5 billion. Increases in Aviation-related customer allowance accruals (which is a component of All other operating activities) of $0.6 billion were $0.2 billion higher compared with 2019.

The increase in cash used for working capital was due to: lower progress collectionsWe utilized the provision of $2.4 billion, mainlythe CARES Act which allows employers to defer the payment of Social Security taxes and, as a result, we deferred $0.3 billion as of net utilizationDecember 31, 2020.

Changes in 2018, including the impact of the timing of progress collections received in the fourth quarter of 2017; an increase in cash used forworking capital compared to prior year were as follows: current receivables of $2.0$1.5 billion, driven by lower volume, partially offset by a higher decrease in sales of receivables to third parties of $2.6 billion; inventories, including deferred inventory, of $2.7 billion, primarily driven by lower sales of receivables; and higher inventory buildmaterial purchases, partially offset by lower liquidations; current contract assets of $0.7 billion, mainlyprimarily due to a net unfavorable change in estimated profitability of $1.2 billion at Aviation; accounts payable and equipment project accruals of $(3.3) billion, driven by lower volume in 2020 and higher disbursements related to purchases of materials in prior periods; progress collections and current deferred income of $(1.7) billion, driven by higher net liquidations. Progress collections and current deferred income included early payments received at our Aviation Military equipment business of $0.7 billion in 2020 as a resultpart of expected deliveriesthe U.S. Department of Defense's efforts to support vendors in 2019. These increasesits supply chain during the COVID-19 pandemic.

Cash from investing activities was $19.3 billion in cash used for working capital were partially offset by2020, an increase in cash from accounts payable of $1.6$7.1 billion primarily driven by inventory build and improved payment terms.

GE cash from investing activities was $3.1 billion in 2018 compared with cash used for investing activities of $11.7 billion in 2017. The increase in cash of $14.9 billion was2019, primarily due to: net proceeds from the sale of our BioPharma business in 2020 of $20.5 billion; partially offset by the nonrecurrence of proceeds from the spin-off of our Transportation business of $6.2 billion (including the sale of our retained ownership interests in Wabtec); lower proceeds from sales of our stake in Baker Hughes of $2.6 billion (including the sale of a decreaseportion of our retained ownership interests in 2020); higher net purchases of equity investments of $1.5 billion and lower cash usedreceived related to net settlements between our continuing operations and businesses in discontinued operations of $6.6$1.5 billion primarily related to funding in the first half(both components of 2017 in order to complete the Baker Hughes acquisition; an increase in proceeds fromAll other investing activities); and lower other business dispositions (net of cash transferred) of $3.0$1.1 billion primarily from the sale of businesses at Power and Healthcare; a decrease in cash used for business acquisitions (net of cash acquired) of $2.7 billion, primarily driven by the acquisitions of LM Wind Power and ServiceMax in 2017; lower cash. Cash used for additions to property, plant and equipment and internal-use software, (which is a componentwhich are components of GE Industrial free cash flows*), was $1.7 billion in 2020, down $0.8 billion compared with 2019.

Cash used for financing activities was $19.8 billion in 2020, an increase of $1.3$4.1 billion compared with 2019, primarily due to: higher payments for debt extinguishments of $11.4 billion; and the provisiona reduction in commercial paper of a promissory note to Baker Hughes in the third quarter of 2017 of $1.1$3.0 billion; partially offset by the purchasean increase in other net debt issuances of an aviation technology joint venture$9.4 billion and lower cash settlements of $0.6$1.1 billion on derivatives hedging foreign currency debt. We paid cash to repurchase long term debt of $16.5 billion and $5.1 billion, including cash paid for debt extinguishment costs of $0.3 billion and $0.3 billion in 2018.2020 and 2019, respectively.

GE cash from financing activities was $1.5 billion in 2018 compared with $1.9 billion in 2017. The $0.4 billion decrease was primarily due to: a decrease in net borrowings of $7.9 billion, mainly as a result of the issuance of long-term euro debt, primarily to fund acquisitions in 2017; and the acquisition of Alstom's interest in grid technology, renewable energy, and global nuclear and French steam power joint ventures for $3.1 billion in 2018. These decreases in cash were partially offset by: a decrease in common dividends paid to shareholders of $4.2 billion; an increase in dispositions of noncontrolling interests in Baker Hughes of $4.1 billion; and a decrease in net repurchases of GE treasury shares of $2.5 billion.

GE CASH FLOWS FROM DISCONTINUED OPERATIONS.GE cash used forCash from operating activities ofin 2021 related primarily to cash generated from earnings (loss) from discontinued operations was an insignificant amount in 2019 compared with cash generated of $2.1 billion in 2018. The $2.1 billion decrease was primarily as a result of the dispositions of Baker Hughes in the third quarter of 2019 and our Transportation segment in the first quarter of 2019, due to the nonrecurrence of operating cash generated in 2018, primarily in the fourth quarter.

GE cashGECAS business. Cash used for investing activities decreased in 2021 compared with 2020, primarily due to an increase in net purchases of plant, property and equipment partially offset by an increase in net collections of financing receivables.


*Non-GAAP Financial Measure
2021 FORM 10-K 23
of
Cash from operating activities in 2020 related primarily to cash generated from earnings (loss) from discontinued operations in our GECAS business. was $3.4 billionCash used for investing activities decreased in 20192020 compared with $0.7 billion in 2018. The $2.8 billion increase in cash used was primarily2019 due to the deconsolidation of Baker Hughes cash of $3.1 billion as a result of the reduction in our ownership interest in the segment in the third quarter of 2019.

GE cash used for financing activitiesof discontinued operations was $0.4 billion in 2019 compared with $4.5 billion in 2018. The $4.1 billion decrease of cash used was primarily due to: the nonrecurrence of Baker Hughes share repurchases of $2.5 billion in 2018; and an increase in Baker Hughes borrowings of $0.3 billion in 2019 compared with net repayments of Baker Hughes borrowings of $1.1 billion in 2018.

GE cash from operating activities of discontinued operations was $2.1 billion in 2018 compared with cash used of $0.2 billion in 2017. The $2.2 billion increase in cash was primarily as a result of better operating performance at Baker Hughes.

GE cash used for investing activitiesof discontinued operations was $0.7 billion in 2018 compared with cash generated of $2.3 billion in 2017. The $3.0 billion increase in cash used was primarily due to: a decrease in net cash received from continuing operations of $6.6 billion, primarily related to funding in the first half of 2017 in order to complete the Baker Hughes acquisition; partially offset by the nonrecurrence of net cash paid for the Baker Hughes acquisition of $3.4 billion in 2017.lower business dispositions.



*Non-GAAP Financial Measure

GE2019 FORM 10-K 32

MD&ACAPITAL RESOURCES AND LIQUIDITY

GE cash used for financing activitiesSUPPLY CHAIN FINANCE PROGRAMSof discontinued operations was $4.5 billion in 2018 compared with cash generated of $3.5 billion in 2017. The $8.0 billion increase in cash used was primarily due to: net repayments of Baker Hughes borrowings of $1.1 billion in 2018 compared with net new debt of $4.7 billion in 2017, including the issuance of long-term debt of $4.0 billion and a promissory note received from GE of $1.1 billion; and an increase in Baker Hughes share repurchases of $2.0 billion.

GE CAPITAL CASH FLOWS FROM CONTINUING OPERATIONS.GE Capital cash from operating activities was $1.9 billion in 2019 compared with $1.6 billion in 2018. The increase of $0.3 billion was primarily due to: a net increase in cash collateral received and settlements paid from counterparties on derivative contracts of $2.0 billion; partially offset by a general decrease in cash generated from earnings (loss) from continuing operations.

GE Capital cash from investing activities was $9.5 billion in 2019 compared with $11.8 billion in 2018. The decrease of $2.3 billion was primarily due to: lower collections of financing receivables of $6.6 billion; an increase of net purchases of investment securities of $4.2 billion; lower net sales of equity investments of $3.1 billion; and an increase in cash used related to net settlements between our continuing operations (primarily our Corporate function) and businesses in discontinued operations (primarily WMC) of $2.4 billion; partially offset by the nonrecurrence of intercompany loans from GE Capital to GE of $6.5 billion in 2018; an increase in cash related to our current receivables and supply chain finance programs with GE of $4.4 billion; higher proceeds from business dispositions $1.9 billion; and the repayment of GE Capital intercompany loans by GE of $1.5 billion in 2019.

GE Capital cash used for financing activities was $7.0 billion in 2019 compared with $23.9 billion in 2018. The decrease of $16.9 billion was primarily due to lower net repayments of borrowings of $11.4 billion; a capital contribution from GE to GE Capital of $4.0 billion; and lower cash settlements on derivatives hedging foreign currency debt of $1.4 billion.

GE Capital cash from operating activities was $1.6 billion in 2018 compared with $2.4 billion in 2017. The decrease of $0.8 billion was primarily due to:a net increase in cash collateral and settlements paid to counterparties on derivative contracts of $1.5 billion; partially offset by a general increase in cash generated from earnings (loss) from continuing operations.

GE Capital cash from investing activities was $11.8 billion in 2018 compared with $8.2 billion in 2017. The increase of $3.5 billion was primarily due to: higher collections of financing receivables of $7.1 billion and proceeds from the sales of EFS' debt origination business and EFS equity investments of $6.1 billion in 2018; partially offset by a decrease in net investment securities of $4.6 billion: $2.5 billion in 2018 compared with $7.1 billion in 2017; an increase in net additions to property, plant and equipment of $1.6 billion; net proceeds from sales of discontinued operations of an insignificant amount in 2018 compared with $1.5 billion in 2017; an increase in net intercompany loans from GE Capital to GE of $6.5 billion in 2018 compared with $5.9 billion in 2017 and a general reduction in funding related to discontinued operations.

GE Capital cash used for financing activitieswas $23.9 billion in 2018 compared with $23.6 billion in 2017. The increase of $0.3 billion was primarily due to: higher net repayments of borrowings of $21.1 billion in 2018 compared with $19.0 billion in 2017 and a net increase in derivative cash settlements paid of $2.0 billion partially offset by no GE Capital common dividends paid to GE in 2018 compared with $4.0 billion in 2017.

INTERCOMPANY TRANSACTIONS BETWEEN GE AND GE CAPITAL.Transactions between related companies are made on arm's length terms and are reported in the GE and GE Capital columns of our financial statements, which we believe provide useful supplemental information to our consolidated financial statements. See Note 25 to the consolidated financial statements for further information.

Sales of Receivables. In order to manage short-term liquidity and credit exposure, GE may sell current customer receivables to GE Capital and other third parties. These transactions are made on arm's length terms and any discount related to time value of money, is recognized within the respective GE Industrial business in the period these receivables were sold to GE Capital or third parties. See Note 4 to the consolidated financial statements for further information.

Supply Chain Finance Programs. GE facilitates. We facilitate voluntary supply chain finance programs with third parties, which provide participating GE suppliers the opportunity to sell their GE receivables to third parties at the sole discretion of both the suppliers and the third parties. The terms of these programs do not alter GE’s obligations to its suppliers which arise from independently negotiated contractual supply agreements. GE's obligation remains limited to making payment on its supplier invoices on the terms originally negotiated with its suppliers, regardless of whether the supplier sells its receivable to a third party. GE has guaranteed the program providers that its participating affiliates will pay their supplier invoices on the terms originally negotiated with their suppliers.

At December 31, 20192021 and 2018,December 31, 2020, included in GE's accounts payable is $2.4was $3.4 billion and $0.4$2.9 billion, respectively, of supplier invoices that are subject to the third-party programs. GE accounts for all payments made under the programs as reductions to CFOA. Total GE supplier invoices paid through these third-party programs were $1.4$6.9 billion and an insignificant amount$4.9 billion for the years ended December 31, 20192021 and 2018,2020, respectively.


GE2019 FORM 10-K 33
MD&ACAPITAL RESOURCES AND LIQUIDITY

Previously, GE Capital operated a supply chain finance program for suppliers to GE’s industrial businesses. Under that program, GE Capital may settle GE’s industrial businesses supplier invoices early in return for early pay discounts. In turn, GE settled invoices with GE Capital in accordance with the original supplier payment terms. On February 28, 2019, GE Capital sold the program platform to MUFG Union Bank, N.A. (MUFG) and is transitioning GE’s suppliers to a MUFG supply chain finance program. Information for suppliers which have already transitioned from GE Capital to MUFG is included within the third-party supply chain finance program data presented above. For the year ended December 31, 2019, there was not a significant effect on GE CFOA related to the MUFG transition.

The GE funded participation in the GE Capital program will continue to be settled following the original invoice payment terms with an expectation that the transition be completed by the end of 2020. The GE liability associated with the funded participation in the program is presented as accounts payable and amounted to $2.1 billion and $4.4 billion at December 31, 2019 and 2018, respectively.

GE Capital Finance Transactions. During the years ended December 31, 2019 and 2018, GE Capital acquired from third parties 51 aircraft with a list price totaling $6.4 billion and 64 aircraft with a list price totaling $7.8 billion, respectively, that will be leased to others and are powered by engines manufactured by GE Aviation and affiliates. GE Capital also made payments to GE Aviation and affiliates related to spare engines and engine parts of $0.7 billion and $0.4 billion, which included $0.6 billion and $0.2 billion to CFM International, during the years ended December 31, 2019 and 2018, respectively. Additionally, GE Capital had $2.0 billion and $1.2 billion of net book value of engines, originally manufactured by GE Aviation and affiliates and subsequently leased back to GE Aviation and affiliates at December 31, 2019 and 2018, respectively.

Also, during the years ended December 31, 2019 and 2018, GE recognized equipment revenues of $1.6 billion and $1.0 billion, respectively, from customers within our Power and Renewable Energy segments in which GE Capital has been an investee or is committed to be an investee in the underlying projects.

For certain of these investments, in order to meet its underwriting criteria, GE Capital may obtain a direct guarantee from GE related to the performance of the third party. GE guarantees include direct performance or payment guarantees, return on investment guarantees and asset value guarantees. As of December 31, 2019, GE had outstanding guarantees to GE Capital on $0.9 billion of funded exposure and $1.0 billion of unfunded commitments, which included guarantees issued by industrial businesses. The recorded contingent liability for these guarantees was insignificant as of December 31, 2019 and is based on individual transaction level defaults, losses and/or returns.

CONTRACTUAL OBLIGATIONS.As defined by reporting regulations, our contractual obligations for estimated future payments as of December 31, 2019, follow.
(In billions)Total
2020
2021-2022
2023-2024
Thereafter
      
Borrowings (Note 11)$90.9
$23.6
$15.9
$8.4
$42.9
Interest on borrowings24.8
2.5
3.9
3.1
15.3
Purchase obligations(a)(b)57.8
18.4
20.2
15.1
4.2
Insurance liabilities (Note 12)39.7
2.4
4.1
4.1
29.0
Operating lease obligations (Note 7)3.7
0.8
1.2
0.8
0.9
Other liabilities(c)45.3
10.1
6.7
5.1
23.4
Contractual obligations of discontinued operations(d)0.6
0.3
0.1
0.1
0.1
(a)
Included all take-or-pay arrangements, capital expenditures, contractual commitments to purchase equipment that will be leased to others, software acquisition/license commitments, and other purchase commitments.
(b)
Excluded funding commitments entered into in the ordinary course of business. See Notes 23 to the consolidated financial statements for further information on these commitments and other guarantees.
(c)
Included an estimate of future expected funding requirements related to our postretirement benefit plans and included liabilities for unrecognized tax benefits. Because their future cash outflows are uncertain, the following non-current liabilities are excluded from the table above: derivatives, deferred income and other sundry items. See Notes 13, 15 and 21 to the consolidated financial statements for further information on certain of these items.
(d)
Included payments for other liabilities.

CRITICAL ACCOUNTING ESTIMATES. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. Actual results in these areas could differ from management's estimates. See Note 1 to the consolidated financial statements for further information on our most significant accounting policies.

REVENUE RECOGNITION ON LONG-TERM SERVICES AGREEMENTS. We have long-term service agreements with our customers predominately within our Power and Aviation segments that require us to maintain the customers’ assets over the contract terms, which generally range from 5 to 25 years. However, contract modifications that extend or revise contracts are not uncommon. We recognize revenue as we perform under the arrangements using the percentage of completion method which is based on our costs incurred to date relative to our estimate of total expected costs. This requires us to make estimates of customer payments expected to be received over the contract term as well as the costs to perform required maintenance services.


GE2019 FORM 10-K 34

MD&ACRITICAL ACCOUNTING ESTIMATES

Customers generally pay us based on the utilization of the asset (per hour of usage for example) or upon the occurrence of a major event within the contract such as an overhaul. As a result, a significant estimate in determining expected revenues of a contract is estimating how customers will utilize their assets over the term of the agreement. The estimate of utilization, which can change over the contract life, impacts both the amount of customer payments we expect to receive and our estimate of future contract costs. Customers’ asset utilization will influence the timing and extent of overhauls and other service events over the life of the contract. We generally use a combination of both historical utilization trends as well as forward-looking information such as market conditions and potential asset retirements in developing our revenue estimates.

To develop our cost estimates, we consider the timing and extent of future maintenance and overhaul events, including the amount and cost of labor, spare parts and other resources required to perform the services. In developing our cost estimates, we utilize a combination of our historical cost experience and expected cost improvements. Cost improvements are only included in future cost estimates after savings have been observed in actual results or proven effective through an extensive regulatory or engineering approval process.

We routinely review estimates under long-term servicesservice agreements and regularly revise them to adjust for changes in outlook. These revisions are based on objectively verifiable information that is available at the time of the review. Contract modifications that change the rights and obligations, as well as the nature, timing and extent of future cash flows, are evaluated for potential price concessions, contract asset impairments and significant financing to determine if adjustments of earnings are required before effectively accounting for a modified contract as a new contract.

We regularly assess expected billings adjustments and customer credit risk inherent in the carrying amounts of receivables and contract assets, including the risk that contractual penalties may not be sufficient to offset our accumulated investment in the event of customer termination. We gain insight into future utilization and cost trends, as well as credit risk, through our knowledge of the installed base of equipment and thefleet management strategies through close interaction with our customers that comes with supplying critical services and parts over extended periods. Revisions may affect a long-term services agreement’s total estimated profitability resulting in an adjustment of earnings.

On December 31, 2019,2021, our net long-term service agreements balance of $5.1$0.6 billion represents approximately 2.9%0.3% of our total estimated life of contract billings of $176.7$187.4 billion. Our contracts (on average) are approximately 22.2%19.0% complete based on costs incurred to date and our estimate of future costs. Revisions to our estimates of future billings or costs that increase or decrease total estimated contract profitability by one percentage point would increase or decrease the long-term service agreements balance by $0.4 billion. Cash billingsBillings collected on these contracts were $11.5$10.0 billion and $10.2$9.6 billion during the years ended December 31, 20192021 and 2018,2020, respectively.

See Notes 1 and 9 to the consolidated financial statements8 for further information.

IMPAIRMENT OF GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS. During 2019, and in order to improve alignment ofWe perform our annual goodwill impairment testing and strategic planning process, we changed our annual testing date from the third quarter toin the fourth quarter. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts or decreases in market multiples (and the magnitude thereof), if any, and (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any.

We determine fair value for each of the reporting units using the market approach, when available and appropriate, or the income approach, or a combination of both. We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation. If multiple valuation methodologies are used, the results are weighted appropriately.
2021 FORM 10-K 24

Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market approach is limited to reporting units for which there are publicly traded companies that have the characteristics similar to our businesses.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ from those assumed in our forecasts. We derive our discount rates using a capital asset pricing model and analyzing published rates for industries relevant to our reporting units to estimate the cost of equity financing. We use discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. Discount rates used in our annual reporting unit valuations ranged from 8.9%11.5% to 22.0%20.5%.

Estimating the fair value of reporting units requires the use of significant judgments that are based on a number of factors including actual operating results, internal forecasts, market observable pricing multiples of similar businesses and comparable transactions, possible control premiums, determining the appropriate discount rate and long-term growth rate assumptions, and, if multiple approaches are being used, determining the appropriate weighting applied to each approach. It is reasonably possible that the judgments and estimates described above could change in future periods.

We review identified intangible assets with defined useful lives and subject to amortization for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment loss has occurred requires the use of our internal forecast to estimate future cash flows and the useful life over which these cash flows will occur. To determine fair value, we use our internal cash flow estimates discounted at an appropriate discount rate.

rate. See Notes 1 and 8 to the consolidated financial statements7 for further information.

GE2019 FORM 10-K 35
MD&ACRITICAL ACCOUNTING ESTIMATES

INSURANCE AND INVESTMENT CONTRACTS. Refer to the Other Items - Insurance section within MD&A for further discussion of the accounting estimates and assumptions in our insurance reserves and their sensitivity to change. Also seeSee Notes 1 and 12 to the consolidated financial statements11 for further information.

PENSION ASSUMPTIONS. Our defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including a discount rate, an expected return on assets, mortality rates of participants and expectation of mortality improvement. We evaluate these critical assumptions at least annually on a plan and country-specific basis. We periodically evaluate other assumptions involving demographic factors such as retirement age and turnover, and update themRefer to reflect our experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

Projected benefit obligations are measured as the present value of expected payments. We discount those cash payments using the weighted average of market-observed yields for high-quality fixed-income securities with maturities that correspond to the payment of benefits. Lower discount rates increase present values and generally increase subsequent-year pension expense; higher discount rates decrease present values and generally reduce subsequent-year pension expense.

Our discount rates for principal pension plans at December 31, 2019, 2018 and 2017 were 3.36%, 4.34% and 3.64%, respectively, reflecting market interest rates.

To determine the expected long-term rate of return on pension plan assets, we consider our asset allocation, as well as historical and expected returns on various categories of plan assets. In developing future long-term return expectationsNote 12 for our principalaccounting estimates and assumptions related to our postretirement benefit plans’ assets, we formulate views on the future economic environment, both in the U.S. and abroad. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given our asset allocation. Assets in our principal pension plans earned 17.8% in 2019, and had annualized returns of 6.3%, 7.7% and 8.2% in the 5-, 10- and 25-year periods ended December 31, 2019, respectively. Based on our analysis of future expectations of asset performance, past return results, and our asset allocation, we have assumed a 6.25% long-term expected return on those assets for cost recognition in 2020, as compared to 6.75% in 2019 and 2018.plans.

The Society of Actuaries issued new base and improvement mortality tables in 2019 and we updated mortality assumptions in the U.S. accordingly. These changes in assumptions decreased the December 31, 2019 U.S. pension and retiree benefit plans' obligations by $0.5 billion.

Changes in key assumptions for our principal pension plans would have the following effects.
Discount rate – A 25 basis point decrease in discount rate would increase pension cost in the following year by about $0.2 billion and would increase the pension benefit obligation at year-end by about $2.3 billion.
Expected return on assets – A 50 basis point decrease in the expected return on assets would increase pension cost in the following year by about $0.3 billion.  

See Other Consolidated Information – Postretirement Benefit Plans section within MD&A and Note 13 to the consolidated financial statements for further information.

INCOME TAXES. Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties. We review our tax positions quarterly and adjust the balances as new information becomes available. Our income tax rate is significantly affected by the tax rate on our global operations. In addition to local country tax laws and regulations, this rate can depend on the extent earnings are indefinitely reinvested outside the U.S. Historically U.S. taxes were due upon repatriation of foreign earnings. Due to the enactment of U.S. tax reform, most repatriations of available cash from foreign earnings willare expected to be free of U.S. federal income tax but may incur withholding or state taxes. Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company. Most of these earnings have been reinvested in active non-U.S. business operations. At December 31, 2019,2021, we have not changed our indefinite reinvestment decision as a result of tax reform but willwe reassess this on an ongoing basis. In December 2021, the Company announced plans to form three public companies focused on aviation, healthcare and energy. Planning for and execution of this separation will result in tax including potentially tax on changes in indefinite reinvestment outside the U.S. The impact of a change in reinvestment will be recorded when there is a specific change in ability and intent to reinvest earnings.


GE2019 FORM 10-K 36
MD&ACRITICAL ACCOUNTING ESTIMATES

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the recoverability of these futuredeferred income tax deductions and creditsassets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of incomestrategies, which heavily rely heavily on estimates. We use our historical experience and our short- and long-range business forecasts to provide insight. Further, our global and diversified business portfolio gives us the opportunity to employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. Amounts recorded for deferred tax assets related to non-U.S. net operating losses, net of valuation allowances, were $2.2$1.5 billion and $3.1$2.1 billion at December 31, 20192021 and 2018, including $0.2 billion related to held for sale assets at December 31, 2019 and $0.22020, respectively. Of this, $0.1 billion and $0.5$0.3 billion at December 31, 20192021 and 2018,2020, respectively, were associated with losses reported in discontinued operations, primarily related to our legacy financial services businesses and for 2018, our Baker Hughes segment. Such year-end 2019 amounts are expected to be fully recoverable within the applicable statutory expiration periods. To the extent we consider it more likely than not that a deferred tax asset will not be recovered, a valuation allowance is established.

businesses. See Other Consolidated Information – Income Taxes section within MD&A and Note 15 to the consolidated financial statementsNotes 1 and 14 for further information.

LOSS CONTINGENCIES. Loss contingencies are uncertain and unresolved matters that arise in the ordinary course of business and result from events or actions by others that have the potential to result in a future loss. Such contingencies include, but are not limited to, environmental obligations, litigation, regulatory investigations and proceedings, product quality and losses resulting from other events and developments. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and negotiations with or decisions by third parties that will determine the ultimate resolution of the contingency. Moreover, it is not uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated to determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We regularly review contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. See Note 23 to the consolidated financial statements22 for further information.

2021 FORM 10-K 25

OTHER ITEMS
INSURANCE.The run-off insurance operations of North American Life and Health (NALH) primarily include Employers Reassurance Corporation (ERAC) and Union Fidelity Life Insurance Company (UFLIC). ERAC was formerly part of Employers Reinsurance Corporation (ERC) until the sale of ERC to Swiss Re in 2006. UFLIC was formerly part of Genworth Financial Inc. (Genworth) but was retained by GE after Genworth’s initial public offering in 2004.

ERAC primarily assumes long-term care insurance and life insurance from numerous cedents under various types of reinsurance
treaties and stopped accepting new policies after 2008. UFLIC primarily assumes long-term care insurance, structured settlement
annuities with and without life contingencies and variable annuities from Genworth Financial Inc.(Genworth) and has been closed to new business since 2004.
The vast majority of NALH’s reinsurance exposures are long-duration arrangements that still involve substantial levels of premium
collections and benefit payments even though ERAC and UFLIC have not entered into new reinsurance treaties in aboutmore than a decade. These long-duration arrangements involve a number of direct writers and contain a range of risk transfer provisions and other contractual elements. In many instances, these arrangements do not transfer to ERAC or to UFLICus 100 percent of the risk embodied in the encompassed underlying policies issued by the direct writers. Furthermore, we cede insurance risk to third-party reinsurers for a portion of our insurance contracts, primarily on long-term care insurance policies.

Our run-off insurance liabilities and annuity benefits primarily comprise a liability for future policy benefits for those insurance contract claims not yet incurred and claim reserves for claims that have been incurred or are estimated to have been incurred but not yet reported. The insurance liabilities and annuity benefits amounted to $39.8$37.2 billion and $35.6$42.2 billion and primarily relate to individual long-termlong- term care insurance reserves of $21.0$21.7 billion and $20.0$21.3 billion and structured settlement annuities and life insurance reserves of $11.1$10.3 billion and $11.2$10.7 billion, at December 31, 20192021 and December 31, 2018,2020, respectively. The increasedecrease in insurance liabilities and annuity benefits of $4.2$5.0 billion from December 31, 20182020 to December 31, 2019,2021 is primarily due to an adjustment of $3.4$4.8 billion resulting from an increasethe higher margin from the 2021 premium deficiency test and the decline in unrealized gains on investment securities that would result in a premium deficiency should those gains be realized and a $1.0 billion adjustment arising from the annual premium deficiency testing completed in third quarter 2019, as discussed further below.realized.

In addition to NALH, Electric Insurance Company (EIC) is a property and casualty insurance company primarily providing insurance to GE and its employees with net claim reserves of $0.2 billion and $0.3 billion at December 31, 2019.2021 and 2020, respectively.


GE2019 FORM 10-K 37
MD&AOTHER ITEMS

We regularly monitor emerging experience in our run-off insurance operations and industry developments to identify trends that may help us refine our reserve assumptionsassumptions. We believe recent elevated mortality across our portfolio and lower long-term care insurance claims are short term in nature and attributable to COVID-19. However, the effects of COVID-19, including the continued emergence of variants and success of vaccinations, remain uncertain and may result in variability in levels of future mortality and long-term care insurance claims activity, including changes in policyholder behavior (e.g., policyholder willingness to enter long-term care facilities or seek care at home), among others. These monitoring activities also allow us to evaluate opportunities to reduce our insurance risk profile and improve the results of our run-off insurance operations. TheseSuch opportunities may include the pursuit of future premium rate increases and benefit reductions on long-term care insurance contracts in accordance with our reinsurance contracts with our ceding companies; recapture and reinsurance transactions to reduce risk where economically justified; investment strategies to improve asset and liability matching and enhance investment portfolio yields; and managing our expense levels.

Key Portfolio Characteristics
Long-term care insurance contracts. The long-term care insurance contracts we reinsure provide coverage at varying levels of benefits to policyholders and may include attributes that could result in claimants being on claim for longer periods or at higher daily claim costs, or alternatively limiting the premium paying period, compared to contracts with a lower level of benefits. For example, policyholders with a lifetime benefit period could receive coverage up to the specified daily maximum as long as the policyholder is claim eligible and receives care for covered services; inflation protection options increase the daily maximums to protect the policyholder from the rising cost of care with some options providing automatic annual increases of 3% to 5% or policyholder elected inflation-indexed increases for increased premium; joint life policies provide coverage for two lives which permit either life under a single contract to receive benefits at the same time or separately; and premium payment options may limit the period over which the policyholder pays premiums while still receiving coverage after premium payments cease, which may limit the impact of our benefit from future premium rate increases.

The ERAC long-term care insurance portfolio comprises more than two-thirds of our total long-term care insurance reserves and is assumed from approximately 30 ceding companies through various types of reinsurance and retrocession contracts having complex terms and conditions. Compared to the overall long-term care insurance block, it has a lower average attained age with a larger number ofand more policies (and covered lives, as over one-third of the policies are joint life policies), with lifetime benefit periods and/or with inflation protection options which may result in a higher potential for future claims.

The UFLIC long-term care insurance block comprises the remainder of our total long-term care insurance reserves and is more mature with policies that are more uniform, as it is assumed from a single ceding company, Genworth, and has fewer policies with lifetime benefit periods, no joint life policies and slightly more policies with inflation protection options.

Long-term care insurance policies allow the issuing insurance entity to increase premiums, or alternatively allow the policyholder the option to decrease benefits, with approval by state regulators, should actual experience emerge worse than what was projected when such policies were initially underwritten. As a reinsurer, we are unable to directly or unilaterally pursue long-term care insurance premium rate increases. However, we engage actively with our ceding company clients in pursuing allowed long-term care insurance premium rate increases. The amount of times that rate increases have occurred varies by ceding company.

As further described within the Premium Deficiency Testing section below, we reconstructed our future claim cost projections in 2017 utilizing trends observed in our emerging experience for older claimant ages and later duration policies. Also described within that section are key assumption changes in 2019.

Presented in the table below are GAAP and statutory reserve balances and key attributes of our long-term care insurance portfolio.
December 31, 2019 (Dollars in billions, except where noted)
ERACUFLICTotal
    
Gross GAAP future policy benefit reserves and claim reserves$15.2
$5.8
$21.0
Gross statutory future policy benefit reserves and claim reserves(a)23.7
7.1
30.8
Number of policies in force196,000
67,000
263,000
Number of covered lives in force261,000
67,000
328,000
Average policyholder attained age75
83
77
Gross GAAP future policy benefit reserve per policy (in actual dollars)$66,500
$56,000
$64,000
Gross GAAP future policy benefit reserve per covered life (in actual dollars)50,000
56,000
51,000
Gross statutory future policy benefit reserve per policy (in actual dollars)(a)109,000
74,000
100,000
Gross statutory future policy benefit reserve per covered life (in actual dollars)(a)81,000
74,000
80,000
Percentage of policies with:   
Lifetime benefit period70%35%61%
Inflation protection option81%91%84%
Joint lives34%—%25%
Percentage of policies that are premium paying73%82%75%
Policies on claim10,700
9,300
20,000
(a)
Statutory balances reflect recognition of the estimated remaining statutory increase in reserves of approximately $7 billion through 2023 under the permitted accounting practice discussed further below and in Note 12 to our consolidated financial statements
.


GE20192021 FORM 10-K 3826

MD&AOTHER ITEMS

December 31, 2021ERACUFLICTotal
Gross GAAP future policy benefit reserves and claim reserves$16,274 $5,370 $21,644 
Gross statutory future policy benefit reserves and claim reserves(a)24,407 6,625 31,032 
Number of policies in force183,300 57,300 240,600 
Number of covered lives in force244,300 57,300 301,600 
Average policyholder attained age77 83 78 
Gross GAAP future policy benefit reserve per policy (in actual dollars)$75,100 $58,100 $71,100 
Gross GAAP future policy benefit reserve per covered life (in actual dollars)56,400 58,100 56,700 
Gross statutory future policy benefit reserve per policy (in actual dollars)(a)118,800 79,100 109,300 
Gross statutory future policy benefit reserve per covered life (in actual dollars)(a)89,100 79,100 87,200 
Percentage of policies with:
Lifetime benefit period70 %33 %61 %
Inflation protection option81 %91 %83 %
Joint lives33 %— %25 %
Percentage of policies that are premium paying72 %78 %74 %
Policies on claim10,800 8,400 19,200 
(a)    Statutory balances reflect recognition of the estimated remaining statutory increase in reserves of approximately $3.6 billion through 2023 under the permitted accounting practice discussed further below and in Note 11.

Structured settlement annuities and life insurance contracts.We reinsure approximately 31,00027,400 structured settlement annuities with an average attained age of 52.54. These structured settlement annuities were primarily underwritten on impaired lives (i.e., shorter-than-averageshorter-than- average life expectancies) at origination and have projected payments extending decades into the future. Our primary risks associated with these contracts include mortality (i.e., life expectancy or longevity), mortality improvement (i.e., assumed rate that mortality is expected to reduce over time), which may extend the duration of payments on life contingent contracts beyond our estimates, and reinvestment risk (i.e., a low interest rate environment may reduce our ability to achieve our targeted investment margins). Unlike long-termlong- term care insurance, structured settlement annuities offer no ability to require additional premiums or reduce benefits.

Our life reinsurance business typically covers the mortality risk associated with various types of life insurance policies that we reinsure from approximately 150 ceding company relationships where we pay a benefit based on the death of a covered life. AcrossAs of December 31, 2021, across our U.S. and Canadian life insurance blocks, we reinsure approximately $100$70 billion of net amount at risk (i.e., difference between the death benefit and any accrued cash value) from approximately 2.21.7 million policies with an average attained age of 58.60. In 2019,2021, our incurred claims were approximately $0.5$0.6 billion with an average individual claim of approximately $48,000.$50,000. The largest product types covered areproducts primarily include permanent life insurance and 20 and 30-year level term insurance. We anticipate a significant portion of the 20-year level term policies, which represent approximately 40%25% of the net amount atof risk, and are anticipated to lapse (i.e., the length of time a policy will remain in force) over the next 2 to 4 yearsthrough 2024 as the policies reach the end of their 20-year level premium period.

Investment portfolio and other adjustmentsadjustments.. Our insurance liabilities and annuity benefits are primarily supported by investment securities of $38.0$41.6 billion and $32.9$42.0 billion and commercial mortgage loans of $1.9$1.8 billion and $1.7$1.8 billion at December 31, 20192021 and 2018,2020, respectively. Additionally, we expect to purchase approximately $9$5.5 billion of new assets through 2024 in conjunction with expected capital contributions from GE Capital to our insurance subsidiaries, of which approximately $2.0 billion was receivedis expected to be contributed in the first quarter of 2020.2022, pending completion of our December 31, 2021 statutory reporting process, which includes asset adequacy testing. Our investment securities are classified as available-for-sale and comprise mainly investment-grade debt securities. The portfolio includes $5.7$6.7 billion of net unrealized gains that are recorded within OtherAccumulated other comprehensive income (AOCI), net of applicable taxes and other adjustments.adjustments as of December 31, 2021.

In calculating our future policy benefit reserves, we are required to consider the impact of net unrealized gains and losses on our available-for-sale investment securities supporting our insurance contracts as if those unrealized amounts were realized. To the extent that the realization of gains would result in a premium deficiency, an adjustment is recorded to increase future policy benefit reserves with an after-tax offset to OtherAccumulated other comprehensive income. At December 31, 2019, the entire $5.72021, $3.4 billion balance of net unrealized gains on our investment securities required a related increase to future policy benefit reserves. This adjustment increaseddecreased from $2.2$8.2 billion in 20182020 to $5.7$3.4 billion in 20192021 primarily from the higher margin resulting from the 2021 premium deficiency test and the decline in unrealized gains within theon investment security portfolio supporting our insurance contracts in response to decreased market yields.securities. See Note 3 to our consolidated financial statements for further information about our investment securities.

We manage the investments in our run-off insurance operations under strict investment guidelines, including limitations on asset class concentration, single issuer exposures, asset-liability duration variances, and other factors to meet credit quality, yield, liquidity and diversification requirements associated with servicing our insurance liabilities under reasonable circumstances. Investing in these assets exposes us to both credit risk (i.e., debtor’s ability to make timely paymentsThis process includes consideration of principalvarious asset allocation strategies and interest) and interest rate risk (i.e., market price, cash flow variability, and reinvestment risk due to changes in market interest rates). We regularly review investment securities for impairment using both quantitative and qualitative criteria.

Additionally, our run-off insurance operations have approximately $0.7 billion of assets held by states or other regulatory bodies in statutorily required deposit accounts, and approximately $28.6 billion of assets held in trust accounts associated with reinsurance contracts in place between either ERAC or UFLIC as the reinsuring entity and a number of ceding insurers. Assets in these reinsurance trusts are held by an independent trustee for the benefit of the ceding insurer, and are subject to various investment guidelines as set forth in the respective reinsurance contacts.

We have studied and analyzed various options, along withincorporates information from several external investment advisors to improve our investment yield subject to maintaining our ability to satisfy insurance liabilities when due, as well as considering our risk-based capital requirements, regulatory constraints, and tolerance for surplus volatility. With the expected capital contributions from GE Capital through 2024, we intend to add new asset classes to further diversify our portfolio, including with non-traditional asset classes such as private equity, senior secured loans and infrastructure debt, among others. Asset allocation planning is a dynamic process that considers changes in market conditions, risk appetite, liquidity needs and other factors which are reviewed on a periodic basis by our investment team. Investing in these assets exposes us to both credit risk (i.e., debtor’s ability to make timely payments of principal and interest), interest rate risk (i.e., market price, cash flow variability, and reinvestment risk due to changes in market interest rates) and equity risk (i.e., the risk arising from changes in the prices of equity instruments). We also hiredregularly review investment securities for impairment using both quantitative and qualitative criteria.
2021 FORM 10-K 27

Our run-off insurance operations have approximately $0.8 billion of assets held by states or other regulatory bodies in statutorily required deposit accounts, and approximately $31.0 billion of assets held in trust accounts associated with reinsurance contracts and reinsurance security trust agreements in place between either ERAC or UFLIC as the reinsuring entity and a new Chief Investment Officernumber of ceding insurers. Assets in 2018these trusts are held by an independent trustee for the benefit of the ceding insurer, and are subject to oversee our entirevarious investment processguidelines as set forth in the respective reinsurance contracts and will be adding furthertrust agreements. Some of these trust agreements may allow a ceding company to withdraw trust assets from the trust and hold these assets on its balance sheet, in an account under its control for the benefit of ERAC or UFLIC which might allow the ceding company to exercise investment managers.control over such assets.

Critical Accounting Estimates. Our insurance reserves include the following key accounting estimates and assumptions described below.

Future policy benefit reserves. Future policy benefit reserves represent the present value of future policy benefits less the present value of future gross premiums based on actuarial assumptions including, but not limited to, morbidity (i.e., frequency and severity of claim, including claim termination rates and benefit utilization rates); morbidity improvement (i.e., assumed rate of improvement in morbidity in the future); mortality (i.e., life expectancy or longevity); mortality improvement (i.e., assumed rate that mortality is expected to reduce over time); policyholder persistency or lapses (i.e., the length of time a policy will remain in force); anticipated premium increases or benefit reductions associated with future in-force rate actions, including actions that are: (a) approved and not yet implemented, (b) filed but not yet approved, and (c) estimated on future filings through 2028,2030, on long-term care insurance policies; and interest rates. Assumptions are locked-in throughout the remaining life of a contract unless a premium deficiency develops.


GE2019 FORM 10-K 39
MD&AOTHER ITEMS

Claim reserves. Claim reserves are established when a claim is incurred or is estimated to have been incurred and represents our best estimate of the present value of the ultimate obligations for future claim payments and claim adjustment expenses. Key inputs include actual known facts about the claim, such as the benefits available and cause of disability of the claimant, as well as assumptions derived from our actual historical experience and expected future changes in experience factors. Claim reserves are evaluated periodically for potential changes in loss estimates with the support of qualified actuaries, and any changes are recorded in earnings in the period in which they are determined.

Reinsurance recoverables. recoverables. We cede insurance risk to third-party reinsurers for a portion of our insurance contracts, primarily on long-term care insurance policies, and record receivables for estimated recoveries as we are not relieved from our primary obligation to policyholders or cedents. These receivables are estimated in a manner consistent with the future policy benefit reserves and claim reserves. Reserves ceded to reinsurers, net of allowance, were $2.4$2.7 billion and $2.3$2.6 billion at December 31, 20192021 and December 31, 2018,2020, respectively, and are included in the caption “Other GE Capital receivables” onAll other assets in our consolidated Statement of Financial Position.

Premium Deficiency Testing. Testing. We annually perform premium deficiency testing in the third quarter in the aggregate across our run-off insurance portfolio. The premium deficiency testing assesses the adequacy of future policy benefit reserves, net of unamortized capitalized acquisition costs, using current assumptions without provision for adverse deviation. A comprehensive review of premium deficiency assumptions is a complex process and depends on a number of factors, many of which are interdependent and require evaluation individually and in the aggregate across all insurance products. The vast majority of our run-off insurance operations consists of reinsurance from multiple ceding insurance entities pursuant to treaties having complex terms and conditions. Premium deficiency testing relies on claim and policy information provided by these ceding entities and considers the reinsurance treaties and underlying policies. In order to utilize that information for purposes of completing experience studies covering all key assumptions, we perform detailed procedures to conform and validate the data received from the ceding entities. Our long-term care insurance business includes coverage where credible claim experience for higher attained ages is still emerging, and to the extent future experience deviates from current expectations, new projections of claim costs extending over the expected life of the policies may be required. Significant uncertainties exist in making projections for these long-term care insurance contracts, which requires that we consider a wide range of possible outcomes.

The primary assumptions used in the premium deficiency tests include:

Morbidity. Morbidity assumptions used in estimating future policy benefit reserves are based on estimates of expected incidences of disability among policyholders and the costs associated with these policyholders asserting claims under their contracts, and these estimates account for any expected future morbidity improvement. For long-term care exposures, estimating expected future costs includes assessments of incidence (probability of a claim), utilization (amount of available benefits expected to be incurred) and continuance (how long the claim will last). Prior to 2017, premium deficiency assumptions considered the risk of anti-selection by including issue age adjustments to morbidity based on an actuarial assumption that long-term care policies issued to younger individuals would exhibit lower expected incidences and claim costs than those issued to older policyholders. Recent claim experience and the development of reconstructed claim cost curves indicated issue age differences had minimal impact on claim cost projections, and, accordingly, beginning in 2017, issue age adjustments were eliminated in developing morbidity assumptions. Higher morbidity increases, while lower morbidity decreases, the present value of expected future benefit payments.


2021 FORM 10-K 28

Rate of Change in Morbidity.Morbidity. Our annual premium deficiency testing incorporates our best estimates of projected future changes in the morbidity rates reflected in our base claim cost curves. These estimates draw upon a number of inputs, some of which are subjective, and all of which are interpreted and applied in the exercise of professional actuarial judgment in the context of the characteristics specific to our portfolios. This exercise of judgment considers factors such as the work performed by internal and external independent actuarial experts engaged to advise us in our annual testing, the observed actual experience in our portfolios measured against our base projections, industry developments, and other trends, including advances in the state of medical care and health-care technology development. With respect to industry developments, we take into account that there are differences between and among industry peers in portfolio characteristics (such as demographic features of the insured populations), the aggregate effect of morbidity improvement or deterioration as applied to base claim cost projections, the extent to which such base cost projections reflect the most current experience, and the accepted diversity of practice in actuarial professional judgment. We assess the potential for any change in morbidity with reference to our existing base claim cost projections, reconstructed in 2017. Projected improvement or deterioration in morbidity can have a material impact on our future claim cost projections, both on a stand-alone basis and also by virtue of influencing other variables such as discount rate and premium rate increases.

Mortality. Mortality assumptions used in estimating future policy benefit reserves are based on published mortality tables as adjusted for the results of our experience studies and estimates of expected future mortality improvement. For life insurance products, higher mortality increases the present value of expected future benefit payments, while for annuity and long-term care insurance contracts, higher mortality decreases the present value of expected future benefit payments.

Discount rate. Interest rate assumptions used in estimating the present value of future policy benefit reserves are based on expected investment yields, net of related investment expenses and expected defaults. In estimating future investment yields, we consider the actual yields on our current investment securities held by our run-off insurance operations and the future rates at which we expect to reinvest any proceeds from investment security maturities, net of other operating cash flows, and the projected future capital contributions into our run-off insurance operations. Lower future investment yields result in a lower discount rate and a higher present value of future policy benefit reserves.


GE2019 FORM 10-K 40

MD&AOTHER ITEMS

Future long-term care premium rate increases. Long-term care insurance policies allow the issuing insurance entity to increase premiums, or alternatively allow the policyholder the option to decrease benefits, with approval by state regulators, should actual experience emerge worse than what was projected when such policies were initially underwritten. As a reinsurer, we rely upon the primary insurers that issued the underlying policies to file proposed premium rate increases on those policies with the relevant state insurance regulators, asregulators. While we have no direct ability to seek or to institute such premium rate increases, we often collaborate with the primary insurers in accordance with reinsurance contractual terms to file proposed premium rate increases. The amount of times that rate increases have occurred varies by ceding company. We consider recent experience of rate increase filings made by our ceding companies along with state insurance regulatory processes and precedents in establishing our current expectations. Higher future premium rate increases lower the present value of future policy benefit reserves and lower future premium rate increases increase the present value of future policy benefit reserves.

Terminations. Terminations refers to the rate at which the underlying policy is canceledpolicies are cancelled due to either mortality, lapse (non-payment of premiums by a policyholder), or, in the case of long-term care insurance, benefit exhaustion. Termination rate assumptions used in estimating the present value of future policy benefit reserves are based on the results of our experience studies and reflect actuarial judgment. Lower termination rates increase, while higher termination rates decrease, the present value of expected future benefit payments.

In 2017, based on elevated claim experience for a portion of our long-term care insurance contracts, we initiated a comprehensive review of all premium deficiency testing assumptions across all insurance products, resulting in a reconstruction of our future claim cost projections for long-term care insurance products. Our internalWhile our long-term care insurance claim experience has been consistentshown some emerging modest favorable experience, it remains largely in-line with those reconstructed projections, althoughprojections. However, the extent of actual experience since 2017 to date is limited in the context of a long-tailed, multi-decade portfolio.

20192021 Premium Deficiency Testing. We annually performcompleted our annual premium deficiency testing in the aggregate across our run-off insurance portfolio.  We performed this year’s testingportfolio in the third quarter of 2019, consistent with our historical practice prior to 2017 when we reconstructed our claim cost curves.2021. These procedures included updating experience studies since our last test completed in the fourththird quarter of 2018,2020, independent actuarial analysis (principally on long-term care insurance exposures) and review of industry benchmarks. As we experienced a premium deficiency in 2018, our 2019Our 2021 premium deficiency testing started with a zerothe positive margin and, accordingly, any net adverse development would result in a future charge to earnings. Using our most recent future policy benefit reserve assumptions, including changes to our assumptions related to discount rate and future premium rate increases, we identified a premium deficiency resulting in a $1.0 billion pre-tax charge to earnings inof less than 2% of the third quarter 2019. The increase torecorded future policy benefit reserves that resulted from our 2020 premium deficiency testing. Using updated assumptions, the 2021 premium deficiency testing results indicated a significant increase in the positive margin to approximately 11% of the related future policy benefit reserves recorded at September 30, 2021. As a result, the assumptions updated in connection with the premium deficiency recognized in 2019 remain locked-in and will remain so unless another premium deficiency occurs in the future.


2021 FORM 10-K 29

The significant increase in the premium deficiency testing margin resulting from our 20192021 premium deficiency testing was primarilylargely attributable to an increase in the significant decline in market interest rates we observed this year, which has resulted in a loweroverall discount rate and adversely impacted our reserve margin by $1.3 billion, and higher levels of projected long-term care premium rate increases due to larger rate filings by some ceding companies than previously planned, which favorably impacted our reserve margin by $0.3 billion.

Our discount rate assumption for purposes of performing the premium deficiency assessment resulted in a weighted average rate of 5.74%6.15% compared to 6.04%5.70% in 2018.2020 ($2.2 billion). This declineincrease in the discount rate from 20182020 reflects further progress of our previously communicated investment portfolio realignment strategy, that includes increased amounts allocated to 2019 reflectedgrowth assets, consisting of private equity, equity-like securities and select high yield credit strategies, from our previous target of approximately 8% up to approximately 15%. These amounts are expected to be funded over the next 5 to 7 years from the remaining projected capital contribution of approximately $5.5 billion through 2024 and regular portfolio cash flows while maintaining an overall A-rated fixed income portfolio. The 2021 discount rate assumptions also reflect a lower expected reinvestment rate increasingon fixed-income investments versus that applied in 2020, due to anlower prevailing benchmark interest rates in the U.S, grading to a lower expected long-term average investment yield over a longershorter period lower prospective expected returns on higher yielding assets classes introduced with our 2018 strategic initiatives, and slightly lower actual yields on our fixed-income investment security portfolio. As a result of this increased allocation to higher-yielding assets, our run-off insurance operations may experience future earnings volatility due to investments carried at fair value with changes in fair values reported in earnings and changes in the allowance for credit losses, and temporary elevated amounts of unfunded investment commitments.

As noted above,While our observed long-term care insurance claim experience has shown some modest favorable emerging morbidity experience in the period since the 2017 reconstruction of our future long-term care claim cost projections, has been consistentit remains largely in-line with those reconstructed projections. Based on the application of professional actuarial judgment to the factors discussed above, we have made no substantial change to our assumptions concerning morbidity, morbidity improvement, mortality, mortality improvement, terminations, or terminationslong-term care insurance premium rate increases in 2019.

2021. As with all assumptions underlying our premium deficiency testing, we will continue to monitor these factors, which may result in future changes in our assumptions. See Note 12

Since our premium deficiency testing performed in 2020, we have implemented approximately $0.2 billion of previously approved long-term care insurance premium rate increase actions and made no substantial changes to the consolidated financial statementsamount of projected future premium rate increase approvals. Our 2021 premium deficiency test includes approximately $1.7 billion of anticipated future premium increases or benefit reductions associated with future in-force rate actions, of which approximately $0.9 billion has been approved and not yet implemented. This represents a decrease of $0.2 billion from our 2020 premium deficiency test to account for further informationactions that are: (a) approved and not yet implemented, (b) filed but not yet approved, and (c) estimated on future filings through 2030 and includes the effects of the higher discount rate mentioned above and longer anticipated timing to achieve and implement certain premium rate approvals.

As a result of exposure period cut-off dates to permit experience to develop and lags in ceding company data reporting from our ceding companies, the impact of COVID-19 was generally not reflected in the experience studies data used in our 2021 premium deficiency testing. However, we assessed certain scenarios to better understand potential impacts associated with COVID-19 and, due to the currently observed insignificance and perceived short-term nature of such uncertain future impacts, including the natural offsets from mortality in the aggregate across our run-off insurance products (i.e., for life insurance products, higher mortality increases the present value of expected future benefit payments, while for annuity and long-term care insurance contracts, higher mortality decreases the present value of expected future benefit payments), concluded adjustments to our primary assumptions used in the premium deficiency testing were not warranted.

When results of our 2019the premium deficiency testing.testing indicate overall reserves are sufficient, we are also required to assess whether additional future policy benefit reserves are required to be accrued over time in the future. Such an accrual would be required if profits are projected in earlier future periods followed by losses projected in later future years (i.e., profits followed by losses). When this pattern of profits followed by losses is projected, we would be required to accrue a liability in the expected profitable years by the amount necessary to offset projected losses in later future years. We noted our projections as of third quarter 2021 indicate the present value of projected earnings in each future year to be positive, and therefore, no further adjustments to our future policy benefit reserves were required at this time.

GAAP Reserve Sensitivities.Sensitivities. The results of our premium deficiency testing are sensitive to the assumptions described above. Certain future adverse changes in our assumptions could result in the unlocking of reserves, resetting of actuarial assumptions to current assumptions, an increase to future policy benefit reserves and a charge to earnings. Considering the results of the 20192021 premium deficiency test which reset ourresulted in a margin, to zero, any future net adverse changes in our assumptions willmay reduce the margin or result in a premium deficiency requiring an increase to future policy benefit reserves. For example, hypothetical adverse changes in key assumptions related to our future policy benefits reserves, holding all other assumptions constant, would have the following effectsestimated increase to the projected present value of future cash flows as presented in the table below. Any future net favorable changes to these assumptions could result in a lower projected present value of future cash flows and additional margin in our premium deficiency test and higher income over the remaining duration of the portfolio, including higher investment income. The assumptions within our future policy benefit reserves are subject to significant uncertainties, including those inherent in the complex nature of our reinsurance treaties. Many of our assumptions are interdependent and require evaluation individually and in the aggregate across all insurance products. Small changes in the amounts used in the sensitivities, or the use of different factors or effect from converting to modeling future cash flow projections for our long-term insurance exposures to a "first principles" model based on more granular assumptions of expected future claim experience could result in materially different outcomes from those reflected below.

GE20192021 FORM 10-K 4130
MD&AOTHER ITEMS


2020 assumption2021 assumptionHypothetical change in 2021 assumptionEstimated increase to projected present value of future cash flows
Long-term care insurance morbidity improvement1.25% per year over 12 to 20 years1.25% per year over 12 to 20 years25 basis point reduction
No morbidity improvement		$500
$2,700
Long-term care insurance morbidityBased on company experienceBased on company experience5% increase in dollar amount of paid claims$900
Long-term care insurance mortality improvement0.5% per year for 10 years with annual improvement graded to 0% over next 10 years0.5% per year for 10 years with annual improvement graded to 0% over next 10 years1.0% per year for 10 years with annual improvement graded to 0% over next 10 years$400
Total terminations:
Long-term care insurance mortalityBased on company experienceBased on company experienceAny change in termination assumptions that reduce total terminations by 10%$900
Long-term care insurance lapse rateVaries by block, attained age and benefit period; average 0.5% - 1.15%Varies by block, attained age and benefit period; average 0.5% -1.15%
Long-term care insurance benefit exhaustionBased on company experienceBased on company experience
Long-term care insurance future premium rate increasesVaries by block based on filing experienceVaries by block based on filing experience25% adverse change in premium rate increase success rate$400
Discount rate:
Overall discount rate5.70%6.15%25 basis point reduction$800
Reinvestment rate2.70%; grading to a long-term average investment yield of 5.8%2.60%; grading to a long-term average investment yield of 5.1%25 basis point reduction; grading to a long-term average investment yield of 5.1%Less than $100
Structured settlement annuity mortalityBased on company experienceBased on company experience5% decrease in mortality$100
Life insurance mortalityBased on company experienceBased on company experience5% increase in mortality$300
 2018 assumption2019 assumptionHypothetical change in 2019 assumption
Estimated increase to future policy benefit reserves
(In billions, pre-tax)
     
Long-term care insurance morbidity improvement1.25% per year over 12 to 20 years1.25% per year over 12 to 20 years25 basis point reduction
No morbidity improvement
$0.7
$3.7
Long-term care insurance morbidityBased on company experienceBased on company experience5% increase in dollar amount of paid claims$1.1
Long-term care insurance mortality improvement0.5% per year for 10 years with annual improvement graded to 0% over next 10 years0.5% per year for 10 years with annual improvement graded to 0% over next 10 years1.0% per year for 10 years with annual improvement graded to 0% over next 10 years$0.4
Total terminations:    
Long-term care insurance mortalityBased on company experienceBased on company experienceAny change in termination assumptions that reduce total terminations by 10%$1.0
Long-term care insurance lapse rateVaries by block, attained age and benefit period; average 0.5 - 1.15%Varies by block, attained age and benefit period; average 0.5 - 1.15%
Long-term care insurance benefit exhaustionBased on company experienceBased on company experience
Long-term care insurance future premium rate increasesVaries by block based on filing experienceVaries by block based on filing experience25% adverse change in premium rate increase success rate$0.5
Discount rate:    
Overall discount rate6.04%5.74%25 basis point reduction$1.0
Reinvestment rate4.35%; grading to a long-term average investment yield of 6.0%3.05%; grading to a long-term average investment yield of 5.9%25 basis point reduction; grading to long-term investment yield of 5.9%Less than $0.1
Structured settlement annuity mortalityBased on company experienceBased on company experience5% decrease in mortality$0.1
Life insurance mortalityBased on company experienceBased on company experience5% increase in mortality$0.3

Statutory Considerations.Considerations. Our run-off insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices. Statutory accounting practices, not GAAP, determine the minimum required statutory capital levels of our insurance legal entities. We annually perform statutory asset adequacy testing and expect our December 31, 2021 testing process to be completed in the first quarter of 2022, the results of which may affect the amount or timing of capital contributions from GE to the insurance legal entities.

Statutory accounting practices are set forth by the National Association of Insurance Commissioners (NAIC) as well as state laws, regulation and general administrative rules and differ in certain respects from GAAP. Under statutory accounting practices, base formulaic reserve assumptions typically do not change unless approved by our primary regulator, KID. In addition to base reserves, statutory accounting practices require additional actuarial reserves (AAR) be established based on results of asset adequacy testing reflecting moderately adverse conditions (i.e., assumptions include a provision for adverse deviation (PAD) rather than current assumptions without a PAD as required for premium deficiency testing under GAAP). As a result, our statutory asset adequacy testing assumptions reflect less long-term care insurance morbidity improvement and for shorter durations, restrictions on future long-term care insurance premium rate increases, no life insurance mortality improvement and a lower discount rate.rate, among other differences. As a result, several of the sensitivities described in the table above would be less impactful on our statutory reserves.

The adverse impact on our statutory AAR arising from our revised assumptions in 2017, including the collectability of reinsurance recoverables, is expected to require GE Capital to contribute approximately $14.5 billion of additional capital to itsour run-off insurance operationssubsidiaries in 2018-2024. For statutory accounting purposes, KID approved our request for a permitted accounting practice to recognize the 2017 AAR increase over a seven-year period. GE Capital provided capital contributions to its insurance subsidiaries of $2.0 billion, $2.0 billion, $1.9 billion and $3.5 billion were contributed to our run-off insurance subsidiaries in the first quarter of 2021, 2020, 2019 and 2018, respectively. GE Capital expectsWe expect to provide further capital contributions of approximately $7$5.5 billion through 2024 (of which approximately $2.0 billion is expected to be contributed in the first quarter of 2022, pending completion of our December 31, 2021 statutory reporting process, which includes asset adequacy testing), subject to ongoing monitoring by KID. GE is a party to capital maintenance agreements with ERAC and UFLIC wherebyunder which GE willis required to maintain their minimum statutory capital levels at 300% of their year-end Authorized Control Level risk-based capital requirements as defined from time to time by the NAIC.

2021 FORM 10-K 31

If our future policy benefit reserves established under GAAP are realized over the estimated remaining life of our run-off insurance obligations, we would expect the $14.5 billion of capital contributed to the run-off insurance operations over the 2018 to 2024 period to be considered statutory capital surplus at the end of the periodestimated remaining life with no additional charge to GAAP earnings. However, should the more conservative statutory assumptions be realized, we would be required to record the difference between GAAP assumptions and statutory assumptions as a charge to GAAP earnings in the future periods.


GE2019 FORM 10-K 42

MD&AOTHER ITEMS

See Other Items - New Accounting Standards within MD&A and Notes 1 and 12 to the consolidated financial statements11 for further information.

NEW ACCOUNTING STANDARDS. In August 2018, theThe Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accountingnew guidance on accounting for Long-Duration Contracts. In October 2019, the FASB affirmed its decision to defer thelong-duration insurance contracts that is effective date tofor our interim and annual periods beginning after December 31, 2021,January 1, 2023, with an election to adopt early.early, and restatement of prior periods presented. We intend to adopt the new guidance effective January 1, 2023 (with transition adjustments as of January 1, 2021), using the modified retrospective transition method where permitted. We are evaluating the effect of the standardnew guidance on our consolidated financial statements and anticipate that its adoption will significantly change the accounting for measurements of our long-duration insurance liabilities. The ASUnew guidance requires cash flow assumptions used in the measurement of various insurance liabilities to be reviewed at least annually and updated if actual experience or other evidence indicates previous assumptions need to be revised with any required changes recorded in earnings. Under the current accounting guidance, the discount rate is based on expected investment yields, while under the ASUnew guidance the discount rate will be equivalent to the upper-medium grade (e.g.(i.e., single A) fixed-income instrument yield reflecting the duration characteristics of the liability and is required to be updated in each reporting period with changes recorded in other comprehensive income. We expect that the single-A rate under the new guidance at the transition date will be lower than our current discount rate. In measuring the insurance liabilities under the new standard,guidance, contracts shall not be grouped together from different issue years. These changes will result in the elimination of premium deficiency testing and shadow adjustments. While we continue to evaluate the effect of the standardnew guidance on our ongoing financial reporting, we anticipate that theits adoption of the ASU will materially affect our financial statements.statements and require changes to certain of our processes, systems, and controls. As the ASUnew guidance is only applicable to the measurements of our long-duration insurance liabilities under GAAP, it will not affect the accounting for our insurance reserves or the levels of capital and surplus under statutory accounting practices.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit losses and additional disclosures related to credit risk. The CECL model utilizes a lifetime expected credit loss measurement objective for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. This model replaces the multiple existing impairment models in current GAAP, which generally require that a loss be incurred before it is recognized. The new standard also applies to receivables arising from revenue transactions such as contract assets and accounts receivables, as well as reinsurance recoverables at GE Capital's run-off insurance operations and is effective for fiscal years beginning after December 15, 2019. The standard will be applied prospectively with an adjustment to retained earnings. As we finalize our process, we expect the adoption of the ASU to have an effect of approximately $0.2 billion to retained earnings.

OTHER.We own, or hold licenses to use, numerous patents. New patents are continuously being obtained through our research and development activities as existing patents expire. Patented inventions are used both within the Company and are licensed to others. GE is a trademark and service mark of General Electric Company.

Because of the diversity of our products and services, as well as the wide geographic dispersion of our production facilities, we use numerous sources for the wide variety of raw materials needed for our operations. We have not been adversely affected by our inability to obtain raw materials.

NON-GAAP FINANCIAL MEASURES. We believe that presenting non-GAAP financial measures provides management and investors useful measures to evaluate performance and trends of the total company and its businesses. This includes adjustments in recent periods to GAAP financial measures to increase period-to-period comparability following actions to strengthen our overall financial position and how we manage our business.

In addition, management recognizes that certain non-GAAP terms may be interpreted differently by other companies under different circumstances. In various sections of this report we have made reference to the following non-GAAP financial measures in describing our (1) revenues, specifically GE Industrial segment organic revenues;revenues by segment; organic revenues, and GE Industrialequipment and services organic revenues (2) profit, specifically GE Industrial segment organic profit; Adjusted GE Industrial profit and profit margin;margin by segment; Adjusted GE Industrialprofit and profit margin (excluding certain items); Adjusted organic profit and profit margin; Adjusted earnings (loss); and Adjusted earnings (loss) per share (EPS), (3) taxes, specifically GE effective tax rates, excluding GE Capital earnings; and reconciliation of U.S. federal statutory income tax rate to GE effective tax rate excluding GE Capital earnings, (4) cash flows, specifically GE Industrial free cash flows (FCF), and (5) debt balances, specifically GE Industrial net debt.. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.

ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP)
RevenuesSegment profit (loss)Profit margin
20212020V%20212020V%20212020V pts
Aviation (GAAP)$21,310 $22,042 (3)%$2,882 $1,229 F13.5 %5.6 %7.9pts
Less: acquisitions— — — — 
Less: business dispositions— 48 — (48)
Less: foreign currency effect21 — (18)— 
Aviation organic (Non-GAAP)$21,289 $21,994 (3)%$2,900 $1,277 F13.6 %5.8 %7.8pts
Healthcare (GAAP)$17,725 $18,009 (2)%$2,966 $3,060 (3)%16.7 %17.0 %(0.3)pts
Less: acquisitions19 (96)(29)(43)
Less: business dispositions— 911 — 373 
Less: foreign currency effect308 — 114 — 
Healthcare organic (Non-GAAP)$17,398 $17,194 1 %$2,881 $2,729 6 %16.6 %15.9 %0.7pts
Renewable Energy (GAAP)$15,697 $15,666 — %$(795)$(715)(11)%(5.1)%(4.6)%(0.5)pts
Less: acquisitions— — — — 
Less: business dispositions— 33 — (4)
Less: foreign currency effect414 — (39)— 
Renewable Energy organic (Non-GAAP)$15,283 $15,633 (2)%$(756)$(711)(6)%(4.9)%(4.5)%(0.4)pts
Power (GAAP)$16,903 $17,589 (4)%$726 $274 F4.3 %1.6 %2.7pts
Less: acquisitions— — — — 
Less: business dispositions26 220 (2)7 
Less: foreign currency effect203 — (59)— 
Power organic (Non-GAAP)$16,674 $17,370 (4)%$788 $267 F4.7 %1.5 %3.2pts
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.
GE20192021 FORM 10-K 4332

ORGANIC REVENUES (NON-GAAP)20212020V%20202019V%
Total revenues (GAAP)$74,196 $75,833 (2)%$75,833 $90,221 (16)%
Less: Insurance revenues3,106 2,865 2,865 2,802 
Adjusted revenues (Non-GAAP)$71,090 $72,969 (3)%$72,969 $87,419 (17)%
Less: acquisitions19 (67)138 37 
Less: business dispositions(a)(33)1,447 58 3,631 
Less: foreign currency effect(b)979 — (282)— 
Organic revenues (Non-GAAP)$70,125 $71,589 (2)%$73,055 $83,751 (13)%
(a) Dispositions impact in 2020 primarily related to our BioPharma business, with revenues of $830 million. Dispositions impact in 2019 primarily related to our BioPharma business, with revenues of $2,524 million.
(b) Foreign currency impact in 2021 was primarily driven by U.S. Dollar appreciation against the euro, Chinese renminbi, and British pound. Foreign currency impact in 2020 was primarily driven by U.S. Dollar appreciation against the Brazilian real, euro, and Indian rupee.
EQUIPMENT AND SERVICES ORGANIC REVENUES (NON-GAAP)20212020V%20202019V%
Total equipment revenues (GAAP)$34,200 $37,584 (9)%$37,584 $42,811 (12)%
Less: acquisitions— — 13 14 
Less: business dispositions(32)1,037 19 3,193 
Less: foreign currency effect664 — (179)— 
Equipment organic revenues (Non-GAAP)$33,567 $36,547 (8)%$37,730 $39,604 (5)%
Total services revenues (GAAP)$36,890 $35,385 4 %$35,385 $44,608 (21)%
Less: acquisitions19 (67)125 23 
Less: business dispositions(1)410 39 438 
Less: foreign currency effect315 — (102)— 
Services organic revenues (Non-GAAP)$36,558 $35,042 4 %$35,324 $44,147 (20)%
We believe 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 PROFIT AND PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) (NON-GAAP)202120202019
Total revenues (GAAP)$74,196 $75,833 $90,221 
Less: Insurance revenues3,106 2,865 2,802 
Adjusted revenues (Non-GAAP)71,090 72,969 87,419 
Total costs and expenses (GAAP)80,702 81,259 92,754 
Less: Insurance cost and expenses2,540 2,668 3,622 
Less: interest and other financial charges1,813 2,018 2,826 
Less: debt extinguishment costs6,524 301 256 
Less: non-operating benefit costs1,782 2,430 2,839 
Less: restructuring & other(a)455 693 922 
Less: Steam asset impairment— 363 — 
Less: SEC settlement charge— 200 — 
Less: goodwill impairments— 728 1,486 
Add: noncontrolling interests(71)(158)7 
Add: EFS benefit from taxes(162)(154)(166)
Adjusted costs (Non-GAAP)67,354 71,546 80,643 
Other income (GAAP)2,823 11,396 2,479 
Less: gains (losses) on equity securities(a)1,921 (1,891)933 
Less: restructuring & other(a)75 13 36 
Less: gains (losses) on purchases and sales of business interests(a)(44)12,452 (135)
Adjusted other income (Non-GAAP)871 823 1,646 
Profit (loss) (GAAP)$(3,683)$5,970 $(54)
Profit (loss) margin (GAAP)(5.0)%7.9 %(0.1)%
Adjusted profit (loss) (Non-GAAP)$4,608 $2,246 $8,422 
Adjusted profit (loss) margin (Non-GAAP)6.5 %3.1 %9.6 %
(a) See the Corporate section for further information.
We believe that adjusting profit to exclude the effects of items that are not closely associated with ongoing operations provides management and investors with a meaningful measure that increases the period-to-period comparability. Gains (losses) 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 and other activities.
2021 FORM 10-K 33

ADJUSTED ORGANIC PROFIT (NON-GAAP)20212020V%20202019V%
Adjusted profit (loss) (Non-GAAP)$4,608 $2,246 F$2,246 $8,422 (73)%
Less: acquisitions(29)15 (4)6 
Less: business dispositions(2)367 (3)1,064 
Less: foreign currency effect28 — 16 — 
Adjusted organic profit (loss) (Non-GAAP)$4,611 $1,863 F$2,236 $7,352 (70)%
Adjusted profit (loss) margin (Non-GAAP)6.5 %3.1 %3.4 pts3.1 %9.6 %(6.5)pts
Adjusted organic profit (loss) margin (Non-GAAP)6.6 %2.6 %4.0 pts3.1 %8.8 %(5.7)pts
We believe this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.
ADJUSTED EARNINGS (LOSS) (NON-GAAP)202120202019
(Per-share amounts in dollars)EarningsEPSEarningsEPSEarningsEPS
Earnings (loss) from continuing operations (GAAP) (Note 17)$(3,571)$(3.25)$5,975 $5.46 $(1,074)$(0.98)
Insurance earnings570 0.52 193 0.18 (818)(0.75)
Tax effect on Insurance earnings(126)(0.11)(50)(0.05)155 0.14 
Less: Insurance earnings444 0.40 143 0.13 (663)(0.61)
Earnings (loss) excluding Insurance (Non-GAAP)(4,015)(3.66)5,832 5.32 (411)(0.38)
Non-operating benefits costs (GAAP)(1,782)(1.62)(2,430)(2.22)(2,839)(2.60)
Tax effect on non-operating benefit costs374 0.34 510 0.47 596 0.55 
Less: non-operating benefit costs(1,408)(1.28)(1,920)(1.75)(2,243)(2.06)
Gains (losses) on purchases and sales of business interests(a)(44)(0.04)12,452 11.37 (135)(0.12)
Tax effect on gains (losses) on purchases and sales of business interests6 0.01 (1,257)(1.15)(26)(0.02)
Less: gains (losses) on purchases and sales of business interests(37)(0.03)11,195 10.22 (162)(0.15)
Gains (losses) on equity securities(a)1,921 1.75 (1,891)(1.73)933 0.86 
Tax effect on gains (losses) on equity securities(b)128 0.12 637 0.58 (53)(0.05)
Less: gains (losses) on equity securities2,049 1.87 (1,255)(1.15)880 0.81 
Restructuring & other(a)(380)(0.35)(680)(0.62)(886)(0.81)
Tax effect on restructuring & other35 0.03 151 0.14 187 0.17 
Less: restructuring & other(346)(0.31)(529)(0.48)(699)(0.64)
Debt extinguishment costs(6,524)(5.94)(301)(0.27)(256)(0.23)
Tax effect on debt extinguishment costs(c)430 0.39 57 0.05 55 0.05 
Less: debt extinguishment costs(6,094)(5.55)(244)(0.22)(201)(0.18)
Steam asset impairments (pre-tax)(a)— — (363)(0.33)— — 
Tax effect on Steam asset impairments— — 37 0.03 — — 
Less: Steam asset impairments— — (326)(0.30)— — 
Goodwill impairments(a)— — (728)(0.66)(1,486)(1.36)
Tax effect on goodwill impairments— — (23)(0.02)(55)(0.05)
Less: goodwill impairments— — (751)(0.69)(1,541)(1.41)
BioPharma deal expense— — — — — — 
Tax effect on BioPharma deal expense— — — — (647)(0.59)
Less: BioPharma deal expense— — — — (647)(0.59)
Less: Accretion of redeemable noncontrolling interest(9)(0.01)(151)(0.14)— — 
Less: SEC settlement charge— — (200)(0.18)— — 
Less: U.S. tax reform enactment adjustment8 0.01 (49)(0.05)(2)— 
Less: Tax benefit related to BioPharma sale— — 143 0.13 — — 
Less: Tax loss related to GECAS transaction(54)(0.05)— — — — 
Adjusted earnings (loss) (Non-GAAP)$1,876 $1.71 $(81)$(0.07)$4,204 $3.86 
(a) See the Corporate section for further information.
(b) Includes tax benefits available to offset the tax on gains in equity securities.
(c) Includes related tax valuation allowances.
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 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 2021.
*Non-GAAP Financial Measure
2021 FORM 10-K 34


OTHER FINANCIAL DATA.
MD&ANON-GAAP FINANCIAL MEASURES
FIVE-YEAR PERFORMANCE GRAPH

GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP)
 Revenues Segment profit (loss) Profit margin
(Dollars 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: acquisitions25
—
  (1)—
     
Less: business dispositions10
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: acquisitions3
—
  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 dispositions25
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: acquisitions83
—
  (19)—
     
Less: business dispositions2
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: acquisitions111
—
  (15)—
     
Less: business dispositions(a)38
3,357
  (24)295
     
Less: foreign currency effect(b)(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
            
(a) Dispositions impact in 2018 primarily related to our Industrial Solutions and Distributed Power businesses within our Power segment, with revenues of $1,257 million and $1,274 million, respectively, and Value-Based Care within our Healthcare segment, with revenues of $222 million.
(b) Primarily the euro, Japanese yen and Brazilian real.
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 organic 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.

















*Non-GAAP Financial Measure

GE2019 FORM 10-K 44

MD&ANON-GAAP FINANCIAL MEASURES

GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP)
 Revenues Segment profit (loss) Profit margin
(Dollars in millions)2018
2017
V%
 2018
2017
V%
 2018
2017
V pts
            
Power (GAAP)$22,150
$29,426
(25)% $(808)$1,894
U
 (3.6)%6.4%(10)pts
Less: acquisitions70
9
  (2)—
     
Less: business dispositions125
3,359
  4
291
     
Less: foreign currency effect368
—
  (11)—
     
Power organic (Non-GAAP)$21,587
$26,058
(17)% $(799)$1,602
U
 (3.7)%6.1%(9.8)pts
            
Renewable Energy (GAAP)$14,288
$14,321
— % $292
$728
(60)% 2.0 %5.1%(3.1)pts
Less: acquisitions143
80
  45
1
     
Less: business dispositions—
—
  —
—
     
Less: foreign currency effect(75)—
  (41)—
     
Renewable Energy organic (Non-GAAP)$14,220
$14,242
— % $288
$727
(60)% 2.0 %5.1%(3.1)pts
            
Aviation (GAAP)$30,566
$27,013
13 % $6,466
$5,370
20 % 21.2 %19.9%1.3pts
Less: acquisitions4
2
  (1)—
     
Less: business dispositions—
—
  —
—
     
Less: foreign currency effect28
—
  (29)—
     
Aviation organic (Non-GAAP)$30,534
$27,010
13 % $6,496
$5,370
21 % 21.3 %19.9%1.4pts
            
Healthcare (GAAP)$19,784
$19,017
4 % $3,698
$3,488
6 % 18.7 %18.3%0.4pts
Less: acquisitions6
1
  (4)(2)     
Less: business dispositions13
267
  (1)123
     
Less: foreign currency effect152
—
  52
—
     
Healthcare organic (Non-GAAP)$19,613
$18,748
5 % $3,650
$3,367
8 % 18.6 %18.0%0.6pts
            
GE Industrial segment (GAAP)$86,789
$89,776
(3)% $9,647
$11,479
(16)% 11.1 %12.8%(1.7)pts
Less: acquisitions(a)224
92
  38
(1)     
Less: business dispositions(b)138
3,626
  3
414
     
Less: foreign currency effect(c)473
—
  (29)—
     
GE Industrial segment organic
(Non-GAAP)
$85,955
$86,059
— % $9,634
$11,066
(13)% 11.2 %12.9%(1.7)pts
            
(a) Acquisition impact primarily related to LM Wind within our Renewable Energy segment, with $142 million and $80 million of revenues in 2018 and 2017, respectively.
(b) Dispositions impact in 2017 primarily related to Industrial Solutions, Distributed Power and Water businesses within our Power segment, with $1,368 million, $408 million and $1,516 million of revenues, respectively, and Value-Based Care within our Healthcare segment, with $213 million of revenues.
(c) Primarily the Brazilian real and the Euro.
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 organic 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.















*Non-GAAP Financial Measure

GE2019 FORM 10-K 45
MD&ANON-GAAP FINANCIAL MEASURES

ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN (Dollars in millions)
2019
2018
2017
    
GE total revenues (GAAP)$87,719
$89,038
$92,229
    
GE total costs and expenses (GAAP)88,118
111,967
92,834
Less: GE interest and other financial charges2,115
2,415
2,538
Less: non-operating benefit costs2,828
2,740
2,409
Less: restructuring & other(a)1,351
2,832
2,914
Less: goodwill impairments(b)1,486
22,136
1,165
Add: noncontrolling interests6
(130)(280)
Adjusted GE Industrial costs (Non-GAAP)80,343
81,714
83,527
    
GE other income (GAAP)2,200
2,317
1,893
Less: unrealized gains (losses)(c)793
—
—
Less: restructuring & other36
(120)(109)
Less: gains (losses) and impairments for disposed or held for sale businesses(c)4
1,370
926
Adjusted GE other income (Non-GAAP)1,367
1,068
1,076
    
GE Industrial profit (GAAP)$1,801
$(20,612)$1,288
GE Industrial profit margin (GAAP)2.1%(23.1)%1.4%
    
Adjusted GE Industrial profit (Non-GAAP)$8,743
$8,392
$9,778
Adjusted GE Industrial profit margin (Non-GAAP)10.0%9.4 %10.6%
    
(a) See the GE Corporate Items and Eliminations - Restructuring section within MD&A for further information.
(b) Related to our Renewable Energy segment in 2019, Power and Renewable Energy segments in 2018 and our Power segment in 2017. See Note 8 to the consolidated financial statements for further information.
(c) See the Corporate Items and Eliminations section within MD&A for further information.
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) (Dollars in millions)
2019
2018
V%
    
GE total revenues (GAAP)$87,719
$89,038
(1)%
Adjustments:


Less: acquisitions111
—

Less: business dispositions(a)45
4,233

Less: foreign currency effect(b)(1,442)—

GE Industrial organic revenues (Non-GAAP)$89,004
$84,805
5 %
    
 2018
2017
V%
    
GE total revenues (GAAP)$89,038
$92,229
(3)%
Adjustments:   
Less: acquisitions(c)245
106
 
Less: business dispositions(d)138
3,815
 
Less: foreign currency effect(e)479
—
 
GE Industrial organic revenues (Non-GAAP)$88,177
$88,308
— %
    
(a) Dispositions impact in 2018 primarily related to our Industrial Solutions and Distributed Power businesses within our Power segment, with revenues of $1,257 million and $1,274 million, respectively, and Value-Based Care within our Healthcare segment, with revenues of $222 million, and Current with revenues of $727 million.
(b) Primarily the euro, Japanese yen and Brazilian real.
(c) Acquisitions in 2018 primarily related to LM Wind within our Renewable Energy segment, which was acquired in 2017 and contributed $142 million in revenues.
(d) Dispositions impact in 2017 primarily related to Industrial Solutions, Distributed Power and Water businesses within our Power segment, with $1,368 million, $408 million and $1,516 million of revenues, respectively, Value-Based Care within our Healthcare segment with $213 million of revenues, and Current with $189 million of revenues.
(e) Primarily the Brazilian real and the Euro.
We believe 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.







GE2019 FORM 10-K 46

MD&ANON-GAAP FINANCIAL MEASURES

ADJUSTED GE INDUSTRIAL ORGANIC PROFIT (NON-GAAP) (Dollars in millions)
2019
2018
V%
    
Adjusted GE Industrial profit (Non-GAAP)$8,743
$8,392
4 %
Adjustments:


Less: acquisitions(15)—

Less: business dispositions(32)284

Less: foreign currency effect144
—

Adjusted GE Industrial organic profit (Non-GAAP)$8,646
$8,107
7 %
    
Adjusted GE Industrial profit margin (Non-GAAP)10.0%9.4%0.6pts
Adjusted GE Industrial organic profit margin (Non-GAAP)9.7%9.6%0.1pts
    
 2018
2017
V%
    
Adjusted GE Industrial profit (Non-GAAP)$8,392
$9,778
(14)%
Adjustments:   
Less: acquisitions49
(19) 
Less: business dispositions(3)420
 
Less: foreign currency effect(64)—
 
Adjusted GE Industrial organic profit (Non-GAAP)$8,410
$9,377
(10)%
    
Adjusted GE Industrial profit margin (Non-GAAP)9.4%10.6%(1.2)pts
Adjusted GE Industrial organic profit margin (Non-GAAP)9.5%10.6%(1.1)pts
    
We believe 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.
GE EFFECTIVE TAX RATES, EXCLUDING GE CAPITAL EARNINGS (NON-GAAP)
(Dollars in millions)
2019
2018
2017
    
GE earnings (loss) from continuing operations before income taxes (GAAP)$1,271
$(21,101)$(5,476)
Less: GE Capital earnings (loss) from continuing operations(530)(489)(6,765)
Total$1,801
$(20,612)$1,289
    
GE provision for income taxes (GAAP)$1,309
$467
$3,493
GE effective tax rate, excluding GE Capital earnings (Non-GAAP)72.7%(2.3) %271.0%
RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO   
GE EFFECTIVE TAX RATE EXCLUDING GE CAPITAL EARNINGS (NON-GAAP)2019
2018
2017
U.S. federal statutory income tax rate21.0 %21.0 %35.0 %
Reduction in rate resulting from:   
Tax on global activities including exports61.0
(5.1)(146.9)
U.S. business credits(6.4)0.4
(6.4)
Goodwill impairments16.6
(21.9)31.1
Tax Cuts and Jobs Acts enactment5.6
0.5
380.5
All other – net(25.1)2.8
(22.3)
 51.7
(23.3)236.0
GE effective tax rate, excluding GE Capital earnings (Non-GAAP)72.7 %(2.3) %271.0 %
    
We believe the GE effective tax rate, excluding GE Capital earnings*, is best analyzed in relation to GE earnings before income taxes excluding the GE Capital net earnings from continuing operations, as GE tax expense does not include taxes on GE Capital earnings. Management believes in addition to the Consolidated and GE Capital tax rates shown in Note 15 to the consolidated financial statements, this supplemental measure provides investors with useful information as it presents the GE effective tax rate that can be used in comparing the GE results to other non-financial services businesses.









*Non-GAAP Financial Measure

GE2019 FORM 10-K 47
MD&ANON-GAAP FINANCIAL MEASURES

ADJUSTED EARNINGS (LOSS) AND ADJUSTED EPS201920182017
(NON-GAAP) (In millions, per-share amounts in dollars)
Earnings
EPS
Earnings
EPS
Earnings
EPS
       
Consolidated earnings (loss) from continuing operations
attributable to GE common shareholders (GAAP)		$(44)$(0.01)$(21,438)$(2.47)$(8,689)$(1.00)
Less: GE Capital earnings (loss) from continuing operations
attributable to GE common shareholders (GAAP)		(530)(0.06)(489)(0.06)(6,765)(0.78)
GE Industrial earnings (loss) (Non-GAAP)486
0.06
(20,949)(2.41)(1,924)(0.22)
Non-operating benefits costs (pre-tax) (GAAP)(2,828)(0.32)(2,740)(0.32)(2,409)(0.28)
Tax effect on non-operating benefit costs594
0.07
575
0.07
843
0.10
Less: non-operating benefit costs (net of tax)(2,234)(0.26)(2,165)(0.25)(1,566)(0.18)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)(a)4
—
1,370
0.16
926
0.11
Tax effect on gains (losses) and impairments for disposed or held for sale businesses34
—
(380)(0.04)(62)(0.01)
Less: gains (losses) and impairments for disposed or held for sale
  businesses (net of tax)
39
—
990
0.11
864
0.10
Restructuring & other (pre-tax)(b)(1,315)(0.15)(2,952)(0.34)(3,024)(0.35)
Tax effect on restructuring & other277
0.03
338
0.04
893
0.10
Less: restructuring & other (net of tax)(1,039)(0.12)(2,614)(0.30)(2,131)(0.25)
Goodwill impairments (pre-tax)(c)(1,486)(0.17)(22,136)(2.55)(1,165)(0.13)
Tax effect on goodwill impairments(55)(0.01)(235)(0.03)9
—
Less: goodwill impairments (net of tax)(1,541)(0.18)(22,371)(2.57)(1,156)(0.13)
Unrealized gains (losses) (pre-tax)793
0.09
—
—
—
—
Tax effect on unrealized gains (losses)(114)(0.01)—
—
—
—
Less: unrealized gains (losses) (net of tax)679
0.08
—
—
—
—
Debt extinguishment costs(255)(0.03)—
—
—
—
Tax effect on debt extinguishment costs53
0.01
—
—
—
—
Less: Debt extinguishment costs (net of tax)(201)(0.02)—
—
—
—
BioPharma deal expense (pre-tax)—
—
—
—
—
—
Tax on BioPharma deal expense(647)(0.07)—
—
—
—
Less: BioPharma deal expense (net of tax)(647)(0.07)—
—
—
—
Less: GE Industrial U.S. tax reform enactment adjustment(101)(0.01)(38)—
(4,905)(0.56)
Adjusted GE Industrial earnings (loss) (Non-GAAP)$5,531
$0.63
$5,249
$0.60
$6,970
$0.80
  

 

  
GE Capital earnings (loss) from continuing operations attributable
to GE common shareholders (GAAP)		(530)(0.06)(489)(0.06)(6,765)(0.78)
Insurance charges and EFS impairments (pre-tax)(972)(0.11)—
—
(11,444)(1.32)
Tax effect on insurance charges and EFS impairments204
0.02
—
—
3,501
0.40
Less: Insurance charges and EFS impairments (net of tax)(768)(0.09)—
—
(7,943)(0.91)
Less: GE Capital U.S. tax reform enactment adjustment99
0.01
(173)(0.02)206
0.02
Adjusted GE Capital earnings (loss) (Non-GAAP)$139
$0.02
$(316)$(0.04)$972
$0.11
 







  
Adjusted GE Industrial earnings (loss) (Non-GAAP)$5,531
$0.63
$5,249
$0.60
$6,970
$0.80
Add: Adjusted GE Capital earnings (loss) (Non-GAAP)139
0.02
(316)(0.04)972
0.11
Adjusted earnings (loss) (Non-GAAP)$5,671
$0.65
$4,933
$0.57
$7,942
$0.91
       
(a) See the Corporate Items and Eliminations section within MD&A for further information.
(b) See the GE Corporate Items and Eliminations - Restructuring section within MD&A for further information.
(c) Related to our Renewable Energy segment in 2019, Power and Renewable Energy segments in 2018 and our Power segment in 2017. See Note 8 to the consolidated financial statements for further information.
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 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 presenting Adjusted Industrial earnings* and 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.


*Non-GAAP Financial Measure

GE2019 FORM 10-K 48

MD&ANON-GAAP FINANCIAL MEASURES

GE INDUSTRIAL FREE CASH FLOWS (FCF) (NON-GAAP) (In millions)
2019
2018
2017
    
GE CFOA (GAAP)$4,614
$701
$11,479
Add: gross additions to property, plant and equipment(2,216)(2,234)(3,403)
Add: gross additions to internal-use software(274)(306)(423)
Less: common dividends from GE Capital—
—
4,016
Less: GE Pension Plan funding—
(6,000)(1,717)
Less: taxes related to business sales(198)(180)(229)
GE Industrial free cash flows (Non-GAAP)$2,322
$4,341
$5,582
    
We believe investors may 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 this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows.
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 GE31,368
36,262
Add: intercompany loans from GE Capital12,226
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 liabilities3,369
3,868
GE preferred stock5,738
5,573
Less: 50% of GE preferred stock2,869
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. See Note 13 to the consolidated financial statements for further information.
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.

OTHER FINANCIAL DATA
General Electric Company (In millions; per-share amounts in dollars)
2019
2018
2017
2016
2015
      
Revenues$95,214
$97,012
$99,279
$103,297
$94,494
Earnings (loss) from continuing operations attributable to the Company416
(20,991)(8,253)7,454
(7)
Earnings (loss) from discontinued operations, net of taxes, attributable to the Company(5,395)(1,364)(231)47
(5,068)
Net earnings (loss) attributable to the Company(4,979)(22,355)(8,484)7,500
(5,074)
Dividends declared810
3,669
7,741
9,054
9,161
Preferred stocks dividends460
447
436
656
18
Per common share:     
Earnings (loss) from continuing operations – diluted$(0.01)$(2.47)$(1.00)$0.74
$(0.13)
Earnings (loss) from discontinued operations – diluted(0.62)(0.16)(0.03)—
(0.51)
Net earnings (loss) – diluted(0.62)(2.62)(1.03)0.75
(0.64)
Earnings (loss) from continuing operations – basic(0.01)(2.47)(1.00)0.75
(0.13)
Earnings (loss) from discontinued operations – basic(0.62)(0.16)(0.03)0.01
(0.51)
Net earnings (loss) – basic(0.62)(2.62)(1.03)0.76
(0.64)
Dividends declared0.04
0.37
0.84
0.93
0.92
Total assets266,048
311,072
371,099
361,014
491,109
Short-term borrowings22,072
12,776
23,087
30,519
49,540
Non-recourse borrowings of consolidated securitization entities1,655
1,875
1,980
417
3,083
Long-term borrowings67,155
88,949
102,263
105,192
144,594


*Non-GAAP Financial Measure

GE2019 FORM 10-K 49
OTHER FINANCIAL DATA

FIVE-YEAR PERFORMANCE GRAPH
fiveyearperformancegrapha22.jpg
chart-81c8313d23cbdef2035.jpgge-20211231_g2.jpg
The annual changes for the five-year period shown in the above graph are based on the assumption that $100 had been invested in General Electric common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and the Dow Jones Industrial Average (DJIA)Standard & Poor’s 500 Industrials Stock Index (S&P Industrial) on December 31, 2014,2016, and that all quarterly dividends were reinvested. The cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31 for each year indicated. In 2020, we began measuring GE’s relative performance against the S&P Industrial index for performance share unit awards.

With respect to “Market Information,” in the United States, General Electric common stock is listed on the New York Stock Exchange under the ticker symbol "GE" (its principal market). General Electric common stock is also listed on the London Stock Exchange, Euronext Paris, the SIX Swiss Exchange and the Frankfurt Stock Exchange.

As of January 31, 2020,2022, there were approximately 379,000294,000 shareholder accounts of record.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. GE did not repurchase any equity securitiesrepurchased 109,000 shares of common stock at an average price of $95.94, in connection with the settlement of hedging instruments related to the Company’s deferred incentive compensation program during the three months ended December 31, 2019, and no repurchase program has been authorized.   2021.

RISK FACTORS FACTORS.
The following discussion of riskthe material factors, events and uncertainties that may make an investment in the Company speculative or risky contains "forward-looking statements," as discussed in the Forward-Looking Statements section. These risk factors may be important to understanding any statement in this Form 10-K report or elsewhere. The risks described below should not be considered a complete list of potential risks that we face, and additional risks not currently known to us or that we currently consider immaterial may face.also negatively impact us. The following information should be read in conjunction with the MD&A section and the consolidated financial statements and related notes. The risks we describe in this Form 10-K report or in our other SEC filings could, in ways we may not be able to accurately predict, recognize or control, have a material adverse effect on our business, reputation, financial position, and results of operations, cash flows and stock price, and they could cause our future results to be materially different than we presently anticipate.

STRATEGIC RISKS.Strategic risk relates to the Company's future business plans and strategies, including the risks associated with: our strategic plan to separate into three public companies; the global macro-environment; our portfolio of businesses and capital allocation decisions; dispositions, acquisitions, joint ventures and restructuring activity;the global energy transition; competitive threats, the demand for our products and services and the success of our investments in technology and innovation; our portfolio of businesses and capital allocation decisions; dispositions, acquisitions, joint ventures and restructuring activity; intellectual property; and other risks. risks.

Strategic plan- We may encounter challenges to executing our plan to separate GE into three public companies, or to completing the plan within the timeframes we anticipate, and we may not realize some or all of the expected benefits of the separations. In November 2021, we announced our plan to form three independent public companies from our (i) Aviation business, (ii) Healthcare business and (iii) combined Renewable Energy, Power and Digital businesses, in order to better position those businesses to deliver long-term growth and create value for customers, investors, and employees. The planned business separations are expected to be effected through spin-offs by GE that are intended to be tax-free for the Company’s shareholders for U.S. federal income tax purposes. These separation transactions will be subject to the satisfaction of a number of customary conditions, including, among others, final approvals by GE’s Board of Directors, receipt of tax rulings in certain jurisdictions and/or tax opinions from external counsel, the filing with the SEC and effectiveness of Form 10 registration statements, and satisfactory completion of financing. The failure to satisfy all of the required conditions could delay the completion of the separation transactions for a significant period of time or prevent them from occurring at all. Additionally, the separation transactions are complex in nature, and unanticipated developments or changes may affect our ability to complete one or both of the separation transactions as currently expected, within the anticipated timeframes or at all. These or other developments could cause us not to realize some or all of the expected benefits, or to realize them
2021 FORM 10-K 35

on a different timeline than expected. If we are unable to complete any of the separations, we will have incurred costs without realizing the benefits of such transaction. In addition, the terms and conditions of the required regulatory authorizations and consents that are granted, if any, may impose requirements, limitations or costs, or place restrictions on the conduct of the independent companies. And, although we intend for the separation transactions to be tax-free to the Company’s shareholders for U.S. federal income tax purposes, we expect to incur non-U.S. cash taxes on the preparatory restructuring and may also incur non-cash tax expense including potential impairments of deferred tax assets. Moreover, there can be no assurance that the separation transactions will qualify as tax-free for U.S. purposes. If the separation transactions were ultimately determined to be taxable, we would incur a significant tax liability, while
the distributions to the Company’s shareholders would become taxable and the new independent companies might incur income tax liabilities as well. Furthermore, if the separation transactions are completed, we cannot be assured that each separate company will be successful.

Whether or not the separation transactions are completed, our businesses may face material challenges in connection with these transactions, including, without limitation the diversion of management’s attention from ongoing business concerns and impact on the businesses of the Company; appropriately allocating assets and liabilities among the three companies, particularly given the staggered nature of the separation transactions; maintaining employee morale and retaining key management and other employees; retaining existing or attracting new business and operational relationships, including with customers, suppliers, employees and other counterparties; assigning customer contracts and intellectual property to each of the businesses; and potential negative reactions from the financial markets. In particular, GE for the past several years has been undertaking various restructuring and business transformation actions (including workforce reductions, global facility consolidations and other cost reduction initiatives) that have entailed changes across our organizational structure, senior leadership, culture, functional alignment, outsourcing and other areas. This poses risks in the form of personnel capacity constraints and institutional knowledge loss that could lead to missed performance or financial targets, loss of key personnel and harm to our reputation, and these risks are heightened with the additional interdependent actions that will be needed to complete the planned separation transactions. Moreover, completion of the separation transactions will result in the three independent public companies that are smaller, less diversified companies with more limited businesses concentrated in their respective industries than GE is today. As a result, each company may be more vulnerable to changing market conditions, which could have a material adverse effect on its business, financial condition and results of operations. In addition, the diversification of revenues, costs, and cash flows will diminish, such that each company’s results of operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and its ability to fund capital expenditures and investments, pay dividends and meet debt obligations and other liabilities may be diminished. Each of the separate companies will also incur ongoing costs, including costs of operating as independent companies, that the separated businesses will no longer be able to share. Additionally, we cannot predict whether the market value of our common stock and the common stock of each of the new independent companies after the separation transactions will be, in the aggregate, less than, equal to or greater than the market value of our common stock prior to the separation transactions. If the separation transactions are completed, investors holding our common stock may sell the common stock of any of the new independent companies that do not match their investment strategies, which may cause a decline in the market price of such common stock.

COVID-19 - The global COVID-19 pandemic has had and may continue to have a material adverse impact on our operations and financial performance, as well as on the operations and financial performance of many of the customers and suppliers in industries that we serve. Our operations and financial performance since early 2020 have been negatively impacted by the COVID-19 pandemic that has caused, and may continue to cause, a slowdown of economic activity (including the decrease in demand for a broad variety of goods and services), disruptions in global supply chains and significant volatility and disruption of financial markets. As the COVID-19 pandemic continues to affect economic activity globally or in various regions, the extent to which this will adversely impact our future operations and financial performance is uncertain. Across all of our businesses, we have experienced and expect to continue to experience operational challenges from the need to protect employee health and safety, site shutdowns, workplace disruptions and restrictions on the movement of people, raw materials and goods, both at our own facilities and at those of our customers and suppliers, global supply chain disruptions and price inflation. We also have experienced, and may continue experiencing, lower demand and volume for products and services, customer requests for potential payment deferrals or other contract modifications, supply chain under-liquidation, delays of deliveries and the achievement of other billing milestones, delays or cancellations of new projects and related down payments and other factors related directly and indirectly to the COVID-19 pandemic's effects on our customers that adversely impact our businesses. In particular, interruptions of regional and international air travel from COVID-19 are having a material adverse effect on our airline and airframer customers and their demand for our services and products. While our Aviation business is showing continued signs of recovery, the recently renewed intensity of the COVID-19 pandemic in many parts of the world could stall the recovery achieved to date and lead to future requests for payment deferrals, contract modifications, and similar actions across the aviation sector, which may lead to additional charges, impairments and other adverse financial impacts, or to customer disputes.

The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: the severity and duration of the pandemic, including the impact of coronavirus variants and resurgences; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transport and workforce pressures); the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity; the development, availability and public acceptance of effective treatments or vaccines; our employees’ compliance with vaccine mandates that may apply in various jurisdictions; the availability of federal, state, local or non-U.S. funding programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; and the pace and extent of recovery when the COVID-19 pandemic subsides. A number of accounting estimates that we make have been and will continue to be affected by the COVID-19 pandemic and uncertainties related to these and other factors, and our accounting estimates and assumptions may change over time in response to COVID-19 (see Note 1). As the COVID-19 pandemic continues to adversely affect our operating and financial results, it may also have the effect of heightening many of the other risk factors described below.
2021 FORM 10-K 36

Global macro-environment - Our growth is subject to global economic, political and geopolitical risks. We operate in virtually every part of the world, serve customers in over 170175 countries and received 59%56% of our revenues for 20192021 from outside the United States. Our operations and the execution of our business plans and strategies are subject to the effects of global economic trends, competition and geopolitical risks and demand or supply shocks from events that could include war, a major terrorist attack, natural disaster, adisasters or actual or threatened public health pandemic or other events.emergencies (such as COVID-19). They are also affected by local and regional economic environments and policies in the U.S. and other markets that we serve, including interest rates, monetary policy, inflation, economic growth, recession, commodity prices, currency volatility, currency controls or other limitations on the ability to expatriate cash, sovereign debt levels and actual or anticipated defaults on sovereign debt. For example, changes in local economic conditions or outlooks, such as lower rates of investment or economic growth in China, Europe or other key markets, affect the demand for or profitability of our products and services outside the U.S., and the impact on the Company could be significant given the extent of our activities outside the United States. Political changes and trends such as populism, protectionism, economic nationalism and sentiment toward multinational companies and resulting tariffs, export controls or other trade barriers, or changes to trade, tax or other laws and policies, (including tariffs) have been and may continue to be disruptive and costly to our businesses, and these can interfere with our global operating model, supply chain, production costs, customer relationships and competitive position. Further escalation of specific trade tensions, such as thoseincluding intensified decoupling between the U.S. and China, or in global trade conflict more broadly could leadbe harmful to a significant deterioration of global economic growth or to our business in or with China or other countries, and related decreases in confidence or investment activity in the global markets would adversely affect our business performance. We also do business in many emerging market jurisdictions where economic, political and legal risks are heightened. While

Energy transition – The strategic priorities and financial performance of some of our businesses are subject to market and other dynamics related to decarbonization, which can pose risks in addition to opportunities for those businesses. Given the nature of our businesses and the industries we serve, we must anticipate and respond to market, technological, regulatory and other changes driven by broader trends related to decarbonization efforts in response to climate change. These changes present both risks and opportunities for our businesses, many of which provide products and services to customers in sectors like power generation and commercial aviation that have historically been carbon intensive and will remain important to efforts globally to lower greenhouse gas emissions for decades to come. For example, the significant decreases in recent years in the levelized cost of energy for renewable sources of power generation (such as wind and solar), along with ongoing changes in government, investor, customer and consumer policies, commitments, preferences and considerations related to climate change, in some cases have adversely affected, and are expected to continue to affect, the demand for and the competitiveness of products and services related to fossil fuel-based power generation, including sales of new gas turbines and the utilization and servicing needs for existing gas power plants. Continued shifts toward greater penetration by renewables in both new capacity additions and the proportionate share of power generation, particularly depending on the pace and timeframe for such shifts across different markets globally, could have a material adverse effect on the performance of our Power business and our consolidated results. And while the anticipated market growth and power generation share for renewable energy over time is favorable for our wind businesses, there too we face uncertainties related to the future anticipated levels and timeframes of government subsidies and credits (such as the U.S. wind Production Tax Credit), significant price competition among wind equipment manufacturers, dynamics between onshore and offshore wind power, potential further consolidation in the wind industry, competition with other sources of renewable energy such as solar power-based electricity generation and the pace at which power grids are modernized to maintain reliability with higher levels of renewables penetration.

In addition, the achievement of deep decarbonization goals for the power sector over the coming decades is likely to depend in part on technologies that are not yet deployed or widely adopted today but that may become more important over time (such as grid-scale batteries or other storage solutions, hydrogen-based power generation, carbon capture and sequestration technologies or small modular or other advanced nuclear power). This is likely to require significant investments in power grids and other infrastructure, research and development and new technology and products, both by GE and third parties. The process of developing new high-technology products and enhancing existing products to mitigate climate change is often complex, costly and uncertain, and we may pursue strategies or make investments that do not prove to be commercially successful. Similar dynamics exist in the aviation sector, where decarbonization over time will require a combination of continued technological innovation in the fuel efficiency of engines, expanding the use of sustainable aviation fuels in next generation engines and the development of electric flight and hydrogen-based aviation technologies. A failure to invest properly in these technological developments, or to adequately position our businesses to benefit from the growth in adoption of new technologies, could adversely affect our competitive position, business, results of operations, cash flows and financial condition. In addition, there are increasing scrutiny and expectations from many customers, governments, regulators, investors, banks, project financers and other stakeholders regarding the roles that the private sector and individual companies play in decarbonization, and this can pose reputational or other risks for companies like GE that serve carbon intensive industries or relative to progress that we make over time in reducing emissions from our operations or products. Trends related to the global energy transition and decarbonization, including the relative competitiveness of different types of theseproduct and service offerings within and across our energy businesses, as well as for GE Aviation, will continue to be impacted in ways that are uncertain by factors such as the pace of technological developments and related cost considerations, the levels of economic risks can be hedged using derivativesgrowth in different markets around the world and the adoption of climate change-related policies (such as carbon taxes, cap and trade regimes, increased efficiency standards, greenhouse gas emission reduction targets or commitments, incentives or mandates for particular types of energy or policies that impact the availability of financing for certain types of projects) at the national and sub-national levels or by customers, investors or other financial instrumentsprivate actors.

Competitive environment - We are dependent on the maintenance of existing product lines and someservice relationships, market acceptance of new product and service introductions, and technology and innovation leadership for revenue and earnings growth. The markets in which we operate are insurable, such attemptshighly competitive in terms of pricing, product and service quality, product development and introduction time, customer service, financing terms, the ability to mitigate these risks are costlyrespond to shifts in market demand and not always successful. the ability to attract and


GE20192021 FORM 10-K 5037

RISK FACTORS


retain skilled talent. Our long-term operating results and competitive position also depend substantially upon our ability to continually develop, introduce, and market new and innovative technology, products, services and platforms, to develop digital solutions for our own operations and our customers, to modify existing products and services, to customize products and services, to maintain long-term customer relationships and to increase our productivity over time as we perform on long-term service agreements. A failure to appropriately plan for these dynamics may adversely affect our delivery of products, services and outcomes in line with our projected financial performance or cost estimates, and ultimately may result in excess costs, build-up of inventory that becomes obsolete, lower profit margins and an erosion of our competitive position. Our businesses are subject to technological change and advances, such as growth in industrial automation and increased digitization of the operations, infrastructure and solutions that customers demand across all the industries we serve. The introduction of innovative and disruptive technologies in the markets in which we operate also poses risks in the form of new competitors (including new entrants from outside our traditional industries, such as competitors from digital technology companies), market consolidation, substitutions of existing products, services or solutions, niche players, new business models and competitors that are faster to market with new or more cost-effective products or services. Existing and new competitors are frequently offering services for our installed base, and this can erode the revenues and profitability of our businesses if we fail to maintain or enter into new services relationships with customers that purchase our equipment and products. In addition, the research and development cycle involved in bringing products in our businesses to market is often lengthy, it is inherently difficult to predict the economic conditions and competitive dynamics that will exist when any new product is complete, and our investments, to the extent they result in bringing a product to market, may generate weaker returns than we anticipated at the outset. Our capacity to invest in research and development efforts to pursue advancement in a wide range of technologies, products and services also depends on the financial resources that we have available for such investment relative to other capital allocation priorities. Under-investment in research and development, or investment in technologies that prove to be less competitive in the future (at the expense of alternative investment opportunities not pursued), could lead to loss of sales of our products and services in the future, particularly in our long-cycle businesses that have longer product development cycles. The amounts that we do invest in research and development efforts may not lead to the development of new technologies or products on a timely basis or meet the needs of our customers as fully as competitive offerings.
Portfolio strategy execution
Business portfolio - Our success depends on achieving our strategic and financial objectives, including through dispositions. acquisitions, integrations, dispositions and joint ventures.We are With respect to acquisitions and business integrations, such as our Healthcare business’s recent acquisition of BK Medical, or with joint ventures and business integrations, we may not achieve expected returns and other benefits on a timely basis or at all as a result of changes in strategy, integration challenges or other factors. Over the past several years we have also been pursuing a variety of dispositions, including the planned saleongoing monetization of our BioPharma business within our Healthcare segment and exiting our remaining equity ownership position in Baker Hughes. The proceeds that we expectHughes and our plans to receive from such actions are an important source of cash flow for the Company as part ofmonetize our strategic and financial planning. As we seek to sell certain businesses, equity interests or assets, we may encounter difficultyownership position in finding buyers, managing interdependencies across multiple transactions and other Company initiatives or implementing separation plans, which could delay or prevent the accomplishment of our strategic and financial objectives, including our goal of reducing the Company’s leverage to targeted levels over time. In particular, some of the disposition strategies that we are considering or may consider depend on favorable conditions in the capital markets or private acquisition financing markets for execution, and declinesAerCap. Declines in the values of equity interests (such as our remaining interestinterests in Baker Hughes)Hughes and AerCap) or other assets that we sell can diminish the cash proceeds that we realize. We may dispose of businesses or assets at a price or on terms that are less favorable than we had anticipated, or with purchase price adjustments or the exclusion of assets or liabilities that must be divested, managed or run off separately. We are also subject to limitations in the form of regulatory or governmental approvals that may prevent certain prospective purchasers from completing transactions with us or delay us from executing transactions on our preferred timeline, or arising from our debt or other contractual obligations that limit our ability to complete certain business or asset dispositions. Moreover, recent and planned dispositions have the effects of reducing the Company’s cash flow and earnings capacity, resulting in a less diversified portfolio of businesses and increasing our dependency on remaining businesses for our financial results from ongoing operations. Executing on these transactions can divert senior management time and resources from other pursuits. Dispositions or other business separations also often involve continued financial involvement in the divested business, such as through continuing equity ownership, retained assets or liabilities, transition services agreements, commercial agreements, guarantees, indemnities or other current or contingent financial obligations or liabilities. Under these arrangements, performance by the divested businesses or other conditions outside our control could materially affect our future financial results.

With respect to acquisitions, joint venturesExecuting on all types of portfolio transactions can divert senior management time and business integrations, we may not achieve expected returns andresources from other benefits as a result of changes in strategy or separation/integration challenges related to personnel, IT systems or other factors. In addition, in connection with acquisitions over time, we have recorded significant goodwill and other intangible assets on our balance sheet, and if we are not able to realize the value of these assets, we may be required to incur charges relating to the impairment of these assets.pursuits. We also participate in a number of joint ventures with other companies or government enterprises in various markets around the world, including joint ventures where we have a lesser degree of control over the business operations, which may expose us to additional operational, financial, reputational, legal or compliance risks. risks.

Competitive environment - We are dependent on the maintenance of existing product lines and service relationships, market acceptance of new product and service introductions and technology and innovation leadership for revenue and earnings growth. The markets in which we operate are highly competitive in terms of pricing, product and service quality, product development and introduction time, customer service, financing terms and shifts in market demand, and competitors are increasingly offering services for our installed base. Our long-term operating results and competitive position depend substantially upon our ability to continually develop, introduce, and market new and innovative products, services and platforms, to modify existing products and services, to customize products and services, to increase our productivity as we perform on long-term service agreements, and to anticipate and respond to market and technological changes driven by trends such as increased digitization or automation or by developments such as climate change that present both risks and opportunities for our businesses. A failure to appropriately plan for future customer demand and industry trends may adversely affect our delivery of products, services and outcomes in line with our projected financial performance or cost estimates, and ultimately may result in excess costs, build-up of inventory that becomes obsolete, lower profit margins and an erosion of our competitive position. For example, the significant decreases in recent years in the levelized cost of renewable sources of power generation (such as wind and solar), along with ongoing changes in investor and consumer preferences and considerations related to climate change, affect the demand for and the competitiveness of our products and services related to fossil fuel-based power generation and further changes over time could have a material adverse effect on the performance of those businesses and our consolidated results. These trends and the relative competitiveness of different types of product and service offerings will continue to be impacted in ways that are uncertain by factors such as the pace of technological developments and related cost considerations, the levels of economic growth in different markets around the world and the adoption of climate change-related policies (such as carbon taxes, cap and trade regimes, increased efficiency standards or incentives or mandates for particular types of energy) at the national and sub-national levels or by private actors.

Our businesses are also subject to technological change and require us to continually attract and retain skilled talent. The introduction of innovative and disruptive technologies in the markets in which we operate also poses risks in the form of new competitors (including new entrants from outside our traditional industries), market consolidation, substitutions of existing products, services or solutions, niche players, new business models and competitors that are faster to market with new or more cost-effective products or services. Because the research and development cycle involved in bringing products in our businesses to market is often lengthy, it is inherently difficult to predict the economic conditions and competitive dynamics that will exist when any new product is complete, and our investments may generate weaker returns than we anticipated at the outset. Our capacity to invest in research and development efforts to pursue advancement in a wide range of technologies, products and services also depends on the financial resources that we have available for such investment relative to other capital allocation priorities, and under-investment could lead to the loss of sales of our products and services. The amounts that we do invest in research and development divert resources from other potential investments in our businesses, and our efforts may not lead to the development of new technologies or products on a timely basis or meet the needs of our customers as fully as competitive offerings.


GE2019 FORM 10-K 51
RISK FACTORS

Restructuring & personnel - We have been undertaking extensive cost reduction and restructuring efforts; these efforts may have adverse effects on our operations, employee retention, results and reputation and may not achieve the expected benefits. We continue undertaking restructuring actions that include workforce reductions, global facility consolidations and other cost reduction initiatives. These actions are a central component of our ongoing efforts to improve operational and financial performance. The extent of change across our organizational structure, senior leadership, culture, functional alignment, outsourcing and other areas poses risks in the form of personnel capacity constraints and institutional knowledge loss that could lead to missed performance or financial targets, loss of key personnel and harm to our reputation. The risk of capacity constraints is also heightened with the number of interdependent and transformational business portfolio and internal actions that we have been undertaking during a period of significant restructuring and cost reduction across the Company. Moreover, if we do not successfully manage our restructuring and other transformational activities, the anticipated operational improvements, efficiencies and other benefits might be delayed or not realized, and our operations and business could be disrupted. Risks associated with these actions include unforeseen delays in implementation of workforce reductions, additional unexpected costs, adverse effects on employee morale, loss of key employees or other retention issues, inability to attract and hire talented professionals or the failure to meet operational targets due to the loss of employees or work stoppages, any of which may impair our ability to achieve anticipated cost reductions or may otherwise harm our business or reputation and have an adverse effect on our competitive position or financial performance. 

Intellectual property - Our intellectual property portfolio may not prevent competitors from independently developing products and services similar to or duplicative to ours, and the value of our intellectual property may be negatively impacted by external dependencies. Our patents and other intellectual property may not prevent competitors from independently developing or selling products and services similar to or duplicative of ours, and there can be no assurance that the resources invested by us to protect our intellectual property will be sufficient or that our intellectual property portfolio will adequately deter misappropriation or improper use of our technology. Trademark licenses of the GE brand in connection with dispositions may negatively impact the overall value of the brand in the future. As a result of increased numbers of employee exits due to restructuring activities or otherwise, we also face heightened risks related to the loss or unauthorized use of the Company’s intellectual property or other protected data. We also face competition in some countries where we have not invested in an intellectual property portfolio. If we are not able to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected. We also face attempts, both internally from insider threats and externally from cyber-attacks, to gain unauthorized access to our IT systems or products for the purpose of improperly acquiring our trade secrets or confidential business information. In addition, we have observed an increase in the use of social engineering tactics by bad actors attempting to obtain confidential business information or credentials to access systems with our intellectual property. The theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incidentincidents could adversely affect our competitive position and the value of our investment in research and development. In addition, we are subject to the enforcement of patents or other intellectual property by third parties, including aggressive and opportunistic enforcement claims by non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. If GE is found to infringe any third-party rights, we could be required to pay substantial damages or we could be enjoined from offering some of our products and services. The value of, or our ability to use, our intellectual property may also be negatively impacted by dependencies on third parties, such as our ability to obtain or renew on reasonable terms licenses that we need in the future, or our ability to secure or retain ownership or rights to use data in certain software analytics or services offerings. offerings.

OPERATIONAL RISKS.Operational risk relates to risks arising from systems, processes, people and external events that affect the operation of our businesses. It includes risks related to product and service lifecycle and execution; product safety and performance; information management and data protection and security, including cybersecurity; and supply chain and business disruption.
2021 FORM 10-K 38

Operational execution - Operational challenges could have a material adverse effect on our business, reputation, financial position, and results of operations. operations and cash flows.The Company’s financial results depend on the successful execution of our businesses’ operating plans across all steps of the product and service lifecycle. For example, weWe continue working to improve the operations and execution of our Power and Renewable Energy businesses and our ability to effectmake the desired operational turnaroundsimprovements will be a significant factor in determiningour overall financial performance. We also face operational risks in connection with launching or ramping new product platforms, such as the financial performanceHaliade-X offshore wind turbine or the Cypress onshore wind turbine at Renewable Energy, or the LEAP engine at Aviation. With significant new product platforms and technologies, our businesses seek to reduce the costs of the Company as a whole. In addition, we have dependency on the continued strengththese products over time with experience, and successful operating planrisks related to our supply chain, product quality, timely delivery or other aspects of operational execution can adversely affect our profit margins or free cash flow. Operational failures at any of our other businesses particularly Aviation, during this period of operational improvement. Operational failures that result in quality problems or potential product, environmental, health or safety risks, could have a material adverse effect on our business, reputation, financial position and results of operations. In addition, a portion of our business, particularly within our Power and Renewable Energy businesses, involves large projects where we take on, or are members of a consortium responsible for, the full scope of engineering, procurement, construction or other services. These types of projects often pose unique risks related to their location, scale, complexity, duration and pricing or payment structure. Performance issues or schedule delays can arise due to inadequate technical expertise, unanticipated project modifications, developments at project sites, environmental, health and safety issues, execution by or coordination with suppliers, subcontractors or consortium partners, financial difficulties of our customers or significant partners or compliance with government regulations, and these can lead to cost overruns, contractual penalties, liquidated damages and other adverse consequences. Where GE is a member of a consortium, we are typically subject to claims based on joint and several liability, and claims can extend to aspects of the project or costs that are not directly related or limited to GE’s scope of work.work or over which GE does not have control. Operational, quality or other issues at large projects, or across our projects portfolio more broadly, can adversely affect GE’s business, reputation or results of operations.  operations.


GE2019 FORM 10-K 52

RISK FACTORS

Product safety - Our products and services are highly sophisticated and specialized, and a major failure or similar event affecting our products or third-party products with which our products are integrated can adversely affect our business, reputation, financial position, and results of operations. operations and cash flows.We produce highly sophisticated products and provide specialized services for both our own and third-party products that incorporate or use complex or leading-edge technology, including both hardware and software. Many of our products and services involve complex industrial machinery or infrastructure projects, such as commercial jet engines, gas turbines, onshore and offshore wind turbines or nuclear power generation, and accordingly the impact of a catastrophic product failure or similar event could be significant. In particular, actual or perceived design or production issues related to new product introductions or relatively new product lines can result in significant reputational harm to our businesses, in addition to direct warranty, maintenance and other costs that may arise. A significant product issue resulting in injuries or death, widespread outages, a fleet grounding or similar systemic consequences could have a material adverse effect on our business, reputation, financial position and results of operations. WeIn some circumstances, we have and in the future we may alsocontinue to incur increased costs, delayed payments or lost equipment or services revenue in connection with a significant issue with a third party’s product with which our products are integrated. For example,integrated, or if parts or other components that we incorporate in our products have defects or other quality issues. There can be no assurance that the LEAP-1B engine that our Aviation business develops, produces and sells through CFM is the exclusive engine for the Boeing 737 MAX, which has been subject to a global fleet grounding since March 2019 following two fatal crashes that were unrelated to the LEAP engine. The 737 MAX grounding had an adverse effect on GE CFOA in 2019, and uncertainties related to the timing for the 737 MAX return to service and future engine production rates pose material risk for our Aviation business and GE’s overall financial outlook and results. For further information regarding the effect of the 737 MAX grounding on GE CFOA, see the Aviation and GECAS 737 MAX section in Consolidated Results within MD&A. While we have built operational processes to ensure that ouraround product design, manufacture, performance and servicing meet rigorous quality standards, there can be no assurance that we or our customers or other third parties have designed to meet rigorous quality standards will not experiencebe sufficient to prevent us or our customers or other third parties from experiencing operational process or product failures and other problems, including through manufacturing or design defects, process or other failures of contractors or third-party suppliers, cyber-attacks or other intentional acts, software vulnerabilities or malicious software, that could result in potential product, safety, quality, regulatory or environmental risks.

Cybersecurity - Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime pose a risk to our systems, networks, products, solutions, services and data.Increased global cybersecurity vulnerabilities, threats, computer viruses and more sophisticated and targeted cyber-related attacks such as ransomware, as well as cybersecurity failures resulting from human error and technological errors, pose a risk to the security of GE's and its customers', partners', suppliers' and third-party service providers' infrastructure, products, systems and networks and the confidentiality, availability and integrity of GE's and its customers' data. As the perpetrators of such attacks become more capable (including sophisticated state or state-affiliated actors), and as critical infrastructure is increasingly becoming digitized, the risks in this area continue to grow. While we attemptA significant cyber-related attack in one of our industries, even if such an attack does not involve GE products, services or systems, could pose broader disruptions and adversely affect our business. We have also observed an increase in third-party breaches and ransomware attacks at suppliers, service providers and software providers, and our efforts to mitigate theseadverse effects on GE if this trend continues may be less successful in the future. The increasing degree of interconnectedness between GE and its partners, suppliers and customers also poses a risk to the security of GE’s network as well as the larger ecosystem in which GE operates. There can be no assurance that our efforts to mitigate cybersecurity risks by employing a number of measures, including employee training, monitoring and testing, performing security reviews and requiring business partners with connections to the GE network to appropriately secure their information technology systems, and maintenance of protective systems and contingency plans, will be sufficient to prevent, detect and limit the impact of cyber-related attacks, and we remain vulnerable to known or unknown threats, and there is no assurance that the impact from such threats will not be material.threats. In addition to existing risks, the adoption of new technologies in the future may also increase our exposure to cybersecurity breaches and failures. While we have developed secure development lifecycle design practices to secure our software designs and connected products, an unknown vulnerability or compromise could potentially impact the security of GE’s software or connected products and lead to the loss of GE intellectual property, misappropriation of sensitive, confidential or personal data, safety risks or unavailability of equipment. We also have access to sensitive, confidential or personal data or information in certain of our businesses that is subject to privacy and security laws, regulations or customer-imposed controls. Despite our use of reasonable and appropriate controls to protect our systems and sensitive, confidential or personal data or information, we have vulnerability to security breaches, theft, misplaced, lost or corrupted data, programming errors, employee errors and/or malfeasance (including misappropriation by departing employees) that could potentially lead to material compromising of sensitive, confidential or personal data or information, improper use of our systems,
2021 FORM 10-K 39

software solutions or networks, unauthorized access, use, disclosure, modification or destruction of or denial of access to information, defective products, production downtimes and operational disruptions. Data privacy and protection laws are evolving, can vary significantly by country and present increasing compliance challenges, which increase our costs, affect our competitiveness and can expose us to substantial fines or other penalties. In addition, a significant cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness, remediation, increased digital infrastructure or increased protectionother costs that are not covered by insurance, litigation or regulatory action.

Supply chain - Significant raw material shortages, supplier capacity constraints, supplier or customer production disruptions, supplier quality and sourcing issues or price increases can increase our operating costs and adversely impact the competitive positions of our products.Our reliance on third-party suppliers, contract manufacturers and service providers, and commodity markets to secure raw materials, parts, components and sub-systems used in our products exposes us to volatility in the prices and availability of these materials, parts, components, systems and services. As our supply chains extend into many different countries and regions around the world, we are also subject to global economic and geopolitical dynamics and risks associated with exporting components manufactured in particular countries for incorporation into finished products completed in other countries. In connection with effects related to the COVID-19 pandemic, we are operating in a supply-constrained environment and are facing, and may continue to face, supply-chain shortages, inflationary pressures, logistics challenges and manufacturing disruptions that impact our revenues, profitability and timeliness in fulfilling customer orders. In our Healthcare business, for example, our fulfillment of customer orders and revenue in 2021 were adversely affected by industry-wide semiconductor, resin, parts and labor shortages; we anticipate these, and other supply chain pressures across our businesses, will continue to adversely affect our operations and financial performance for some period of time. In addition, some of our suppliers or their sub-suppliers are limited- or sole-source suppliers. We also have internal dependencies on certain key GE manufacturing or other facilities. Disruptions in deliveries, from a key GE facility or from our third-party suppliers, contract manufacturers or outsourced or other service providers, capacity constraints, production disruptions up- or down-stream, price increases, or decreased availability of raw materials or commodities, including as a result of war, natural disaster,disasters (including the effects of climate change such as sea level rise, drought, flooding, wildfires and more intense weather events), actual or threatened public health pandemicemergencies or other business continuity events, adversely affect our operations and, depending on the length and severity of the disruption, can limit our ability to meet our commitments to customers or significantly impact our operating profit or cash flows. For example, we are monitoring the impact across our businesses of the recent coronavirus outbreak, which has already caused disruption to production facilities and activities in China, and the severity of the operational and financial impact will depend on how long and widespread the disruption proves to be. Quality, capability, compliance and sourcing issues experienced by third-party providers can also adversely affect our costs, margin rates and the quality and effectiveness of our products and services and result in liability and reputational harm.harm; the harm to us could be significant if, for example, a quality issue at a supplier or with components that we integrate into our products results in a widespread quality issue across one of our product lines or our installed base of equipment. In addition, while we require our suppliers to implement and maintain reasonable and appropriate controls to protect information we provide to them, they may be the victim of a cyber-related attack that could lead to the compromise of the Company’s intellectual property, personal data or other confidential information, or to production downtimes and operational disruptions that could have an adverse effect on our ability to meet our commitments to customers. customers. An unknown security vulnerability or malicious software embedded in a supplier’s product that is later integrated into a GE product could lead to a vulnerability in the security of GE’s product or if used internally in the GE network environment to a compromise of the GE network, which could potentially lead to the loss of information or operational disruptions.

GE2019 FORM 10-K 53
RISK FACTORS

FINANCIAL RISKS.Financial risk relates to our ability to meet financial obligations and mitigate exposure to broad market risks, including funding and liquidity risks, such as risk related to our credit ratings and our availability and cost of funding; credit risk; and volatility in foreign currency exchange rates, interest rates and commodity prices. Liquidity risk refers to the potential inability to meet contractual or contingent financial obligations (whether on- or off-balance sheet) as they arise, and could potentially impact an institution'sour financial condition or overall safety and soundness. Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations, and we face credit risk arising from both our industrial businesses and from GE Capital. our remaining financial services operations.

Leverage & borrowingsBorrowings - Our indebtednessWe may face risks related to our debt levels, could limitparticularly if we face severely adverse market conditions. We have significantly reduced our debt levels over the flexibility of our businesses,past several years through debt tenders and other liability management actions, and we could face further constraints as a result of failingexpect to decrease our leverage over time, further downgrades of our credit ratings or adverse market conditions.  Our abilitycontinue to decrease our leverage as planned is dependent on the proceeds that we generatedo so with cash flows from business and asset dispositions,operations, as well as proceeds from asset sales and dispositions, including our cash flows from operations. De-leveragingstakes in Baker Hughes and servicing our debt will require a significant amount of cash, and ifAerCap. If we are unable to generate cash flows in accordance with our plans, we may be required to adopt one or more alternatives such as increasing borrowing under credit lines, further reducing or delaying investments or capital expenditures sellingor other businesses or assets, refinancing debt or raising additional equity capital.actions. In particular, addition, we have significant pension and run-off insurance liabilities that are sensitive to numerous factors and assumptions that we use in our pension liability, GAAP insurance reserve and statutory insurance statutory calculations. For example, the impact of low or declining market interest rates on the discount rates that we use to calculate these long-term liabilities (holding other variables constant) can adversely affect our earnings and cash flows, as well as the pace of progress toward our leverage goals for GE and for GE Capital. Lower than expected disposition proceeds or cash generation by our businesses over time could also adversely affect our progress toward our leverage goals. Our indebtednessdebt levels could put us at a competitive disadvantage compared to competitors with lower debt levels that may have greater financial flexibility to secure additional funding for their operations, pursue strategic acquisitions, finance long-term projects or take other actions. Continuing to have substantial indebtednessSignificant debt levels could also havepose risks in the consequenceevent of increasing our vulnerability to general economic conditions, such as slowing economic growthrecession or recession. It could also increase our vulnerability to adverse industry-specific conditions or to increases in the capital or liquidity needs at the GE or GE Capital levels, and it could limit our flexibility in planning for, or reacting to, changes in the economy and the industries in which we compete.

conditions. In addition, our existing levels of indebtednesselevated debt may impairlimit our ability to obtain additionalnew debt financing on favorable terms in the future, particularly if coupled with further downgrades of our credit ratings or a deterioration of capital markets conditions more generally. External conditions in the financial and credit markets may limit the availability of funding at particular times or increase the cost of funding, which could adversely affect our business, financial position and results of operations. Factors that may affect the availability of funding or cause an increase in our funding costs include market disruptions arising in the United States, Europe, China, emerging markets or other markets, currency movements or other factors.

Liquidity - Failure to meet our cash flow targets, or additional credit downgrades, could adversely affect our liquidity, funding costs and related margins. We rely primarily on cash and cash equivalents, free cash flows from operationsour operating businesses, cash generated from asset sales and proceeds from businessdispositions, and asset dispositions, as well as access to the short- and long-term debt markets,short-term borrowing facilities, including revolving credit facilities, to fund our operations, maintain a contingency buffer of liquidity and meet our financial obligations and capital allocation priorities. If we do notFailure to meet our cash flow objectives through both improved cash performance in our businesses or successful execution of business and asset dispositions,could adversely affect our financial condition could be adversely affected. Our access to the debt markets, and to the commercial paper markets in particular, depends onor our credit ratings. As a result of ratings actions by Moody’s, S&P and Fitch in 2018, GE transitioned to a tier-2 commercial paper issuer, which reduced our borrowing capacity in the commercial paper markets that we historically relied on significantly to fund our operations on an intra-quarter basis. To accommodate GE’s short-term liquidity needs, we have been increasing utilization of our revolving credit facilities as a substitute for commercial paper borrowings, which results in an overall increase to our cost of funds.


GE2019 FORM 10-K 54

RISK FACTORS

There can also be no assurance that we will not face additional credit downgrades as a result of factors such as our progress in decreasing our leverage, the performance of our businesses, the failure to executemake progress as planned on dispositionsthe separation transactions and continued progress in decreasing GE’s leverage or changes in rating application or methodology. Future downgrades could further adversely affect our cost of funds and related margins, liquidity, competitive position and access to
2021 FORM 10-K 40

capital markets, and a significant downgrade could have an adverse commercial impact on our industrial businesses. For example, if our short-term credit ratings were to fall below A-2/P-2/F2, it is possible that we would lose all or part of our access to the tier-2 commercial paper markets, and therefore our borrowing capacity in the commercial paper markets would likely be further reduced. Further, we have relied, and may continue to rely, on securitization programs to provide alternative funding for sales of GE receivables to third-party investors. If any of our short-term credit ratings were to fall below A-2/P-2/F2, the timing or amount of liquidity generated by these programs could be adversely affected. In addition, in certain securitization transactions where we provide servicing for third-party investors, we are contractually permitted to commingle cash collected from customers on financing receivables sold or pledged to third-party investors with our own cash prior to making required payments to third-party investors, provided our short-term credit rating does not fall below A-2/P-2/F2. In the event our ratings were to fall below such levels, we would be required to segregate certain of these cash collections owed to third-party investors into restricted bank accounts and would lose the short-term liquidity benefit of commingling with respect to such collections. In addition, under various debt and derivative instruments, guarantees and covenants, we could be required to post additional capital or collateral in the event of a ratings downgrade, which would increase the impact of a ratings downgrade on our liquidity and capital position. Swap,swap, forward and option contracts are executed under standard master agreements that typically contain mutual downgrade provisions that provide the ability of the counterparty to require termination if the credit ratings of the applicable GE entity were to fall below specified ratings levels agreed upon with the counterparty, primarily BBB/Baa2.counterparty. For additional discussion about our current credit ratings and related considerations, refer to the Capital Resources and Liquidity - Credit Ratings and Conditions section within MD&A&A.
.  

Economy, customers & counterpartiesFinancial services operations - Deterioration in conditions in the global economy, the major industries we serve or the financial markets, or in the soundness of financial institutions, governments or customers we deal with, can adversely affect our business and results of operations. The business and operating results of our industrial businesses have been, and willWe continue to be, affected by worldwide economic conditions, including conditions in the air transportation, power generation, renewable energy, healthcare and other industries we serve. Existing or potential customers may delay or cancel plans to purchase our products and services, including large infrastructure projects, and may not be able to fulfill their obligations to us in a timely fashion as a result of business deterioration, cash flow shortages or difficulty obtaining financing for particular projects or due to macroeconomic conditions, geopolitical disruptions, changes in law or other challenges affecting the strength of the global economy. The airline industry, for example, is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and international economies. An extended disruption of regional or international travel, such as a disruption in connection with a terrorist incident, health pandemic or recessionary economic environment that results in the loss of business and leisure traffic, could have a material adverse effect on our airline customers, the viability of their business and their demand for our products and services. Such effects would be particularly significant for GE in the current environment, in which we have dependency on the continued strength of our Aviation business as we execute on planned dispositions and continue working to improve the operations and execution of other GE businesses. Secular, cyclical and competitive pressures facing customers across our energy businesses can also have a significant impact on the operating results and outlooks for our businesses. These include pressures such as lower demand in our Power business than in the past as a result of increased cost competitiveness and market penetration by renewable sources of power generation; the effects of changes in production or other tax credits for wind energy projects, and significant price competition among wind equipment manufacturers and consolidation in the industry; and shifts in the availability of financing for certain types of projects as investors, governments, regulators and other market participants develop plans for addressing climate change. In particular, our ability to effect an operational turnaround in our Power business will be more challenging to the extent that markets for our products and services remain lower for longer than expected. Further, our vendors may experience similar conditions, which may impact their ability to fulfill their obligations to us. We also at times face greater challenges collecting on receivables with customers that are sovereign governments or located in emerging markets. If there is significant deterioration in the global economy, our results of operations, financial position and cash flows could be materially adversely affected. 


GE2019 FORM 10-K 55
RISK FACTORS

GE Capital - A smaller GE Capital continues to have exposure to insurance, credit, legal and other risks in our financial services operations and, in the event of future adverse developments, may not be able to meet itsour business and financial objectives without further actions at GE Capital or additional capital contributions by GE.To fund the statutory capital contributions that it expectswe expect to make to itsour insurance subsidiaries over the next several years, as well as to meet itsour debt maturities and other obligations, GE Capital expectswe expect to rely on its existing liquidity, cash generated from asset reductions, cash flows from its businesses, GE repayments of intercompany loans and capital contributions from GE. However, as GE Capital’s excess liquidity from past disposition proceeds runs off, and as its future earnings are reduced as a result of business and asset sales, thereour operations. There is a risk that future adverse developments could cause liquidity or funding stress for GE Capital.stress. For example, it is possible that future requirements for capital contributions to the insurance subsidiaries will be greater than currently estimated or could be accelerated by regulators. Our annual testing of insurance reserves is subject to a variety of assumptions, including assumptions about the discount rate (which is sensitive to changes in market interest rates), morbidity, mortality and future long-term care premium increases. Any future adverse changes to these assumptions (to the extent not offset by any favorable changes to these assumptions) could result in an increase to future policy benefit reserves and, potentially, to the amount of capital we are required to contribute to the insurance subsidiaries (as discussed in the Other Items - Insurance section within MD&A). We also anticipate that the new insurance accounting standard scheduled to be effective after 2021on January 1, 2023 (as discussed in the Other Items - New Accounting Standards section within MD&A) will significantly change the accounting for measurements of our long-duration insurance liabilities under GAAP and will materially affect our financial statements.statements and require changes to certain of our processes, systems, and controls. In addition, we continue to evaluate strategic options to accelerate the further reduction in the size of GE Capital.our financial services operations. Some of these options could have a material financial charge or other adverse effects depending on the timing, negotiated terms and conditions of any ultimate arrangements. It is also possible that contingent liabilities and loss estimates from GE Capital’sour financial services-related continuing or discontinued operations, such as those related to Bank BPH (see the Other Consolidated Information - Discontinued Operations section within MD&A)Note 22), will need to be recognized or increase in the future and will become payable. If GE Capital's credit ratings are downgraded because of inadequate increases in its capital levels over time, changes in rating application or methodology or other factors, GE Capital may also face increased interest costs and limitations on its ability to access external funding in the future.

GE Capital also has exposure to many different industries and counterparties, including sovereign governments, and routinely executes transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. Many of these transactions expose GE Capital to credit risk in the event of default of its counterparty or client. If conditions in the financial markets deteriorate, they may adversely affect the business and results of operations of GE Capital, as well as the soundness of financial institutions, governments and other counterparties we deal with. There can be no assurance that future liabilities, losses or impairments to the carrying value of assets within our financial assetsservices operations would not materially and adversely affect GE Capital'sGE’s business, financial position, cash flows, results of operations andor capacity to provide financing to support orders from GE's industrialat the businesses.

Customers & counterparties – Global economic, industry-specific or other developments that weaken the soundness of significant customers, governments, financial institutions or other parties we deal with can adversely affect our business, results of operations and cash flows. The business and operating results of our businesses or that factors causing sufficiently severe stress at GE Capital would not require GEhave been, and will continue to make larger than expected capital contributions to GE Capitalbe, affected by worldwide economic conditions, including conditions in the future. air transportation, power generation, renewable energy, healthcare and other industries we serve. Existing or potential customers may delay or cancel plans to purchase our products and services, including large infrastructure projects, and may not be able to fulfill their obligations to us in a timely fashion or at all as a result of business deterioration, cash flow shortages or difficulty obtaining financing for particular projects or due to macroeconomic conditions, geopolitical disruptions, changes in law or other challenges affecting the strength of the global economy. The airline industry, for example, is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and international economies. Aviation industry activity is also particularly influenced by a small group of large original equipment manufacturers, as well as large airlines in various geographies, and our credit exposure to some of our largest aviation customers is significant. As described above, the current extended disruption of regional and international air travel from the COVID-19 pandemic has had and is expected to continue to have a material adverse effect on our airframer and airline customers. A potential future disruption in connection with a terrorist incident, cyberattack, actual or threatened public health emergency or recessionary economic environment that results in the loss of business and leisure traffic could also adversely affect these customers, their ability to fulfill their obligations to us in a timely fashion or at all, demand for our products and services and the viability of a customer’s business. Secular, cyclical or other pressures facing customers across our energy businesses, including in connection with decarbonization, industry consolidation and competition and shifts in the availability of financing for certain types of power projects or technologies (such as prohibitions on financing for fossil fuel-based projects or technologies), can also have a significant impact on the operating results and outlooks for our businesses operating in those industries. Our financial services operations also have exposure to many different industries and counterparties, including customers that are sovereign governments or located in emerging markets, and we transact with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, insurance companies and other institutional clients. Many of these transactions expose us to credit and other risks in the event of insolvency or other default of its counterparty or client. For example, a portion of our run-off insurance operations’ assets are held in trust accounts associated with reinsurance contracts. For UFLIC, such trust assets are currently held in trusts for the benefit of insurance company subsidiaries of Genworth, which during 2021 publicly stated any proceeds from its contingency plan will be used to repay parent company debt and not bolster the capital position of its insurance subsidiaries. Solvency or other concerns about Genworth or its insurance company subsidiaries may cause those subsidiaries or their regulators to take or attempt to take actions that could adversely affect UFLIC, including control over assets in the relevant trusts. In addition, our customers include numerous governmental entities within and outside the U.S., including the U.S. federal government and state and local entities. We also at times face greater challenges collecting on receivables with customers that are sovereign governments or located in emerging markets. If there is significant deterioration in the global economy, in our industries, in financial markets or with particular significant counterparties, our results of operations, financial position and cash flows could be materially adversely affected.

Postretirement benefit plans - Increases in pension, healthcare and healthcarelife insurance benefits obligations and costs can adversely affect our earnings, cash flows and further progress toward our leverage goals.goals. Our results of operations may be positively or negatively affected by the amount of income or expense we record for our defined benefit pension plans. GAAP requires that we calculate income or expense for the plans using actuarial valuations, which reflect assumptions about financial markets, interest rates and other economic conditions such as the discount rate and the expected long-term rate of return on plan assets. We are also
2021 FORM 10-K 41

required to make an annual measurement of plan assets and liabilities, which may result in a significant reduction or increase to equity. The factors that impact our pension calculations are subject to changes in key economic indicators, and future decreases in the discount rate or low returns on plan assets can increase our funding obligations and adversely impact our financial results. In addition, although GAAP expense and pension funding contributions are not directly related, key economic factors that affect GAAP expense would also likely affect the amount of cash we would be required to contribute to pension plans under ERISA. Failure to achieve expected returns on plan assets driven by various factors, which could include a continued environment of low interest rates or sustained market volatility, could also result in an increase to the amount of cash we would be required to contribute to pension plans. In addition, there may be upward pressure on the cost of providing healthcare benefits to current employees and future retirees. AlthoughThere can be no assurance that the measures we have actively soughttaken to control increases in these costs there can be no assurance that we will succeed in limiting cost increases, and continued upward pressure could reduce our profitability. For a discussion regarding how our financial statements have been and can be affected by our pension and healthcare benefit obligations, see the Other Consolidated Information - Postretirement Benefit Plans and the Critical Accounting Estimates - Pension Assumptions sections within MD&A and Note 13 to the consolidated financial statements. 12.


GE2019 FORM 10-K 56

RISK FACTORS

LEGAL & COMPLIANCE RISKS.Legal and compliance risk relates to risks arising from the government and regulatory environment, and action and from legal proceedings and compliance with integrity policies and procedures, including thosematters relating to financial reporting and environmental,the environment, health and safety matters.safety. Government and regulatory risk includes the risk that the government or regulatory actions will impose additional cost on us or require us to make adverse changes to our business models or practices.

Regulatory - We are subject to a wide variety of laws, regulations and government policies that may change in significant ways.Our businesses are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and policies. There can be no assurance that laws, regulations and policies will not be changed or interpreted or enforced in ways that will require us to modify our business models and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating costs or prohibiting them outright. In particular, recent trends globally toward increased protectionism, import and export controls and the use of tariffs and other trade barriers can result in actions by governments around the world that have been and may continue to be disruptive and costly to our businesses, and can interfere with our global operating model and weaken our competitive position. Other legislative and regulatory areas of significance for our businesses that U.S. and non-U.S. governments have focused and continue to focus on include cybersecurity, data privacy and sovereignty, improper payments,anti-corruption, competition law, compliance with complex trade controls and economic sanctions laws, climate change and greenhouse gas emissions, foreign exchange intervention in response to currency volatility and currency controls that could restrict the movement of liquidity from particular jurisdictions. Potential further changes to tax laws, including additional guidance concerning the enactmentchanges to taxation of the recent U.S. tax reform,global income, may have an effect on GE's, GE Capital's or other regulatedour subsidiaries' structure, operations, sales, liquidity, cash flows, capital requirements, effective tax rate and performance. For example, legislative or regulatory measures by U.S. federal, states or non-U.S. governments, in response to the recent U.S. federal tax reform or otherwise, or rules, interpretations or audits under the new or existing tax laws, could increase our costs or tax rate. In addition, efforts by public and private sectors to control healthcare costs may lead to lower reimbursements and increased utilization controls related to the use of our products by healthcare providers. Regulation or government scrutiny may impact the requirements for marketing our products and slow our ability to introduce new products, resulting in an adverse impact on our business. Furthermore, we have been, and expectmake sales to continue, participating in U.S. and internationalnon-U.S. governments and other public sector customers, and we participate in various governmental financing programs, whichthat require us to comply with strict governmental regulations. Inability to comply with these regulations could adversely affect our status with such customers or our ability to participate in these projects, and could have collateral consequences such as suspension or debarment. Debarment,Suspension or debarment, depending on the entity involved and length of time, can limit our ability to do bid for business with certain government-related customers or to participate in other projects involving multilateral development banks, and this could adversely affect our results of operations, financial position and cash flows. flows.

Legal proceedings - We are subject to legal proceedings, disputes, investigations and legal compliance risks, including trailing liabilities from businesses that we dispose of or that are inactive.We are subject to a variety of legal proceedings, commercial disputes, legal compliance risks and environmental, health and safety compliance risks in virtually every part of the world. We, our representatives, and the industries in which we operate are subject to continuing scrutiny by regulators, other governmental authorities and private sector entities or individuals in the U.S., the European Union, China and other jurisdictions, which have led or may, in certain circumstances, lead to enforcement actions, adverse changes to our business practices, fines and penalties, required remedial actions such as contaminated site clean-up or other environmental claims, or the assertion of private litigation claims andand/or damages that could be material. For example, following our acquisition of Alstom's Thermal, Renewables and Grid businesses in 2015, we are subject to legacy legal proceedings and legal compliance risks that relate to claimed anti-competitive conduct or improper paymentscorruption by Alstom in the pre-acquisition period, and payments for settlements, judgments, penalties or other liabilities in connection with those matters have resulted and will in the future result in cash outflows. In addition, since late 2017while in December 2020 we have beenentered into a settlement to conclude the previously disclosed SEC investigation of GE, we remain subject to a range of shareholder lawsuits and inquiries from governmental authorities related to the Company's financial performance, accounting and disclosure practices and related legacy matters. We have observed that these proceedings related to claims about past financial performance and reporting pose particular reputational risks for the Company that can cause new allegations about past or current misconduct, even if unfounded, to have a more significant impact on our reputation and how we are viewed by investors, customers and others than they otherwise would. We have established reserves for legal matters when and as appropriate; however, the estimation of legal reserves or possible losses involves significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations, and the actual losses arising from particular matters may exceed our current estimates and adversely affect our results of operations. While we believe that we have adopted appropriateThe risk management and compliance programs we have adopted and related actions that we take may not fully mitigate legal and compliance risks that we face, particularly in light of the global and diverse nature of our operations and the current enforcement environment mean that legalenvironments in many jurisdictions. For example, when we investigate potential noncompliance under U.S. and compliance risks will continuenon-U.S. law involving GE employees or third parties we work with, in some circumstances we make self-disclosures about our findings to existrelevant authorities who may pursue or decline to pursue enforcement proceedings against us in connection with respect to our operations, and wethose matters. We are also subject to material trailing legal liabilities from businesses that we dispose of or that are inactive. We also expect that additional legal proceedings and other contingencies will arise from time to time. Moreover, we sell products and services in growth markets where claims arising from alleged violations of law,
2021 FORM 10-K 42

product failures or other incidents involving our products and services are adjudicated within legal systems that are less developed and less reliable than those of the U.S. or other more developed markets, and this can create additional uncertainty about the outcome of proceedings before courts or other governmental bodies in suchthose markets. See Note 23 to the consolidated financial statements22 for further information about legal proceedings and other loss contingenciescontingencies.
.  

LEGAL PROCEEDINGS PROCEEDINGS.
Refer to Legal Matters and Environmental, Health and Safety Matters in Note 2322 to the consolidated financial statements for information relating to legal proceedings.


GE2019 FORM 10-K 57
REPORTS

MANAGEMENT AND AUDITOR’S REPORTS
MANAGEMENT’S DISCUSSION OF FINANCIAL RESPONSIBILITY. Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. The consolidated financial statements, which include amounts based on management’s estimates and judgments, have been prepared in conformity with U.S generally accepted accounting principles.

The Company designs and maintains accounting and internal control systems to provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. These systems are enhanced by policies and procedures, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits.

The Company engaged KPMGDeloitte and Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB). In March 2019, the PCAOB announced the effectiveness of a new requirement for auditors to communicate critical audit matters (CAMs) in the audit opinion, and the KPMG audit opinion that follows includes this discussion of CAMs. In December 2018, we announced our intention to conduct an auditor tender process, which is currently underway.

The Board of Directors, through its Audit Committee, which consists entirely of independent directors, meets periodically with management, internal auditors, and our independent registered public accounting firm to ensure that each is meeting its responsibilities and to discuss matters concerning internal controls and financial reporting. KPMGDeloitte and Touche LLP and the internal auditors each have full and free access to the Audit Committee.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With our participation, an evaluation of the effectiveness of our internal control over financial reporting was conducted as of December 31, 2019,2021, based on the framework and criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2019.2021.

Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting. Their report follows.
/s/ H. Lawrence Culp, Jr./s/ Jamie S. MillerCarolina Dybeck Happe
H. Lawrence Culp, Jr.

Jamie S. MillerCarolina Dybeck Happe
Chairman of the Board and Chief Executive OfficerSenior Vice President and Chief Financial Officer
February 24, 202011, 2022

DISCLOSURE CONTROLS. Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that our disclosure controls and procedures were effective as of December 31, 2019.2021. There have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2019,2021, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

GE20192021 FORM 10-K 5843

REPORTS


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors and Shareowners
of General Electric Company:

Company
Opinions
Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated statementsstatement of financial position of General Electric Company and consolidated affiliatessubsidiaries (the Company)"Company") as of December 31, 2019 and 2018,2021, the related consolidated statements of earnings (loss), comprehensive income (loss), changes in shareowners’shareholders’ equity, and cash flows for each of the years in the three-year periodyear then ended, December 31, 2019, and the related notes (collectively referred to as the consolidated financial statements)“financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018,2021, and the results of its operations and its cash flows for each of the years in the three-year periodyear then ended, December 31, 2019, in conformity with U.S.accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 11, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting principles. Alsofirm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Sales of services - Revenue recognition on certain long-term service agreements - Refer to Notes 1 and 8 to the financial statements

Critical Audit Matter Description
The Company enters into long-term service agreements with certain customers, predominately within the Aviation and Power segments. These agreements require the Company to provide maintenance services for customer assets over the contract term, which generally range from 5 to 25 years. Revenue for these agreements is recognized using the percentage of completion method, based on costs incurred relative to total estimated costs over the contract term. As part of the revenue recognition process, the Company estimates both customer payments that are expected to be received and costs to perform maintenance services over the contract term. Key estimates that require significant judgment from management include: (a) how the customer will utilize the assets covered over the contract term; (b) the expected timing and extent of future maintenance and overhaul services; (c) the future cost of materials, labor, and other resources; and (d) forward looking information concerning market conditions, including the potential for early retirements of assets, and expected cost improvement.

Given the complexity involved with evaluating the key estimates, which includes significant judgment necessary to estimate customer payments and future costs, auditing these assumptions required a high degree of auditor judgment and extensive audit effort, including the involvement of professionals with specialized skills and industry knowledge.

How the Critical Audit Matter Was Addressed in the Audit
Our auditing procedures over the key estimates described above related to the amount and timing of revenue recognition of the long-term service agreements, predominately within the Aviation and Power segments, included the following, among others:

•We tested the effectiveness of controls over the revenue recognition process for the long-term service agreements, including controls over management’s key estimates.
•We evaluated management’s risk assessment process through observation of key meetings and processes addressing contract status and current market conditions including the timely incorporation of changes that affect total estimated costs to complete the contract and future billings.
2021 FORM 10-K 44

•We evaluated the appropriateness and consistency of management’s methods and key assumptions applied in recognizing revenue and developing cost estimates.
•We tested management’s utilization assumptions for the assets covered over the contract term, which impact the estimated timing and extent of future maintenance and overhaul services by comparing current estimates to historical information and projected market conditions.
•We tested management’s process for estimating the timing and amount of costs associated with maintenance, overhaul, and other major events throughout the contract term, including comparing estimates to historical cost experience, performing a retrospective review, conducting analytical procedures, and utilizing specialists to evaluate engineering studies and statistical models used by the Company to estimate the useful life of certain components of the installed equipment.

Premium deficiency testing - future policy benefits – refer to Notes 1 and 11 to the financial statements

Critical Audit Matter Description
The Company performs premium deficiency testing to assess the adequacy of future policy benefit reserves on an annual basis or whenever events or changes in circumstances indicate that a premium deficiency event may have occurred. Significant uncertainties exist in testing cash flow projections in the premium deficiency test for these insurance contracts, including consideration of a wide range of possible outcomes of future events over the life of the insurance contracts that can extend for long periods of time.

Given the significant judgments made by management in estimating the cash flow projections used in the premium deficiency test, including the determination of certain key assumptions, auditing the premium deficiency test required a high degree of auditor judgment and an increased extent of effort, including the involvement of our actuarial specialists. Key assumptions impacting the cash flow projections that are sensitive and are more subjective requiring significant judgment by management are discount rate, rate of changes in morbidity, and future long-term care premium rate increases.

How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures, which included the involvement of our actuarial specialists, related to the premium deficiency analysis included the following, among others:
•We tested the effectiveness of controls related to the premium deficiency test process, including controls over the development of key assumptions and management’s judgments related to the development of the cash flow projections.
•We tested the underlying data for completeness and accuracy, including historical cash flows and experience study data, that served as the basis for the actuarial estimates.
•We evaluated the key assumptions by considering historical actual experience, sensitivity analyses, relevant industry data when available, and management’s basis for changes or lack of change in key assumptions.
•We performed recalculations to assess that the key assumptions were reflected in the cash flow projections.
•We evaluated the impact of updated key assumptions to the projected cash flows and the overall conclusion for the premium deficiency test.

/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 11, 2022
We have served as the Company's auditor since 2020.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of General Electric Company

Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of General Electric Company and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 20192021, based on criteria established in Internal Control -— Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the Committee of Sponsoring Organizationsstandards of the Treadway Commission.

Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 11, 2022, expressed an unqualified opinion on those financial statements.

Basis for OpinionsOpinion
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

2021 FORM 10-K 45

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedrisk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinions.opinion.

Definition and Limitations of Internal Control Overover Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Accompanying Supplemental Information
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 11, 2022
TheREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of General Electric Company:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidating information appearing on pages 63, 65,consolidated statement of financial position of General Electric Company, and 67consolidated affiliates (the supplemental information) has been subjected to audit procedures performedCompany) as of December 31, 2020, the related consolidated statements of earnings (loss), comprehensive income (loss), changes in conjunction with the auditshareholders’ equity, and cash flows for each of the Company’syears in the two‑year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements. The supplemental information isstatements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for each of the years in the two‑year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit procedures included determiningto obtain reasonable assurance about whether the supplemental information reconciles to the consolidated financial statements are free of material misstatement, whether due to error or the underlying accounting and other records, as applicable, andfraud. Our audits included performing procedures to testassess the completeness and accuracyrisks of the information presented in the supplemental information. In our opinion, the supplemental information is fairly stated, in all material respects, in relation tomisstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a whole.reasonable basis for our opinion.

GE2019 FORM 10-K 59
REPORTS
/s/ KPMG LLP

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of revenue recognition on certain long-term service agreements
As discussed in Note 1 to the consolidated financial statements, the Company enters into long-term service agreements with some of its customers. Certain long-term service agreements require the Company to provide maintenance services that may include levels of assurance regarding asset performance and uptime throughout the contract period. Revenue for such long-term service agreements is recognized using the percentage of completion method, based on costs incurred relative to total expected costs.

We identified the evaluation of revenue recognition on certain long-term service agreements as a critical audit matter because of the complex auditor judgment required in evaluating some of the long-term estimates in such arrangements. Such estimates include the amount of customer payments expected to be received over the contract term, which are generally based on a combination of both historical customer utilization of the covered assets as well as forward-looking information such as market conditions. In addition, these estimates include the total costs expected to be incurred to perform required maintenance services over the contract term and include estimates of expected cost improvements when such cost improvements are supported by actual results or have been proven effective. Further, contract modifications that extend or revise contract terms are not uncommon and require judgment in evaluating the related revisions of the long-term estimates.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s revenue recognition process for long-term service agreements, including controls related to estimating customer payments and costs expected to be incurred to perform required maintenance services over the contract term. We evaluated the estimated customer payments by comparing the estimated customer utilization of the covered assets to historical utilization and industry utilization data, where available. We evaluated the estimated costs expected to be incurred to perform required maintenance services over the contract term by:
comparing estimated labor and part costs to historical labor and parts costs,
comparing the estimated useful life, which is referred to as part life, of certain component parts to historical data and regulatory limits on part life, where applicable,
inspecting evidence underlying the inclusion of cost improvements in estimated costs, including regulatory and engineering approvals and actual reductions in production costs to date, and
ascertaining if major overhauls of covered assets are included in the cost estimates on a basis consistent with the estimated customer utilization of the assets that is used in estimating customer payments.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in testing certain cost estimates, including assessing statistical models used by the Company to estimate the part life of certain component parts of the covered assets.

Evaluation of premium deficiency testing to assess the adequacy of future policy benefit reserves
As discussed in Notes 1 and 12 to the consolidated financial statements, the Company performs premium deficiency testing to assess the adequacy of future policy benefit reserves. This testing is performed on an annual basis, or whenever events and changes in circumstances indicate that a premium deficiency event may have occurred. Significant uncertainties exist in testing cash flow projections in the premium deficiency testing for these insurance contracts, including consideration of a wide range of possible outcomes of future events over the life of the underlying contracts that can extend for long periods of time.

We identified the evaluation of premium deficiency testing to assess the adequacy of future policy benefit reserves as a critical audit matter. Specifically, the evaluation of the following key assumptions in the premium deficiency testing required subjective auditor judgment and specialized skills and knowledge: long-term care morbidity and mortality, long-term care morbidity improvement and mortality improvement, discount rates, and long-term care premium rate increases.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s premium deficiency testing process, including controls to develop the key assumptions described above. In addition, we involved actuarial professionals with specialized skills and knowledge, who assisted in:
challenging the Company’s key assumptions and results by evaluating the relevance, reliability, and consistency of the assumptions with each other, the underlying data, relevant historical data, and industry data,
assessing the summary experience data and the corresponding actuarial assumptions for conformity with generally accepted actuarial principles,
performing recalculations to assess that the key assumptions were reflected in the cash flow projections, and
comparing the current year and prior year cash flow projections to analyze the impact of the updated key assumptions to the cash flows.


GE2019 FORM 10-K 60

KPMG LLP
REPORTSWe served as the Company’s auditor from 1909 to 2020.

We evaluated projected future long-term premium rate increases by comparing the proposed, attained, denied, and approved premium rate increases to underlying source documentation. We also compared the current year premium rate increase projection to actual historical rate increase experience.

Evaluation of projected revenue and operating profit used in the assessment of the carrying value of goodwill in the Grid Solutions equipment and services and Hydro reporting units
As discussed in Note 8 to the consolidated financial statements, the Company performs a goodwill impairment test on an annual basis or whenever events or changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value. Projected revenue and operating profit are important elements of the estimated future cash flows used by the Company in determining the fair value of each reporting unit and the amount of related goodwill impairment losses.

In the second quarter of 2019, the Company reorganized its Grid Solutions reporting unit to separate the Grid Solutions software business and the Grid Solutions equipment and services business. As a result of this reorganization, the Company allocated goodwill to the Grid Solutions businesses based on their relative fair values, and performed a goodwill impairment test. The goodwill allocated to the Grid Solutions equipment and services business was determined to be impaired, and an impairment loss of $744 million was recorded. In the third quarter of 2019, the Company performed its annual goodwill impairment test, and recorded an impairment loss of $742 million in its Hydro reporting unit.

We identified the evaluation of projected revenue and operating profit used in the assessment of the carrying value of goodwill, including the determination of related goodwill impairment losses, for the Grid Solutions equipment and services and Hydro reporting units as a critical audit matter. Specifically, the evaluation of projected revenue and operating profit required the application of subjective auditor judgment because these projections involve assumptions about future events.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s goodwill impairment process, including controls over the development of projected financial information, and the Company’s review of the projections and comparison to historical results. We evaluated the projected revenue and operating profit assumptions by comparing the projected amounts to the past performance of the reporting units, including historical results and growth rates, and relevant and reliable industry benchmark data related to future events. We also considered evidence obtained in other areas of the audit, including information that might be contrary to the assumptions used by the Company in preparing its projections. We evaluated the Company’s ability to accurately prepare projections by comparing the projected revenues and operating profit to actual results for the same period. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:
comparing the projected amounts to industry benchmark data, and
evaluating sensitivity analyses related to key inputs, including long-term revenue growth rates and projected operating profit.

Evaluation of the effects of particular tax positions
As discussed in Note 15 to the consolidated financial statements, the Company’s annual tax rate is based on the Company’s income, statutory tax rates, and the effects of tax positions taken in the various jurisdictions in which the Company operates. Tax laws are complex and subject to different interpretations by taxpayers and respective government taxing authorities.

We identified the evaluation of the effects of particular tax positions as a critical audit matter. Complex auditor judgment was involved in evaluating the Company’s interpretation of applicable tax laws and regulations for these tax positions, including the evaluation of income tax uncertainties related to the tax positions.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s income tax process for particular tax positions, including controls related to the Company’s interpretation of applicable tax laws and regulations and the evaluation of income tax uncertainties. We inspected relevant documentation related to particular tax positions, including correspondence between the Company and taxing authorities. In addition, we involved tax professionals with specialized skills and knowledge, who assisted in:

evaluating the Company’s interpretation and application of relevant tax laws and regulations related to the tax positions, including income tax uncertainties, and
assessing the Company’s computation of the effects of the tax positions.


Boston, Massachusetts
February 12, 2021, except for the changes described in the first four paragraphs of note 1, the third paragraph of note 2 and the first paragraph of note 17, as to which the date is February 11, 2022
/s/ KPMG LLP
KPMG LLP

We have served as the Company's auditor since 1909.

Boston, Massachusetts
February 24, 2020

GE2019 FORM 10-K 61
FINANCIAL STATEMENTS

FINANCIAL STATEMENTS
STATEMENT OF EARNINGS (LOSS)Consolidated
(In millions; per-share amounts in dollars)2019
2018
2017
    
Sales of goods$58,949
$60,148
$62,709
Sales of services28,538
28,792
29,233
GE Capital revenues from services7,728
8,072
7,337
Total revenues (Note 26)95,214
97,012
99,279
    
Cost of goods sold48,406
50,244
52,483
Cost of services sold21,622
22,574
23,110
Selling, general and administrative expenses13,949
14,643
14,257
Interest and other financial charges4,227
4,766
4,655
Insurance losses and annuity benefits (Note 12)3,294
2,790
12,168
Goodwill impairments (Note 8)1,486
22,136
2,550
Non-operating benefit costs2,844
2,753
2,423
Other costs and expenses458
414
1,060
Total costs and expenses96,287
120,320
112,707
    
Other income (Note 19)2,222
2,321
2,083
GE Capital earnings (loss) from continuing operations—
—
—
    
Earnings (loss) from continuing operations
  before income taxes
1,149
(20,987)(11,345)
Benefit (provision) for income taxes (Note 15)(726)(93)2,808
Earnings (loss) from continuing operations423
(21,080)(8,536)
Earnings (loss) from discontinued operations,
  net of taxes (Note 2)
(5,335)(1,363)(312)
Net earnings (loss)(4,912)(22,443)(8,849)
Less net earnings (loss) attributable to noncontrolling
  interests
66
(89)(365)
Net earnings (loss) attributable to the Company(4,979)(22,355)(8,484)
Preferred stock dividends(460)(447)(436)
Net earnings (loss) attributable to GE common
  shareholders
$(5,439)$(22,802)$(8,920)
    
Amounts attributable to GE common shareholders   
Earnings (loss) from continuing operations$423
$(21,080)$(8,536)
Less net earnings (loss) attributable to
  noncontrolling interests, continuing operations
7
(90)(283)
Earnings (loss) from continuing operations attributable
  to the Company
416
(20,991)(8,253)
Preferred stock dividends(460)(447)(436)
Earnings (loss) from continuing operations attributable
  to GE common shareholders
(44)(21,438)(8,689)
Earnings (loss) from discontinued operations,
  net of taxes
(5,335)(1,363)(312)
Less net earnings (loss) attributable to
  noncontrolling interests, discontinued operations
60
1
(81)
Net earnings (loss) attributable to
  GE common shareholders
$(5,439)$(22,802)$(8,920)
    
Per-share amounts (Note 18)   
Earnings (loss) from continuing operations   
Diluted earnings (loss) per share$(0.01)$(2.47)$(1.00)
Basic earnings (loss) per share$(0.01)$(2.47)$(1.00)
    
Net earnings (loss)   
Diluted earnings (loss) per share$(0.62)$(2.62)$(1.03)
Basic earnings (loss) per share$(0.62)$(2.62)$(1.03)
    
Dividends declared per common share$0.04
$0.37
$0.84


GE2019 FORM 10-K 62

FINANCIAL STATEMENTS


STATEMENT OF EARNINGS (LOSS) (CONTINUED)GE(a) GE Capital
(In millions)2019
2018
2017
 2019
2018
2017
        
Sales of goods$59,138
$60,147
$62,786
 $79
$121
$130
Sales of services28,581
28,891
29,443
 —
—
—
GE Capital revenues from services—
—
—
 8,662
9,430
8,940
Total revenues (Note 26)87,719
89,038
92,229
 8,741
9,551
9,070
        
Cost of goods sold48,620
50,265
52,588
 61
95
102
Cost of services sold19,665
20,611
21,062
 2,019
2,089
2,196
Selling, general and administrative expenses13,404
13,851
13,094
 931
1,341
1,662
Interest and other financial charges2,115
2,415
2,538
 2,532
2,982
3,145
Insurance losses and annuity benefits (Note 12)—
—
—
 3,353
2,849
12,213
Goodwill impairments (Note 8)1,486
22,136
1,165
 —
—
1,386
Non-operating benefit costs2,828
2,740
2,409
 16
12
14
Other costs and expenses—
(51)(22) 480
558
986
Total costs and expenses88,118
111,967
92,834
 9,392
9,926
21,703
        
Other income (Note 19)2,200
2,317
1,893
 —
—
—
GE Capital earnings (loss) from continuing operations(530)(489)(6,765) —
—
—
        
Earnings (loss) from continuing operations
  before income taxes
1,271
(21,101)(5,476) (652)(375)(12,633)
Benefit (provision) for income taxes (Note 15)(1,309)(467)(3,493) 582
374
6,302
Earnings (loss) from continuing operations(38)(21,568)(8,970) (69)(1)(6,331)
Earnings (loss) from discontinued operations,
  net of taxes (Note 2)
(5,335)(1,363)(319) 192
(1,670)(312)
Net earnings (loss)(5,373)(22,931)(9,288) 123
(1,672)(6,643)
Less net earnings (loss) attributable to noncontrolling
  interests
66
(129)(368) 1
40
4
Net earnings (loss) attributable to the Company(5,439)(22,802)(8,920) 122
(1,712)(6,647)
Preferred stock dividends—
—
—
 (460)(447)(436)
Net earnings (loss) attributable to GE common shareholders$(5,439)$(22,802)$(8,920) $(338)$(2,159)$(7,083)
        
Amounts attributable to GE common shareholders:       
Earnings (loss) from continuing operations$(38)$(21,568)$(8,970) $(69)$(1)$(6,331)
Less net earnings (loss) attributable to
  noncontrolling interests, continuing operations
6
(130)(280) 1
40
(3)
Earnings (loss) from continuing operations attributable
  to the Company
(44)(21,438)(8,689) (70)(42)(6,328)
Preferred stock dividends—
—
—
 (460)(447)(436)
Earnings (loss) from continuing operations attributable
  to GE common shareholders
(44)(21,438)(8,689) (530)(489)(6,765)
Earnings (loss) from discontinued operations,
  net of taxes
(5,335)(1,363)(319) 192
(1,670)(312)
Less net earnings (loss) attributable to
  noncontrolling interests, discontinued operations
60
1
(88) —
—
6
Net earnings (loss) attributable to
  GE common shareholders
$(5,439)$(22,802)$(8,920) $(338)$(2,159)$(7,083)

2021 FORM 10-K 46

STATEMENT OF EARNINGS (LOSS)
For the years ended December 31 (In millions; per-share amounts in dollars)202120202019
Sales of equipment$34,200 $37,584 $42,811 
Sales of services36,890 35,385 44,608 
Insurance revenues (Note 11)3,106 2,865 2,802 
Total revenues (Note 23)74,196 75,833 90,221 
Cost of equipment sold31,399 35,242 37,572 
Cost of services sold22,497 22,629 27,280 
Selling, general and administrative expenses11,707 12,592 13,806 
Research and development2,497 2,565 3,118 
Interest and other financial charges1,876 2,068 2,927 
Debt extinguishment costs (Note 10)6,524 301 256 
Insurance losses and annuity benefits (Note 11)2,283 2,397 3,294 
Goodwill impairments (Note 7)— 877 1,486 
Non-operating benefit costs1,782 2,430 2,839 
Other costs and expenses136 159 176 
Total costs and expenses80,702 81,259 92,754 
Other income (Note 18)2,823 11,396 2,479 
Earnings (loss) from continuing operations before income taxes(3,683)5,970 (54)
Benefit (provision) for income taxes (Note 14)286 487 (552)
Earnings (loss) from continuing operations(3,396)6,457 (606)
Earnings (loss) from discontinued operations, net of taxes (Note 2)(3,195)(911)(4,306)
Net earnings (loss)(6,591)5,546 (4,912)
Less net earnings (loss) attributable to noncontrolling interests(71)(158)66 
Net earnings (loss) attributable to the Company(6,520)5,704 (4,979)
Preferred stock dividends(237)(474)(460)
Net earnings (loss) attributable to GE common shareholders$(6,757)$5,230 $(5,439)
Amounts attributable to GE common shareholders
   Earnings (loss) from continuing operations$(3,396)$6,457 $(606)
   Less net earnings (loss) attributable to noncontrolling interests,
     continuing operations(71)(158)7 
   Earnings (loss) from continuing operations attributable to the Company(3,325)6,615 (613)
   Preferred stock dividends(237)(474)(460)
   Earnings (loss) from continuing operations attributable
     to GE common shareholders(3,562)6,141 (1,073)
Earnings (loss) from discontinued operations attributable
to GE common shareholders(3,195)(911)(4,366)
Net earnings (loss) attributable to GE common shareholders$(6,757)$5,230 $(5,439)
   Earnings (loss) per share from continuing operations (Note 17)
      Diluted earnings (loss) per share$(3.25)$5.46 $(0.98)
      Basic earnings (loss) per share$(3.25)$5.46 $(0.98)
   Net earnings (loss) per share (Note 17)
      Diluted earnings (loss) per share$(6.16)$4.63 $(4.99)
      Basic earnings (loss) per share$(6.16)$4.63 $(4.99)

2021 FORM 10-K 47

STATEMENT OF FINANCIAL POSITION
December 31 (In millions, except share amounts)20212020
Cash, cash equivalents and restricted cash(a)$15,770 $36,530 
Investment securities (Note 3)12,297 7,319 
Current receivables (Note 4)15,620 16,691 
Inventories, including deferred inventory costs (Note 5)15,847 15,890 
Current contract assets (Note 8)4,881 5,764 
All other current assets (Note 9)1,933 2,659 
  Current assets66,348 84,853 
Investment securities (Note 3)42,209 42,549 
Property, plant and equipment – net (Note 6)15,609 16,699 
Goodwill (Note 7)26,182 25,524 
Other intangible assets – net (Note 7)9,330 9,671 
Contract and other deferred assets (Note 8)6,124 5,888 
All other assets (Note 9)19,040 16,025 
Deferred income taxes (Note 14)10,855 14,253 
Assets of discontinued operations (Note 2)3,177 40,749 
Total assets$198,874 $256,211 
Short-term borrowings (Note 10)$4,361 $4,713 
Accounts payable and equipment project accruals16,243 16,458 
Progress collections and deferred income (Note 8)17,372 18,371 
All other current liabilities (Note 13)13,977 15,071 
  Current liabilities51,953 54,613 
Deferred income (Note 8)1,989 1,801 
Long-term borrowings (Note 10)30,824 70,189 
Insurance liabilities and annuity benefits (Note 11)37,166 42,191 
Non-current compensation and benefits21,202 29,677 
All other liabilities (Note 13)13,240 14,781 
Liabilities of discontinued operations (Note 2)887 5,886 
Total liabilities157,262 219,138 
Preferred stock (5,939,875 shares outstanding at both December 31, 2021
and December 31, 2020)		6 6 
Common stock (1,099,027,213 and 1,095,686,581 shares outstanding
at December 31, 2021 and December 31, 2020, respectively)(b)		15 702 
Accumulated other comprehensive income (loss) – net attributable to GE1,582 (9,749)
Other capital34,691 34,307 
Retained earnings85,110 92,247 
Less common stock held in treasury(81,093)(81,961)
Total GE shareholders’ equity40,310 35,552 
Noncontrolling interests (Note 15)1,302 1,522 
Total equity41,612 37,073 
Total liabilities and equity$198,874 $256,211 
(a) Represents the adding together of all GE Industrial affiliatesExcluded $353 million and GE Capital continuing operations on a one-line basis.$455 million at December 31, 2021 and December 31, 2020, respectively, in our run-off Insurance business, which is subject to regulatory restrictions. This balance is included in All other assets. See Note 1.9 for further information.

(b) Reduction of $687 million in common stock represents the change in par value of issued shares from $0.06 to $0.01 with the offsetting change in Other capital.
GE2019 FORM 10-K 63
FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITIONConsolidated
December 31 (In millions, except share amounts)2019
2018
   
Cash, cash equivalents and restricted cash$36,394
$31,124
Investment securities (Note 3)48,521
33,508
Current receivables (Note 4)16,769
14,645
Financing receivables – net (Note 5)3,134
7,699
Inventories (Note 6)14,104
13,803
Other GE Capital receivables7,144
7,143
Property, plant and equipment – net (Note 7)43,290
43,611
Operating lease assets (Note 7)2,896
—
Receivable from GE Capital—
—
Investment in GE Capital—
—
Goodwill (Note 8)26,734
33,974
Other intangible assets – net (Note 8)10,653
12,178
Contract and other deferred assets (Note 9)16,801
17,431
All other assets (Note 10)16,461
18,357
Deferred income taxes (Note 15)9,889
12,117
Assets of businesses held for sale (Note 2)9,149
1,629
Assets of discontinued operations (Note 2)4,109
63,853
Total assets$266,048
$311,072



Short-term borrowings (Note 11)$22,072
$12,776
Short-term borrowings assumed by GE (Note 11)—
—
Accounts payable, principally trade accounts15,926
13,826
Progress collections and deferred income (Note 9)20,508
18,983
Other GE current liabilities (Note 14)15,753
14,866
Non-recourse borrowings of consolidated securitization entities (Note 11)1,655
1,875
Long-term borrowings (Note 11)67,155
88,949
Long-term borrowings assumed by GE (Note 11)—
—
Operating lease liabilities (Note 7)3,162
—
Insurance liabilities and annuity benefits (Note 12)39,826
35,562
Non-current compensation and benefits31,687
31,928
All other liabilities (Note 14)16,583
20,839
Liabilities of businesses held for sale (Note 2)1,658
708
Liabilities of discontinued operations (Note 2)203
19,281
Total liabilities236,187
259,591



Preferred stock (5,939,875 shares outstanding at both
  December 31, 2019 and December 31, 2018)
6
6
Common stock (8,738,434,000 and 8,702,227,000 shares outstanding
  at December 31, 2019 and December 31, 2018, respectively)
702
702
Accumulated other comprehensive income (loss) – net attributable to GE(11,732)(14,414)
Other capital34,405
35,504
Retained earnings87,732
93,109
Less common stock held in treasury(82,797)(83,925)
Total GE shareholders’ equity28,316
30,981
Noncontrolling interests (Note 16)1,545
20,500
Total equity29,861
51,481
Total liabilities and equity$266,048
$311,072



GE2019 FORM 10-K 64

FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION (CONTINUED)GE(a)
GE Capital
December 31 (In millions, except share amounts)2019
2018
 2019
2018
      
Cash, cash equivalents and restricted cash$17,613
$16,632

$18,781
$14,492
Investment securities (Note 3)10,008
187

38,514
33,393
Current receivables (Note 4)13,883
10,262

—
—
Financing receivables – net (Note 5)—
—

6,979
13,628
Inventories (Note 6)14,104
13,803

—
—
Other GE Capital receivables—
—

11,767
15,361
Property, plant and equipment – net (Note 7)14,370
14,828

29,649
29,510
Operating lease assets (Note 7)3,077
—
 237
—
Receivable from GE Capital19,142
22,513

—
—
Investment in GE Capital15,299
11,412

—
—
Goodwill (Note 8)25,895
33,070

839
904
Other intangible assets – net (Note 8)10,461
11,942

192
236
Contract and other deferred assets (Note 9)16,833
17,431

—
—
All other assets (Note 10)8,399
8,578

8,648
9,869
Deferred income taxes (Note 15)8,189
10,176

1,700
1,936
Assets of businesses held for sale (Note 2)8,626
1,524

241
—
Assets of discontinued operations (Note 2)202
59,169

3,907
4,610
Total assets$186,100
$231,526

$121,454
$123,939
 




Short-term borrowings (Note 11)$5,606
$5,147
 $12,030
$4,999
Short-term borrowings assumed by GE (Note 11)5,473
4,207
 2,104
2,684
Accounts payable, principally trade accounts17,702
17,579

886
1,171
Progress collections and deferred income (Note 9)20,694
19,239

—
—
Other GE current liabilities (Note 14)16,833
16,444

—
—
Non-recourse borrowings of consolidated securitization entities (Note 11)—
—

1,655
1,875
Long-term borrowings (Note 11)15,085
20,804
 26,175
36,154
Long-term borrowings assumed by GE (Note 11)25,895
32,054
 17,038
19,828
Operating lease liabilities (Note 7)3,369
—
 238
—
Insurance liabilities and annuity benefits (Note 12)—
—

40,232
35,994
Non-current compensation and benefits31,208
31,461

472
459
All other liabilities (Note 14)12,787
14,881

5,040
7,562
Liabilities of businesses held for sale (Note 2)1,620
748

52
—
Liabilities of discontinued operations (Note 2)106
17,481

97
1,800
Total liabilities156,379
180,045

106,016
112,527
 




Preferred stock (5,939,875 shares outstanding at both
December 31, 2019 and December 31, 2018)		6
6

6
6
Common stock (8,738,434,000 and 8,702,227,000 shares outstanding
at December 31, 2019 and December 31, 2018, respectively)		702
702

—
—
Accumulated other comprehensive income (loss) – net attributable to GE(11,732)(14,414)
(852)(783)
Other capital34,405
35,504

17,001
12,883
Retained earnings87,732
93,109

(857)(694)
Less common stock held in treasury(82,797)(83,925)
—
—
Total GE shareholders’ equity28,316
30,981

15,299
11,412
Noncontrolling interests (Note 16)1,406
20,499

139
1
Total equity29,721
51,480

15,438
11,412
Total liabilities and equity$186,100
$231,526

$121,454
$123,939

(a) Represents the adding together of all GE Industrial affiliates and GE Capital continuing operations on a one-line basis. See Note 1.


GE2019 FORM 10-K 65
FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWSConsolidated
For the years ended December 31 (In millions)2019
2018
2017
    
Net earnings (loss)$(4,912)$(22,443)$(8,849)
(Earnings) loss from discontinued operations5,335
1,363
312
Adjustments to reconcile net earnings (loss) to cash provided from
  operating activities:
   
Depreciation and amortization of property, plant and equipment (Note 7)4,026
4,419
4,332
Amortization of intangible assets (Note 8)1,569
2,163
1,862
Goodwill impairments (Note 8)1,486
22,136
2,550
(Earnings) loss from continuing operations retained by GE Capital—
—
—
(Gains) losses on purchases and sales of business interests (Note 19)(53)(1,522)(1,024)
Principal pension plans cost (Note 13)3,878
4,226
3,687
Principal pension plans employer contributions (Note 13)(298)(6,283)(1,978)
Other postretirement benefit plans (net) (Note 13)(1,228)(1,033)(888)
Provision (benefit) for income taxes (Note 15)726
93
(2,808)
Cash recovered (paid) during the year for income taxes(1,950)(1,404)(1,924)
Decrease (increase) in contract and other deferred assets62
(81)(1,243)
Decrease (increase) in GE current receivables(2,851)(358)(3,902)
Decrease (increase) in inventories(1,109)(356)324
Increase (decrease) in accounts payable2,977
1,545
169
Increase (decrease) in GE progress collections1,373
(571)1,912
All other operating activities1,388
1,317
13,308
Cash from (used for) operating activities – continuing operations10,419
3,210
5,840
Cash from (used for) operating activities – discontinued operations(1,647)1,768
714
Cash from (used for) operating activities8,772
4,978
6,554
    
Additions to property, plant and equipment(5,813)(6,627)(6,642)
Dispositions of property, plant and equipment3,718
4,093
5,530
Additions to internal-use software(282)(320)(454)
Net decrease (increase) in GE Capital financing receivables1,117
1,796
805
Proceeds from sale of discontinued operations5,864
29
1,464
Proceeds from principal business dispositions4,683
8,425
3,208
Net cash from (payments for) principal businesses purchased(68)(1)(2,722)
Capital contribution from GE to GE Capital—
—
—
All other investing activities1,466
11,530
5,538
Cash from (used for) investing activities – continuing operations10,684
18,925
6,728
Cash from (used for) investing activities – discontinued operations(1,745)(645)(1,349)
Cash from (used for) investing activities8,939
18,280
5,379
    
Net increase (decrease) in borrowings (maturities of 90 days or less)280
(4,343)1,699
Newly issued debt (maturities longer than 90 days)2,185
3,120
10,879
Repayments and other reductions (maturities longer than 90 days)(16,567)(20,319)(25,220)
Capital contribution from GE to GE Capital—
—
—
Net dispositions (purchases) of GE shares for treasury29
(17)(2,550)
Dividends paid to shareholders(649)(4,474)(8,650)
All other financing activities(1,043)(1,312)(85)
Cash from (used for) financing activities – continuing operations(15,764)(27,345)(23,927)
Cash from (used for) financing activities – discontinued operations(368)(4,462)5,443
Cash from (used for) financing activities(16,133)(31,807)(18,484)
Effect of currency exchange rate changes on cash, cash equivalents
  and restricted cash
(50)(628)891
Increase (decrease) in cash, cash equivalents and restricted cash1,529
(9,176)(5,659)
Cash, cash equivalents and restricted cash at beginning of year35,548
44,724
50,384
Cash, cash equivalents and restricted cash at end of year37,077
35,548
44,724
Less cash, cash equivalents and restricted cash of
  discontinued operations at end of year
638
4,424
7,901
Cash, cash equivalents and restricted cash of continuing operations
  at end of year
$36,439
$31,124
$36,823
Supplemental disclosure of cash flows information   
Cash paid during the year for interest$(3,816)$(4,409)$(4,211)



GE20192021 FORM 10-K 6648

FINANCIAL STATEMENTS


STATEMENT OF CASH FLOWS (CONTINUED)GE(a) GE Capital
For the years ended December 31 (In millions)2019
2018
2017
 2019
2018
2017
        
Net earnings (loss)$(5,373)$(22,931)$(9,288) $123
$(1,672)$(6,643)
(Earnings) loss from discontinued operations5,335
1,363
319
 (192)1,670
312
Adjustments to reconcile net earnings (loss) to cash provided from
  operating activities:
       
Depreciation and amortization of property, plant and equipment (Note 7)2,001
2,290
2,050
 2,026
2,110
2,277
Amortization of intangible assets1,512
2,109
1,796
 57
53
65
Goodwill impairments (Note 8)1,486
22,136
1,165
 —
—
1,386
(Earnings) loss from continuing operations retained by GE Capital530
489
10,781
 —
—
—
(Gains) losses on purchases and sales of business interests (Note 19)(3)(1,234)(1,024) (50)(288)—
Principal pension plans cost (Note 13)3,878
4,226
3,687
 —
—
—
Principal pension plans employer contributions (Note 13)(298)(6,283)(1,978) —
—
—
Other postretirement benefit plans (net) (Note 13)(1,213)(1,015)(865) (15)(18)(23)
Provision (benefit) for income taxes (Note 15)1,309
467
3,493
 (582)(374)(6,302)
Cash recovered (paid) during the year for income taxes(1,904)(1,343)(2,188) (46)(61)264
Decrease (increase) in contract and other deferred assets62
(81)(1,243) —
—
—
Decrease (increase) in GE current receivables(3,904)(966)1,040
 —
—
—
Decrease (increase) in inventories(877)(364)339
 —
—
—
Increase (decrease) in accounts payable684
1,595
(46) (44)2
(75)
Increase (decrease) in GE progress collections1,317
(433)1,938
 —
—
—
All other operating activities (Note 24)72
676
1,504
 605
158
11,114
Cash from (used for) operating activities – continuing operations4,614
701
11,479
 1,881
1,582
2,374
Cash from (used for) operating activities – discontinued operations(49)2,051
(195) (1,917)(415)(968)
Cash from (used for) operating activities4,565
2,752
11,284
 (35)1,166
1,407
        
Additions to property, plant and equipment(2,216)(2,234)(3,403) (3,830)(4,569)(3,680)
Dispositions of property, plant and equipment371
271
1,186
 3,348
3,853
4,579
Additions to internal-use software(274)(306)(423) (8)(14)(31)
Net decrease (increase) in GE Capital financing receivables (Note 24)—
—
—
 3,389
9,986
2,897
Proceeds from sale of discontinued operations5,864
—
—
 —
29
1,464
Proceeds from principal business dispositions1,083
6,047
3,086
 3,938
2,011
—
Net cash from (payments for) principal businesses purchased(447)(1)(2,722) —
—
—
Capital contribution from GE to GE Capital(4,000)—
—
 —
—
—
All other investing activities (Note 24)3,675
(640)(9,439) 2,617
482
3,013
Cash from (used for) investing activities – continuing operations4,056
3,138
(11,715) 9,453
11,777
8,242
Cash from (used for) investing activities – discontinued operations(3,449)(698)2,312
 2,023
186
(1,784)
Cash from (used for) investing activities607
2,439
(9,403) 11,476
11,964
6,458
        
Net increase (decrease) in borrowings (maturities of 90 days or less)(595)(987)1,808
 (256)(4,308)69
Newly issued debt (maturities longer than 90 days)31
6,570
16,267
 2,154
3,045
1,909
Repayments and other reductions (maturities longer than 90 days)(6,458)(1,023)(5,579) (11,632)(19,836)(21,007)
Capital contribution from GE to GE Capital—
—
—
 4,000
—
—
Net dispositions (purchases) of GE shares for treasury (Note 24)29
(17)(2,550) —
—
—
Dividends paid to shareholders(352)(4,179)(8,355) (455)(371)(4,311)
All other financing activities (Note 24)(312)1,107
290
 (819)(2,408)(280)
Cash from (used for) financing activities – continuing operations(7,658)1,470
1,881
 (7,007)(23,878)(23,619)
Cash from (used for) financing activities – discontinued operations(368)(4,462)3,534
 (1)—
1,909
Cash from (used for) financing activities(8,026)(2,992)5,415
 (7,008)(23,878)(21,710)
Effect of currency exchange rate changes on cash, cash equivalents
  and restricted cash
(56)(494)444
 6
(134)447
Increase (decrease) in cash, cash equivalents and restricted cash(2,911)1,706
7,739
 4,439
(10,882)(13,399)
Cash, cash equivalents and restricted cash at beginning of year20,528
18,822
11,083
 15,020
25,902
39,301
Cash, cash equivalents and restricted cash at end of year17,617
20,528
18,822
 19,460
15,020
25,902
Less cash, cash equivalents and restricted cash of
  discontinued operations at end of year
4
3,896
7,144
 633
528
757
Cash, cash equivalents and restricted cash of continuing operations
  at end of year
$17,613
$16,632
$11,678
 $18,826
$14,492
$25,145
Supplemental disclosure of cash flows information       
Cash paid during the year for interest$(1,975)$(2,201)$(2,347) $(2,632)$(2,883)$(2,793)
(a) Represents the adding together of all GE Industrial affiliates and the impact of GE Capital dividends on a one-line basis. See Note 1.

GE2019 FORM 10-K 67
STATEMENT OF CASH FLOWS
For the years ended December 31 (In millions)202120202019
Net earnings (loss)$(6,591)$5,546 $(4,912)
(Earnings) loss from discontinued operations3,195 911 4,306 
Adjustments to reconcile net earnings (loss)
   to cash provided from operating activities
Depreciation and amortization of property, plant and equipment1,871 2,128 2,018 
Amortization of intangible assets1,138 1,336 1,523 
Goodwill impairments (Note 7)— 877 1,486 
(Gains) losses on purchases and sales of business interests (Note 18)40 (12,469)14 
(Gains) losses on equity securities (Note 18)(1,656)2,085 (696)
Debt extinguishment costs (Note 10)6,524 301 256 
Principal pension plans cost (Note 12)2,650 3,559 3,878 
Principal pension plans employer contributions (Note 12)(326)(2,806)(298)
Other postretirement benefit plans (net) (Note 12)(1,144)(893)(1,228)
Provision (benefit) for income taxes (Note 14)(286)(487)552 
Cash recovered (paid) during the year for income taxes(1,165)(1,441)(1,950)
Changes in operating working capital:
Decrease (increase) in current receivables(177)(1,319)(2,851)
Decrease (increase) in inventories, including deferred inventory costs(702)1,105 (1,581)
Decrease (increase) in current contract assets1,031 1,631 891 
Increase (decrease) in accounts payable and equipment project accruals(2)(582)2,679 
Increase (decrease) in progress collections and current deferred income(1,052)(247)1,476 
Financial services derivatives net collateral/settlement(1,143)1,897 1,278 
All other operating activities(1,317)(109)2,000 
Cash from (used for) operating activities – continuing operations888 1,025 8,838 
Cash from (used for) operating activities – discontinued operations2,444 2,543 (104)
Cash from (used for) operating activities3,332 3,568 8,734 
Additions to property, plant and equipment(1,250)(1,579)(2,216)
Dispositions of property, plant and equipment167 203 379 
Additions to internal-use software(111)(151)(282)
Proceeds from sale of discontinued operations22,356 — 5,864 
Proceeds from principal business dispositions1 20,562 1,124 
Net cash from (payments for) principal businesses purchased(1,550)(85)(68)
Sales of retained ownership interests4,145 417 3,383 
Net (purchases) dispositions of insurance investment securities(1,290)(1,352)(1,600)
All other investing activities1,237 1,280 5,613 
Cash from (used for) investing activities – continuing operations23,705 19,297 12,197 
Cash from (used for) investing activities – discontinued operations(2,397)(2,626)(3,220)
Cash from (used for) investing activities21,308 16,671 8,977 
Net increase (decrease) in borrowings (maturities of 90 days or less)(710)(4,168)280 
Newly issued debt (maturities longer than 90 days)364 15,028 2,185 
Repayments and other debt reductions (maturities longer than 90 days)(36,521)(29,632)(16,307)
Dividends paid to shareholders(575)(648)(649)
Cash paid for debt extinguishment costs(7,196)(335)(255)
All other financing activities(658)(6)(941)
Cash from (used for) financing activities – continuing operations(45,296)(19,762)(15,686)
Cash from (used for) financing activities – discontinued operations119 (90)(446)
Cash from (used for) financing activities(45,177)(19,852)(16,133)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash(213)145 (50)
Increase (decrease) in cash, cash equivalents and restricted cash(20,750)531 1,529 
Cash, cash equivalents and restricted cash at beginning of year37,608 37,077 35,548 
Cash, cash equivalents and restricted cash at December 3116,859 37,608 37,077 
Less cash, cash equivalents and restricted cash of discontinued operations at
December 31
736 623 774 
Cash, cash equivalents and restricted cash of continuing operations at December 31$16,123 $36,985 $36,303 
Supplemental disclosure of cash flows information
Cash paid during the year for interest$(2,536)$(2,976)$(4,101)
FINANCIAL STATEMENTS
2021 FORM 10-K 49


STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31 (In millions)202120202019
Net earnings (loss)$(6,591)$5,546 $(4,912)
Less net earnings (loss) attributable to noncontrolling interests(71)(158)66 
Net earnings (loss) attributable to the Company$(6,520)$5,704 $(4,979)
Currency translation adjustments(174)435 1,275 
Benefit plans9,044 1,632 1,229 
Investment securities and cash flow hedges2,466 (78)136 
Less: other comprehensive income (loss) attributable to noncontrolling interests5 6 (40)
Other comprehensive income (loss) attributable to the Company$11,330 $1,984 $2,681 
Comprehensive income (loss)$4,745 $7,536 $(2,272)
Less: comprehensive income (loss) attributable to noncontrolling interests(66)(152)26 
Comprehensive income (loss) attributable to the Company$4,810 $7,688 $(2,297)
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES   
STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31 (In millions)
2019
2018
2017
    
Net earnings (loss)$(4,912)$(22,443)$(8,849)
Less net earnings (loss) attributable to noncontrolling interests66
(89)(365)
Net earnings (loss) attributable to the Company$(4,979)$(22,355)$(8,484)
    
Investment securities$100
$64
$(776)
Currency translation adjustments1,275
(1,664)2,178
Cash flow hedges36
(51)51
Benefit plans1,229
1,416
2,782
Other comprehensive income (loss)2,641
(235)4,236
Less other comprehensive income (loss) attributable to noncontrolling interests(40)(225)51
Other comprehensive income (loss) attributable to the Company$2,681
$(10)$4,184
    
Comprehensive income (loss)$(2,272)$(22,678)$(4,613)
Less comprehensive income (loss) attributable to noncontrolling interests26
(314)(314)
Comprehensive income (loss) attributable to the Company$(2,297)$(22,364)$(4,300)

GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (In millions)
2019
 2018
 2017
      
Preferred stock issued$6
 $6
 $6
Common stock issued$702
 $702
 $702
      
Beginning balance(14,414) (14,404) (18,588)
Investment securities100
 63
 (777)
Currency translation adjustments1,315
 (1,472) 2,145
Cash flow hedges35
 (49) 50
Benefit plans1,231
 1,448
 2,766
Accumulated other comprehensive income (loss) ending balance$(11,732) $(14,414) $(14,404)
Beginning balance35,504
 37,384
 37,224
Gains (losses) on treasury stock dispositions(925) (759) (304)
Stock-based compensation475
 413
 358
Other changes(649) (1,534) 106
Other capital ending balance$34,405
 $35,504
 $37,384
Beginning balance93,109
 117,245
 133,857
Net earnings (loss) attributable to the Company(4,979) (22,355) (8,484)
Dividends and other transactions with shareholders(766) (4,042) (8,130)
Changes in accounting (Note 1)368
 2,261
 2
Retained earnings ending balance$87,732
 $93,109
 $117,245
Beginning balance(83,925) (84,902) (83,038)
Purchases(57) (268) (3,849)
Dispositions1,186
 1,244
 1,985
Common stock held in treasury ending balance$(82,797) $(83,925) $(84,902)
GE shareholders' equity balance28,316
 30,981
 56,031
Noncontrolling interests balance (Note 16)1,545
 20,500
 17,468
Total equity balance at December 31(a)$29,861
 $51,481
 $73,499

(a)Total equity balance decreased by $(43,638) million from December 31, 2017, primarily due to non-cash after-tax goodwill impairment charge of $(22,371) million in 2018, reduction of noncontrolling interest balance of $(15,836) million attributable to Baker Hughes Class A shareholders at December 31, 2017 and after-tax loss of $(8,238) million in discontinued operations due to deconsolidation of Baker Hughes in 2019, partially offset by after-tax gain of $2,508 million in discontinued operations due to spin-off and subsequent merger of our Transportation business with Wabtec in 2019.


STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended December 31 (In millions)202120202019
Preferred stock issued$6 $6 $6 
Common stock issued$15 $702 $702 
Beginning balance(9,749)(11,732)(14,414)
Currency translation adjustments(177)433 1,315 
Benefit plans9,041 1,628 1,231 
Investment securities and cash flow hedges2,466 (78)135 
Accumulated other comprehensive income (loss)$1,582 $(9,749)$(11,732)
Beginning balance34,307 34,405 35,504 
Gains (losses) on treasury stock dispositions(740)(703)(925)
Stock-based compensation429 429 475 
Other changes696 176 (649)
Other capital$34,691 $34,307 $34,405 
Beginning balance92,247 87,732 93,109 
Net earnings (loss) attributable to the Company(6,520)5,704 (4,979)
Dividends and other transactions with shareholders(617)(1,014)(766)
Changes in accounting— (175)368 
Retained earnings$85,110 $92,247 $87,732 
Beginning balance(81,961)(82,797)(83,925)
Purchases(107)(28)(57)
Dispositions974 864 1,186 
Common stock held in treasury$(81,093)$(81,961)$(82,797)
GE shareholders' equity balance40,310 35,552 28,316 
Noncontrolling interests balance1,302 1,522 1,545 
Total equity balance at December 31$41,612 $37,073 $29,861 

GE2019 FORM 10-K 68

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2021 FORM 10-K 50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION.On November 1, 2021, we completed the combination of our GE Capital Aviation Services (GECAS) business with AerCap Holdings N.V. (AerCap). Upon completion of this transaction, in order to focus on our core industrial businesses of Aviation, Healthcare, Renewable Energy and Power, we voluntarily transitioned from three-column to simpler one-column financial statement reporting for all periods presented.
We present
Previously, we presented our financial statements in a three-column format, which allowsallowed investors to see our GE industrial operations separately from our financial services operations. We believe that this provides useful supplemental informationoperations (GE Capital). Moving to ourone-column consolidated financial statements. Tostatements reflects the extent that we have transactions between GE and GE Capital, these transactions are made on arm's length terms, are reportedreduction in the respective columnssize of our financial statementsservices portfolio as a result of various strategic actions taken over recent years.

We also made these related reporting changes for all periods presented:
•began presenting the results of the remainder of our former Capital segment, including Energy Financial Services (EFS) and are eliminated in consolidation. See Note 25 for further information.our run-off insurance operations, within Corporate.
•reclassified amounts related to our EFS, Working Capital Solutions (WCS) and Treasury businesses from our formerly captioned GE Capital revenues from services to Other income to align with our industrial segment presentation of derivative, equity method and other investment income. There was no change to the presentation of our run-off Insurance revenues and, consequently, our run-off Insurance revenues are now presented as a separate line in our Statement of Earnings (Loss).
•reclassified our formerly captioned Financing receivables and Other GE Capital receivables to All other assets to further simplify our Statement of Financial Position given the reduction of these balances over time in relation to consolidated total assets.
•ceased referring to GE Industrial, a term formerly defined as the adding together of all industrial affiliates giving effect to the elimination of transactions among such affiliates.
•redefined the basis on which profit is determined for the remainder of our former Capital segment which is now reported within Corporate. Previously, Interest and other financial charges, income taxes, non-operating benefit costs and preferred stock dividends were included in determining our former Capital segment profit (which we sometimes referred to as net earnings). To align with our industrial segments, these items are now excluded in determining profit for all businesses reported within Corporate except EFS, which will continue to be reported on a net earnings basis given the integral nature of Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) in relation to its business model.

In addition, effective December 31, 2021, we have changed the way we present sales of spare parts, upgrade equipment and other aftermarket goods that are used in the provision of our services in our Statement of Earnings (Loss) to conform with the way we manage the businesses and have historically presented them in MD&A and other related notes. Specifically, we now consistently present sales of spare parts used in a service arrangement as part of Sales of services and the related costs as Costs of services sold. While this presentation change has no impact on Total revenues or Total costs and expenses, including the timing of revenue recognition, Sales of services now includes $11,425 million, $11,823 million and $16,058 million of revenues and Cost of services sold now includes $5,776 million, $6,751 million and $8,269 million of costs for the years ended December 31, 2021, 2020 and 2019, respectively, for tangible products primarily attributable to spare part sales at our Aviation and Power segments.

Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP), which requires us to make estimates based on assumptions about current, and for some estimates, future, economic and market conditions which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations, financial position and financial position.cash flows. In particular, a number of estimates have been and will continue to be affected by the ongoing Coronavirus Disease 2019 (COVID-19) pandemic. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. As a result, our accounting estimates and assumptions may change over time in response to COVID-19. Such changes could result in future impairments of goodwill, intangibles, long-lived assets and investment securities, revisions to estimated profitability on long-term product service agreements, incremental credit losses on receivables and debt securities, a change in the carrying amount of our tax assets and liabilities, or a change in our insurance liabilities and pension obligations as of the time of a relevant measurement event.

In preparing our Statement of Cash Flows, we make certain adjustments to reflect cash flows that cannot otherwise be calculated by changes in our Statement of Financial Position. These adjustments may include, but are not limited to, the effects of currency exchange, acquisitions and dispositions of businesses, businesses classified as held for sale, the timing of settlements to suppliers for property, plant and equipment, non-cash gains/losses and other balance sheet reclassifications.


2021 FORM 10-K 51

We have reclassified certain prior-year amounts to conform to the current-year’s presentation. Unless otherwise noted, tables are presented in U.S. dollars in millions. Certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions. Earnings per share amounts are computed independently for earnings from continuing operations, earnings from discontinued operations and net earnings. As a result, the sum of per-share amounts may not equal the total. Unless otherwise indicated, information in these notes to consolidated financial statements relates to continuing operations. Certain of our operations have been presented as discontinued. We present businesses whose disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results as discontinued operations when the components meet the criteria for held for sale, are sold, or spun-off. See Note 2 for further information.

CONSOLIDATION. Our financial statements consolidate all of our affiliates, entities where we have a controlling financial interest, most often because we hold a majority voting interest, or where we are required to apply the variable interest entity (VIE) model
because we have the power to direct the most economically significant activities of entities. We reevaluate whether we have a controlling financial interest in all entities when our rights and interests change.

REVENUES FROM THE SALE OF EQUIPMENT
EQUIPMENT. Performance Obligations Satisfied Over Time. We recognize revenue on agreements for the sale of customized goods including power generation equipment, long-term construction projects and military development contracts on an over-time basis as we customize the customer's equipment during the manufacturing or integration process and obtain right to payment for work performed.

We recognize revenue as we perform under the arrangements using the percentage of completion method, which is based on our costs incurred to date relative to our estimate of total expected costs. Our estimate of costs to be incurred to fulfill our promise to a customer is based on our history of manufacturing or constructing similar assets for customers and is updated routinely to reflect changes in quantity or pricing of the inputs. We provide for potential losses on these agreements when it is probable that we will incur the loss.

Our billing terms for these over-time contracts are generally based on achieving specified milestones. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions. See Note 98 for further information.

Performance Obligations Satisfied at a Point in Time. We recognize revenue on agreements for non-customized equipment including commercial aircraft engines, healthcare equipment and other goods we manufacture on a standardized basis for sale to the market at the point in time that the customer obtains control of the good,product, which is generally no earlier than when the customer has physical possession of the product.possession. We use proof of delivery for certain large equipment with more complex logistics, whereas the delivery of other equipment is estimated based on historical averages of in-transit periods (i.e., time between shipment and delivery).

Where arrangements include customer acceptance provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded that the customer has control of the goodsequipment and that acceptance is likely to occur. We do not provide for anticipated losses on point-in-time transactions prior to transferring control of the equipment to the customer.

Our billing terms for these point-in-time equipment contracts generally coincide with delivery to the customer; however, within certain businesses, we receive progress collections from customers for large equipment purchases, to generally reserve production slots.

REVENUES FROM THE SALE OF SERVICES. Consistent with our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) discussion and the way we manage our businesses, we refer to sales under service agreements, which includes both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations. We sometimes offer our customers financing discounts for the purchase of certain GE productsequipment when sold in contemplation of long-term service agreements. These sales are accounted for as financing arrangements when payments for the productsequipment are collected through higher usage-based fees from servicing the equipment. See Note 98 for further information.

Performance Obligations Satisfied Over Time. We enter into long-term service agreements with our customers primarily within our Aviation and Power segments. These agreements require us to provide preventative maintenance, overhauls, and standby "warranty-type" services that include certain levels of assurance regarding asset performance and uptime throughout the contract periods, which generally range from 5 to 25 years.years. We account for items that are integral to the maintenance of the equipment as part of our performance obligation, unless the customer has a substantive right to make a separate purchasing decision (e.g., equipment upgrade).

GE2019 FORM 10-K 69
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We recognize revenue as we perform under the arrangements using the percentage of completion method which is based on our costs incurred to date relative to our estimate of total expected costs. Throughout the life of a contract, this measure of progress captures the nature, timing and extent of our underlying performance activities as our stand-ready services often fluctuate between routine inspections and maintenance, unscheduled service events and major overhauls at pre-determined usage intervals. We provide for potential losses on these agreements when it is probable that we will incur the loss. Contract modifications that extend or revise contract terms are not uncommon and generally result in our recognizing the impact of the revised terms prospectively over the remaining life of the modified contract (i.e., effectively like a new contract).

Our billing terms for these arrangements are generally based on the utilization of the asset (e.g., per hour of usage) or upon the occurrence of a major maintenance event within the contract, such as an overhaul. The differences between the timing of our revenue recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our contract asset or contract liability positions. See Note 98 for further information.

2021 FORM 10-K 52

We also enter into long-term services agreements in our Healthcare and Renewable Energy segments. Revenues are recognized for these arrangements on a straight-line basis consistent with the nature, timing and extent of our services, which primarily relate to routine maintenance and as needed productequipment repairs. We generally invoice periodically as services are provided.

Performance Obligations Satisfied at a Point in Time. We sell certain tangible products, largely spare parts, through our services businesses. We recognize revenues and bill our customers at the point in time that the customer obtains control of the good, which is at the point in time we deliver the spare part to the customer.customer.

COLLABORATIVE ARRANGEMENTS. Our Aviation business enters into collaborative arrangements and joint ventures with manufacturers and suppliers of components used to build and maintain certain engines. Under these arrangements, GE and its collaborative partners share in the risks and rewards of these programs through various revenue, cost and profit sharing payment structures. GE recognizes revenue and costs for these arrangements based on the scope of work GE is responsible for transferring to its customers. GE’s payments to participants are primarily recorded as either cost of services sold ($1,939($2,125 million, $1,809$2,407 million and $1,884$3,517 million for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively) or as cost of goodsequipment sold ($2,974751 million, $3,097$1,093 million and $2,806$1,396 million for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively). Our most significant collaborative arrangement is with Safran Aircraft engines, a subsidiary of Safran Group of France, which sells LEAP and CFM56 engines through CFM International, a jointly owned non-consolidated company. GE makes substantial sales of parts and services to CFM International based on arm's lengtharms-length terms.

GE CAPITAL REVENUES FROM SERVICES. INSURANCE REVENUES.We use the interest method to recognize Insurance revenues is comprised primarily of premiums and investment income on loans. Interest on loans includes origination, commitment and other non-refundable fees related to funding (recorded in earned income on the interest method). We stop accruing interest at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days pastour run-off Insurance business. For traditional long-duration insurance contracts, we report premiums as revenue when due. Previously recognized interest income that was accrued but not collected from the borrower is reversed, unless the terms of the loan agreement permit capitalization of accrued interest to the principal balance. PaymentsPremiums received on nonaccrual loansnon-traditional long-duration insurance contracts and investment contracts, including annuities without significant mortality risk, are applied to reduce the principal balance of the loan. We resume accruing interest on nonaccrual loans only when payments are brought current according to the loan’s original terms and future payments are reasonably assured.

not reported as revenues but rather as deposit liabilities. We recognize financing lease incomerevenues for charges and assessments on the interest methodthese contracts, mostly for mortality, contract initiation, administration and surrender. Amounts credited to produce a level yield on funds not yet recovered. Estimated unguaranteed residual valuespolicyholder accounts are based upon management's best estimates of the value of the leased asset at the end of the lease term. We use various sources of data in determining these estimates, including information obtained from third parties, which is adjusted for the attributes of the specific asset under lease. Guarantees of residual values by unrelated third parties are included within minimum lease payments. Significant assumptions we use in estimating residual values include estimated net cash flows over the remaining lease term, anticipated results of future remarketing, and estimated future component part and scrap metal prices, discounted at an appropriate rate.

We recognize operating lease income on a straight-line basis over the terms of underlying leases.

charged to expense.
SALES OF BUSINESS INTERESTS IN WHICH WE LOSE CONTROL.
Gains or losses on sales of affiliate shares that result in our loss of a controlling financial interest are recorded in earnings. If we retain a noncontrolling interest in our former affiliate, we initially record our investment at fair value, and any subsequent adjustments to the carrying value of the investment are recorded in earnings.

SALES OF BUSINESS INTERESTS IN WHICH WE RETAIN CONTROL. Gains or losses on sales of affiliate shares where we retain a controlling financial interest are recorded in equity.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH. Debt securities and money market instruments with original maturities of three months or less are included in cash, cash equivalents and restricted cash unless classified as available-for-sale investment securities. Restricted cash primarily comprised collateral for receivables sold and funds restricted in connection with certain ongoing litigation matters and amounted to $589$317 million and $388$408 million at December 31, 20192021 and December 31, 2018,2020, respectively.

INVESTMENT SECURITIES. We report investments in available-for-sale debt securities and certain equity securities at fair value. Unrealized gains and losses on available-for-sale debt securities are recorded to other comprehensive income, net of applicable taxes and adjustments related to our insurance liabilities. Unrealized gains and losses on equity securities with readily determinable fair values are recorded to earnings.

GE2019 FORM 10-K 70

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Although we generally do not have the intent to sell any specific debt securities in the ordinary course of managing our portfolio, we may sell debt securities prior to their maturities for a variety of reasons, including diversification, credit quality, yield and liquidity requirements and the funding of claims and obligations to policyholders.

We regularly review investment securities for impairment. For debt securities, if we do not intend to sell the security or it is not more likely than not that we will be required to sell the security before recovery of our amortized cost, we evaluate qualitative criteria, such as the financial health of and specific prospects for the issuer, to determine whether we do not expect to recover the amortized cost basis of the security. We also evaluate quantitative criteria including determining whether there has been an adverse change in expected future cash flows. If we do not expect to recover the entire amortized cost basis of the security, we consider the security to be other-than-temporarily impaired (OTTI),contain an expected credit loss, and we record the difference between the security’s amortized cost basis and its recoverable amount in earnings as an allowance for credit loss and the difference between the security’s recoverable amount and fair value in other comprehensive income. If we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis, the security is also considered OTTI,impaired, and we recognize the entire difference between the security’s amortized cost basis and its fair value in earnings. See Note 3 for further information.

CURRENT RECEIVABLES. Amounts due from customers arising from the sales of productsequipment and services are recorded at the outstanding amount, less allowance for losses. We regularly monitor the recoverability of our receivables. See Note 4 for further information.

FINANCING RECEIVABLES.ALLOWANCE FOR CREDIT LOSSES. OurWhen we record customer receivables, contract assets and financing receivables portfolio consists of a variety ofarising from revenue transactions, as well as commercial mortgage loans and leases, including both larger-balance, non-homogeneous loansreinsurance recoverables in our run-off insurance operations, financial guarantees and leases and smaller-balance homogeneous loans and leases. We routinely evaluate our entire portfoliocertain commitments, we record an allowance for potential specific credit or collection issues that might indicate an impairment. Losses on financing receivables are recognized when they are incurred, which requires us to make our best estimate of probable losses for the current expected credit losses (CECL) inherent in the portfolio. See Note 5asset over its expected life. The allowance for further information.credit losses is a valuation account deducted from the amortized cost basis of the assets to present their net carrying value at the amount expected to be collected. Each period the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets. We evaluate debt securities with unrealized losses to determine whether any of the losses arise from concerns about the issuer’s credit or the underlying collateral and record an allowance for credit losses, if required.


2021 FORM 10-K 53

We estimate expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. When measuring expected credit losses, we pool assets with similar country risk and credit risk characteristics. Changes in the relevant information may significantly affect the estimates of expected credit losses.

INVENTORIES. All inventories are stated at lower of cost or realizable values. Cost of inventories is primarily determined on a first-in, first-out (FIFO) basis. See Note 65 for further information.

PROPERTY, PLANT AND EQUIPMENT. The cost of GE property, plant and equipment is generally depreciated on a straight-line basis over its estimated economic life. The cost of GE Capital equipment leased to others on operating leases is depreciated on a straight-line basis to estimated residual value over the lease term or over the estimated economic life of the equipment. See Note 76 for further information.

LEASE ACCOUNTING. We determine if an arrangement is a lease or a service contract at inception. Where an arrangement is a lease we determine if it is an operating lease or a finance lease. Subsequently, if the arrangement is modified we reevaluate our classification.

Lessee.ACCOUNTING FOR LESSEE ARRANGEMENTS. At lease commencement, we record a lease liability and corresponding right-of-use (ROU) asset. Lease liabilities represent the present value of our future lease payments over the expected lease term which includes optionsOptions to extend or terminate the lease are included as part of the ROU lease asset and liability when it is reasonably certain those optionsthe Company will be exercised.exercise the option. We have elected to include lease and non-lease components in determining our lease liability for all leased assets except our vehicle leases. Non-lease components are generally services that the lessor performs for the Company associated with the leased asset. For those leases with payments based on an index, the lease liability is determined using the index at lease commencement. Lease payments based on increases in the index subsequent to lease commencement are recognized as variable lease expense as they occur. The present value of our lease liability is determined using our incremental collateralized borrowing rate at lease inception. ROU assets represent our right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability. Over the lease term we use the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to earnings in a manner that results in a straight-line expense recognition in the Statement of Earnings. A ROU asset and lease liability is not recognized forFor leases with an initial term of 12 months or less, an ROU asset and we recognizelease liability is not recognized and lease expense for these leasesis recognized on a straight-line basis over the lease term. We test ROU assets at least annually for impairment or whenever events or changes in circumstance indicate that the asset may be impaired.

Lessor. Equipment leased to others under operating leases are included in Property, plant and equipment and leases classified as finance leases are included in Financing receivables on our Statement of Financial Position. Finance lease receivables are tested for impairment as described in the Financing Receivables section above. See Notes 5 and 7 for further information.

GOODWILL AND OTHER INTANGIBLE ASSETS. We test goodwill at least annually for impairment at the reporting unit level. A reporting unit is the operating segment, or one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. However, components are aggregated as a single reporting unit if they have similar economic characteristics. We recognize an impairment charge if the carrying amount of a reporting unit exceeds its fair value and the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill.value. When a portion of a reporting unit is disposed, goodwill is allocated to the gain or loss on disposition based on the relative fair values of the business or businesses disposed and the portion of the reporting unit that will be retained.


GE2019 FORM 10-K 71
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For other intangible assets that are not deemed indefinite-lived, cost is generally amortized on a straight-line basis over the asset’s estimated economic life, except for individually significant customer-related intangible assets that are amortized in relation to total related sales. Amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. In these circumstances, they are tested for impairment based on undiscounted cash flows and, if impaired, written down to estimated fair value based on either discounted cash flows or appraised values. See Note 87 for further information.

ASSOCIATED COMPANIES.
For unconsolidated entities over which we have significant influence and have not elected the fair value option, we account for our interest as equity method investments, and our investments in, and advances to, associated companies are presented on a one-line basis in All other assets in our consolidated Statement of Financial Position, net of any impairment. We evaluate our equity method investments for impairment whenever events or changes in circumstance indicate that the carrying amounts of such investments may not be recoverable. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. Our share of the results of associated companies are presented on a one-line basis in Other income within continuing operations in our consolidated Statement of Earnings (Loss). See Note 10 for further information.

Where we adopt the fair value option for our investment in an associated company, our investment in and any advances to are recorded in Investment securities in our consolidated Statement of Financial Position and any subsequent changes in fair value are recognized in Other income within continuing operations in our consolidated Statement of Earnings (Loss). See Note 3 for further information.

DERIVATIVES AND HEDGING. We use derivatives to manage a variety of risks, including risks related to interest rates, foreign exchange, certain equity investments and commodity prices. Accounting for derivatives as hedges requires that, at inception and over the term of the arrangement, the hedged item and related derivative meet the requirements for hedge accounting. In evaluating whether a particular relationship qualifies for hedge accounting, we test effectiveness at inception and each reporting period thereafter by determining whether changes in the fair value of the derivative offset, within a specified range, changes in the fair value of the hedged item. If fair value changes fail this test, we discontinue applying hedge accounting to that relationship prospectively. Fair values of both the derivative instrument and the hedged item are calculated using internal valuation models incorporating market-based assumptions, subject to third-party confirmation, as applicable. See Note 2120 for further information.

DEFERRED INCOME TAXES. Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carryforwards, and are stated at enacted tax rates expected to be in effect when those taxes are paid or recovered. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent we consider it more likely than not that a deferred tax asset will not be recovered, a valuation allowance is established. Deferred taxes, as needed, are provided for our investment in affiliates and associated companies when we plan to remit those earnings. See Note 1514 for further information.

BUSINESSES AND ASSETS HELD FOR SALE. Businesses and assets held for sale represent components that meet accounting requirements to be classified as held for sale and are presented as single asset and liability amounts in our financial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less cost to sell. Financing receivables that no longer qualify to be presented as held for investment are classified as assets held for sale and recognized in our financial statements at the lower of cost or fair value, less cost to sell, with that amount representing a new cost basis at the date of transfer.

The determination of fair value for businesses and assets held for sale involves significant judgments and assumptions. Development of estimates of fair values in this circumstance is complex and is dependent upon, among other factors, the nature of the potential sales transaction (for example, asset sale versus sale of legal entity), composition of assets and/or businesses in the disposal group, the comparability of the disposal group to market transactions and negotiations with third-party purchasers. Such factors bear directly on the range of potential fair values and the selection of the best estimates. Key assumptions were developed based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction. We review all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values, less cost to sell. See Note 2 for further information.

INVESTMENT CONTRACTS, INSURANCE LIABILITIES AND INSURANCE ANNUITY BENEFITS. Our run-off insurance operations include providing insurance and reinsurance for life and health risks and providing certain annuity products. Primary product types include long-term care, structured settlement annuities, life and disability insurance contracts and investment contracts. Insurance contracts are contracts with significant mortality and/or morbidity risks, while investment contracts are contracts without such risks.

For traditional long-duration insurance contracts, we report premiums as revenue when due. Premiums received on non-traditional long-duration insurance contracts and investment contracts, including annuities without significant mortality risk, are not reported as revenues but rather as deposit liabilities. We recognize revenues for charges and assessments on these contracts, mostly for mortality, contract initiation, administration and surrender. Amounts credited to policyholder accounts are charged to expense.


GE2019 FORM 10-K 72

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Liabilities for traditional long-duration insurance contracts includesinclude both future policy benefit reserves and claims reserves. Future policy benefit reserves represent the present value of future policy benefits less the present value of future gross premiums based on actuarial assumptions. Liabilities for investment contracts equal the account value, that is, the amount that accrues to the benefit of the contract or policyholder including credited interest and assessments through the financial statement date.

Claim reserves are established when a claim is incurred or is estimated to have been incurred and representsrepresent our best estimate of the present value of the ultimate obligations for future claim payments and claim adjustments expenses.

To the extent that unrealized gains on specific investment securities supporting our insurance contracts would result in a premium deficiency, should those gains be realized, an increase in future policy benefit reserves is recorded, with an offsetting after-tax reduction to net unrealized gains recorded in other comprehensive income.
2021 FORM 10-K 54

Reinsurance recoverables are recorded when we cede insurance risk to third parties but are not relieved from our primary obligation to policyholders and cedents. When losses on ceded risks give rise to claims for recovery, we establish allowances for probable losses on such receivables from reinsurers as required. See Note 1211 for further information.

POSTRETIREMENT BENEFIT PLANS. We sponsor a number of pension and retiree health and life insurance benefit plans that we present in three categories, principal pension plans, other pension plans and principal retiree benefit plans. We use a December 31 measurement date for these plans. On our consolidated Statement of Financial Position, we measure our plan assets at fair value and the obligations at the present value of the estimated payments to plan participants. Participants earn benefits based on their service and pay. Those estimated future payment amounts are determined based on assumptions. Differences between our actual results and what we assumed are recorded in a separate component of equity each period. These differences are amortized into earnings over the remaining average future service of active employees or the expected life of inactive participants, as applicable, who participate in the plan. See Note 1312 for further information.

LOSS CONTINGENCIES. Loss contingencies are uncertain and unresolved matters that arise in the ordinary course of business and result from events or actions by others that have the potential to result in a future loss. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory investigations and proceedings, product quality and losses resulting from other events and developments. When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. We regularly review contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. See Note 2322 for further information.

SUPPLY CHAIN FINANCE PROGRAMS. We evaluate supply chain finance programs to ensure where we use a third-party intermediary to settle our trade payables, their involvement does not change the nature, existence, amount, or timing of our trade payables and does not provide the Company with any direct economic benefit. If any characteristics of the trade payables change or we receive a direct economic benefit, we reclassify the trade payables as borrowings.

FAIR VALUE MEASUREMENTS. The following sections describe the valuation methodologies we use to measure financial and non-financial instruments accounted for at fair value including certain assets within our pension plans and retiree benefit plans. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These inputs establish a fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets.
markets; Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
observable; and Level 3 – Significant inputs to the valuation model are unobservable.

RECURRING FAIR VALUE MEASUREMENTS. For financial assets and liabilities measured at fair value on a recurring basis, primarily investment securities and derivatives, fair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. See Note 2019 for further information.

Debt Securities. When available, we use quoted market prices to determine the fair value of debt securities which are included in Level 1. For our remaining debt securities, we obtain pricing information from an independent pricing vendor. The inputs and assumptions to the pricing vendor’s models are derived from market observable sources including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and other market-related data. These investments are included in Level 2. Our pricing vendors may also provide us with valuations that are based on significant unobservable inputs, and in those circumstances, we classify the investment securities in Level 3.

Annually, we conduct reviews of our primary pricing vendor to validate that the inputs used in that vendor’s pricing process are deemed to be market observable as defined in the standard. We believe that the prices received from our pricing vendor are representative of prices that would be received to sell the assets at the measurement date (exit prices) and are classified appropriately in the hierarchy.


GE2019 FORM 10-K 73
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We use non-binding broker quotes and other third-party pricing services as our primary basis for valuation when there is limited, or no, relevant market activity for a specific instrument or for other instruments that share similar characteristics. Debt securities priced in this manner are included in Level 3.

Equity securities with readily determinable fair values. These publicly traded equity securities are valued using quoted prices and are included in Level 1.

Derivatives. The majority of our derivatives are valued using internal models. The models maximize the use of market observable inputs including interest rate curves and both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2 primarily represent interest rate swaps, cross-currency swaps and foreign currency and commodity forward and option contracts. Derivative assets and liabilities included in Level 3 primarily represent equity derivatives and interest rate products that contain embedded optionality or prepayment features.

2021 FORM 10-K 55

Investments in private equity, real estate and collective funds held within our pension plans. TheseMost investments are generally valued using the net asset value (NAV) per share as a practical expedient for fair value provided certain criteria are met. The NAVs are determined based on the fair values of the underlying investments in the funds. Investments that are measured at fair value using the NAV practical expedient are not required to be classified in the fair value hierarchy. Investments classified within Level 3 primarily relate to real estate and private equities which are valued using unobservable inputs, primarily by discounting expected future cash flows, using comparative market multiples, third-party pricing sources, or a combination of these approaches as appropriate. See Note 12 for further information.

NONRECURRING FAIR VALUE MEASUREMENTS. Certain assets are measured at fair value on a nonrecurring basis. These assets may include loans and long-lived assets reduced to fair value upon classification as held for sale, impaired loans based on the fair value of the underlying collateral, impaired equity securities without readily determinable fair value, equity method investments and long-lived assets, and remeasured retained investments in formerly consolidated subsidiaries upon a change in control that results in the deconsolidation of that subsidiary and retention of a noncontrolling stake in the entity. Assets written down to fair value when impaired and retained investments are not subsequently adjusted to fair value unless further impairment occurs. See Note 20 for further information.

Equity investments without readily determinable fair value and Associated companies. Equity investments without readily determinable fair value and associated companies are valued using market observable data such as transaction prices when available. When market observable data is unavailable, investments are valued using either a discounted cash flow model, comparative market multiples, third-party pricing sources or a combination of these approaches as appropriate. These investments are generally included in Level 3.

Long-lived Assets.Fair values of long-lived assets including aircraft, are primarily derived internally and are based on observed sales transactions for similar assets. In other instances for which we do not have comparable observed sales transaction data, collateral values are developed internally and corroborated by external appraisal information. Adjustments to third-party valuations may be performed in circumstances where market comparables are not specific to the attributes of the specific collateral or appraisal information may not be reflective of current market conditions due to the passage of time and the occurrence of market events since receipt of the information.information.

ACCOUNTING CHANGES. On January 1, 2019,2021, we adopted ASU No. 2016-02 and related amendments,2019-12, LeasesIncome Taxes (Topic 842)740): Simplifying the Accounting for Income Taxes. Upon adoption, we recorded a $315 million increaseThe ASU removes certain exceptions from the guidance in ASC 740 related to retained earnings, primarily attributableintra-period tax allocations, interim calculations and the recognition of deferred tax liabilities for outside basis differences and clarifies and simplifies several other aspects of accounting for income taxes. Different transition methods apply to the release of deferred gains on sale-lease back transactions. Our ROU assets and lease liabilities for operating leases at adoption were $3,272 million and $3,459 million, respectively, excluding discontinued operations and businesses held for sale. Aftervarious income tax simplifications. For the changes requiring a retrospective or modified retrospective transition, the adoption date, principal collections on financing leases are classified as Cash from operating activities inof the new standard did not have a material impact to our consolidated Statement of Cash Flows. Previously, such flows were classified as Cash from investing activities.    financial statements.

On January 1, 2019,2020, we adopted ASU No. 2017-12,2016-13, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging ActivitiesFinancial Instruments - Credit Losses. The ASU 2016-13 requires certain changesus to prospectively record an allowance for credit losses for the presentation of hedge accountingcurrent expected credit losses inherent in the financial statementsasset over its expected life, replacing the incurred loss model that recognized losses only when they became probable and some new or modified disclosures. The ASU also simplifiesestimable. We recorded a $221 million increase in our allowance for credit losses and a $175 million decrease to retained earnings, net of tax, reflecting the application of hedge accounting and expands the strategies that qualify for hedge accounting. The adoption had an immaterialcumulative effect on our financial statements.retained earnings.

NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONSOPERATIONS.
ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE.In August 2019,On December 1, 2021, we announced an agreement to sell PK AirFinance, an aviation lending business within our Capital segment, to Apollo Global Management, LLC and Athene Holding Ltd. The sale of a substantial portion of the assets and liabilities was completed in the fourth quarter for proceeds of $3,575 million, and we recognized a pre-tax gain of $50 million. As of December 31, 2019, we had remaining assets of $241 million (including Cash, cash equivalents and restricted cash of $45 million) and liabilities of $52 million for this business classified as held for sale. We expect to complete the sale of these remaining assetsGE's share of our boiler manufacturing business in China in our Power segment. In connection with the first halftransaction, we recorded a loss on the disposal of 2020.this business of $170 million in Other income in our Statement of Earnings (Loss). See Note 18 for further information.

In February 2019,On March 31, 2020, we announced an agreement to sellcompleted the sale of our BioPharma business within our Healthcare segment to Danaher Corporation for total consideration of approximately $21,400$21,112 million subject to(after certain adjustments.working capital adjustments) and incurred $185 million of cash payments directly associated with the transaction. As of December 31, 2019, we had assets of $8,742 million (including goodwill of $5,549 million) and liabilities of $1,372 million for this business classified as held for sale. We expect to complete the sale, subject to regulatory approval,a result, in the first quarter of 2020.

In 2018, we signed an agreement to sell Energy Financial Services' (EFS) debt origination business within our Capital segment, to Starwood Property Trust, Inc. The sale was completed for proceeds of $2,011 million and2020, we recognized a pre-tax gain of $288 million.


GE2019 FORM 10-K 74

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In November 2017, the Company announced its intention to exit approximately $20 billion of industrial assets. Since this announcement, we have classified various businesses across our Power, Aviation, and Healthcare segments, and Corporate as held for sale. In 2019, we closed certain of these transactions within Corporate and our Power and Aviation segments for total net proceeds of $1,070$12,362 million, recognized a pre-tax gain of $214 ($11,213 million in Other incomeafter-tax) in our consolidated Statement of Earnings (Loss) and liquidated $548 million of.

DISCONTINUED OPERATIONS primarily comprise our previously recorded valuation allowance. These transactions are subject to customary working capitalGE Capital Aviation Services (GECAS) business, discontinued in 2021, our mortgage portfolio in Poland, and other post-close adjustments. In addition, we recorded an additional valuation allowance of $254 million for the remaining businesses in held for sale. As of December 31, 2019, we have closed the sale of substantially all of these assets in accordance with the plan.
FINANCIAL INFORMATION FOR ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE
December 31 (In millions)
2019
2018
   
Current receivables$499
$184
Inventories712
529
Financing receivables held for sale197
—
Property, plant, and equipment – net and Operating leases958
423
Goodwill and Other intangible assets - net6,286
884
Valuation allowance(719)(1,013)
Deferred income taxes815
—
All other assets400
622
Assets of businesses held for sale$9,149
$1,629

  
Accounts payable & Progress collections and deferred income$843
$428
Non-current compensation and benefits466
152
All other liabilities349
128
Liabilities of businesses held for sale$1,658
$708


DISCONTINUED OPERATIONS.Discontinued operations include our Baker Hughes and Transportation segments and certaintrailing assets and liabilities from legacy financial services businesses.associated with prior dispositions. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented.presented and the notes to the financial statements have been adjusted on a retrospective basis.

GECAS. On November 1, 2021 we completed the combination of our GECAS business with AerCap for total consideration consisting of $22,583 million subject to future closing adjustments, 111.5 million shares of AerCap common stock (approximately 46% ownership interest) valued at approximately $6,583 million based on AerCap’s closing share price of $59.04 on October 29, 2021, and a $1,000 million AerCap senior note with an interest rate of 1.899% and a maturity date of November 1, 2025. In connection with the closing of the transaction, the Company recorded a non-cash pre-tax loss of $3,312 million ($3,882 million after-tax) in discontinued operations. Additionally, we have elected to prospectively measure our investment in AerCap at fair value and expect to fully monetize our stake over time.

We have continuing involvement with AerCap, primarily through our ownership interest, ongoing sales or leases of products and services, and transition services that we provide to AerCap. For the year ended December 31, 2021, we had direct and indirect sales of $29 million and purchases of $22 million with AerCap, primarily related to engine sales through airframers and engine leases, respectively.
2021 FORM 10-K 56

Baker Hughes (BKR).In September 2019, pursuant to our announced plan of an orderly separation of Baker Hughes over time, we sold a total of 144.1 million shares in Baker Hughes for $3,037 million in cash (net of certain deal related costs), which reduced our ownership interestpercentage in Baker Hughes from 50.2% to 36.8%. As a result, we have deconsolidated our Baker Hughes segment and reclassified its results to discontinued operations for all periods presented and recognized a loss of $8,715 million ($8,238 million after-tax). The loss represents the sum of the realized loss on sale of the 144.1 million shares as well as the loss upon deconsolidation, which represents the difference between the carrying value and fair value of our remaining interest as of the transaction date.

We elected to account for our remaining interest in Baker Hughes (comprising our 36.8% ownership interest and a promissory note receivable) at fair value. The initial fair value of this investment was $9,587 million based on the Baker Hughes opening share price of $23.53 as of the transaction date and the fair value of the promissory note receivable of $706 million. Our investment is recorded in Investment securities in our consolidated Statement of Financial Position and related earnings or loss from subsequent changes in fair value will be recognized in Other income in continuing operations in our consolidated Statement of Earnings (Loss). See Note 3 for further information.

discontinued operations. We have continuing involvement with Baker HughesBKR primarily through our remaining interest, ongoing purchases and sales of products and services, as well as the transition services that we provide to Baker Hughes. They also participated in GE Capital's supply chain finance program up to the date of separation. In addition,BKR, as well as an aeroderivative joint venture (JV) we formed with BKR in the fourth quarter of 2019, we formed an aeroderivative2019. The JV is a 50-50 joint venture (JV) with Baker Hughes relating to their respective aeroderivative gas turbine productsbetween GE and services. The JV has total assets net of liabilities of $613 millionBKR and is currentlywas consolidated by GE. SinceGE due to the datesignificance of our investment in BKR. In the transaction,fourth quarter of 2021, our investment in BKR fell below 20%, and we deconsolidated the JV. We recognized a pre-tax gain of $71 million in continuing operations in Other income in our Statement of Earnings (Loss) as a result of deconsolidation.

For the year ended December 31, 2021, we had sales of $716 million and purchases of $218 million with BKR for products and services with Baker Hughes and affiliatesoutside of $312 million and $105 million, respectively.the JV. We have collected net cash of $1,016$631 million from Baker HughesBKR related to thesesales, purchases and transition services. For the year ended December 31, 2021, we had sales of $364 million to BKR for products and services from the JV, and we collected cash of $489 million. The deconsolidation of the JV is not expected to have a material impact on Cash from operating activities including $494(CFOA). In addition, for the year ended December 31, 2021, we received $39 million of repayments on the promissory note. In addition, in the fourth quarternote receivable from BKR and dividends of 2019 we received a dividend of $68$173 million from Baker Hughes.on our investment.

Transportation.In February 2019, we completed the spin-off and subsequent merger of our Transportation business with Wabtec,Wabtec. As a U.S. rail equipment manufacturer. In the transaction, our shareholders received shares of Wabtec common stock representing an approximate 24.3% ownership interest in Wabtec common stock. We received $2,827 million in cash (net of certain deal related costs) as well as shares of Wabtec common stock and Wabtec non-voting convertible preferred stock that, together, represent approximately 24.9% ownership interest in Wabtec. In addition, we are entitled to additional cash consideration up to $470 million for tax benefits that Wabtec realizes from the transaction. We reclassified our Transportation segment to discontinued operations in the first quarter of 2019.

As part of the transaction,result, we recorded a gain of $3,471 million ($2,508 million after-tax) in discontinued operations and a net after-tax decrease of $852 million in additional paid in capital in connection with the spin-off of approximately 49.4% of Transportation to our shareholders. The decrease in additional paid in capital was net of $940 million of taxes, including $860 million of current taxes (of which $693 million was related to U.S. federal taxes)operations.

Bank BPH. The fair value of our interest in Wabtec’s common and preferred shares was $3,513 million based on the opening share price of $73.45 at the date of the transaction and was recorded in Investment securities in our consolidated Statement of Financial Position.

GE2019 FORM 10-K 75
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Discontinued operations for our financial services businesses primarily relate to the GE Capital Exit Plan (our plan, announced on April 10, 2015, to reduce the size of our financial services businesses) and were previously reported in our Capital segment. These discontinued operations primarily comprise our mortgage portfolio in Poland residual assets(Bank BPH) comprises floating rate residential mortgages, 87% of which are indexed to or denominated in foreign currencies (primarily Swiss francs). At December 31, 2021, the total portfolio had a carrying value, net of reserves, of $1,799 million with a 2.05% 90-day delinquency rate and liabilitiesan average loan to value ratio of approximately 58.0%. The portfolio is recorded at the lower of cost or fair value, less cost to sell, which reflects market yields as well as estimates with respect to ongoing litigation in Poland related to our exited U.S. mortgage business (WMC),foreign currency-denominated mortgages and trailing liabilities associated with the sale of our GE Capital businesses.

In January 2019, we announced an agreement in principle with the United States to settle the investigation by the U.S. Department of Justice (DOJ) regarding potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of $1,500 million.

In June 2019, GE Capital recorded in Earnings (loss)other factors. Loss from discontinued operations netfor the year ended December 31, 2021 included $509 million non-cash pre-tax charges, reflecting estimates with respect to ongoing litigation as well as market yields. To ensure appropriate capital levels, during the fourth quarter of taxes2021, we made a capital contribution of $360 million into Bank BPH. Future changes in our consolidated Statement of Earnings (Loss), $332 million of tax benefitsthe estimated legal liabilities or market yields could result in further losses and $46 million of net interest benefits duecapital contributions related to a decreasethese loans in our balance of unrecognized tax benefits.future reporting periods. See Note 1522 for further information.

RESULTS OF DISCONTINUED OPERATIONS
For the year ended December 31, 2021
GECASBaker HughesTransportationOtherTotal
Total revenues$— $— $— $— $— 
Cost of equipment and services sold(398)— — — (398)
Other income, costs and expenses1,992 (10)(6)(584)1,393 
— 
Earnings (loss) of discontinued operations before income taxes1,594 (10)(6)(584)995 
Benefit (provision) for income taxes(258)2 (1)(78)(335)
Earnings (loss) of discontinued operations, net of taxes(a)1,336 (8)(6)(662)660 
Gain (loss) on disposal before income taxes(3,312)4 — 61 (3,246)
Benefit (provision) for income taxes(570)— — (38)(608)
Gain (loss) on disposal, net of taxes(3,882)4 — 23 (3,855)
Earnings (loss) from discontinued operations, net of taxes$(2,546)$(4)$(6)$(639)$(3,195)

For the year ended December 31, 2020
Total revenues$— $— $— $— $— 
Cost of equipment and services sold(2,555)— — — (2,555)
Other income, costs and expenses1,781 2 — (197)1,586 
— 
Earnings (loss) of discontinued operations before income taxes(773)2 1 (197)(968)
Benefit (provision) for income taxes(13)(13)9 105 89 
Earnings (loss) of discontinued operations, net of taxes(a)(786)(10)9 (93)(879)
Gain (loss) on disposal before income taxes— (23)(12)3 (31)
Benefit (provision) for income taxes— — — (1)(1)
Gain (loss) on disposal, net of taxes— (23)(12)2 (32)
Earnings (loss) from discontinued operations, net of taxes$(786)$(33)$(2)$(90)$(911)
2021 FORM 10-K 57

RESULTS OF DISCONTINUED OPERATIONS
For the year ended December 31, 2019 (In millions)
Baker Hughes
 Transportation and Other
  GE Capital
 Total
        
Sales of goods and services$16,047
 $550
 $—
 $16,598
GE Capital revenues and other income (loss)—
 —
 33
 33
Cost of goods and services sold(13,317) (478) —
 (13,795)
Other costs and expenses(2,390) (19) (240) (2,650)
   —
    
Earnings (loss) of discontinued operations before income taxes340
 53
 (207) 186
Benefit (provision) for income taxes(b)(176) (15) 344
 153
Earnings (loss) of discontinued operations, net of taxes(a)165
 39
 136
 339
        
Gain (loss) on disposal before income taxes(8,715) 3,471
 61
 (5,183)
Benefit (provision) for income taxes(b)477
 (963) (5) (491)
Gain (loss) on disposal, net of taxes(8,238) 2,508
 56
 (5,675)
 
     —
Earnings (loss) from discontinued operations, net of taxes$(8,074) $2,547
 $192
 $(5,335)
For the year ended December 31, 2018 (In millions)
       
        
Sales of goods and services$22,859
 $3,898
 $—
 $26,757
GE Capital revenues and other income (loss)—
 —
 (1,347) (1,347)
Cost of goods and services sold(19,198) (2,809) —
 (22,007)
Other costs and expenses(3,346) (607) (407) (4,360)
        
Earnings (loss) of discontinued operations before income taxes315
 482
 (1,755) (958)
Benefit (provision) for income taxes(b)(347) (143) 82
 (408)
Earnings (loss) of discontinued operations, net of taxes(a)(33) 339
 (1,673) (1,366)
        
Gain (loss) on disposal before income taxes—
 —
 4
 4
Benefit (provision) for income taxes(b)—
 —
 (1) (1)
Gain (loss) on disposal, net of taxes—
 —
 3
 3
        
Earnings (loss) from discontinued operations, net of taxes$(33) $339
 $(1,670) $(1,363)
For the year ended December 31, 2017 (In millions)
       
        
Sales of goods and services$17,180
 $3,935
 $—
 $21,115
GE Capital revenues and other income (loss)—
 —
 174
 174
Cost of goods and services sold(14,450) (2,990) —
 (17,441)
Other costs and expenses(2,993) (483) (910) (4,386)
        
Earnings (loss) of discontinued operations before income taxes(264) 461
 (735) (538)
Benefit (provision) for income taxes(b)(59) (138) 295
 97
Earnings (loss) of discontinued operations, net of taxes(a)(323) 323
 (440) (441)
        
Gain (loss) on disposal before income taxes—
 —
 306
 306
Benefit (provision) for income taxes(b)—
 —
 (178) (178)
Gain (loss) on disposal, net of taxes—
 —
 128
 128
        
Earnings (loss) from discontinued operations, net of taxes$(323) $323
 $(312) $(312)
For the year ended December 31, 2019GECASBaker HughesTransportationOtherTotal
Total revenues$— $16,047 $550 $— $16,598 
Cost of equipment and services sold(2,069)(13,317)(478)— (15,863)
Other income, costs and expenses3,272 (2,390)(18)(208)656 
Earnings (loss) of discontinued operations before income taxes1,204 340 54 (208)1,390 
Benefit (provision) for income taxes(175)(176)(15)344 (21)
Earnings (loss) of discontinued operations, net of taxes(a)1,029 165 39 135 1,369 
Gain (loss) on disposal before income taxes— (8,715)3,471 61 (5,183)
Benefit (provision) for income taxes— 477 (963)(5)(491)
Gain (loss) on disposal, net of taxes— (8,238)2,508 56 (5,675)
Earnings (loss) from discontinued operations, net of taxes$1,029 $(8,074)$2,547 $191 $(4,306)
(a) Earnings (loss) of discontinued operations attributable to the Company after income taxes was $279from GECAS operations included $359 million, $(1,367)$2,545 million and $(360)$2,048 million of depreciation and amortization for the years ended December 31, 2021, 2020 and 2019, 2018respectively. GECAS depreciation and 2017, respectively.amortization ceased on March 10, 2021.
(b) Total tax benefit (provision) for discontinued operations and disposals included current tax benefit (provision) of $1,260 million, $(508) million, and $(704) million, including current U.S. Federal tax benefit (provision) of $1,252 million, $156 million and $(313) million, and deferred tax benefit (provision) of $(1,599) million, $99 million and $624 million for the years ended December 31, 2019, 2018, and 2017, respectively.

GE2019 FORM 10-K 76

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31 (In millions)
2019
2018



Cash, cash equivalents and restricted cash$638
$4,424
Investment securities202
522
Current receivables81
6,258
Inventories—
5,419
Financing receivables held for sale (Polish mortgage portfolio)2,485
2,745
Property, plant and equipment - net—
7,139
Goodwill and intangible assets - net—
31,622
Deferred income taxes264
1,174
All other assets439
4,550
Assets of discontinued operations(a)$4,109
$63,853



Accounts payable & Progress collections and deferred income$40
$6,806
All other liabilities163
12,476
Liabilities of discontinued operations(b)$203
$19,281

ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONSDecember 31, 2021December 31, 2020
Cash, cash equivalents and restricted cash$736 $623 
Financing receivables - net— 2,710 
Financing receivables held for sale (Polish mortgage portfolio)1,799 2,461 
 Property, plant, and equipment - net88 28,429 
All other assets554 6,527 
Assets of discontinued operations(a)$3,177 $40,749 
Deferred income taxes— 2,172 
Accounts payable and all other liabilities887 3,714 
Liabilities of discontinued operations(a)$887 $5,886 
(a) AssetsIncluded 0 and $37,199 million of discontinued operations included $54,596assets and 0 and $4,997 million and $4,573 million related to our Baker Hughes and Transportation businesses, respectivelyof liabilities for GECAS as of December 31, 2018. 2021 and 2020, respectively.

(b) Liabilities of discontinued operations included $15,535 million and $1,871 million related to our Baker Hughes and Transportation businesses, respectively as of December 31, 2018.

Included within All other liabilities of discontinued operations at December 31, 2019 and December 31, 2018 are intercompany tax receivables in the amount of $839 million and $1,141 million, respectively, primarily related to the financial services businesses that were part of the GE Capital Exit Plan, which are offset within All other liabilities of consolidated GE.  

NOTE 3. INVESTMENT SECURITIESSECURITIES.
All of our debt securities are classified as available-for-sale and substantially all are investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations. ChangesOn November 1, 2021, we received 111.5 million ordinary shares of AerCap (approximately 46% ownership interest) and an AerCap senior note as partial consideration in conjunction with the GECAS transaction, for which we have adopted the fair value option. Our investment in BKR comprises 166.6 million shares (approximately 16% ownership interest) as of December 31, 2021. Both our debt securitiesAerCap and BKR investments are recorded to other comprehensive income.as Equity securities with readily determinable fair valuesvalues. We classify investment securities as current or non-current based on our intent regarding the usage of proceeds from those investments. Investment securities held within insurance entities are included within this captionclassified as non-current as they support the long-duration insurance liabilities.

December 31, 2021December 31, 2020
Amortized
cost		Gross
unrealized
gains		Gross
unrealized
losses		Estimated
fair value		Amortized
cost		Gross
unrealized
gains		Gross
unrealized
losses		Estimated
fair value
Equity and note (AerCap)$— $— $— $8,287 $— $— $— $— 
Equity (Baker Hughes)— — — 4,010 — — — 7,319 
Current investment securities$— $— $— $12,297 $— $— $— $7,319 
Debt
U.S. corporate$25,182 $5,502 $(33)$30,652 $23,604 $6,651 $(26)$30,230 
Non-U.S. corporate2,361 343 (4)2,701 2,283 458 (1)2,740 
State and municipal2,639 573 (6)3,205 3,387 878 (9)4,256 
Mortgage and asset-backed3,950 117 (47)4,019 3,652 171 (71)3,752 
Government and agencies1,086 104 (2)1,188 1,169 184 — 1,353 
Other equity443 — — 443 218 — — 218 
Non-current investment securities$35,662 $6,639 $(92)$42,209 $34,313 $8,342 $(106)$42,549 

The amortized cost of debt securities excludes accrued interest of $415 million and changes$414 million as of December 31, 2021 and 2020, respectively, which is reported in their fair value are recorded in earnings.
All other current assets.
 2019 2018
December 31 (In millions)Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Estimated
fair value

Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Estimated
fair value










Debt








U.S. corporate$23,037
$4,636
$(11)$27,661

$21,306
$2,257
$(357)$23,206
Non-U.S. corporate2,161
260
(1)2,420

1,906
53
(76)1,883
State and municipal3,086
598
(15)3,669

3,320
367
(54)3,633
Mortgage and asset-backed3,117
116
(4)3,229

3,325
51
(54)3,322
Government and agencies1,391
126
—
1,516

1,314
62
(20)1,357
Equity10,025
—
—
10,025

107
—
—
107
Total$42,816
$5,736
$(31)$48,521

$31,277
$2,792
$(561)$33,508

The estimated fair valuesvalue of investment securities at December 31, 20192021 increased since December 31, 2018,2020, primarily due to decreases in market yields and the classification of our remainingnew equity interest in Baker HughesAerCap within investment securities. We elected to account for our remaining Baker Hughes interestsecurities and a promissory note receivable at fair value. At December 31, 2019,new insurance investments, partially offset by the sales of BKR shares and higher market yields.
2021 FORM 10-K 58

Total estimated fair value of debt securities in an unrealized loss position were $3,446 million and $1,765 million, of which $644 million and $165 million had gross unrealized losses of $(42) million and $(20) million and had been in a loss position for 12 months or more at December 31, 2021 and 2020, respectively. Gross unrealized losses of $(92) million at December 31, 2021 included $(33) million related to U.S. corporate securities and $(32) million related to commercial mortgage-backed securities (CMBS). The majority of our interestCMBS in Baker Hughes was $9,888 million.

an unrealized loss position have received investment-grade credit ratings from the major rating agencies and are collateralized by pools of commercial mortgage loans on real estate.

Net unrealized gains (losses) for equity securities with readily determinable fair values, which are recorded in Other income within continuing operations, were $800$1,656 million, (including a gain of $793 million related to our interest in Baker Hughes), $(8)$(1,670) million and an insignificant amount$800 million for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively.


Proceeds from debt and equity securities sales, early redemptions by issuers and principal payments on the Baker HughesBKR promissory note totaled $7,967$6,666 million, $3,222$5,060 million and $3,240$7,967 million for the years ended December 31, 2019, 2018,2021, 2020 and 2017,2019, respectively. Gross realized gains on investmentdebt securities were $115$69 million, $249$173 million and $243 million, and gross realized losses and impairments were $(203) million, $(41) million and $(24)$114 million for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively. TheseGross realized losses included $(132)and impairments on debt securities were $(11) million, related to$(68) million and $(60) million for the Wabtec sale as ofyears ended December 31, 2019.2021, 2020 and 2019, respectively.


Our run-off Insurance business cash flows are subject to regulatory restrictions. Associated purchases, dispositions and maturities of investment securities are as follows:
Gross unrealized losses of $(11) million and $(20) million are associated with debt securities with a fair value of $724 million and $274 million that have been in a loss position for less than 12 months and 12 months or more, respectively, at December 31, 2019. Gross unrealized losses of $(310) million and $(251) million are associated with debt securities with a fair value of $7,048 million, and $3,856 million that have been in a loss position for less than 12 months and 12 months or more, respectively, at December 31, 2018.

For the years ended December 3120212020
Purchases of investment securities$(4,286)$(6,031)
Dispositions and maturities of investment securities2,997 4,679 
Net (purchases) dispositions of insurance investment securities$(1,290)$(1,352)
GE
2019 FORM 10-K 77
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contractual maturities of investments in available-for-saleour debt securities (excluding mortgage and asset-backed securities) at December 31, 20192021 are as follows:
(In millions)
Amortized
cost

Estimated
fair value

   
Due  
Within one year$514
$527
After one year through five years2,615
2,766
After five years through ten years6,614
7,599
After ten years19,932
24,374


Amortized costEstimated fair value
Within one year$358 $363 
After one year through five years3,475 3,778 
After five years through ten years6,278 7,287 
After ten years21,158 26,318 

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.


In addition to the equity securities described above, we hold $517$441 million and $542$274 million of equity securities without readily determinable fair valuevalues at December 31, 20192021 and December 31, 2018,2020, respectively, that are classified inwithin non-current All other assets in our consolidated Statement of Financial Position. We initially recognize these assets at costFair value adjustments, including impairments, recorded in earnings were $46 million, $(141) million and have recorded insignificant fair value increases, net of impairment, to earnings$7 million for the years ended December 31, 2021, 2020 and 2019, and 2018, respectively and cumulatively, based on observable transactions. respectively.


NOTE 4. CURRENT AND LONG-TERM RECEIVABLES
CURRENT RECEIVABLES
December 3120212020
Aviation$4,476 $4,417 
Healthcare3,033 2,336 
Renewable Energy1,847 2,401 
Power3,490 3,995 
Corporate233 310 
Customer receivables$13,079 $13,459 
Non-income based tax receivables1,222 1,346 
Revenue sharing program receivables1,166 1,038 
Supplier advances596 676 
Deferred purchase price on receivables facility— 413 
Receivables from disposed businesses148 242 
Other sundry receivables483 678
Sundry receivables3,615 4,395 
Allowance for credit losses(a)(1,074)(1,164)
Total current receivables$15,620 $16,691 
(a) Allowance for credit losses decreased primarily due to write-offs and foreign currency impact, partially offset by net new provisions of $150 million.

2021 FORM 10-K 59


Consolidated
GE
December 31 (In millions)2019
2018

2019
2018







Power$4,689
$4,652

$3,289
$2,270
Renewable Energy2,306
1,938

1,749
1,475
Aviation(a)3,249
1,483

2,867
1,145
Healthcare2,105
2,431

1,379
1,260
Corporate246
238

223
205
Customer receivables12,594
10,742

9,507
6,355
Sundry receivables5,049
4,573

5,247
4,569
Allowance for losses(874)(670)
(872)(662)
Total current receivables$16,769
$14,645

$13,883
$10,262
(a) IncreaseSales of current customer receivables. Effective April 1, 2021, we discontinued the majority of our factoring programs and subsequently announced the discontinuation of our remaining unconsolidated receivables facility effective in Aviation segment is primarily driven by receivables from Boeing duethe fourth quarter of 2021. The remaining balance related to 737 MAX temporary fleet grounding, with balance of $1,397these discontinued programs was $161 million as of December 31, 2019.

Current sundry2021. As shown in the table below, WCS no longer holds any GE business receivables. Customer receivables include supplier advances, revenue sharing programs receivables, other non-income based tax receivables, certain intercompany balances that eliminate upon consolidationheld by WCS and deferred purchase price. The deferred purchase price represents our retained risk with respect to current customer receivables sold to third parties through one of the receivable facilities. The balance of the deferred purchase price held by GE Capital at December 31, 2019 and 2018, was $421were $3,134 million and $468$2,582 million, respectively.  

Sales ofrespectively, at March 31, 2021. When GE current customer receivables.GE sales ofbusinesses sell customer receivables to GE CapitalWCS or third parties, are made on arm's length terms and any discount related to time value of money is recognized by GE when the customer receivables are sold. As of December 31, 2019 and 2018, GE sold approximately 51% and 66%, respectively, of its gross customer receivables to GE Capital or third parties. The performance of sold current receivables is similar to the performance of our other GE current receivables; delinquencies are not expected to be significant. Any difference between the carrying value of receivables sold and total cash collected is recognized as financing costs by GE in Interest and other financial charges in our consolidated Statement of Earnings (Loss). Costs of $515 million and $616 million were recognized during the years ended December 31, 2019 and 2018, respectively.


GE2019 FORM 10-K 78

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity related to customer receivables sold by GE is as follows:
(In millions)GE Capital Third Parties GE Capital Third Parties
 2019 2018
        
Balance at January 1$4,386
 $7,880
 $9,656
 $5,710
GE sales to GE Capital40,988
 —
 50,318
 —
GE sales to third parties—
 6,370
 —
 5,481
GE Capital sales to third parties(28,073) 28,073
 (30,904) 30,904
Collections and other(14,621) (35,567) (25,414) (34,216)
Reclassification from long-term customer receivables407
 —
 731
 —
Balance at December 31$3,087
(a)$6,757
 $4,386
(a)$7,880
(a) At December 31, 2019 and 2018, $539 million and $1,380 million, respectively, of the current receivables purchased and retained by GE Capital, had been sold by GE to GE Capital with recourse (i.e., GE retains all or some risk of default). The effect on GE cash flows from operating activities (CFOA) of claims by GE Capital on receivables sold with recourse has been insignificant for the years ended December 31, 2019 and 2018.

When GE sells customer receivables to GE Capital or third parties it acceleratesthey accelerate the receipt of cash that would otherwise have been collected from customers. In any given period, the amount of cash received from sales of customer receivables compared to the cash GE would have otherwise collected had those customer receivables not been sold represents the cash generated or used in the period relating to this activity. SalesAs of December 31, 2020, GE businesses sold approximately 40% of their gross customer receivables to GE Capital impact GE CFOA, while salesWCS or third parties. Separately from the factoring programs that have been discontinued, the Company from time to time sells current or long-term receivables to third parties impact both GE and Consolidated CFOA. The impact of selling fewerin response to customer-sponsored requests or programs, to facilitate sales, or for risk mitigation purposes. Activity related to customer receivables to GE Capital and those subsequently sold by GE Capital to third parties, including the effect of business dispositions, decreased GE’s CFOA by $2,099 million, $3,401 million and $138 million in the years ended December 31, 2019, 2018 and 2017, respectively.

LONG-TERM RECEIVABLES. In certain circumstances, GE provides customers, primarily within our Power, Renewable Energy and Aviation businesses with extended payment terms for the purchase of new equipment, purchases of upgrades and spare parts for our long-term service agreements. These long-term customer receivables are initially recorded at present value and have an average remaining duration of approximately three years and are included in All other assets in the consolidated Statement of Financial Position. 

Consolidated GE
December 31 (In millions)
2019
2018

2019
2018






Long-term customer receivables$906
$1,442

$506
$559
Long-term sundry receivables1,504
1,180

1,834
1,519
Allowance for losses(128)(145)
(128)(145)
Total long-term receivables$2,282
$2,477

$2,212
$1,933


Long-term sundry receivables include supplier advances, revenue sharing programs receivables, other non-income based tax receivables and certain intercompany balances that eliminate upon consolidation.

Sales of GE long-term customer receivables.Through the second quarter of 2018, sales of long-term customer receivables were primarily made to GE Capital, while subsequently, GE has sold an insignificant amount to third parties to transfer economic risk during both the years ended December 31, 2019 and 2018. Activity related to long-term customer receivables purchased by GE Capital is as follows:
GE Capital December 31 (In millions)
2019
 2018
    
Balance at January 1$883
 $1,947
GE sales to GE Capital—
 134
Sales, collections, accretion and other(75) (468)
Reclassification to current customer receivables(407) (731)
Balance at December 31(a)$400
 $883
WCSThird PartiesWCSThird Parties
20212020
Balance at January 1$3,618 $2,992 $3,087 $6,757 
GE businesses sales to WCS13,773 — 32,869 — 
GE businesses sales to third parties— 1,415 (a)— 863 
WCS sales to third parties(10,816)10,816 (18,654)18,654 
Collections and other(6,676)(15,062)(14,004)(23,283)
Reclassification from long-term customer receivables100 — 321 — 
Balance at December 31$— $161 $3,618 $2,992 
(a) At December 31, 2019Related primarily to our participation in customer-sponsored supply chain finance programs. Within these programs, the Company has no continuing involvement, fees associated with the transferred receivables are covered by the customer and 2018, $312 million and $628 million, respectively, of long-term customer receivables purchased and retained by GE Capital, had been sold by GE to GE Capital with recourse (i.e., GE retains all or some risk of default). The effect on GE CFOA of claims by GE Capital on receivables sold with recourse have been insignificant forcash is received at the years ended December 31, 2019 and 2018.original invoice due date.

Similar to sales of current customer receivables, sales of long-term customer receivables can result in cash generation or use in our Statements of Cash Flows. The impact from the sale of long-term customer receivables to GE Capital, including those subsequently sold by GE Capital to third parties, decreased GE’s CFOA by $585 million, $878 million and increased GE's CFOA by $250 million in the years ended December 31, 2019, 2018 and 2017, respectively.
LONG-TERM RECEIVABLES
December 3120212020
Long-term customer receivables$521 $585 
Financing receivables592 713 
Supplier advances309 351 
Non-income based tax receivables245 244 
Receivables from disposed businesses150 230 
Sundry receivables440 569 
Allowance for credit losses(160)(174)
Total long-term receivables$2,097 $2,518 


GE2019 FORM 10-K 79
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNCONSOLIDATED RECEIVABLES FACILITIES. GE Capital has 2In the fourth quarter of 2021, we discontinued our 1 remaining revolving receivables facilities, with a total program size of $4,300 million,facility, under which customer receivables purchased from GE arebusinesses were sold to third parties. In one of the facilities, uponUpon the sale of receivables, we receivereceived proceeds of cash and deferred purchase price and the Company’s remaining risk with respect to the sold receivables iswas limited to the balance of the deferred purchase price. In December 2018, we renegotiatedAs a result of our termination and settlement of the termsfacility, there are no remaining receivables in the facility and the balance of this receivables facility. Effective January 2019, sales of receivables to the third-party purchasers and creation ofour deferred purchase price occur monthly rather than daily. As a result, both non-cash increaseswas reduced to the deferred purchase price and cash payments received on the deferred purchase price declined in 2019. In the other facility, upon the sale of receivables, we receive proceeds of cash only and therefore the Company has no remaining risk with respect to the sold receivables. zero.

Activity related to theseour unconsolidated receivables facilities is included in GE Capitalthe WCS sales to third parties line in the sales of GE businesses current customer receivables table above and is as follows:
For the years ended December 3120212020
Customer receivables sold to receivables facilities$9,324 $13,591 
Collections and other on receivables sold to receivables facilities11,371 15,515 
Total cash purchase price for customer receivables8,683 13,031 
Cash collections re-invested to purchase customer receivables7,920 11,567 
Non-cash increases to deferred purchase price$608 $481 
Cash payments received on deferred purchase price597 489 
For the years ended December 31 (In millions)
2019

2018




Customer receivables sold to receivables facilities$21,695

$23,984
Total cash purchase price for customer receivables21,202

18,040
Cash collections re-invested to purchase customer receivables18,012

15,095





Non-cash increases to deferred purchase price$257

$5,272
Cash payments received on deferred purchase price303

5,192


CONSOLIDATED SECURITIZATION ENTITIES. GE Capital consolidates 3 VIEsconsolidated 2 variable interest entities (VIEs) that purchased customer receivables and long-term customer receivables from GE.GE businesses prior to the April 1, 2021 discontinuation of the majority of the Company's factoring programs. At December 31, 2019 and 2018,2021, there were no remaining assets or liabilities in these entities. At December 31, 2020, these VIEs held current customer receivables of $2,080 million and $2,141$1,489 million and long-term customer receivables of $375 million and $678 million, respectively that were funded through the issuance of non-recourse debt to third parties.$93 million. At December 31, 2019 and 2018,2020, the outstanding non-recourse debt under their respective debt facilities was $1,655 million and $1,875 million, respectively. $892 million. 

2021 FORM 10-K 60

NOTE 5. FINANCING RECEIVABLES AND ALLOWANCESINVENTORIES, INCLUDING DEFERRED INVENTORY COSTS
December 31, 2021December 31, 2020
Raw materials and work in process$8,710 $7,937 
Finished goods4,927 5,654 
Deferred inventory costs(a)2,210 2,299 
Inventories, including deferred inventory costs$15,847 $15,890 
 Consolidated GE Capital
December 31 (In millions)
2019
2018
 2019
2018
      
Loans, net of deferred income$1,098
$5,118

$4,927
$10,834
Investment in financing leases, net of deferred income2,070
2,639

2,070
2,822

3,168
7,757

6,996
13,656
Allowance for losses(33)(58)
(17)(28)
Financing receivables – net$3,134
$7,699

$6,979
$13,628
(a) Represents cost deferral for shipped goods (such as components for wind turbine assemblies within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.

Consolidated finance lease income was $173 million, $275 million and $274 million for the years ended December 31, 2019, 2018 and 2017, respectively.
NET INVESTMENT IN FINANCING LEASESTotal financing leases
Direct financing and sales type leases(a)
Leveraged leases
December 31 (In millions)
2019
2018
 2019
2018
 2019
2018

        
Total minimum lease payments receivable$1,628
$2,719
 $799
$1,421
 $829
$1,298
Less principal and interest on third-party non-recourse debt(216)(474) —
—
 (216)(474)
Net minimum lease payments receivable1,412
2,245
 799
1,421
 613
824
Less deferred income(178)(329) (139)(286) (39)(43)
Discounted lease receivable1,234
1,916
 660
1,135
 574
781
Estimated unguaranteed residual value of leased assets, net of deferred income835
906
 412
420
 423
486
Investment in financing leases, net of deferred income(b)$2,070
$2,822
 $1,072
$1,556
 $997
$1,266

(a) Included $506 million and $399 million investment in sales type leases at December 31, 2019 and 2018, respectively.
(b) See Note 15 for deferred tax amounts related to financing leases.

CONTRACTUAL MATURITIES, DUE IN 
(In millions)
2020
2021
2022
2023
2024
Thereafter
Total
        
Total loans$3,832
$511
$238
$113
$93
$140
$4,927
Net minimum lease payments receivable303
270
194
281
198
166
1,412


We expect actual maturities to differ from contractual maturities, primarily as a result of prepayments. 


GE2019 FORM 10-K 80

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We manage our GE Capital financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At December 31, 2019, 4.2%, 2.9% and 6.1% of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively, with the vast majority of nonaccrual financing receivables secured by collateral. At December 31, 2018, 2.4%, 1.8% and 0.9% of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.

GE Capital financing receivables that comprise receivables purchased from GE are reclassified to either Current receivables or All other assets in the consolidated Statement of Financial Position. To the extent these receivables are purchased with full or limited recourse, they are excluded from the delinquency and nonaccrual data above. See Note 4 for further information.

NOTE 6. INVENTORIES
December 31 (In millions)
2019
2018

  
Raw materials and work in process$8,771
$8,057
Finished goods5,333
5,746
Total inventories$14,104
$13,803


NOTE 7. PROPERTY, PLANT AND EQUIPMENT AND OPERATING LEASES
Depreciable livesOriginal CostNet Carrying Value
December 31(in years)2021202020212020
Land and improvements8$585 $602 $576 $592 
Buildings, structures and related equipment8 - 408,311 8,295 3,728 3,841 
Machinery and equipment4 - 2021,036 21,151 7,356 7,968 
Leasehold costs and manufacturing plant under construction1 - 101,971 2,051 1,343 1,447 
ROU operating lease assets2,606 2,852 
Property, plant and equipment - net$31,904 $32,098 $15,609 $16,699 


Depreciable lives-newOriginal Cost
Net Carrying Value
December 31 (Dollars in millions)
(in years)2019
2018

2019
2018







Land and improvements8$608
$700

$596
$673
Buildings, structures and related equipment8-407,824
8,455

3,875
4,083
Machinery and equipment4-2020,082
19,425

8,360
8,048
Leasehold costs and manufacturing plant under construction1-102,165
2,646

1,539
2,024
GE
$30,680
$31,225

$14,370
$14,828







Land and improvements, buildings, structures and related equipment1-40149
$153

29
$32
Equipment leased to others (ELTO)
  


   Aircraft15-2035,507
36,476

21,414
22,201
Engines15-204,113
3,234

3,283
2,489
Helicopters15-205,474
5,230

4,709
4,660
   All other15-35237
209

214
128
GE Capital(a)
$45,480
$45,302

$29,649
$29,510
       
Eliminations
(972)(909)
(729)(728)
Total
$75,187
$75,618

$43,290
$43,611
(a) Included $1,539In the third quarter of 2020, we recognized a non-cash pre-tax impairment charge of $316 million and $1,397 million of original cost of assets leased to GE with accumulated amortization of $(251) million and $(241) million at December 31, 2019 and 2018, respectively.

Consolidated depreciation and amortization related to property, plant and equipment at our Steam business within our Power segment due to our announcement to exit the new build coal power market. We determined the fair value of these assets using an income approach. This charge was $4,026 million, $4,419 millionrecorded by Corporate in Selling, general, and $4,332 million for the years ended December 31, 2019, 2018 and 2017, respectively. Amortizationadministrative expenses in our Statement of GE Capital ELTO was $2,019 million, $2,089 million and $2,190 million for the years ended December 31, 2019, 2018 and 2017, respectively.Earnings (Loss).

Noncancellable future rentals due from customers for equipment on operating leases at December 31, 2019, are as follows:
(In millions)2020
2021
2022
2023
2024
Thereafter
Total
        
 $2,982
$2,625
$2,258
$1,820
$1,647
$5,652
$16,985

Operating Lease Liabilities. Our consolidated operating lease income onliabilities, included in All other liabilities in our ELTO was $3,804 million, $4,075Statement of Financial Position, were $2,848 million and $4,144$3,195 million, for the years ended December 31, 2019, 2018, and 2017, respectively, and comprises fixed lease income of $3,045 million, $3,243 million and $3,395 million and variable lease income of $759 million, $832 million and $748 million, respectively.

Operating Lease Assets and Liabilities. Our ROU assets and lease liabilities for operating leases were $2,896 million and $3,162 million, respectively, as of December 31, 2019.2021 and 2020, respectively. Substantially all of our operating leases have remaining lease terms of 1214 years or less, some of which may include options to extend.
OPERATING LEASE EXPENSE (In millions)
2019
 2018
 2017
      
Long-term (fixed)$834
 $966
 $1,003
Long-term (variable)136
 177
 231
Short-term206
 133
 131
Total operating lease expense$1,176
 $1,276
 $1,365


OPERATING LEASE EXPENSE202120202019
Long-term (fixed)$770 $827 $893 
Long-term (variable)119 143 175 
Short-term192 206 201 
Total operating lease expense$1,081 $1,176 $1,269 
GE2019 FORM 10-K 81
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MATURITY OF LEASE LIABILITIES (In millions)
2020
2021
2022
2023
2024
Thereafter
Total
        
Undiscounted lease payments$766
$655
$561
$465
$375
$914
$3,737
Less: imputed interest      (575)
Total lease liability as of December 31, 2019      $3,162

MATURITY OF LEASE LIABILITIES20222023202420252026ThereafterTotal
Undiscounted lease payments$729 $620 $504 $353 $262 $821 $3,289 
Less: imputed interest442 
Total lease liability as of December 31, 2021$2,848 
SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES (Dollars in millions)
 
  
Operating cash flows used for operating leases for the year ended December 31, 2019$888
Right-of-use assets obtained in exchange for new lease liabilities for the year ended December 31, 2019$746
Weighted-average remaining lease term at December 31, 20196.9 years
Weighted-average discount rate at December 31, 20194.9%


SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES202120202019
Operating cash flows used for operating leases$834 $835 $961 
Right-of-use assets obtained in exchange for new lease liabilities603 594 739 
Weighted-average remaining lease term7.2 years6.7 years7.1 years
Weighted-average discount rate4.0 %4.6 %4.9 %

NOTE 8.7. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS
ACQUISITIONS. On December 21, 2021 our Healthcare business acquired BK Medical, a leader in surgical ultrasound imaging and guidance technology, for $1,455 million. The preliminary purchase price allocation resulted in goodwill of approximately $1,020 million and amortizable intangible assets of approximately $393 million. The allocation of the purchase price will be finalized upon completion of post-closing procedures.
CHANGES IN GOODWILL BALANCES


20182019
(In millions)Balance at
December 31, 2017
Dispositions and
classifications
to held for sale
Impairments
Currency exchange and other
Balance at
December 31, 2018
Dispositions and classifications to held for sale
Impairments
Currency exchange and other
Balance at
December 31, 2019















Power$20,855
$(1,903)$(18,443)$(369)$139
$—
$—
$6
$145
Renewable Energy7,626
(3)(2,859)(35)4,730
—
(1,486)46
3,290
Aviation10,008
(12)—
(158)9,839
—
—
20
9,859
Healthcare17,306
(21)—
(58)17,226
(5,558)—
59
11,728
Capital(a)984
—
—
(80)904
(39)—
(26)839
Corporate(b)2,042
(81)(833)9
1,136
—
—
(262)873
Total$58,821
$(2,020)$(22,136)$(691)$33,974
$(5,597)$(1,486)$(157)$26,734
2021 FORM 10-K 61

CHANGES IN GOODWILL BALANCES
20202021
Balance at December 31, 2019AcquisitionsImpairmentsCurrency exchange and otherBalance at December 31, 2020AcquisitionsCurrency exchange and other
Balance at December 31, 2021
Aviation$9,859 $— $(877)$266 $9,247 $— $(234)$9,013 
Healthcare11,728 89 — 37 11,855 1,064 (40)12,879 
Renewable Energy3,290 — — 111 3,401 — (169)3,231 
Power145 — — — 146 — (1)145 
Corporate(a)873 — — 2 876 43 (4)914 
Total$25,895 $90 $(877)$417 $25,524 $1,106 $(448)$26,182 
(a) Capital balance at December 31, 2019 is our GE Capital Aviation Services (GECAS) business.
(b) Corporate balance at December 31, 2019 is2021 and 2020 comprises our Digital business.

Goodwill balances decreased primarily as a result of transferring our BioPharma business within our Healthcare segment to held for sale and goodwill impairments at our Hydro and Grid Solutions equipment and services reporting units within our Renewable Energy segment.

In the secondfourth quarter of 2019, we reorganized our Grid Solutions reporting unit in our Power segment by separating our Grid Solutions software business from the Grid Solutions reporting unit. Our Grid Solutions software business was then moved into Corporate and combined with our Digital business. In addition, the remaining Grid Solutions reporting unit (now referred to as Grid Solutions equipment and services) was moved into our Renewable Energy segment as a separate reporting unit. As a result, we allocated goodwill between Grid Solutions software and the Grid Solutions equipment and services reporting units based on the relative fair values of each business. This resulted in $1,618 million of goodwill transferring from our Power segment to our Renewable Energy segment and our Digital business within Corporate in the amounts of $744 million and $874 million, respectively.

As a consequence of separating the two businesses, the Grid Solutions equipment and services reporting unit’s fair value was below its carrying value. Therefore, we conducted step two of the goodwill impairment test for this reporting unit using a current outlook.
In performing the second step, we identified unrecognized intangible assets primarily related to internally developed technology and trade name. The combination of these unrecognized intangibles, adjustments to the carrying value of other assets and liabilities, and reduced reporting unit fair value calculated in step one, resulted in an implied fair value of goodwill below the carrying value of goodwill for the Grid Solutions equipment and services reporting unit. Therefore, we recorded a non-cash goodwill impairment loss of $744 million in Goodwill impairments in our consolidated Statement of Earnings (Loss). We determined the fair value of the Grid Solutions equipment and services reporting unit using a combination of the market and income approaches. After the impairment charge, there is no remaining goodwill associated with our Grid Solutions equipment and services reporting unit.

Further, in the second quarter of 2019, a portion of goodwill recorded at Corporate associated with our Digital acquisitions that was previously allocated to our Renewable Energy, Aviation and Healthcare segments in purchase accounting and for goodwill testing purposes was reflected in these segments in the table above.


GE2019 FORM 10-K 82

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the third quarter of 2019,2021, we performed our annual impairment test. Based on the results of this test, the fair values of each of our reporting units exceeded their carrying values except for our Hydro reporting unit within our Renewable Energy segment. The Hydro reporting unit continued to experience declines in order growth and increased project costs which resulted in downward revisions to our current and projected earnings and cash flows for this business. Therefore,values. In the second quarter of 2020, we performed a step two analysis which resulted inrecognized a non-cash goodwill impairment loss of $742 million. We determined the fair value of the Hydro reporting unit using the income approach. We recorded the impairment loss in Goodwill impairments in our consolidated Statement of Earnings (Loss). After the impairment charge, there is 0 remaining goodwill associated with our Hydro reporting unit. All of the goodwill in this reporting unit was previously recorded as a result of the Alstom acquisition.

Subsequent to this year's third quarter testing, and in order to improve alignment of our annual goodwill impairment testing and strategic planning processes, we changed our annual testing date from the third quarter to the fourth quarter. Therefore, we retested the goodwill at each of our reporting units in the fourth quarter of 2019. Based on the results of this test, the fair value of all our reporting units exceeded their carrying values.

We continue to monitor the operating results and cash flow forecasts of our Additive reporting unit in our Aviation segment as the fair value of this reporting unit was not significantly in excess of its carrying value. At December 31, 2019, our Additive reporting unit had goodwill of $1,116 million.

We also continue to evaluate strategic options to accelerate the further reduction$877 million in the size of GE Capital, some of which could have a material charge depending on the timing, negotiated terms and conditions of any agreements, including $839 million of goodwill.

In 2018, we recognized a total non-cash goodwill impairment loss of $22,136 millioncaption Goodwill impairments in our Power Generation, Grid Solutions, and Hydro reporting units in our Power and Renewable Energy segments.Statement of Earnings (Loss).

Determining the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods.
 2019 2018
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION December 31 (In millions)
Gross carrying
amount
Accumulated
amortization
Net

Gross carrying
amount
Accumulated
amortization
Net

       
Customer-related(a)$6,770
$(3,070)$3,701
 $7,107
$(2,768)$4,341
Patents and technology8,180
(3,730)4,450
 9,166
(3,973)5,192
Capitalized software5,822
(3,651)2,171
 5,951
(3,643)2,308
Trademarks & other737
(406)332
 818
(481)337
Total$21,510
$(10,857)$10,653
 $23,041
$(10,865)$12,178
20212020
INTANGIBLE ASSETS SUBJECT TO AMORTIZATION December 31
Useful lives
(in years)		Gross carrying
amount		Accumulated
amortization		NetGross carrying
amount		Accumulated
amortization		Net
Customer-related(a)3-35$6,400 $(3,250)$3,150 $6,765 $(3,350)$3,415 
Patents and technology2-258,592 (4,361)4,230 8,191 (4,135)4,056 
Capitalized software3-105,764 (3,999)1,765 5,822 (3,836)1,986 
Trademarks & other3-50449 (313)136 541 (328)213 
Total$21,205 $(11,923)$9,282 $21,319 $(11,648)$9,671 
(a) Balance includes payments made to our customers, primarily within our Aviation business.

Substantially all other intangible assets are subject to amortization. Intangible assets decreased $388 million in the fourth quarter of 2019,2021, primarily as a result of amortization impairments,partially offset by the acquisition of patents and the transfertechnology and capitalized software mainly at Aviation and Healthcare of BioPharma within our Healthcare segment to held for sale of $542$945 million. Consolidated amortization expense was $1,569$1,138 million, $2,163$1,336 million and $1,862$1,523 million for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively.


IncludedIn the third quarter of 2020, we recognized a non-cash pre-tax impairment charge of $113 million related to intangible assets at our Steam business within amortization expense for the years ended December 31, 2019 and December 31, 2018 were non-cash impairment charges recorded in Corporate and in our Power segment for $103 million and $428 million, respectively.due to our announcement to exit the new build coal power market. We determined the fair value of these intangible assets using an income approach. These charges wereThis charge was recorded by Corporate in Selling, general, and administrative expenses in our consolidated Statement of Earnings (Loss).

Estimated Consolidatedconsolidated annual pre-tax amortization for intangible assets over the next five calendar years are as follows:
ESTIMATED 5 YEAR CONSOLIDATED AMORTIZATION (In millions)
2020
2021
2022
2023
2024

     
Estimated annual pre-tax amortization$1,358
$1,274
$1,173
$1,081
$1,107

ESTIMATED 5 YEAR CONSOLIDATED AMORTIZATION20222023202420252026
Estimated annual pre-tax amortization$1,234 $1,158 $1,075 $999 $925 

During 2019,2021, we recorded additions to intangible assets subject to amortization of $664$1,008 million with a weighted-average amortizable period of 5.49.0 years, including capitalized softwarepatents and technology of $555$639 million, with a weighted-average amortizable period of 5.210.4 years.

GE2019 FORM 10-K 83
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.8. CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract and other deferred assets decreased $629$647 million in 2019.the year ended December 31, 2021 primarily due to decreased long-term service agreements and the timing of billing milestones ahead of revenue recognition on long-term equipment contracts, partially offset by increased customer advances and other. Our long-term service agreements decreased primarily due to billings of $11,508$9,967 million, andoffset by revenues recognized of $9,480 million, a net unfavorable change in estimated profitability of $124 million at Power and $49$321 million at Aviation offset by revenues recognizedand a net favorable change in estimated profitability of $11,082 million.$44 million at Power.

2021 FORM 10-K 62

December 31, 2019 (In millions)
PowerAviationRenewable EnergyHealthcareOtherTotal







Revenues in excess of billings$5,342
$4,996
$—
$—
$—
$10,338
Billings in excess of revenues(1,561)(3,719)—
—
—
(5,280)
Long-term service agreements(a)$3,781
$1,278
$—
$—
$—
$5,058
Short-term and other service agreements190
316
43
169
—
717
Equipment contract revenues(b)2,508
82
1,217
324
106
4,236
Total contract assets6,478
1,675
1,260
492
106
10,011













Deferred inventory costs(c)943
287
1,677
359
—
3,267
Nonrecurring engineering costs(d)44
2,257
47
35
8
2,391
Customer advances and other(e)—
1,165
—
—
(32)1,133
Contract and other deferred assets$7,465
$5,384
$2,985
$886
$82
$16,801
December 31, 2021AviationHealthcareRenewable EnergyPowerCorporateTotal
Revenues in excess of billings$2,478 $— $— $5,495 $— $7,972 
Billings in excess of revenues(5,731)— — (1,614)— (7,346)
Long-term service agreements$(3,253)$— $— $3,880 $— $627 
Short-term and other service agreements340 166 87 80 20 692 
Equipment contract revenues33 287 1,297 1,709 236 3,562 
Current contract assets$(2,881)$453 $1,384 $5,669 $256 $4,881 
Nonrecurring engineering costs2,479 31 28 12 — 2,550 
Customer advances and other2,620 154 — 801 — 3,574 
Non-current contract and other deferred assets$5,099 $184 $28 $813 $— $6,124 
Total contract and other deferred assets$2,218 $637 $1,412 $6,482 $256 $11,005 
December 31, 2018 (In millions)













Revenues in excess of billings$5,368
$5,412
$—
$—
$—
$10,780
Billings in excess of revenues(1,693)(3,297)—
—
—
(4,989)
Long-term service agreements(a)$3,675
$2,115
$—
$—
$—
$5,790
Short-term and other service agreements167
272
—
251
—
690
Equipment contract revenues(b)2,761
80
1,174
320
64
4,400
Total contract assets6,603
2,468
1,174
571
64
10,880













Deferred inventory costs(c)1,003
673
1,267
360
5
3,309
Nonrecurring engineering costs(d)43
1,916
85
34
17
2,095
Customer advances and other(e)—
1,146
—
—
—
1,146
Contract and other deferred assets$7,650
$6,204
$2,525
$966
$87
$17,431
(a)
Included amounts due from customers at Aviation for the sales of engines, spare parts and services, which we will collect through higher usage-based fees from servicing equipment under long-term service agreements, totaling $1,712 million and $1,562 million as of December 31, 2019 and 2018, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $308 million and $310 million as of December 31, 2019 and 2018, respectively.
(b)
Included are amounts due from customers at Power for the sale of services upgrades, which we collect through incremental fixed or usage-based fees from servicing the equipment under long-term service agreements, totaling $909 million and $886 million as of December 31, 2019 and 2018, respectively.
(c)
Represents cost deferral for shipped goods (such as components for wind turbine assemblies within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.       
(d)
Included costs incurred prior to production (such as requisition engineering) for equipment production contracts, primarily within our Aviation segment, which are allocated ratably to each unit produced.       
(e)
Included advances to and amounts due from customers at Aviation for the sale of engines, spare parts and services, which we will collect through incremental fees for goods and services to be delivered in future periods, totaling $986 million and $950 million as of December 31, 2019 and 2018, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $256 million and $223 million as of December 31, 2019 and 2018, respectively.

December 31, 2020
Revenues in excess of billings$3,072 $— $— $5,282 $— $8,354 
Billings in excess of revenues(5,375)— — (1,640)— (7,015)
Long-term service agreements$(2,304)$— $— $3,642 $— $1,338 
Short-term and other service agreements282 173 106 129 29 719 
Equipment contract revenues59 306 1,127 2,015 201 3,707 
Current contract assets$(1,963)$479 $1,233 $5,786 $229 $5,764 
Nonrecurring engineering costs2,409 31 34 16 — 2,490 
Customer advances and other2,481 128 — 822 (32)3,398 
Non-current contract and other deferred assets$4,889 $159 $34 $838 $(32)$5,888 
Total contract and other deferred assets$2,927 $638 $1,268 $6,623 $197 $11,653 
PROGRESS COLLECTIONS & DEFERRED INCOME
.Progress collections and deferred income. Progress collections represent cash received from customers under ordinary commercial payment terms in advance of delivery. Progress collections on equipment contracts primarily comprise milestone payments received from customers prior to the manufacture and delivery of customized equipment orders. Other progress collections primarily comprise down payments from customers to reserve production slots for standardized inventory orders such as advance payments from customers when they place orders for wind turbines and blades within our Renewable Energy segment and payments from airframers and airlines for install and spare engines, respectively, within our Aviation segment.

Progress collections and deferred income increased $1,456decreased $811 million in 2019 primarily due to milestone payments received primarily at Aviation and Renewable Energy. These increases were partially offset by the timing of revenue recognition in excess of new collections received, primarily at HealthcareRenewable Energy and Power.

Aviation. Revenues recognized for contracts included in a liability position at the beginning of the year were $11,020$14,569 million and $14,960$12,712 million for the yearyears ended December 31, 20192021 and 2018,2020, respectively.

December 31, 2021AviationHealthcareRenewable EnergyPowerCorporateTotal
Progress collections on equipment contracts$142 $— $1,843 $5,198 $— $7,183 
Other progress collections4,469 522 2,866 385 111 8,354 
Current deferred income170 1,336 198 33 99 1,835 
Progress collections and deferred income$4,782 $1,858 $4,907 $5,615 $210 $17,372 
Non-current deferred income1,090 592 194 110 3 1,989 
Total Progress collections and deferred income$5,871 $2,450 $5,101 $5,725 $213 $19,361 
December 31, 2020
Progress collections on equipment contracts$214 $— $1,229 $4,918 $— $6,362 
Other progress collections4,623 414 4,604 458 152 10,252 
Current deferred income132 1,309 194 17 105 1,757 
Progress collections and deferred income$4,969 $1,724 $6,028 $5,393 $257 $18,371 
Non-current deferred income898 564 214 116 10 1,801 
Total Progress collections and deferred income$5,867 $2,288 $6,241 $5,509 $267 $20,172 

GE20192021 FORM 10-K 8463

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2019 (In millions)
PowerAviationRenewable EnergyHealthcareOtherTotal







Progress collections on equipment contracts$5,857
$115
$1,268
$—
$—
$7,240
Other progress collections413
4,748
4,193
305
189
9,849
Total progress collections$6,270
$4,863
$5,461
$305
$189
$17,089
Deferred income(a)49
1,528
284
1,647
98
3,606
GE Progress collections and deferred income
$6,319
$6,391
$5,745
$1,952
$287
$20,694
December 31, 2018 (In millions)













Progress collections on equipment contracts$5,536
$114
$1,325
$—
$—
$6,975
Other progress collections691
4,034
3,557
299
201
8,783
Total progress collections$6,227
$4,148
$4,883
$299
$201
$15,758
Deferred income(a)112
1,338
260
1,692
79
3,480
GE Progress collections and deferred income
$6,339
$5,486
$5,143
$1,991
$280
$19,239
(a)Included in this balance are finance discounts associated with customer advances at Aviation of $564 million and $533 million as of December 31, 2019 and 2018, respectively.

NOTE 10.9. ALL OTHER ASSETS
December 3120212020
Derivative instruments (Note 20)$684 $487 
Assets held for sale208 212 
Prepaid taxes and deferred charges341 408 
Cash collateral on derivatives76 812 
Accrued interest and investment income426 538 
Other199 202 
All other current assets$1,933 $2,659 
Equity method and other investments7,840 6,383 
Long-term receivables (Note 4)2,097 2,518 
Prepaid taxes and deferred charges800 800 
Insurance receivables4,705 4,661 
Insurance cash and cash equivalents(a)353 455 
Pension surplus2,784 843 
Other461 366 
All other non-current assets$19,040 $16,025 
Total All other assets$20,973 $18,684 
December 31 (In millions)
2019
2018





Equity method and other investments (Notes 3 and 26)$4,015
$4,003
Long-term receivables (Note 4)2,212
1,933
Prepaid taxes and deferred charges1,480
1,763
Derivative instruments (Note 21)211
30
Other481
849
Total GE$8,399
$8,578



Equity method and other investments (Notes 3 and 26)$2,227
$3,097
GECAS pre-delivery payments (Note 23)2,934
3,086
Assets held for sale2,294
2,762
Derivative instruments (Note 21)529
175
Other664
748
Total GE Capital$8,648
$9,869
Eliminations(586)(90)
Total Consolidated$16,461
$18,357
(a) Cash and cash equivalents in our insurance entities are subject to regulatory restrictions and used for operations of those entities. Therefore, the balance is included in All other assets.


Equity method investments. Unconsolidated entities over which we have significant influence are accounted for as equity method investments and presented on a one-line basis in All other assets on our Statement of Financial Position. Equity method income includes our share of the results of unconsolidated entities, gains (loss) from sales and impairments of investments, which is included in Other income and in Insurance revenues in our Statement of Earnings (Loss). See Note 1 for further information.

GE2019 FORM 10-K 85
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. BORROWINGS
December 31 (Dollars in millions)
 2019
 2018
 
      
  Amount
Average Rate
Amount
Average Rate
Commercial paper $3,008
1.62%$3,005
1.64%
Current portion of long-term borrowings 766
0.36
60
4.02
Current portion of long-term borrowings assumed by GE 5,473
3.71
4,207
3.76
Other 1,832
 2,081
 
Total GE short-term borrowings $11,079
 $9,354
 
      
Current portion of long-term borrowings 11,226
3.01%3,984
2.00%
Intercompany payable to GE 2,104
 2,684
 
Other 804
 1,015
 
Total GE Capital short-term borrowings $14,134
 $7,684
 
      
Eliminations (3,140) (4,262) 
Total short-term borrowings $22,072
 $12,776
 
      
 MaturitiesAmount
Average Rate
Amount
Average Rate
Senior notes2022-2044$14,762
2.11%$20,387
2.28%
Senior notes assumed by GE2021-205423,024
4.17
29,218
4.30
Subordinated notes assumed by GE2021-20372,871
3.68
2,836
3.64
Other 324
 417
 
Total GE long-term borrowings $40,980
 $52,858
 
      
Senior notes2021-2042$25,371
3.66%$35,105
3.49%
Subordinated notes 178
 165

Intercompany payable to GE 17,038
 19,828
 
Other 626
 885
 
Total GE Capital long-term borrowings $43,213
 $55,982
 
      
Eliminations (17,038) (19,892) 
Total long-term borrowings $67,155
 $88,949
 
Non-recourse borrowings of
consolidated securitization entities
2020-20211,655
1.34%1,875
2.05%
Total borrowings $90,882
 $103,599
 

At
Equity method investment balanceEquity method income (loss)
December 3120212020202120202019
Aviation$2,000 $2,032 $58 $(41)$204 
Healthcare223 251 27 7 19 
Renewable Energy739 724 39 13 (2)
Power977 576 23 43 (4)
Corporate(a)3,451 2,517 68 23 48 
Total consolidated$7,391 $6,100 $215 $46 $265 
(a) Equity method investments within Corporate include investments held by EFS of $1,943 million and $1,816 million and held by our run-off insurance operations of $1,480 million and $669 million as of December 31, 2019, the outstanding GE Capital borrowings that had been assumed by GE as part of the GE Capital Exit Plan was $31,368 million ($5,473 million short term2021 and $25,895 million long term), for which GE has an offsetting Receivable from GE Capital of $19,142 million. 2020, respectively.

NOTE 10. BORROWINGS
December 3120212020
AmountAverage RateAmountAverage Rate
Current portion of long-term borrowings
   Senior notes issued by GE$1,249 1.39 %$36 5.03 %
   Senior and subordinated notes assumed by GE1,645 2.05 %2,432 3.49 %
   Senior notes issued by GE Capital1,370 0.63 %788 1.58 %
Other97 1,457 
Total short-term borrowings$4,361 $4,713 
MaturitiesAmountAverage RateAmountAverage Rate
Senior notes issued by GE2023-2050$5,373 2.87 %$18,994 2.90 %
Senior and subordinated notes assumed by GE2023-205511,306 3.73 %19,957 3.25 %
Senior notes issued by GE Capital2023-204213,274 4.26 %30,320 3.41 %
Other870 917 
Total long-term borrowings$30,824 $70,189 
Total borrowings$35,186 $74,902 

The difference of $12,226 million ($3,369 million in short-term borrowings and $8,857 million in long-term borrowings) represents the amount of borrowings GE Capital had funded with available cash to GE via intercompany loans in lieu of GE issuing borrowings externally. In 2019, GE repaid $1,523 million of maturing intercompany loans from GE Capital.

At December 31, 2019, total GE borrowings of $32,917 million comprised GE-issued borrowings of $20,691 million and intercompany loans from GE Capital to GE of $12,226 million as described above.

GECompany has provided a full and unconditional guarantee on the payment of the principal and interest on all tradable senior and subordinated outstanding long-term debt securities issued by subsidiaries of GE Capital. This guarantee applied to $13,719 million and all commercial paper$28,503 million of senior notes and other debt issued or guaranteed by GE Capital. AtCapital at December 31, 2019,2021 and December 31, 2020, respectively.

2021 FORM 10-K 64

In the Guarantee appliessecond quarter of 2021, we completed a debt tender to $34,683repurchase a total of $7,275 million of debt, comprising $4,084 million of GE-issued debt with maturities ranging from 2022 through 2050, and $3,191 million of GE assumed debt with maturities ranging from 2021 through 2039. In the fourth quarter of 2021, we completed a debt tender to repurchase a total of $25,350 million of debt, comprised of $7,744 million of GE-issued debt with maturities ranging from 2022 through 2050, $4,718 million of GE assumed debt with maturities ranging from 2022 through 2040 and $12,888 million of GE Capital debt.issued debt with maturities ranging from 2022 through 2039.

On September 30, 2019, GE completed a tender offer to purchase $4,846 million in aggregate principal amount of certain senior unsecured debt, comprising $1,250 million of 4.500% Notes due 2044, $1,144 million of 4.125% Notes due 2042, €992 million ($1,101 million equivalent) of 2.125% Notes due 2037, €784 million ($870 million equivalent) of 1.500% Notes due 2029, €374 million ($415 million equivalent) of 1.875% Notes due 2027, and €59 million ($66 million equivalent) of 1.250% Notes due 2023. The total cash consideration paid for these purchases was $5,031 million and the total carrying amount of the purchased notes was $4,787 million, resulting in a loss of $255 million (including $12 million of accrued fees and other costs associated with the tender) which was recorded in Interest and other financial charges in the GE Statement of Earnings (Loss). In addition to the purchase price, GE paid any accrued and unpaid interest on the purchased notes through the date of purchase.

Non-recourse borrowings of consolidated securitization entities included $1,569 million and $225 million of current portion of long-term borrowings at December 31, 2019 and 2018, respectively. See Notes 4 and 22 for further information.

See Note 2120 for further information about borrowings and associated interest rate swaps.


GE2019 FORM 10-K 86

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt maturities over the next five years follow.
20222023202420252026
Debt issued by GE$1,249 $482 $175 $905 $31 
Debt assumed by GE1,645 1,627 498 236 1,137 
Debt issued by GE Capital1,370 (a)1,297 111 700 159 
(a)Fixed and floating rate notes of $309 million contain put options with exercise dates in 2022, which have final maturity beyond 2036.

(In millions)2020
2021
2022
2023
2024
      
GE excluding assumed debt$766
$47
$4,994
$1,360
$773
GE Capital debt assumed by GE(a)5,473
4,685
1,954
2,842
918
GE Capital other debt11,226(b)1,930
2,215
2,418
117
(a)Of these maturities, $3,369 million, $442 million, 0, 0 and $528 million for 2020, 2021, 2022, 2023 and 2024 respectively, were effectively transferred to GE through intercompany loans with right of offset.
(b)Fixed and floating rate notes of $443 million contain put options with exercise dates in 2020, which have final maturity beyond 2024.

The total interest payments on consolidated borrowings are estimated to be $1,245 million, $1,130 million, $1,081 million, $1,047 million and $1,009 million for 2022, 2023, 2024, 2025 and 2026, respectively.

NOTE 12.11. INSURANCE LIABILITIES AND ANNUITY BENEFITSBENEFITS.
Insurance liabilities and annuity benefits comprise mainlysubstantially all obligations to annuitants and insureds in our run-off insurance operations. Our insurance operations (net of eliminations) generated revenues of $3,106 million, $2,865 million and $2,802 million, profit (loss) of $566 million, $197 million and $(821) million and net earnings (loss) of $444 million, $143 million and $(663) million for the years ended December 31, 2021, 2020 and 2019, respectively. These operations were supported by assets of $49,894 million and $50,067 million at December 31, 2021 and 2020, respectively. A summary of our insurance contracts is presented below:
December 31, 2019 (In millions)
Long-term care insurance contractsStructured settlement annuities & life insurance contractsOther
contracts		Other adjustments(a)Total






Future policy benefit reserves$16,755
$9,511
$183
$5,655
$32,104
Claim reserves(b)4,238
252
1,125

5,615
Investment contracts(c)—
1,136
1,055
—
2,191
Unearned premiums and other30
196
96
—
322

21,023
11,095
2,459
5,655
40,232
Eliminations—
—
(406)—
(406)
Total$21,023
$11,095
$2,053
$5,655
$39,826
December 31, 2018 (In millions)











Future policy benefit reserves$16,029
$9,495
$169
$2,247
$27,940
Claim reserves(b)3,917
230
1,178
—
5,324
Investment contracts(c)—
1,239
1,149
—
2,388
Unearned premiums and other34
205
103
—
342

19,980
11,169
2,599
2,247
35,994
Eliminations—
—
(432)—
(432)
Total$19,980
$11,169
$2,167
$2,247
$35,562

(a)
To the extent that unrealized gains on specific investment securities supporting our insurance contracts would result in a premium deficiency should those gains be realized, an increase in future policy benefit reserves is recorded, with an after-tax reduction of net unrealized gains recognized through Other comprehensive income in our consolidated Statement of Earnings (Loss).      
(b)
Other contracts included claim reserves of $342 million and $346 million related to short-duration contracts at Electric Insurance Company, net of eliminations, at December 31, 2019 and December 31, 2018, respectively.  
(c)
Investment contracts are contracts without significant mortality or morbidity risks.  

December 31, 2021Long-term careStructured settlement annuities & lifeOther contractsOther adjustments(a)Total
Future policy benefit reserves$17,097 $8,902 $188 $3,394 $29,581 
Claim reserves4,546 258 585 — 5,389 
Investment contracts— 955 954 — 1,909 
Unearned premiums and other15 184 89 — 287 
Total$21,658 $10,299 $1,815 $3,394 $37,166 
We annually perform premium deficiency testing
December 31, 2020
Future policy benefit reserves$16,934 $9,207 $181 $8,160 $34,482 
Claim reserves4,393 275 694 — 5,362 
Investment contracts— 1,034 1,016 — 2,049 
Unearned premiums and other19 189 89 — 298 
Total$21,346 $10,705 $1,980 $8,160 $42,191 
(a) The decrease in Other adjustments of $4,766 million is a result of the aggregate across our run-off insurance portfolio. We performed this year’s testing in the third quarter of 2019, consistent with our historical practice prior to 2017 when we reconstructed our claim cost curves. These procedures included updating experience studies since our last test completed in the fourth quarter of 2018, independent actuarial analysis and review of industry benchmarks. As we experienced a premium deficiency in 2018, our 2019 premium deficiency testing started with a zerohigher margin and, accordingly, any net adverse development would result in a future charge to earnings. Using our most recent future policy benefit reserve assumptions, including changes to our assumptions related to discount rate and future premium rate increases, as described below, we identified a premium deficiency resulting in a $972 million non-cash pre-tax charge to earnings in the third quarter 2019.

GE2019 FORM 10-K 87
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The increase to future policy benefit reserves resulting from our 2019 testing was primarily attributable to the following key assumption changes:
•
We have observed a significant decline in market interest rates this year, which has resulted in a lower discount rate and adversely impacted our reserve margin by $1,344 million. As noted above, our discount rate is based upon the actual yields on our investment portfolio and our forecasted reinvestment rates, which comprise the future rates at which we expect to invest proceeds from investment maturities, net of operating cash flows, and projected future capital contributions. Market interest rates have declined by approximately 130 basis points since our 2018 premium deficiency test, with 60 basis points of this reduction occurring since the second quarter 2019. Although the movement in market rates impacts the reinvestment rate, it does not materially impact the actual yield on our existing investments. Furthermore, our assumed reinvestment rate on future fixed income investments is based both on current expected long-term average rates and market interest rates. Thus, a decline in market interest rates will not result in an equivalent decline in our discount rate assumption. Our discount rate assumption for purposes of performing the premium deficiency assessment resulted in weighted average rate of 5.74% compared to 6.04% in 2018. This decline in the discount rate from 2018 to 2019 reflected a lower reinvestment rate increasing to an expected long-term average investment yield over a longer period, lower prospective expected returns on higher yielding assets classes introduced with our 2018 strategic initiatives, and slightly lower actual yields on our investment security portfolio. 
•
Higher levels of projected long-term care premium rate increases due to larger rate filings by some ceding companies than previously planned, which favorably impacted our reserve margin by $263 million. Since our premium deficiency testing performed in 2018, we have implemented approximately $200 million of previously approved rate increase actions. Our 2019 premium deficiency test includes approximately $2,000 million of anticipated future premium increases or benefit reductions associated with future in-force rate actions. This represents an increase of $300 million from our 2018 premium deficiency test to account for actions that are: (a) approved and not yet implemented, (b) filed but not yet approved, and (c) estimated on future filings through 2028, and includes the effect of the lower discount rate mentioned above. 

Certain future adverse changes in our assumptions could result in the unlocking of reserves, resetting of actuarial assumptions to current assumptions, an increase to future policy benefit reserves and a charge to earnings. Any favorable changes to these assumptions could result in additional margin in our2021 premium deficiency test and higher income over the remaining duration of the portfolio, including higherdecline in unrealized gains on investment income. securities.

Claim reserve activity included incurred claims of $1,873$1,699 million, $2,106$1,801 million and $2,020$1,873 million, of which $(36) million, $(46) million, $(1) million
and $135$(36) million related to the recognition of adjustments to prior year claim reserves arising from our periodic reserve evaluation in the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively. Paid claims were $1,626$1,709 million, $1,937$1,728 million and $1,670$1,626 million in the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively. The vast majority of paid claims relate to prior year insured events primarily

Reinsurance recoveries are recorded as a resultreduction of insurance losses and annuity benefits in our Statement of Earnings (Loss) and amounted to $351 million, $350 million and $362 million for the lengthyears ended December 31, 2021, 2020 and 2019, respectively. Reinsurance recoverables, net of time long-term care policyholders remain on claim.

When insurance companies cede insurance riskallowances of $1,654 million and $1,510 million, are included in non-current All other assets in our Statement of Financial Position, and amounted to third parties, such as reinsurers, they are not relieved of their primary obligation to policyholders$2,651 million and cedents. When losses on ceded risks give rise to claims for recovery, we establish allowances for probable losses on such receivables from reinsurers as required.$2,552 million at December 31, 2021 and 2020, respectively. The vast majority of our remaining net reinsurance recoverables are secured by assets held in a trust for which we are the beneficiary.


2021 FORM 10-K Reinsurance recoverables,65

2021 Premium Deficiency Testing. We completed our annual premium deficiency testing in the aggregate across our run-off insurance portfolio in the third quarter of 2021. The results of our testing indicated a significant increase in the positive margin to approximately 11% of the related future policy benefit reserves recorded at September 30, 2021. As a result, the assumptions updated in connection with the premium deficiency recognized in 2019 remain locked-in and will remain so unless another premium deficiency occurs in the future. We also noted our projections as of third quarter 2021 indicate the present value of projected earnings in each future year to be positive, and,therefore, no further adjustments to our future policy benefit reserves were required at this time. Considering the results of the 2021 premium deficiency test which resulted in a margin, any future net of allowances of $1,355 million and $1,090 million, are included in Other GE Capital receivablesadverse changes in our consolidated Statementassumptions may reduce the margin or result in a premium deficiency requiring an increase to future policy benefit reserves. Any future net favorable changes to these assumptions could result in a lower projected present value of Financial Position,future cash flows and amounted to $2,416 million and $2,271 million at December 31, 2019 and December 31, 2018, respectively.   

We recognize reinsurance recoveries as a reduction of Insurance losses and annuity benefitsadditional margin in our consolidated Statementpremium deficiency test and higher income over the remaining duration of Earnings (Loss). Reinsurance recoveries were $362 million, $324 million and $454 million for the years ended December 31, 2019, 2018 and 2017, respectively.portfolio, including higher investment income.

Statutory accounting practices, not GAAP, determine the required statutory capital levels of our insurance legal entities and, therefore, may affect the amount or timing of capital contributions that may be required from GE Capital to itsour insurance legal entities. Statutory accounting practices are set forth by the National Association of Insurance Commissioners (NAIC) as well as state laws, regulation and general administrative rules and differ in certain respects from GAAP. The 2018 and 20192021 premium deficiency resultstesting described above were recordedwas performed on a GAAP basis. The adverse impact on our statutory additional actuarial reserves (AAR) arising from our revised assumptions in 2017, including the collectability of reinsurance recoverables, is expected to require GE Capital to contribute approximately $14,500 million additional capital contributions to itsour run-off insurance operations in 2018-2024.2018—2024. For statutory accounting purposes, the Kansas Insurance Department (KID), approved our request for a permitted accounting practice to recognize the 2017 AAR increase over a seven-year period. GE CapitalWe provided capital contributions to itsour insurance subsidiaries of $2,000 million, $2,000 million, $1,900 million and $3,500 million in the first quarters of 2021, 2020, 2019 and 2018, respectively. GE Capital expectsWe expect to provide further capital contributions of approximately $7,000$5,500 million through 2024 (of which approximately $2,000 million is expected to be contributed in the first quarter of 2022 pending completion of our December 31, 2021 statutory reporting process, which includes asset adequacy testing), subject to ongoing monitoring by KID. GE is a party to capital maintenance agreements with its run-off insurance subsidiaries wherebyunder which GE willis required to maintain their statutory capital levels at 300% of their year-end Authorized Control Level risk-based capital requirements as defined from time to time by the NAIC.

GE2019 FORM 10-K 88

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13.12. POSTRETIREMENT BENEFIT PLANS
PENSION BENEFITS AND RETIREE HEALTH AND LIFE BENEFITS.
We sponsor a number of pension and retiree health and life insurance benefit plans that we present in 3 categories, principal pension plans, other pension plans and principal retiree benefit plans. Smaller pension plans with pension assets or obligations less than $50 million and other retiree benefit plans are not presented. We use a December 31 measurement date for these plans.

DESCRIPTION OF OUR PLANS
Plan CategoryParticipantsFundingComments
Principal Pension PlansGE Pension PlanCovers U.S. participants ~177,000 retirees and beneficiaries, ~88,500 vested former employees and ~24,500 active employeesOur funding policy is to contribute amounts sufficient to meet minimum funding requirements under employee benefit and tax laws. We may decide to contribute additional amounts beyond this level.This plan has been closed to new participants since 2012. Benefits for ~20,000 employees with salaried benefits were frozen effective January 1, 2021, and thereafter these employees receive increased company contributions in the company sponsored defined contribution plan in lieu of participation in a defined benefit plan (announced 10/2019).
GE Supplementary Pension PlanProvides supplementary benefits to higher-level, longer-service U.S. employeesThis plan is unfunded. We pay benefits from company cash.The annuity benefit has been closed to new participants since 2011 and has been replaced by an installment benefit (which was closed to new executives after 2020). Benefits for ~700 employees who became executives before 2011 were frozen effective January 1, 2021, and thereafter these employees accrue the installment benefit.
Other Pension Plans41 U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 millionCovers ~57,500 retirees and beneficiaries, ~48,000 vested former employees and ~17,500 active employeesOur funding policy is to contribute amounts sufficient to meet minimum funding requirements under employee benefit and tax laws in each country. We may decide to contribute additional amounts beyond this level. We pay benefits for some plans from company cash.In certain countries, benefit accruals have ceased and/or have been closed to new hires as of various dates.
Principal Retiree Benefit PlansProvides health and life insurance benefits to certain eligible participantsCovers U.S. participants ~161,000 retirees and dependents and ~22,000 active employeesWe fund retiree health benefits on a pay-as-you-go basis and the retiree life insurance trust at our discretion.Participants share in the cost of the healthcare benefits.

2021 FORM 10-K 66

FUNDING STATUS BY PLAN TYPEBenefit ObligationFair Value of AssetsDeficit/(Surplus)
202120202021202020212020
Principal Pension Plans:
GE Pension Plan (subject to regulatory funding)$65,073 $68,945 $60,990 $58,843 $4,083 $10,102 
GE Supplementary Pension Plan (not subject to regulatory funding)7,226 7,353 — — 7,226 7,353 
    72,299 76,298 60,990 58,843 11,309 17,455 
Other Pension Plans:
Subject to regulatory funding19,698 21,793 22,280 21,283 (2,582)510 
Not subject to regulatory funding2,558 2,865 210 223 2,348 2,642 
Principal retiree benefit plans (not subject to regulatory funding)4,308 5,019 42 134 4,266 4,885 
Total plans subject to regulatory funding84,771 90,738 83,270 80,126 1,501 10,612 
Total plans not subject to regulatory funding14,092 15,237 252 357 13,840 14,880 
Total plans$98,863 $105,975 $83,522 $80,483 $15,341 $25,492 

FUNDING. The Employee Retirement Income Security Act (ERISA) determines minimum pension plans representfunding requirements in the U.S. In December 2020, we made a discretionary contribution of $2,500 million to the GE Pension Plan. No additional contributions were required or made during 2021 and based on our current assumptions, we do not anticipate having to make additional required contributions to the plan in the near future. On an ERISA basis, our estimate is that the GE Pension Plan was 107% and 94% funded at January 1, 2022 and 2021 respectively. The ERISA funded status is higher than the GE Supplementary Pension Plan. The GE Pension PlanGAAP funded status (94% and 85% funded for 2021 and 2020 respectively) primarily because the ERISA prescribed interest rate for determining liabilities is calculated using a definedlong-term average interest rate.

We expect to pay approximately $350 million for benefit plan that covers approximately 245,500 retirees and beneficiaries, approximately 97,000 vested former employees and approximately 31,500 active employees. This plan has been closed to new participants since 2012.

Thepayments under our GE Supplementary Pension Plan is an unfunded plan that provides supplementary benefitsand administrative expenses of our principal pension plans and expect to higher-level, longer-service employees. The GE Supplementary Pension Plan annuity benefit has been closedcontribute approximately $175 million to new participants since 2011 and has been replaced by an installment benefit.

Otherother pension plans in 2019 included 44 U.S.2022. We fund retiree health benefits on a pay-as-you-go basis and non-U.S. pension plans with pension assets or obligations greater than $50 million which cover approximately 57,000 retirees and beneficiaries, approximately 54,000 vested former employees and approximately 22,000 active employees. Principalthe retiree benefit plans provide health and life insurance benefitstrust at our discretion. We expect to certain eligible participants, and these participants sharecontribute approximately $380 million in the cost of the healthcare2022 to fund such benefits. Principal retiree benefit plans cover approximately 176,000 retirees and dependents.

In October 2019, we approved changes to our principalACTIONS. We announced that pension plans. The GE Pension Plan benefits for approximately 20,000 employees with salaried benefits2,700 United Kingdom (UK) participants will be frozen effective January 1, 2021, and thereafter these employees will receive increased company contributions in the company sponsored defined contribution plan in lieu of participation in a defined benefit plan. As a result, we recognized a non-cash pre-tax curtailment loss of $298 million in the fourth quarter of 2019 as non-operating benefit costs. In addition, the GE Supplementary Pension Plan2022. We also announced that pension benefits for approximately 700 employees who became executives before 2011800 Canadian participants will be frozen effective January 1, 2021, and thereafter these employees will accrue the installment benefit currently offered to new executives since 2011. The change in the GE Supplementary Pension Plan reduced the projected benefit obligation by $297 million and has been treatedDecember 31, 2023. These transactions are reflected as a plan amendment that is being amortized over future periods.

As result,curtailment loss in 2021. In December 2020, we remeasured the pension assets andtransferred obligations for the principal pension plans as of October 1, 2019, which resulted in a net actuarial loss of $4,735$1,706 million which was recorded in Accumulated other comprehensive income. The net actuarial loss was primarily due to a reduction in the discount rate since December 31, 2018, offset by our asset performance up to the remeasurement date and the impact of the freeze for the GE Pension Plan.

Finally, we offered approximately 100,000 former U.S. employees with a vested benefit infrom the GE Pension Plan, representing the benefits of approximately 70,000 of GE’s retirees and beneficiaries, to a limited-time optionthird-party insurance company by irrevocably committing to take a lump sum distribution in lieu of future monthly payments. In December 2019, lump sum distributions of $2,657 million were made frompurchase group annuity contracts. The transaction was funded directly by the GE Pension Trust.

At December 31, 2019, we completed our annual year-end measurementassets of the funded status of the principal pension plans which resulted inplan and is reflected as a net actuarial gain of $3,898 million which was recorded in Accumulated Other Comprehensive Income. The net actuarial gain was primarily due to the impact of the lump-sum distributions, an increase in the discount rate since the remeasurement date, asset performance in the fourth quarter and updated mortality assumptions.settlement.

For the year ended December 31, 2019, we recognized a net actuarial loss of $837 million which is a result of a $4,735 million net actuarial loss from remeasurement as of October 1, 2019 and a $3,898 million net actuarial gain from our annual year-end measurement.

GE2019 FORM 10-K 89
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COST OF OUR BENEFITS PLANS AND ASSUMPTIONS
2019 2018 2017
(Dollars in millions)Principal pension
Other pension
Principal retiree benefit
 Principal pension
Other pension
Principal retiree benefit
 Principal pension
Other pension
Principal retiree benefit
     
COST OF OUR BENEFITS PLANSCOST OF OUR BENEFITS PLANS202120202019
AND ASSUMPTIONSAND ASSUMPTIONSPrincipal pensionOther pensionPrincipal retiree benefitPrincipal pensionOther pensionPrincipal retiree benefitPrincipal pensionOther pensionPrincipal retiree benefit
Components of expense (income) ��   Components of expense (income)
Service cost - operating$654
$246
$58
 $888
$323
$63
 $1,055
$542
$94
Service cost - operating$237 $233 $44 $657 $243 $59 $654 $246 $58 
Interest cost2,780
542
202
 2,658
548
196
 2,856
561
224
Interest cost1,951 383 103 2,350 422 150 2,780 542 202 
Expected return on plan assets(3,428)(1,144)(21) (3,248)(1,285)(29) (3,390)(1,176)(36)Expected return on plan assets(3,049)(1,194)— (2,993)(1,082)(11)(3,428)(1,144)(21)
Amortization of net actuarial loss (gain)3,439
319
(118) 3,785
312
(79) 2,812
418
(80)
Amortization of net loss (gain)Amortization of net loss (gain)3,483 403 (79)3,399 434 (82)3,439 319 (118)
Amortization of prior service cost (credit)135
3
(232) 143
(9)(230) 290
(5)(171)Amortization of prior service cost (credit)28 (3)(236)146 1 (234)135 3 (232)
Curtailment / settlement loss (gain)(a)349
13
(38) 34
1
—
 64
24
4
Curtailment / settlement loss (gain)Curtailment / settlement loss (gain)— 76 — — 12 — 349 13 (38)
Non-operating3,275
(267)(207) 3,372
(433)(142) 2,632
(178)(59)Non-operating$2,413 $(335)$(212)$2,902 $(213)$(177)$3,275 $(267)$(207)
Net periodic expense (income)$3,929
$(21)$(149) $4,260
$(110)$(79) $3,687
$364
$35
Net periodic expense (income)$2,650 $(102)$(168)$3,559 $30 $(118)$3,929 $(21)$(149)
Weighted-average assumptions used to determine benefit obligations     
Weighted-average benefit obligations assumptionsWeighted-average benefit obligations assumptions
Discount rate3.36%1.97%3.05% 4.34%2.75%4.12% 3.64%2.41%3.43%Discount rate2.94 %1.93 %2.64 %2.61 %1.44 %2.15 %3.36 %1.97 %3.05 %
Compensation increases2.95
3.16
3.75
 3.60
3.16
3.60
 3.55
3.09
3.55
Compensation increases3.05 2.35 2.63 2.95 3.06 2.82 2.95 3.16 3.75 
Initial healthcare trend rate(b)N/A
N/A
5.90
 N/A
N/A
6.00
 N/A
N/A
6.00
Weighted-average assumptions used to determine benefit cost     
Discount rate(c)4.07
2.75
4.12
 3.64
2.41
3.43
 4.11
2.55
3.75
Initial healthcare trend rate(a)Initial healthcare trend rate(a)N/A5.70 N/A5.90 N/A5.90 
Weighted-average benefit cost assumptionsWeighted-average benefit cost assumptions
Discount rate(b)Discount rate(b)2.61 1.44 2.15 3.36 1.97 3.05 4.07 2.75 4.12 
Expected rate of return on plan assets6.75
6.76
7.00
 6.75
6.75
7.00
 7.50
6.75
7.00
Expected rate of return on plan assets6.25 5.69 1.25 6.25 6.10 7.00 6.75 6.76 7.00 
(a) For 2019, principal pension principally the curtailment loss due to GE Pension Plan freeze announced in October 2019.
(b) For 2019,2021, ultimately declining to 5% for 2030 and thereafter.
(c)(b) Weighted average 2019 discount rate for principal pension was 4.07%. Discount rate was 4.34% for January 1, 2019 through September 30, 2019 and then changed to 3.24% for the remainder of 2019 due to the remeasurement of the plans.

2021 FORM 10-K 67

We expect 2022 net periodic benefit income for principal pension, other pension and principal retiree benefit plans forto be about $40 million, which is a decrease of approximately $2,420 million in costs from 2021. The decrease is primarily due to expiration of the U.S. pension changes announced in October 2019.

period over which some large losses from earlier years were being amortized and lower overall amortization of net actuarial losses as a result of actuarial and investment gains during 2021. The components of net periodic benefit costs, other than the service cost component, are included in Non-operating benefit costs in our consolidated Statement of Earnings (Loss).

PLAN FUNDED STATUS AND AMOUNTS RECORDED IN ACCUMULATED OTHER COMPREHENSIVE LOSS (INCOME)
20212020
Principal pensionOther pensionPrincipal retiree benefitPrincipal pensionOther pensionPrincipal retiree benefit
Change in benefit obligations
Balance at January 1$76,298 $24,658 $5,019 $71,756 $22,921 $5,160 
Service cost237 233 44 657 243 59 
Interest cost1,951 383 103 2,350 422 150 
Participant contributions15 24 60 69 28 63 
Plan amendments— (1)— — 27 (7)
Actuarial loss (gain) - net(2,448)(a)(1,561)(a)(446)7,057 (a)1,927 (a)85 
Benefits paid(3,754)(998)(472)(3,885)(1,062)(491)  
Curtailments— (74)— — (69)— 
Settlements— — — (1,706)(b)— — 
Dispositions/ acquisitions / other - net— (188)— — (335)—   
Exchange rate adjustments— (220)— — 556 —   
Balance at December 31$72,299 (c)$22,256 $4,308 (d)$76,298 (c)$24,658 $5,019 (d)
Change in plan assets
Balance at January 158,843 21,506 134 52,633 19,142 289 
Actual gain (loss) on plan assets5,559 1,602 41 8,926 2,542 (22)
Employer contributions327 594 279 2,806 509 295 
Participant contributions15 24 60 69 28 63 
Benefits paid(3,754)(998)(472)(3,885)(1,062)(491)
Settlements— — — (1,706)(b)— — 
Dispositions/ acquisitions / other - net— (138)— — (59)— 
Exchange rate adjustments— (100)— — 406 — 
Balance at December 31$60,990 $22,490 $42 $58,843 $21,506 $134 
Funded status - surplus (deficit)$(11,309)$234 $(4,266)$(17,455)$(3,152)$(4,885)
Amounts recorded in
Statement of Financial Position
Non-current assets - other— 2,898— — 845 — 
Current liabilities - other(337)(107)(362)(315)(106)(330)
Non-current liabilities - compensation and benefits(10,972)(2,557)(3,904)(17,140)(3,891)(4,555)
Net amount recorded$(11,309)$234 $(4,266)$(17,455)$(3,152)$(4,885)
Amounts recorded in Accumulated other comprehensive loss (income)
Prior service cost (credit)(109)(52)(1,912)(80)19 (2,148)
Net loss (gain)(2,754)2,012(1,042)5,687 4,582 (633)
Total recorded in Accumulated other comprehensive loss (income)$(2,863)$1,960 $(2,954)$5,607 $4,601 $(2,781)

(a)Principally associated with discount rate changes.

(b)Irrevocable commitment to purchase group annuity contracts from a third-party insurance company in December 2020.

(c)The benefit obligation for the GE Supplementary Pension Plan, which is an unfunded plan, was $7,226 million and $7,353 million at year-end 2021 and 2020, respectively.

(d)The benefit obligation for retiree health plans was $2,548 million and $3,094 million at December 31, 2021 and 2020, respectively.


GE2019 FORM 10-K 90
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PLAN FUNDED STATUS AND AMOUNTS RECORDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 2019 2018 
(in millions)Principal pension
 Other pension
 Principal retiree benefit
 Principal pension
 Other pension
 Principal retiree benefit
 
Change in benefit obligations            
Balance at January 1$68,500
 $21,091
 $5,153
 $74,985
 $23,066
 $6,006
 
Service cost654
 246
 58
 888
 323
 63
 
Interest cost2,780
 542
 202
 2,658
 548
 196
 
Participant contributions77
 29
 61
 90
 37
 60
 
Plan amendments(42)(a)(17) (23) —
 82
 —
 
Actuarial loss (gain)7,073
(b)2,422
(e)275
(e)(6,263)(e)(879)(e)(593)(f)
Benefits paid(3,788) (1,043) (533) (3,729) (1,002) (569)  
Curtailments(838) (32) (33) —
 (11) —
 
Settlements(2,657)(c)—
 —
 —
 —
 —
 
Acquisitions (dispositions) / other - net(3) (1,030) —
 (129) (90) (10)  
Exchange rate adjustments—
 713
 —
 —
 (983) —
  
Balance at December 31$71,756
(d)$22,921
 $5,160
(g)$68,500
(d)$21,091
 $5,153
(g)
Change in plan assets            
Balance at January 150,009
 17,537
 362
 50,361
 19,306
 518
 
Actual gain (loss) on plan assets8,694
 2,229
 57
 (2,996) (245) (17) 
Employer contributions298
 716
 342
 6,283
 475
 370
 
Participant contributions77
 29
 61
 90
 37
 60
 
Benefits paid(3,788) (1,043) (533) (3,729) (1,002) (569) 
Settlements(2,657)(c)—
 —
 —
 —
 —
 
Acquisitions (dispositions) / other - net—
 (1,030) —
 —
 (185) —
 
Exchange rate adjustments—
 704
 —
 —
 (849) —
 
Balance at December 31$52,633
 $19,142
 $289
 $50,009
 $17,537
 $362
 
Funded status - deficit(h)$19,123
 $3,779
 $4,871
 $18,491
 $3,554
 $4,791
 
Amounts recorded in the consolidated Statement of Financial Position            
Non-current assets - other—
 475
 —
 —
 746
 —
 
Current liabilities - other(296) (123) (355) (280) (117) (378) 
Non-current liabilities - compensation and benefits(18,827) (4,131) (4,516) (18,211) (4,183) (4,413) 
Net amount recorded$(19,123) $(3,779) $(4,871) $(18,491) $(3,554) $(4,791) 
Amounts recorded in Accumulated other comprehensive income (loss)            
Prior service cost (credit)67
 (16) (2,376) 596
 7
 (2,584) 
Actuarial loss (gain)7,961
 4,665
 (833) 10,430
 3,740
 (1,196) 
Total recorded in Accumulated other comprehensive income (loss)$8,028
 $4,649
 $(3,209) $11,026
 $3,747
 $(3,780) 
(a)GE Supplementary Pension Plan amendment for the U.S. pension changes announced in October 2019 offset by other plan amendments adopted in 2019.
(b)Principally associated with discount rate changes offset by impact of the one-time lump sum payments.
(c)Payments made to former employees from the GE Pension Trust for the one-time lump sum payments.
(d)The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was $6,691 million and $6,110 million at year-end 2019 and 2018, respectively.
(e)Principally associated with discount rate changes.
(f)Principally due to discount rate changes and favorable cost trends.
(g)The benefit obligation for retiree health plans was $3,306 million and $3,425 million at December 31, 2019 and 2018, respectively.
(h)Total unfunded status for principal pension plan, other pension plans and principal retiree benefit plans was $27,773 million and $26,836 million at December 31, 2019 and 2018, respectively. Of these amounts, $14,340 million and $13,292 million at December 31, 2019 and 2018, respectively, related to plans that are not subject to regulatory funding requirements and the benefits for these plans are funded as they become due.


GE2019 FORM 10-K 91
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASSUMPTIONS USED IN CALCULATIONS. Our defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including a discount rate, a compensation assumption, an expected return on assets, mortality rates of participants and expectation of mortality improvement.

Projected benefit obligations are measured as the present value of expected benefit payments. We discount those cash payments using a discount rate. We determine the discount rate using the weighted-average yields on high-quality fixed-income securities with maturities that have maturities consistent withcorrespond to the timingpayment of benefit payments.benefits. Lower discount rates increase the size of the benefit obligationpresent values and generally increase subsequent-year pension expense in the following year;expense; higher discount rates reduce the size of the benefit obligationdecrease present values and generally reduce subsequent-year pension expense.
2021 FORM 10-K 68

The compensation assumption is used to estimate the annual rate at which pay of plan participants will grow. If the rate of growth assumed increases, the size of the pension obligations will increase, as will the amount recorded in Accumulated other comprehensive income (loss)AOCI in our consolidated Statement of Financial Position and amortized into earnings in subsequent periods.

The expected return on plan assets is the estimated long-term rate of return that will be earned on the investments used to fund the pensionbenefit obligations. To determine thisthe expected long-term rate of return on pension plan assets, we consider our asset allocation, as well as historical and expected returns on various categories of plan assets. In developing future long-term return expectations for our principal benefit plans’ assets, we formulate views on the compositionfuture economic environment, both in the U.S. and abroad. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given our plan investments, our historical returns earned, and our expectations about the future.asset allocation. Based on our analysis, we have assumed a 6.75%6.25% long-term expected return on the GE Pension Plan assets for cost recognition in 20192021 and 2018. This is2020, as compared to 6.75% in 2019. For 2022 cost recognition, we have assumed a reduction from6.00% long-term expected return for the 7.50% we assumedGE Pension Plan assets.

The Society of Actuaries issued new mortality improvement tables in 2017.2021 and 2020. We updated mortality assumptions in the U.S. accordingly. These changes in assumptions increased the December 31, 2021 U.S. pension and retiree benefit plans' obligations by $278 million and decreased the December 31, 2020 obligations by $180 million.

The healthcare trend assumptions primarily apply to our pre-65 retiree medical plans. OurMost participants in our post-65 retiree plan hashave a fixed subsidy and therefore isare not subject to healthcare inflation.

We evaluate these critical assumptions annually.at least annually on a plan and country-specific basis. We periodically evaluate other assumptions periodically,involving demographics factors such as retirement age mortality and turnover, and update them as necessary to reflect our actual experience and expectations for the future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. Differences between our actual results and what we assumed are recorded in Accumulated other comprehensive income each period. These differences are amortized into earnings over the remaining average future service of active participating employees or the expected life of inactive participants, as applicable. For the principal pension plans, gains and losses are amortized using a straight-line method with a separate layer for each year’s gains and losses. For most other pension plans and principal retiree benefit plans, gains and losses are amortized using a straight-line or a corridor amortization method.

SENSITIVITIES TO KEY ASSUMPTIONS. Fluctuations in discount rates can significantly impact pension cost and obligations. A 25 basis point decrease in discount rate would increase principal pension plan cost in the following year by about $205 million and would increase the principal pension plan projected benefit obligation at year-end by about $2,300 million. The deficit sensitivity to the discount rate is lower than the projected benefit obligation sensitivity as a result of the liability hedging program incorporated in the plan's asset allocation. A 50 basis point decrease in the expected return on assets would increase principal pension plan cost in the following year by about $260 million.

THE COMPOSITION OF OUR PLAN ASSETS. The fair value of our pension plans' investments is presented below. The inputs and valuation techniques used to measure the fair value of these assets are described in Note 1 and have been applied consistently.
20212020
Principal pensionOther pensionPrincipal pensionOther pension
Global equities$7,778 $3,589 $5,552 $3,674 
Debt securities
Fixed income and cash investment funds7,665 10,527 6,831 10,003 
U.S. corporate(a)10,324 468 8,512 410 
Other debt securities(b)7,331 492 5,505 440 
Real estate2,510 89 2,274 81 
Private equities and other investments1,515 943 490 499 
Total37,123 16,108 29,164 15,107 
Plan assets measured at net asset value
Global equities9,517 1,172 16,259 1,415 
Debt securities5,269 1,287 5,445 1,268 
Real estate1,408 2,126 1,324 1,978 
Private equities and other investments7,673 1,797 6,651 1,738 
Total plan assets at fair value$60,990 $22,490 $58,843 $21,506 
(a)Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
(b)Primarily represented investments in residential and commercial mortgage-backed securities, non-U.S. corporate and government bonds and U.S. government, federal agency, state and municipal debt.



2021 FORM 10-K 69

 2019 2018
(In millions)Principal pension
 Other pension
 Principal pension
 Other pension
        
Global equity$6,826
 $3,484
 $6,015
 $4,323
Debt securities       
Fixed income and cash investment funds4,398
 8,089
 2,069
 6,320
U.S. corporate(a)8,025
 365
 8,734
 397
Other debt securities(b)6,076
 424
 5,264
 472
Real estate2,309
 140
 2,218
 175
Private equities and other investments23
 452
 557
 369
Total27,657
 12,954
 24,857
 12,056
Plan assets measured at net asset value       
Global equity14,616
 1,450
 12,558
 1,228
Debt securities3,744
 914
 6,400
 883
Real estate1,167
 1,930
 1,261
 1,704
Private equities and other investments5,449
 1,894
 4,933
 1,666
Total plan assets at fair value$52,633
 $19,142
 $50,009
 $17,537
(a)Primarily represented investment-grade bonds of U.S. issuers from diverse industries.
(b)Primarily represented investments in residential and commercial mortgage-backed securities, non-U.S. corporate and government bonds and U.S. government, federal agency, state and municipal debt.

Plan assets that were measured at fair value using NAV as practical expedient were excluded from the fair value hierarchy. GE Pension Plan investments with a fair value of $2,838$3,872 million and $2,990$2,721 million in 2019at December 31, 2021 and 2018,2020, respectively, were classified within Level 3 and primarily relate to private equities and real estate. The remaining investments were substantially all considered Level 1 and 2. Investments with a fair value of $12,377 million and $9,922 million at December 31, 2021 and 2020, respectively, were classified within Level 1 and primarily relate to global equities and cash. Investments with a fair value of $20,942 million and $16,514 million at December 31, 2021 and 2020, respectively were classified within Level 2 and relate to primarily debt securities. Other pension plans investments with a fair value of $105$138 million and $116$97 million in 2019at December 31, 2021 and 2018,2020, respectively, were classified within Level 3.3 and primarily relate to private equities and real estate. The remaining investments were substantially all considered Level 1 and 2. Investments with a fair value of $1,312 million and $1,721 million at December 31, 2021 and 2020, respectively, were classified within Level 1 and primarily relate to global equities and cash. Investments with a fair value of $13,802 million and $12,869 million at December 31, 2021 and 2020, respectively, were classified within Level 2 and primarily relate to debt securities. Principal retiree benefit plan investments with a fair value of $289$42 million and $362$134 million at December 31, 20192021 and 2018,2020, respectively, comprised global equity and debt securities which are considered Level 1 and 2. There were no Level 3 principal retiree benefit plan investments held in 20192021 and 2018. Plan assets that were measured at fair value using NAV as practical expedient were excluded from the fair value hierarchy.2020.
ASSET ALLOCATION OF PENSION PLANS2021 Target allocation2021 Actual allocation
Principal PensionOther Pension (weighted average)Principal PensionOther Pension (weighted average)
Global equities20.0 - 38.0%21 %28 %22 %
Debt securities (including cash equivalents)29.0 - 75.558 51 57 
Real estate0.5 - 10.59 6 10 
Private equities & other investments4.5 - 26.512 15 11 
ASSET ALLOCATION OF PENSION PLANS2019 Target allocation 2019 Actual allocation
 Principal Pension  Other Pension (weighted average)  Principal Pension  Other Pension (weighted average) 
            
Global equity30.0 - 47.0% 23% 41% 27%
Debt securities (including cash equivalents)21.0 - 65.0  55  42  51 
Real estate3.5 - 13.5  9  7  11 
Private equities & other investments6.0 - 16.0  13  10  11 



GE2019 FORM 10-K 92
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Plan fiduciaries of the GE Pension Plan set investment policies and strategies for the GE Pension Trust and oversee its investment allocation, which includes selecting investment managers and setting long-term strategic targets. The plan fiduciaries' primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the plan's near-term benefit payment and other cash needs. The plan has incorporated de-risking objectives and liability hedging programs as part of its long-term investment strategy. The plan utilizes a combination of long-dated corporate bonds, treasuries, strips and derivatives to implement its investment strategies as well as for hedging asset and liability risks. Target allocation percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

GE securitiessecurities represented 0.6% and 0.5% of the GE Pension Trust assets at December 31, 20192021 and 2018, respectively.2020. The GE Pension Plan has a broadly diversified portfolio of investments in equities, fixed income, private equities and real estate; these investments are both U.S. and non-U.S. in nature. The plan utilizes derivatives to implement investment strategies as well as for hedging asset and liability risks. As of December 31, 2019, no sector concentration of assets exceeded 15% of total GE Pension Plan assets.

OUR FUNDING POLICY. Our policy for funding the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements under employee benefit and tax laws. We may decide to contribute additional amounts beyond this level. We made contributions of $6,000 million to the GE Pension Plan in 2018. Our 2018 contributions satisfied our minimum ERISA funding requirement of $1,500 million and the remaining $4,500 million was a voluntary contribution to the plan. This voluntary contribution was sufficient to satisfy our minimum ERISA funding requirement for 2019 and 2020. In October 2019, we announced our intent to contribute approximately $4,000 million to $5,000 million to the GE Pension Plan in 2020. We expect this amount to equal our estimated future minimum ERISA funding requirements at least through 2022.

We expect to pay approximately $305 million for benefit payments under our GE Supplementary Pension Plan and administrative expenses of our principal pension plans and expect to contribute approximately $500 million to other pension plans in 2020. We fund retiree health benefits on a pay-as-you-go basis and the retiree life insurance trust at our discretion. We expect to contribute approximately $360 million in 2020 to fund such benefits.

EXPECTED FUTURE BENEFIT PAYMENTS OF OUR BENEFIT PLANS
(In millions)
Principal pension
 Other pension
 Principal retiree benefit
      
2020$3,795
 $1,030
 $495
20213,875
 1,005
 475
20223,930
 1,015
 455
20233,965
 1,035
 435
20243,980
 1,050
 415
2025 - 202919,965
 5,550
 1,775

ANNUALIZED RETURNS1 year5 years10 years25 years
GE Pension Plan9.7 %10.3 %9.0 %7.6 %
EXPECTED FUTURE BENEFIT PAYMENTS OF OUR BENEFIT PLANSPrincipal pensionOther pensionPrincipal retiree benefit
2022$3,800 $950 $410 
20233,835 930 390 
20243,860 930 365 
20253,880 960 350 
20263,895 970 335 
2027-203119,445 5,070 1,440 

DEFINED CONTRIBUTION PLAN. We have a defined contribution plan for eligible U.S. employees that provides discretionary contributions. Defined contribution costsemployer contributions which were $355$418 million, $410$318 million and $460$355 million for the years ended December 31, 2019, 2018,2021, 2020, and 2017,2019, respectively.
COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME 
For the years ended December 312019 2018 2017
(In millions, pre-tax)Principal pension
Other pension
Principal retiree benefit
 Principal pension
Other pension
Principal retiree benefit
 Principal pension
Other pension
Principal retiree benefit
            
Cost (income) of postretirement benefit plans$3,929
$(21)$(149) $4,260
$(110)$(79) $3,687
$364
$35
Changes in other comprehensive income           
Prior service cost (credit) - current year(42)(17)(23) —
82
—
 —
—
(8)
Actuarial loss (gain) - current year971
1,252
240
 (111)464
(543) 474
(639)(128)
Reclassifications out of AOCI           
Curtailment / settlement gain (loss)(353)(12)4
 (45)(2)—
 (64)(20)(4)
Amortization of net actuarial gain (loss)(3,439)(319)118
 (3,785)(312)79
 (2,812)(418)80
Amortization of prior service credit (cost)(135)(3)232
 (143)9
230
 (290)5
171
Total changes in other comprehensive income(2,998)901
571
 (4,084)241
(234) (2,692)(1,072)111
Cost of postretirement benefit plans and changes in other comprehensive income$931
$880
$422
 $176
$131
$(313) $995
$(708)$146



GE20192021 FORM 10-K 9370
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN OTHER COMPREHENSIVE INCOME
For the years ended December 31202120202019
(Pre-tax)Principal pensionOther pensionPrincipal retiree benefitPrincipal pensionOther pensionPrincipal retiree benefitPrincipal pensionOther pensionPrincipal retiree benefit
Cost (income) of postretirement benefit plans$2,650 $(102)$(168)$3,559 $30 $(118)$3,929 $(21)$(149)
Changes in other comprehensive loss (income)
Prior service cost (credit) - current year— (1)— — 27 (7)(42)(17)(23)
Net loss (gain) - current year(4,959)(2,104)(488)1,124 529 119 971 1,592 240 
Reclassifications out of AOCI
Curtailment / settlement gain (loss)— (68)— — (3)— (353)(12)4 
Dispositions— (68)— — (166)— — (340)— 
Amortization of net gain (loss)(3,483)(403)79 (3,399)(434)82 (3,439)(319)118 
Amortization of prior service credit (cost)(28)3 236 (146)(1)234 (135)(3)232 
Total changes in other comprehensive loss (income)(8,470)(2,641)(173)(2,421)(48)428 (2,998)901 571 
Cost (income) of postretirement benefit plans and changes in other comprehensive loss (income)$(5,820)$(2,743)$(341)$1,138 $(18)$310 $931 $880 $422 

NOTE 14.13. CURRENT AND ALL OTHER LIABILITIES
December 3120212020
Sales allowances, equipment projects and other commercial liabilities$5,638 $5,123 
Product warranties (Note 22)1,091 1,197 
Employee compensation and benefit liabilities4,677 4,838 
Interest payable276 793 
Taxes payable500 463 
Environmental, health and safety liabilities (Note 22)386 359 
Derivative instruments (Note 20)212 369 
Other1,196 1,931 
All other current liabilities$13,977 $15,071 
Sales allowances, equipment projects and other commercial liabilities$2,451 $2,543 
Product warranties (Note 22)800 857 
Operating lease liabilities (Note 6)2,848 3,195 
Uncertain and other income taxes and related liabilities3,041 3,385 
Alstom legacy legal matters (Note 22)567 858 
Environmental, health and safety liabilities (Note 22)2,274 2,210 
Redeemable noncontrolling interests (Note 15)148 487 
Interest payable179 382 
Other934 863 
All other non-current liabilities$13,240 $14,781 
Total All other liabilities$27,217 $29,852 
December 31 (In millions)
2019
2018



Sales allowances, equipment projects and other commercial liabilities$5,203
$5,255
Product warranties (Note 23)1,371
1,346
Employee compensation and benefit liabilities5,114
5,138
Taxes payable1,349
503
Environmental, health and safety liabilities (Note 23)330
204
Due to GE Capital1,080
1,578
Other2,385
2,422
Other GE current liabilities16,833
16,444
Eliminations(1,080)(1,578)
Consolidated other GE current liabilities$15,753
$14,866



Sales allowances, equipment projects and other commercial liabilities4,422
5,136
Product warranties (Note 23)793
846
Uncertain tax positions and related liabilities2,585
3,404
Alstom legacy legal matters (Note 23)875
889
Environmental, health and safety liabilities (Note 23)2,154
1,968
Redeemable noncontrolling interests (Note 16)439
378
Derivative instruments (Note 21)171
328
Other1,349
1,931
GE all other liabilities$12,787
$14,881



Aircraft maintenance reserve, sales deposits and other commercial liabilities2,900
2,585
Interest payable1,189
1,458
Uncertain tax positions and other taxes payable394
1,646
Derivative instruments (Note 21)31
258
Other525
1,615
GE Capital other liabilities$5,040
$7,562
Eliminations(1,244)(1,605)
Consolidated all other liabilities$16,583
$20,839
Total$32,336
$35,705


NOTE 15.14. INCOME TAXES.
GE and GE Capital filefiles a consolidated U.S. federal income tax return. Thisreturn which enables GE and GE CapitalGE's businesses to use tax deductions and credits of one member of the group to reduce the tax that otherwise would have been payable by another member of the group. The effective tax rate reflects the benefit of these tax reductions in the consolidated return. GE makes cashCash payments are made to GE CapitalGE's businesses for tax reductions and GE Capital paysfrom GE's businesses for tax increases at the time GE’s tax payments are due..

Our businesses are subject to regulation under a wide variety of U.S. federal, state and foreign tax laws, regulations and policies. Changes to these laws or regulations may affect our tax liability, return on investments and business operations.
(BENEFIT) PROVISION FOR INCOME TAXES (In millions)
2019
2018
2017
    
Current tax expense (benefit)$2,551
$1,743
$2,405
Deferred tax expense (benefit) from temporary differences(1,242)(1,276)1,088
Total GE1,309
467
3,493
Current tax expense (benefit)(720)596
(1,008)
Deferred tax expense (benefit) from temporary differences138
(970)(5,294)
Total GE Capital(582)(374)(6,302)
Current tax expense (benefit)1,831
2,339
1,397
Deferred tax expense (benefit) from temporary differences(1,104)(2,245)(4,205)
Total consolidated$726
$93
$(2,808)
CONSOLIDATED EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (In millions)
2019
2018
2017
    
U.S. earnings$506
$(9,861)$(17,918)
Non-U.S. earnings643
(11,126)6,573
Total$1,149
$(20,987)$(11,345)


EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES202120202019
U.S. earnings (loss)$(2,959)$(4,823)$1,032 
Non-U.S. earnings (loss)(724)10,793 (1,086)
Total$(3,683)$5,970 $(54)
GE2019 FORM 10-K 94


CONSOLIDATED (BENEFIT) PROVISION FOR INCOME TAXES (In millions)
2019
2018
2017
    
U.S. Federal   
Current$146
$1,019
$(734)
Deferred(1,266)(3,144)(3,625)
Non - U.S.   
Current2,008
1,132
1,820
Deferred106
1,197
(429)
Other(267)(111)160
Total$726
$93
$(2,808)

2021 FORM 10-K 71

INCOME TAXES PAID (RECOVERED) (In millions)
2019
2018
2017
    
GE$2,183
$1,803
$2,700
GE Capital45
65
(264)
Total(a)$2,228
$1,868
$2,436
PROVISION (BENEFIT) FOR INCOME TAXES202120202019
Current
U.S. Federal$(1,347)$865 $(22)
Non - U.S.1,154 1,276 1,832 
U.S. State(85)152 (373)
Deferred
U.S. Federal(567)(1,898)(1,047)
Non - U.S.608 (810)59 
U.S. State(50)(72)103 
Total$(286)$(487)$552 
(a) Includes tax
Income taxes paid were $1,330 million, $1,291 million and $2,228 million for the years ended December 31, 2021, 2020 and 2019, respectively, including payments reported in discontinued operations.

RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATEConsolidated GE GE CapitalRECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE202120202019
2019
2018
2017
 2019
2018
2017
 2019
2018
2017
AmountRateAmountRateAmountRate
     
U.S. federal statutory income tax rate21.0 %21.0 %35.0 % 21.0 %21.0 %35.0 % 21.0%21.0 %35.0 %U.S. federal statutory income tax rate$(773)21.0 %$1,254 21.0 %$(11)21.0 %
Increase (reduction) in rate resulting from
inclusion of after-tax earnings of GE Capital in before-tax earnings of GE
—
—
—
 8.8
(0.5)(43.2) —
—
—
Tax on global activities including exports91.0
(5.0)30.3
 86.5
(5.0)34.6
 8.1
3.2
12.2
Tax on global activities including exports155 (4.2)(47)(0.8)505 (935.2)
U.S. business credits(a)(22.5)2.6
4.3
 (9.1)0.4
1.5
 21.9
120.0
3.2
U.S. business credits(a)(189)5.1 (169)(2.8)(259)479.6 
Debt tender and related valuation allowancesDebt tender and related valuation allowances940 (25.5)— — — — 
Deductible stock and restructuring lossesDeductible stock and restructuring losses(583)15.8 (203)(3.4)(144)266.7 
Sale of Biopharma businessSale of Biopharma business(5)0.1 (1,447)(24.2)633 (1,172.2)
Goodwill impairments26.0
(21.5)(7.8) 23.5
(21.4)(7.3) —
—
(3.8)Goodwill impairments— — 184 3.1 299 (553.7)
Tax Cuts and Jobs Act enactment0.2
(0.2)(39.8) 7.9
0.5
(89.6) 15.2
(36.5)3.1
All other – net(b)(c)(d)(52.5)2.7
2.8
 (35.6)2.8
5.2
 23.1
(8.0)0.2
All other – net(b)(c)All other – net(b)(c)169 (4.5)(59)(1.1)(471)871.6 
42.2
(21.4)(10.2) 82.0
(23.2)(98.8) 68.3
78.7
14.9
487 (13.2)(1,741)(29.2)563 (1,043.2)
Actual income tax rate63.2 %(0.4)%24.8 % 103.0 %(2.2)%(63.8)% 89.3%99.7 %49.9 %Actual income tax rate$(286)7.8 %$(487)(8.2)%$552 (1,022.2)%
(a)
(a)U.S. general business credits, primarily the credit for energy produced from renewable sources and the credit for research performed in the U.S.
(b)Included, for each period, the expense or benefit for Other taxes reported above in the consolidated (benefit) provision for income taxes, net of 21.0% federal effect for the years ended December 31, 2019 and 2018 and 35.0% federal effect for the year ended December 31, 2017.
(c)For the year ended December 31, 2019, included (12.5)% and (11.3)% in consolidated and GE, respectively, related to the disposition of the Digital ServiceMax business. For the year ended December 31, 2018, included 2.8% and 2.8% in consolidated and GE, respectively, related to deductible stock losses. Included in 2017 is 5.6% and 11.7% in consolidated and GE, respectively, related to the disposition of the Water business. Also included in 2017 is (3.1)% and (6.4)% in consolidated and GE, respectively, related to losses on planned dispositions.
(d)For the year ended December 31, 2019, included (32.9)%, (27.9)% and 3.5% in consolidated, GE and GE Capital, respectively for the resolution of the IRS audit of our consolidated U.S. income tax returns for 2012-2013.

U.S. TAX REFORM.On December 22, 2017, the U.S. enacted legislation commonly known as the Tax Cuts and Jobs Act (U.S. tax reform) that lowered the statutory tax rate on U.S. earnings to 21%, taxes historic foreign earnings at a reduced rate of tax, establishes a territorial tax system and enacts new taxes associated with global operations.

The impact of enactment of U.S. tax reform was recorded in 2017 on a provisional basis as the legislation provided for additional guidance to be issued by the U.S. Department of the Treasury on several provisions including the computation of the transition tax. This amount was adjusted in both 2018 and 2019 based on guidance issued during each of these years. Additional guidance may be issued after 2019 and any resulting effects will be recorded in the quarter of issuance. Additionally, as part of U.S. tax reform, the U.S. has enacted a minimum tax on foreign earnings (global intangible low tax income). We have not made an accrual for the deferred tax aspects of this provision.


GE(b)2019 FORM 10-K 95

With the enactment of U.S. tax reform, we recorded, for the year ended December 31, 2017, tax expense of $4,512 million to reflect our provisional estimate of both the transition tax on historic foreign earnings ($1,155 million including $2,925 million at GE and $(1,770) million at GE Capital) and the revaluation of deferred taxes ($3,357 million including $1,980 million at GE and $1,377 million at GE Capital). For the year ended December 31, 2018, we finalized our provisional estimate2020, included $(140) million for the resolution of the enactmentIRS audit of our consolidated U.S. income tax reform and recorded an additional tax expense of $41 million.returns for 2014-2015. For the year ended December 31, 2019, we recorded an additional tax expense of $2included $(378) million based onfor the issuance in January 2019 of final regulations on the transition tax on historic foreign earnings. The cash impactresolution of the transitionIRS audit of our consolidated U.S. income tax on historic foreign earnings was largely offset by accelerated usereturns for 2012-2013.
(c)Included for each period, the expense or benefit for U.S. state taxes reported above in the consolidated (benefit) provision for income taxes, net of deductions and tax credits and was substantially incurred with the filing of the 2017 tax return with no amount subject to the deferred payment provision provided under law.21.0% federal effect.

UNRECOGNIZED TAX POSITIONS. Annually, we file over 4,1003,000 income tax returns in almost 300over 270 global taxing jurisdictions. We are under examination or engaged in tax litigation in many of these jurisdictions. The Internal Revenue Service (IRS)IRS is currently auditing our consolidated U.S. income tax returns for 2016-2018. In December 2020, the IRS completed the audit of our consolidated U.S. income tax returns for 2014-2015. The Company recognized a continuing operations benefit of $140 million plus an additional net interest benefit of $96 million. In addition, the Company recorded a benefit in discontinued operations of $130 million of tax benefits and $25 million of net interest benefits. In June 2019, the IRS completed the audit of our consolidated U.S. income tax returns for 2012-2013, which resulted in a decrease in our balance of unrecognized tax benefits (i.e., the aggregate tax effect of differences between tax return positions and the benefits recognized in our financial statements).2012-2013. The Company recognized a resulting non-cash continuing operations tax benefit of $378 million plus an additional net interest benefit of $107 million. Of these amounts, GE recorded $355 million of tax benefits and $98 million of net interest benefits and GE Capital recorded $23 million of tax benefits and $9 million of net interest benefits. GE CapitalThe Company recorded an additional non-cash benefit in discontinued operations of $332 million of tax benefits and $46 million of net interest benefits. See Note 2 for further information. As previously disclosed,

In September 2021, GE resolved its dispute with the United Kingdom tax authorities disallowedauthority, HM Revenue & Customs (HMRC) in connection with interest deductions claimed by GE Capital for the years 2007-2015 that could result in2004-2015. As previously disclosed, HMRC had proposed to disallow interest deductions with a potential impact of approximately $1 billion,$1,100 million, which includesincluded a possible assessment of tax and reduction of deferred tax assets, not including interest and penalties. We are contesting the disallowance. We comply with all applicable tax laws and judicial doctrinesAs part of the United Kingdomsettlement, GE and believeHMRC agreed that a portion of the entire benefit is more likely than notinterest deductions claimed were disallowed, with no fault or blame attributed to be sustained oneither party. The resolution concluded the dispute in its technical merits. We believe that there areentirety without interest or penalties. The adjustments result in no other jurisdictions incurrent tax payment to HMRC, but a deferred tax charge of $112 million as part of discontinued operations as a result of a reduction of available tax attributes, which the outcome of unresolved issues or claims is likely to be material to our results of operations, financial position or cash flows. We further believe that we have made adequate provision for all incomehad previously been recorded as deferred tax uncertainties.assets.


2021 FORM 10-K 72

The balance of unrecognized tax benefits, the amount of related interest and penalties we have provided and what we believe to be the range of reasonably possible changes in the next 12 months were:

UNRECOGNIZED TAX BENEFITS December 31 (Dollars in millions)
2019
2018
 
UNRECOGNIZED TAX BENEFITS December 31
UNRECOGNIZED TAX BENEFITS December 31
202120202019
Unrecognized tax benefits$4,169
$5,563
Unrecognized tax benefits$4,224 $4,191 $4,169 
Portion that, if recognized, would reduce tax expense and effective tax rate(a)2,701
4,265
Portion that, if recognized, would reduce tax expense and effective tax rate(a)3,351 2,986 2,701 
Accrued interest on unrecognized tax benefits722
934
Accrued interest on unrecognized tax benefits597 628 722 
Accrued penalties on unrecognized tax benefits195
182
Accrued penalties on unrecognized tax benefits146 179 195 
Reasonably possible reduction to the balance of unrecognized tax benefits
in succeeding 12 months
0-700
0-1,300
Reasonably possible reduction to the balance of unrecognized tax benefits
in succeeding 12 months
0-2500-3500-700
Portion that, if recognized, would reduce tax expense and effective tax rate(a)0-650
0-1,200
Portion that, if recognized, would reduce tax expense and effective tax rate(a)0-2000-2500-650
(a) Some portion of such reduction may be reported as discontinued operations.

UNRECOGNIZED TAX BENEFITS RECONCILIATION (In millions)
2019
2018
 
UNRECOGNIZED TAX BENEFITS RECONCILIATIONUNRECOGNIZED TAX BENEFITS RECONCILIATION202120202019
Balance at January 1$5,563
$5,449
Balance at January 1$4,191 $4,169 $5,563 
Additions for tax positions of the current year403
300
Additions for tax positions of the current year396 836 403 
Additions for tax positions of prior years500
945
Additions for tax positions of prior years327 326 500 
Reductions for tax positions of prior years(a)(1,927)(905)Reductions for tax positions of prior years(a)(585)(863)(1,927)
Settlements with tax authorities(155)(64)Settlements with tax authorities(33)(127)(155)
Expiration of the statute of limitations(214)(162)Expiration of the statute of limitations(71)(151)(214)
Balance at December 31$4,169
$5,563
Balance at December 31$4,224 $4,191 $4,169 
(a)For 2019, reductions included $710 million related to the completion of the 2012-2013 IRS audit and $442 million related to the deconsolidation of Baker Hughes.
(a)For 2019, reductions included $710 million related to the completion of the 2012-2013 IRS audit and $442 million related to the deconsolidation of Baker Hughes.

We classify interest on tax deficiencies as interest expense; we classify income tax penalties as provision for income taxes. For the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, $(93)$17 million, $127$(30) million and $143$(93) million of interest expense (income), respectively, and $20$(29) million, $(7)$(13) million and $7$20 million of tax expense (income) related to penalties, respectively, were recognized in our consolidated Statement of Earnings (Loss).

DEFERRED INCOME TAXES.As part of the Tax Cuts and Jobs Act of 2017 (U.S. tax reform), the U.S. has enacted a minimum tax on foreign earnings (global intangible low tax income). We have not made an accrual for the deferred tax aspects of this provision. We also have not provided deferred taxes on cumulative net earnings of non-U.S. affiliates and associated companies of approximately $40$12 billion that have been reinvested indefinitely. Given U.S. tax reform, substantially all of our prior unrepatriated net earnings were subject to U.S. tax and accordingly we expect to have the ability to repatriate available non-U.S. cash without additional federal tax cost, and any foreign withholding tax on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit. However, because most of these earnings have been reinvested in active non-U.S. business operations, as of December 31, 2019,2021, we have not decided to repatriate these earnings to the U.S. It is not practicable to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. In December 2021, the Company announced plans to form three public companies focused on aviation, healthcare and energy. Planning for and execution of this separation will result in tax including potentially tax on changes in indefinite reinvestment outside the U.S. The impact of a change in reinvestment will be recorded when there is a specific change in ability and intent to reinvest earnings.

The following table presents our net deferred tax assets and net deferred tax liabilities attributable to different tax jurisdictions or different tax paying components.

DEFERRED INCOME TAXES December 31
20212020
Total assets$11,587 $14,972 
Total liabilities(732)(719)
Net deferred income tax asset (liability)$10,855 $14,253 

GE20192021 FORM 10-K 9673


DEFERRED INCOME TAXES December 31 (In millions)
2019
2018
   
GE$12,807
$14,479
GE Capital5,124
6,214
Total assets17,931
20,693
GE(4,618)(4,302)
GE Capital(3,424)(4,278)
Eliminations—
4
Total liabilities(8,042)(8,576)
Net deferred income tax asset (liability)$9,889
$12,117
COMPONENTS OF THE NET DEFERRED INCOME TAX ASSET (LIABILITY) December 31
20212020
Deferred tax assets
     Accrued expenses and reserves$2,635 $2,667 
     Principal pension plans2,375 3,666 
     Progress collections and deferred income1,830 1,921 
     Insurance company loss reserves1,700 1,684 
     Deferred expenses1,597 1,647 
     Other compensation and benefits1,397 2,149 
     Non-U.S. loss carryforwards(a)1,354 1,793 
     Principal retiree benefit plans896 1,026 
     Capital losses554 582 
     Contract Assets263 (460)
     Other(b)775 817 
Total deferred tax assets15,376 17,492 
Deferred tax liabilities
     Investment in global operations(1,775)(1,289)
     Investment securities(1,278)(969)
     Depreciation(299)(126)
     Other(1,169)(855)
Total deferred tax liabilities(4,521)(3,239)
Net deferred income tax asset (liability)$10,855 $14,253 
(a)Net of valuation allowances of $7,081 million and $6,199 million as of December 31, 2021 and 2020, respectively. Of the net deferred tax asset as of December 31, 2021 of $1,354 million, $25 million relates to net operating loss carryforwards that expire in various years ending from December 31, 2022 through December 31, 2024; $417 million relates to net operating losses that expire in various years ending from December 31, 2025 through December 31, 2041 and $912 million relates to net operating loss carryforwards that may be carried forward indefinitely.
COMPONENTS OF THE NET DEFERRED INCOME TAX ASSET (LIABILITY)
December 31 (In millions)
2019
2018
   
Principal pension plans$4,016
$3,883
Other non-current compensation and benefits2,206
2,431
Provision for expenses1,990
2,208
Intangible assets1,315
820
Retiree insurance plans1,023
1,006
Non-U.S. loss carryforwards(a)602
1,362
U.S. credit carryforwards(b)74
74
Baker Hughes investment(1,256)721
Contract assets(1,232)(1,781)
Depreciation(823)(855)
Other – net(c)274
307
GE8,189
10,176
Operating leases(2,218)(2,690)
Financing leases(477)(599)
Intangible assets(10)(16)
Insurance company loss reserves1,715
1,386
Non-U.S. loss carryforwards(a)1,274
1,231
U.S. credit carryforwards(b)785
2,491
Other – net(c)631
133
GE Capital1,700
1,936
Eliminations—
4
Net deferred income tax asset (liability)$9,889
$12,117
(a)Net of valuation allowances of $4,801 million and $3,799 million for GE and $201 million and $767 million for GE Capital as of December 31, 2019 and 2018, respectively. Of the net deferred tax asset as of December 31, 2019 of $1,876 million, $3 million relates to net operating loss carryforwards that expire in various years ending from December 31, 2020 through December 31, 2022; $193 million relates to net operating losses that expire in various years ending from December 31, 2023 through December 31, 2039 and $1,680 million relates to net operating loss carryforwards that may be carried forward indefinitely.
(b)Of the net deferred tax asset as of December 31, 2019 of $859 million for U.S. credit carryforwards, $74 million expires in the years ending December 31, 2030 through 2032 and $785 million expires in various years ending from December 31, 2036 through December 31, 2039.
(c) Included valuation allowances related to assets other than non-U.S. loss carryforwards of $1,897$1,653 million and $1,002$1,119 million for GE and $248 million and $131 million for GE Capital as of December 31, 20192021 and 2018,2020, respectively.

GE2019 FORM 10-K 97
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16.15. SHAREHOLDERS’ EQUITY
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (In millions)
2019
 2018
 2017
      
Beginning balance$(39) $(102) $674
Other comprehensive income (loss) (OCI) before reclassifications – net of deferred taxes of $32, $41 and $(335)(a)141
 87
 (627)
Reclassifications from OCI – net of deferred taxes of $(11), $(6) and $(81)(42) (23) (149)
Other comprehensive income (loss)100
 64
 (776)
Less OCI attributable to noncontrolling interests—
 —
 1
Investment securities ending balance$61
 $(39) $(102)
      
Beginning balance$(6,134) $(4,661) $(6,806)
OCI before reclassifications – net of deferred taxes of $(98), $29 and $(537)41
 (2,076) 846
Reclassifications from OCI – net of deferred taxes of $(9), $89 and $(543)(b)1,234
 412
 1,333
Other comprehensive income (loss)1,275
 (1,664) 2,179
Less OCI attributable to noncontrolling interests(40) (192) 35
Currency translation adjustments ending balance$(4,818) $(6,134) $(4,661)
      
Beginning balance$13
 $62
 $12
OCI before reclassifications – net of deferred taxes of $6, $(26) and $31(21) (149) 171
Reclassifications from OCI – net of deferred taxes of $2, $4 and $(28)58
 98
 (120)
Other comprehensive income (loss)37
 (51) 51
Less OCI attributable to noncontrolling interests2
 (2) 1
Cash flow hedges ending balance$49
 $13
 $62
      
Beginning balance$(8,254) $(9,702) $(12,469)
OCI before reclassifications – net of deferred taxes of $(355), $115 and $32(1,820) 71
 550
Reclassifications from OCI – net of deferred taxes of $852, $2,610 and $1,1113,048
 1,345
 2,232
Other comprehensive income (loss)1,228
 1,416
 2,782
Less OCI attributable to noncontrolling interests(2) (32) 15
Benefit plans ending balance$(7,024) $(8,254) $(9,702)
      
Accumulated other comprehensive income (loss) at December 31$(11,732) $(14,414) $(14,404)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)202120202019
Beginning balance$(4,386)$(4,818)$(6,134)
AOCI before reclasses – net of taxes of $(91), $(25) and $(98)(104)(255)41 
Reclasses from AOCI – net of taxes of $87, $0 and $(9)(a)(b)(71)691 1,234 
AOCI(174)435 1,275 
Less AOCI attributable to noncontrolling interests2 2 (40)
Currency translation adjustments AOCI$(4,562)$(4,386)$(4,818)
Beginning balance$(5,395)$(7,024)$(8,254)
AOCI before reclasses – net of taxes of $1,643, $(283) and $(418)6,225 (1,256)(2,097)
Reclasses from AOCI – net of taxes of $793, $805 and $915(a)(b)2,819 2,888 3,325 
AOCI9,044 1,632 1,228 
Less AOCI attributable to noncontrolling interests3 4 (2)
Benefit plans AOCI$3,646 $(5,395)$(7,024)
Beginning balance$32 $109 $(25)
AOCI before reclasses – net of taxes of $615, $21 and $38(c)2,422 (39)118 
Reclasses from AOCI – net of taxes of $23, $(25) and $(9)(a)44 (39)17 
AOCI2,466 (78)135 
Investment securities and cash flow hedges AOCI$2,498 $32 $109 
AOCI at December 31$1,582 $(9,749)$(11,732)
Dividends declared per common share$0.32 $0.32 $0.32 
(a) The total reclassification from AOCI included $836 million, including currency translation of $688 million, net of taxes, in 2020, related to the sale of our BioPharma business within our Healthcare segment.
(b) Currency translation and benefit plan gains and losses included $1,343 million, including currency translation of $1,066 million, net of taxes, in 2019 earnings (loss) from discontinued operations related to deconsolidation of Baker Hughes.
(c) Included adjustments of $3,535 million, $(1,979) million and $(2,693) million $1,825 millionin 2021, 2020 and $(1,259) million in 2019, 2018 and 2017, respectively related to insurance liabilities and annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment security gains been realized. See Note 1211 for further information.
(b) Currency translation gains and losses included $1,066 million, 0 and $483 million in 2019, 2018 and 2017, respectively, in earnings (loss) from discontinued operations, net of taxes.
2021 FORM 10-K 74

In 2016, we issuedPreferred stock outstanding comprises $5,694 million of GE Series D preferred stock, which are callable on January 21, 2021. Inin addition to Series D, $250$245 million of existing GE Series A, B and C preferred stock are also outstanding.stock. The total carrying value of GE preferred stock at December 31, 20192021 was $5,738$5,935 million and will increase to $5,944$5,940 million by the respective call dates through periodic accretion. Dividends on GE preferred stock are payable semi-annually in June and December and accretion is recorded on a quarterly basis. Dividends on GE preferred stock totaled $460$237 million, including cash dividends of $295$220 million, $447$474 million, including cash dividends of $295 million, and $436$460 million, including cash dividends of $295 million, for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, respectively.

In conjunction with the 2016 exchange of GE Capital preferred stock into GE preferred stock, GE Capital issued preferred stock to GE for which the amount and terms mirrored the GE external preferred stock. In 2018, GE Capital and GE exchanged the existing Series D preferred stock issued to GE for new Series D preferred stock, which is mandatorily convertible into GE Capital Common stock on On January 21, 2021. After this conversion, GE Capital will no longer pay preferred dividends to GE. The exchange of GE Capital Series D preferred stock has no impact on2021, the GE Series D preferred stock which remainsbecame callable and its dividends converted from 5% fixed rate to 3-month LIBOR plus 3.33%. As of the filing date of this Form 10-K for $5,694 million on January 21,the year ended December 31, 2021, or thereafter on dividend payment dates. Additionally, there were no changes to the existingGE Series A, B or CD preferred stock issued to GE.has not been called.

GE has 50.050 million authorized shares of preferred stock ($1.00 par value), of which 5,939,875 5,939,875 and 5,939,875 shares are outstanding as of December 31, 2019, 20182021, 2020 and 2017, respectively. GE’s2019. GE's authorized common stock consists of 13,2001,650 million shares having a par value of $0.06$0.01 each, with 11,6941,462 million shares issued. Under our share purchaseTo facilitate settlement of employee compensation programs, we repurchased shares of 1.10.5 million and 19.50.1 million, for a total of $10$35.8 million and $235$15.3 million for the years ended 2019 and 2018, respectively.

Noncontrolling interests in equity of consolidated affiliates amounted to $1,545 million and $20,500 million, including 0 and $19,239 million attributable to Baker Hughes Class A shareholders at December 31, 20192021 and 2018, respectively. See Note 2 for further information related to the Baker Hughes transaction. Net earnings (loss) attributable to noncontrolling interests were $33 million, $203 million and $(47) million in 2019, 2018 and 2017, respectively. Dividends attributable to noncontrolling interests were $(331) million, $(362) million and $(222) million in 2019, 2018 and 2017,2020, respectively.

GE2019 FORM 10-K 98

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Redeemable noncontrolling interests, presented inwithin All other liabilities in our consolidated Statement of Financial Position, include common shares issued by our affiliates that are redeemable at the option of the holder of those interests and amounted to $439$148 million and $378$487 million as of December 31, 20192021 and 2018,2020, respectively. Net earnings (loss) attributableThe decrease of $339 million was primarily due to redeemable noncontrolling interests was $33 million, $(291) million and $(320) million for the years ended December 31, 2019, 2018 and 2017, respectively. On October 2, 2018, we settled thea redeemable noncontrolling interest balance associated with3joint ventures with Alstom forin our Aviation segment, which was converted into a payment amount of $3,105 million in accordance with contractual payment terms.mandatorily redeemable instrument and reclassified to All other current liabilities.

Common dividends from GE Capital to GE totaled 0, 0 and $4,105 million (including cash dividends of $4,016 million) for the years ended December 31, 2019, 2018 and 2017, respectively.

NOTE 17.16. SHARE-BASED COMPENSATIONCOMPENSATION.
We grant stock options, restricted stock units and performance share units to employees under the 2007 Long-Term Incentive Plan. Grants made under all plans must be approved by the Management Development and Compensation Committee of GE’s Board of Directors, which is composed entirely of independent directors. We record compensation expense for awards expected to vest over the vesting period. We estimate forfeitures based on experience and adjust expense to reflect actual forfeitures. When options are exercised, and restricted stock units vest, and performance share awards are earned, we issue shares from treasury stock. Where applicable, the disclosures below have been adjusted to reflect the 1-for-8 reverse stock split effective July 30, 2021.

Stock options provide employees the opportunity to purchase GE shares in the future at the market price of our stock on the date the award is granted (the strike price). The options become exercisable over the vesting period, (typically typically three or five years,) and expire 10 years from the grant date if not exercised. Restricted stock units (RSU) provide an employee with the right to receive sharesone share of GE stock when the restrictions lapse over the vesting period. Upon vesting, each RSU is converted into 1 share of GE common stock on a 1-for-one basis.for each unit. Performance share units (PSU) and performance shares provide an employee with the right to receive shares of GE stock based upon achievement of certain performance or market metrics. Upon vesting, (if applicable), each PSU earned is converted into shares of GE common stock on a one-for-one basis.stock. We value stock options using a Black-Scholes option pricing model, RSUs using market price on grant date, and PSUs and performance shares using both market price on grant date and a Monte Carlo simulation as needed based on performance metrics.
WEIGHTED AVERAGE GRANT DATE FAIR VALUE202120202019
Stock options$40.64 $28.64 $27.84 
RSUs104.98 63.28 80.96 
PSUs/Performance shares108.51 63.28 85.84
WEIGHTED AVERAGE GRANT DATE FAIR VALUE
2019
2018
2017
     
Stock Options
$3.48
$3.00
$3.81
RSUs
10.12
13.96
24.89
PSUs
10.73
4.80
N/A


Key assumptions used in the Black ScholesBlack-Scholes valuation for stock options include: risk free rates of 2.5%1.1%, 2.8%1.0%, and 2.3%2.5%, dividend yields of 0.4%0.3%, 2.3%0.4%, and 3.3%0.4%, expected volatility of 33%40%, 32%36%, and 28%33%, expected lives of 6.2 years, 6.1 years, and 6.0 years,, 5.9 years, and 6.3 years, and strike prices of $10.00, $12.13,$105.12, $84.48, and $18.97$80.00 for 2021, 2020, and 2019, 2018, and 2017, respectively.
STOCK-BASED COMPENSATION ACTIVITYStock optionsRSUs
Shares (in thousands)Weighted average exercise priceWeighted average contractual term (in years)Intrinsic value (in millions)Shares (in thousands)Weighted average grant date fair valueWeighted average contractual term (in years)Intrinsic value (in millions)
Outstanding at January 1, 202150,046 $145.26 7,561 $72.35 
Granted494 105.12 2,972 104.98 
Exercised(1,252)74.19 (1,639)97.91 
Forfeited(933)80.31 (837)82.81 
Expired(9,941)159.46 N/AN/A
Outstanding at December 31, 202138,414 $144.97 4.2$193 8,057 $77.90 1.6$761 
Exercisable at December 31, 202133,551 153.11 3.6148 N/AN/AN/AN/A
Expected to vest4,557 $88.70 7.9$42 6,830 $78.75 1.5$645 
STOCK-BASED COMPENSATION ACTIVITYStock Options
RSUs
Shares (in millions)
Weighted average exercise price
Weighted average contractual term (in years)Intrinsic value (in millions)

Shares (in millions)
Weighted average grant date fair value
Weighted average contractual term (in years)Intrinsic value (in millions)










Outstanding at January 1, 2019466
$19.59



29
$18.07


Spin-off adjustment (a)17
N/A




1
N/A



Granted34
10.00



16
10.12


Exercised(7)9.36



(15)17.04


Forfeited(11)13.66



(3)15.40


Expired(41)17.24



N/A
N/A



Outstanding at December 31, 2019458
$18.66
4.6$185

28
$13.29
1.4$315
Exercisable at December 31, 2019335
$21.03
3.1$—

N/A
N/A
N/AN/A
Expected to vest113
$12.36
8.5$165

26
$13.45
1.3$285

(a)
In connection with the spin-off of GE Transportation and pursuant to the anti-dilution provisions of the 2007 Long Term Incentive Plan, the Company made adjustments to exercise price and the number of shares to preserve the intrinsic value of the awards prior to the separation. The adjustments to the stock-based compensation awards did not result in additional compensation expense.

Total outstanding PSUs and performance shares at December 31, 20192021 were 12 million3,215 thousand shares with a weighted average fair value of $7.39.$75.66. The intrinsic value and weighted average contractual term of PSUs and performance shares outstanding were $128$304 million and 2.3 years,, respectively.

GE20192021 FORM 10-K 9975
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS


202120202019
Compensation expense (after-tax)(a)(b)$361 $353 $400 
Cash received from stock options exercised93 6 69 
Intrinsic value of stock options exercised and RSU/PSUs vested217 81 154 
(a)Unrecognized compensation cost related to unvested equity awards as of December 31, 2021 was $491 million, which will be amortized over a weighted average period of 1.1 years.
(In millions)2019
2018
2017




Compensation expense (after-tax)(a)(b)$400
$336
$241
Cash received from stock options exercised69
24
528
Intrinsic value of stock options exercised and RSUs vested

154
83
493
(a)
Unrecognized compensation cost related to unvested equity awards as of December 31, 2019 was $515 million, which will be amortized over a weighted average period of (b)Income tax benefit recognized in earnings was $9 million, $10 million and $20 million in 2021, 2020, and 2019, respectively.1.1 years.
(b)Income tax benefit recognized in earnings was $20 million, $40 million and $138 million in 2019, 2018, and 2017, respectively.


NOTE 18.17. EARNINGS PER SHARE INFORMATIONINFORMATION. In the second quarter of 2021, we announced that we would proceed with the 1-for-8 reverse stock split, as approved by shareholders, and filed an amendment to our certificate of incorporation to effectuate the reverse stock split after the close of trading on July 30, 2021. GE common stock began trading on a split-adjusted basis on August 2, 2021. Our shares of outstanding common stock and earnings per share calculation have been retroactively restated for all periods presented.

2019
2018
2017
(In millions; per-share amounts in dollars)Diluted
Basic

Diluted
Basic

Diluted
Basic











Earnings (loss) from continuing operations for
  per-share calculation
$416
$416

$(20,997)$(20,997)
$(8,270)$(8,270)
Preferred stock dividends(460)(460)
(447)(447)
(436)(436)
Earnings (loss) from continuing operations attributable to
common shareholders for per-share calculation		$(45)$(45)
$(21,445)$(21,445)
$(8,706)$(8,706)
Earnings (loss) from discontinued operations for
  per-share calculation
(5,396)(5,396)
(1,372)(1,372)
(251)(251)
Net earnings (loss) attributable to GE common
  shareholders for per-share calculation
(5,440)(5,440)
(22,809)(22,809)
(8,944)(8,944)









Shares of GE common stock outstanding8,724
8,724

8,691
8,691

8,687
8,687
Employee compensation-related shares (including
stock options) and warrants(a)
—
—

—
—

—
—
Total average equivalent shares8,724
8,724

8,691
8,691

8,687
8,687









Earnings (loss) from continuing operations$(0.01)$(0.01)
$(2.47)$(2.47)
$(1.00)$(1.00)
Earnings (loss) from discontinued operations(0.62)(0.62)
(0.16)(0.16)
(0.03)(0.03)
Net earnings (loss)(0.62)(0.62)
(2.62)(2.62)
(1.03)(1.03)









Potentially dilutive securities(a)
450


420


119
(Earnings for per-share calculation,202120202019
 per-share amounts in dollars)DilutedBasicDilutedBasicDilutedBasic
Earnings from continuing operations$(3,326)$(3,326)$6,601 $6,601 $(614)$(614)
Preferred stock dividends(237)(237)(474)(474)(460)(460)
Accretion of redeemable noncontrolling interests, net of tax(a)(9)(9)(151)(151)— — 
Earnings from continuing operations attributable to GE common shareholders(3,571)(3,571)5,975 5,975 (1,074)(1,074)
Earnings (loss) from discontinued operations(3,195)(3,195)(909)(909)(4,367)(4,367)
Net earnings attributable to GE common shareholders(6,766)(6,766)5,066 5,066 (5,440)(5,440)
Shares of GE common stock outstanding1,098 1,098 1,094 1,094 1,091 1,091 
Employee compensation-related shares (including stock options)— — 1 — — — 
Total average equivalent shares1,098 1,098 1,095 1,094 1,091 1,091 
Earnings (loss) from continuing operations$(3.25)$(3.25)$5.46 $5.46 $(0.98)$(0.98)
Earnings (loss) from discontinued operations(2.91)(2.91)(0.83)(0.83)(4.00)(4.00)
Net earnings (loss)(6.16)(6.16)4.63 4.63 (4.99)(4.99)
Potentially dilutive securities(b)41 56 55 

(a) Represents accretion adjustment of redeemable noncontrolling interests in our Additive business within our Aviation segment.
(a) All outstanding(b) Outstanding stock awards are not included in the computation of diluted earnings per share because their effect was antidilutive due to the loss from continuing operations.antidilutive.


Our unvested restricted stock unit awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and, therefore, are included in the computation of earnings per share pursuant to the two-class method. For the yearsyear ended December 31, 2019, 2018 and 2017,2021, as a result of excess dividends in respect to the current period earnings,loss from continuing operations, losses were not allocated to the participating securities.

Earnings-per-share amounts are computed independently for earnings (loss) For the year ended December 31, 2020, application of this treatment had an insignificant effect. For the year ended December 31, 2019, as a result of the loss from continuing operations, earnings (loss) from discontinued operationslosses were not allocated to the participating securities.

NOTE 18. OTHER INCOME
202120202019
Purchases and sales of business interests(a)$(40)$12,468 $3 
Licensing and royalty income192 161 256 
Equity method income(96)7 264 
Net interest and investment income (loss)(b)2,270 (1,447)1,507 
Other items497 207 449 
Total other income$2,823 $11,396 $2,479 
(a)Included a pre-tax loss of $170 million on the sale of our boiler manufacturing business in China in 2021. Included a pre-tax gain of $12,362 million on the sale of BioPharma in 2020. Included a pre-tax gain of $224 million on the sale of ServiceMax partially offset by charges to the valuation allowance on businesses classified as held for sale of $245 million in 2019. See Note 2 for further information.
(b)Included a pre-tax realized and net earnings (loss). Asunrealized gain of $938 million, pre-tax realized and unrealized loss of $2,037 million and pre-tax unrealized gain of $793 million related to our interest in Baker Hughes in 2021, 2020 and 2019, respectively. Included a result, the sumpre-tax unrealized gain of per-share amounts from continuing operations$711 million related to our interest in AerCap in 2021. Included interest income associated with customer advances of $167 million, $146 million and discontinued operations may not equal the total per-share amounts$143 million in 2021, 2020 and 2019, respectively. See Notes 3, 8 and 24 for net earnings.further information.

2021 FORM 10-K 76

NOTE 19. OTHER INCOME
(In millions)2019
2018
2017

   
Purchases and sales of business interests(a)$3
$1,234
$1,024
Licensing and royalty income256
218
188
Associated companies206
21
208
Net interest and investment income(b)1,220
562
358
Other items515
282
115
GE2,200
2,317
1,893
Eliminations22
4
189
Total$2,222
$2,321
$2,083
(a)Included a pre-tax gain of $224 million on the sale of ServiceMax partially offset by charges to the valuation allowance on businesses classified as held for sale of $245 million in 2019. Included pre-tax gains of $737 million on the sale of Distributed Power, $681 million on the sale of Value-Based Care and $267 million on the sale of Industrial Solutions, partially offset by charges to the valuation allowance on businesses classified as held for sale of $554 million in 2018. Included a pre-tax gain of $1,931 million on the sale of our Water business, partially offset by charges to the valuation allowance on businesses classified as held for sale of $1,000 million in 2017. See Note 2 for further information.
(b)Included unrealized gain of $793 million related to our interest in Baker Hughes in 2019. Included interest income associated with customer advances of $143 million, $136 million and $105 million in 2019, 2018 and 2017, respectively. See Notes 1, 3 and 9.

GE2019 FORM 10-K 100

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20. FAIR VALUE MEASUREMENTS
RECURRING FAIR VALUE MEASUREMENTS.Our assets and liabilities measured at fair value on a recurring basis include investmentdebt securities mainly supporting obligations to annuitants and policyholders in our run-off insurance operations, derivatives,our equity interests in AerCap and our remaining equity interest in Baker Hughes. Hughes, and derivatives.
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
Level 1Level 2Level 3(a)Netting
adjustment(d)		Net balance(b)
December 312021202020212020202120202021202020212020
Investment securities$11,434 $7,319 $35,849 $36,684 $7,222 $5,866 $— $— $54,506 $49,869 
Derivatives— — 1,357 3,061 17 8 (691)(2,582)684 487 
Total assets$11,434 $7,319 $37,207 $39,745 $7,239 $5,874 $(691)$(2,582)$55,189 $50,356 
Derivatives$— $— $891 $1,114 $1 $7 $(681)$(752)$212 $369 
Other(c)— — 863 780 — — — — 863 780 
Total liabilities$— $— $1,754 $1,894 $1 $7 $(681)$(752)$1,075 $1,149 
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS December 31 (In millions)
 
 Level 1Level 2Level 3(a)Netting
adjustment(d)		Net balance(b)
 2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
           
Investment securities$9,704
$88
$33,606
$29,408
$5,210
$4,013
$—
$—
$48,521
$33,508
Derivatives—
—
2,561
2,197
11
8
(1,832)(2,001)740
205
Total assets$9,704
$88
$36,167
$31,605
$5,221
$4,021
$(1,832)$(2,001)$49,261
$33,713
           
Derivatives$—
$—
$834
$1,814
$19
$6
$(651)$(1,234)$202
$586
Other(c)—
—
807
722
—
—
—
—
807
722
Total liabilities$—
$—
$1,641
$2,535
$19
$6
$(651)$(1,234)$1,009
$1,308
(a)Included $4,228 million of U.S. corporate debt securities, $1,427 million of Mortgage and asset-backed debt securities, and the $993 million AerCap note at December 31, 2021. Included $4,185 million of U.S. corporate debt securities and $976 million of Mortgage and asset-backed debt securities at December 31, 2020.
(a)
Included debt securities classified within Level
(b)See Notes 3 and 20 for further information on the composition of our investment securities and derivative portfolios.
(c)Primarily represents the liabilities associated with certain of our deferred incentive compensation plans.
(d)The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk.

$3,977 million of U.S. corporate and $330 million of Government and agencies securities at December 31, 2019, and $3,498 million of U.S. corporate and $292 million of Government and agencies securities at December 31, 2018.   
(b)
See Notes 3 and 21 for further information on the composition of our investment securities and derivative portfolios.   
(c)
Primarily represents the liabilities associated with certain of our deferred incentive compensation plans.   
(d)
The netting of derivative receivables and payables is permitted when a legally enforceable master netting agreement exists. Amounts include fair value adjustments related to our own and counterparty non-performance risk.

LEVEL 3 INSTRUMENTS. The majority of our Level 3 balances comprised debt securities classified as available-for-sale with changes in fair value recorded in otherOther comprehensive income.
(In millions)Balance at
January 1
Net realized/unrealized gains(losses)(a)
Purchases(b)
Sales & Settlements
Transfers
into
Level 3
Transfers
out of
Level 3
Balance at
December 31
        
2019       
Investment securities$4,013
$399
$2,159
$(1,308)$—
$(53)$5,210
2018       
Investment securities$4,109
$(231)$729
$(333)$2
$(262)$4,013
(a)
Primarily included net unrealized gains (losses) of $404 million and $(231) million in other comprehensive income for the years ended December 31, 2019 and December 31, 2018, respectively.  
(b)
Included $975 million and $615 million of U.S. corporate debt securities for the years ended December 31, 2019 and 2018, respectively. 

Balance at
January 1		Net realized/unrealized gains(losses)(a)Purchases(b)Sales & SettlementsTransfers
into
Level 3		Transfers
out of
Level 3		Balance at
December 31
2021
Investment securities$5,866 $(261)$2,589 $(943)$6 $(35)$7,222 
2020
Investment securities$5,210 $357 $1,301 $(958)$2 $(45)$5,866 
NONRECURRING FAIR VALUE MEASUREMENTS. (a)The following table represents fair values (as measured atPrimarily included net unrealized gains (losses) of $(288) million and $323 million in Other comprehensive income for the timeyears ended December 31, 2021 and 2020, respectively.
(b)Included $1,084 million and $745 million of Mortgage and asset-backed debt securities for the years ended December 31, 2021 and 2020, respectively, and the $1,000 million AerCap senior note received as partial consideration on the completion of the adjustment) for those assets remeasured to fair value on a nonrecurring basis during the fiscal year and were still held at December 31, 2019 and 2018. GECAS transaction.
 Remeasured during the years ended December 31
 2019 2018
(In millions)Level 2Level 3 Level 2Level 3
      
Financing receivables and financing receivables held for sale$—
$21
 $—
$47
Equity securities without readily determinable fair value and equity method investments—
306
 479
874
Long-lived assets12
412
 152
422
Goodwill—
—
 —
2,440
Total$12
$739
 $631
$3,783





GE2019 FORM 10-K 101
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018, certainThese Level 3 assets with recurringsecurities are primarily fair value measurements of $4,933 million and $3,893 million, respectively, and nonrecurring measurements of $377 million and $483 million, respectively, were valued using non-binding broker quotes or other third-party sources. These fair value measurementssources that utilize a number of different unobservable inputs not subject to meaningful aggregation. In addition, certain equity securities without readily determinable fair value and equity method investments with a fair value totaling
$36 million and $572 million at December 31, 2019 and 2018, respectively, were valued using the income approach, for which discount rates were determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rates would result in a decrease in the fair values. The range of discount rates used to price these investments was 12%-16%, with a weighted average of 15% and 6.5%-35%, with a weighted average of 8.9% at December 31, 2019 and 2018, respectively. Other Level 3 assets with recurring and nonrecurring fair value measurements are not material individually or in the aggregate.

NOTE 21.20. FINANCIAL INSTRUMENTSINSTRUMENTS.
The following table provides information about assets and liabilities not carried at fair value and excludes finance leases, equity securities without readily determinable fair value and non-financial assets and liabilities. Substantially all of these assets are considered to be Level 3 and the vast majority of our liabilities’ fair value are considered Level 2.
December 31, 2021December 31, 2020
Carrying
amount
(net)		Estimated
fair value		Carrying
amount
(net)		Estimated
fair value
AssetsLoans and other receivables$2,706 $2,853 $2,904 $3,125 
LiabilitiesBorrowings (Note 10)$35,186 $41,207 $74,902 $86,001 
Investment contracts (Note 11)1,909 2,282 2,049 2,547 
 December 31, 2019 December 31, 2018
(In millions)Carrying
amount
(net)
Estimated
fair value
 Carrying
amount
(net)
Estimated
fair value
 

 

Assets

 

Loans and other receivables$4,113
$4,208
 $8,811
$8,829
Liabilities

 

Borrowings (Note 11)$90,882
$97,754
 $103,599
$100,492
Investment contracts (Note 12)2,191
2,588
 2,388
2,630


Unlike the carrying amount, estimated fair value of borrowings included $1,106 million and $1,324 million of accrued interest at
December 31, 2019 and 2018, respectively.

Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures; such items include cash and equivalents, investment securities and derivative financial instruments.

DERIVATIVES AND HEDGING. Our policy requires that derivatives are used solely for managing risks and not for speculative purposes. Total gross notional was $98,018 million ($55,704 million in GE CapitalWe use derivatives to manage currency risks related to foreign exchange, and $42,314 million in GE) and $117,104 million ($79,082 million in GE Capital and $38,022 million in GE) at December 31, 2019 and 2018, respectively. GE Capital notional relates primarily to managing interest rate and currency risk between financial assets and liabilities, and GE notional relates primarily to managing currency risk.certain equity investments and commodity prices.

GE and GE Capital
2021 FORM 10-K 77

We use cash flow hedges primarily to reduce or eliminate the effects of foreign exchange rate changes. In addition, GE Capital useschanges, net investment hedges to hedge investments in foreign operations as well as fair value hedges to hedge the effects of interest rate and currency changes on debt it has issued as well as net investment hedges to hedge investments in foreign operations. Both GE and GE Capitalissued. We also use derivatives not designated as hedges from an accounting standpoint (and therefore we do not apply hedge accounting to the relationship) but otherwise serve the same economic purpose as other hedging arrangements. We use economic hedges when we have exposures to currency exchange risk for which we are unable to meet the requirements for hedge accounting or when changes in the carrying amount of the hedged item are already recorded in earnings in the same period as the derivative making hedge accounting unnecessary. Even though the derivative is an effective economic hedge, there may be a net effect on earnings in each period due to differences in the timing of earnings recognition between the derivative and the hedged item.


FAIR VALUE OF DERIVATIVESDecember 31, 2021December 31, 2020
Gross NotionalAll other assetsAll other liabilitiesGross NotionalAll other assetsAll other liabilities
Interest rate contracts$2,071 $75 $4 $20,500 $1,912 $7 
Currency exchange contracts7,214 114 122 7,387 164 125 
Derivatives accounted for as hedges$9,285 $188 $126 $27,886 $2,076 $132 
Interest rate contracts$1,369 $5 $1 $346 $8 $(1)
Currency exchange contracts64,097 794 756 65,379 767 918 
Other contracts1,674 387 10 2,036 218 71 
Derivatives not accounted for as hedges$67,140 $1,186 $767 $67,761 $993 $989 
Gross derivatives$76,425 $1,374 $893 $95,647 $3,069 $1,121 
Netting and credit adjustments$(637)$(639)$(647)$(647)
Cash collateral adjustments(54)(42)(1,935)(104)
Net derivatives recognized in statement of financial position$684 $212 $487 $369 
Net accrued interest$10 $5 $— $— 
Securities held as collateral(2)— (2)— 
Net amount$691 $217 $484 $369 

GE2019 FORM 10-K 102

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below provides additional information about how derivatives are reflectedIn conjunction with the completion of the debt tender in our financial statements. Derivative assets and liabilities are recorded atthe fourth quarter of 2021, we terminated a significant portion of interest rate contracts that were in fair value exclusivehedge relationships with our borrowings.

It is standard market practice to post or receive cash collateral with our derivative counterparties in order to minimize counterparty exposure. Included in cash, cash equivalents and restricted cash was total net cash collateral received on derivatives of interest earned or owed$66 million (comprising $176 million received and $110 million posted) at December 31, 2021 and $3,289 million (comprising $4,203 million received and $914 million posted) at December 31, 2020. Of these amounts, $84 million and $1,968 million at December 31, 2021 and December 31, 2020, respectively, were received on interest rate derivatives traded through clearing houses, which is presented separately in our consolidated Statementare recorded as a reduction of Financial Position. Cash collateral and securities held as collateral represent assets that have been provided by our derivative counterparties as security for amounts they owe us (derivatives that are in an asset position).assets.
 December 31, 2019 December 31, 2018
(In millions)Gross Notional
All other assets
All other liabilities
 Gross Notional
All other assets
All other liabilities
        
Interest rate contracts$23,918
$1,636
$11
 $22,904
$1,335
$23
Currency exchange contracts7,044
99
46
 7,854
175
114
Derivatives accounted for as hedges$30,961
$1,734
$57
 $30,758
$1,511
$138
        
Interest rate contracts$3,185
$18
$12
 $6,198
$28
$2
Currency exchange contracts62,165
697
744
 77,544
653
1,472
Other contracts1,706
123
40
 2,604
13
209
Derivatives not accounted for as hedges$67,056
$838
$796
 $86,346
$695
$1,682
        
Gross derivatives$98,018
$2,572
$853
 $117,104
$2,205
$1,820
        
Netting and credit adjustments $(546)$(546)  $(959)$(967)
Cash collateral adjustments (1,286)(105)  (1,042)(267)
Net derivatives recognized in Statement of Financial Position $740
$202
  $205
$586
        
Net accrued interest $182
$1
  $205
$1
Securities held as collateral (469)—
  (235)—
Net amount $452
$203
  $174
$587


Fair value of derivativesAlso included in our consolidated Statement of Financial Position excluded accrued interest. Cashtotal net cash collateral received are amounts presented as cash collateral adjustments excluded excess collateral received and postedin the table above, amounts related to accrued interest on interest rate derivatives presented as a reduction of $104Net accrued interest of $11 million and $603$292 million at December 31, 2019,2021 and December 31, 2020, respectively, and $3excess net cash collateral posted of $41 million (comprising $27 million received and $439$68 million posted) at December 31, 2018, respectively. Securities held as collateral excluded excess collateral2021, and $802 million (comprising $3 million received with a fair value of $27and $805 million and 0posted) at December 31, 2019 and 2018, respectively.2020, which are excluded from cash collateral adjustments in the table above.

FAIR VALUE HEDGES.We use derivatives to hedge the effects of interest rate and currency exchange rate changes on our
borrowings. At December 31, 2019,2021, the cumulative amount of hedging adjustments of $4,234$2,072 million (including $2,458$2,073 million on discontinued hedging relationships) was included in the carrying amount of the hedged liability of $54,723$16,819 million. At December 31, 2018,2020, the cumulative amount of hedging adjustments of $3,255$5,687 million (including $2,731$2,248 million on discontinued hedging relationships) was included in the carrying amount of the hedged liability of $59,651$29,374 million. The cumulative amount of hedging adjustments was primarily recorded in long-term borrowings.

CASH FLOW HEDGES AND NET INVESTMENT HEDGES.We use cash flow hedging primarily
Gain (loss) recognized in AOCI
202120202019
Cash flow hedges(a)$(86)$(61)$25 
Net investment hedges(b)487 (675)120 
(a) Primarily related to reduce or eliminate the effectscurrency exchange and interest rate contracts.
(b) The carrying value of foreign exchange rate changes on purchase and sale contracts in our industrial businesses and to convert foreign currency debt that we have issued in our financial services business back to our functional currency.designated as net investment hedges was $4,061 million and $8,348 million at December 31, 2021 and 2020, respectively. The total reclassified from AOCI into earnings was $(87) million, 0, and $7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

2021 FORM 10-K 78

Changes in the fair value of cash flow hedges are recorded in Accumulated other comprehensive income (AOCI) in our consolidated Statement of Financial PositionAOCI and recorded in earnings in the period in which the hedged transaction occurs. The gain (loss) recognized in AOCI was $25 million, $(154) million and $199 million for the years ended December 31, 2019, 2018 and 2017, respectively. The gain (loss) reclassified from AOCI to earnings was $(60) million, $(102) million and $149 million for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts were primarily related to currency exchange and interest rate contracts.

The total amount in AOCI related to cash flow hedges of forecasted transactions was a $110$14 million gainloss at December 31, 2019.2021. We expect to reclassify $16$17 million of gain to earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. ForThe total reclassified from AOCI into earnings was $(79) million, $(7) million, and $(60) million for the years ended December 31, 2021, 2020 and 2019, 2018 and 2017, we recognized insignificant gains and losses related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period.respectively. At December 31, 2019, 2018 and 2017,2021, the maximum term of derivative instruments that hedge forecasted transactions was approximately 13 years, 14 years and 15 years, respectively.

years.
NET INVESTMENT HEDGES.
We invest in foreign operations that conduct their financial services activities in currencies other than the U.S. dollar. We hedge the currency risk associated with those investments primarily using non-derivative instruments such as debt denominated in a foreign currency and short-term currency exchange contracts under which we receive U.S. dollars and pay foreign currency. For these hedges, the portion of the fair value changes of the derivatives or debt instruments that relates to changes in spot currency exchange rates is recorded in a separate component of AOCI. The portion of the fair value changes of the derivatives related to differences between spot and forward rates is recorded in earnings each period. The amounts recorded in AOCI affect earnings if the hedged investment is sold, substantially liquidated, or control is lost.


GE2019 FORM 10-K 103
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total gain (loss) recognized in AOCI on hedging instruments for the years ended December 31, 2019, 2018 and 2017 was $120 million, $646 million and $(1,852) million, respectively, comprising $(36) million, $162 million and $(277) million on currency exchange contracts and $156 million, $484 million and $(1,575) million on foreign currency debt, respectively. The total gain (loss) excluded from assessment and recognized in earnings was $27 million, $23 million and $19 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The carrying value of foreign currency debt designated as net investment hedges was $9,190 million, $12,458 million and $13,028 at
December 31, 2019, 2018 and 2017 respectively. The total reclassified from AOCI into earnings was $7 million, $(1) million and $125 million for the years ended December 31, 2019, 2018 and 2017, respectively.

EFFECTS OF DERIVATIVES ON EARNINGS. All derivatives are marked to fair value on our balance sheet, whether they are designated in a hedging relationship for accounting purposes or are used as economic hedges. For derivatives not designated as hedging instruments, substantially all of the gain or loss recognized in earnings is offset by either the current period change in value of underlying exposures which is recorded in earnings in the current period or a future period when the recording of the exposures occur.

The table below presents the effectgains (losses) of our derivative financial instruments in the consolidated Statement of Earnings (Loss):
20212020
RevenuesDebt Extinguishment CostsInterest ExpenseSG&AOther(a)RevenuesDebt Extinguishment CostsInterest ExpenseSG&AOther(a)
$74,196 $6,524 $1,876 $11,707 $56,719 $75,833 $301 $2,068 $12,592 $69,267 
Effect of cash flow hedges$27 $— $(40)$1 $(67)$15 $— $(40)$1 $17 
Hedged items$70 $1,413 $— $(1,775)
Derivatives designated as hedging instruments(66)(1,549)— 1,743 
Effect of fair value hedges$3 $(135)$— $(31)
Interest rate contracts(a)$1 $52 $(3)$— $(1)$(1)$— $(11)$— $(18)
Currency exchange contracts(6)(16)(18)(127)44 — — — 129 (293)
Other— — — 183 193 — — — 86 (46)
Effect of derivatives not designated as hedges$(5)$35 $(22)$56 $235 $(1)$— $(11)$215 $(357)
 2019 2018
(In millions)RevenuesCost of salesInterest ExpenseSG&AOther Income RevenuesCost of salesInterest ExpenseSG&AOther Income
            
Total amounts presented in
  the consolidated Statement
  of Earnings (Loss)
$95,214
$70,029
$4,227
$13,949
$2,222
 $97,012
$72,818
$4,766
$14,643
$2,321
            
Total effect of cash flow
  hedges
$5
$(24)$(37)$(3)$—
 $(53)$(10)$(39)$—
$—
            
Hedged items  $(1,276)     $617
  
Derivatives designated as
  hedging instruments
  1,229
     (724)  
Total effect of fair value
  hedges
  $(48)     $(107)  
            
Interest rate contracts$(24)$—
$(50)$—
$—
 $(72)$—
$(4)$—
$—
Currency exchange contracts180
(35)—
(6)(59) (1,303)(520)—
—
(47)
Other(2)—
195
—
1
 (1)—
(95)—
(10)
Total effect of derivatives
  not designated as hedges
$154
$(35)$145
$(6)$(58) $(1,375)$(520)$(99)$—
$(56)
(a) Amounts are inclusive of cost of sales and other income.


COUNTERPARTY CREDIT RISK.Fair values of our derivatives can change significantly from period to period based on, among other factors, market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties will default and not make payments to us according to the terms of our agreements) on an individual counterparty basis. Where we have agreed to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take appropriate actions in response, including requiring additional collateral. Our exposures to counterparties (including accrued interest), net of collateral we held, was $368$564 million and $95$392 million at December 31, 20192021 and 2018,December 31, 2020, respectively. Counterparties' exposures to our derivative liability (including accrued interest), net of collateral posted by us, was $159 million and $571$307 million at December 31, 20192021 and 2018,December 31, 2020, respectively.

NOTE 22.21. VARIABLE INTEREST ENTITIESENTITIES.
In addition to the 32 VIEs detailed in Note 4, in our Statement of Financial Position, we have other consolidated VIEs with assets of $2,663$491 million and $2,321$1,733 million and liabilities of $1,137$206 million and $1,611$657 million, at December 31, 20192021 and 2018, respectively.2020, respectively, from other consolidated VIEs. The increasedecline in consolidated VIE assets and liabilities is primarily duedriven by the deconsolidation of our aeroderivative JV and the reduction of the deferred purchase price related to the formationdiscontinuation of the aeroderivative JV described in Note 2.our remaining unconsolidated receivables facility. These entities were created to help our customers facilitate or finance the purchase of GE equipment and services and have no features that could expose us to losses that would significantly exceed the difference between the consolidated assets and liabilities. Substantially all the assets of our consolidated VIEs at December 31, 2019 can only be used to settle the liabilities of those VIEs.

Our investments in unconsolidated VIEs were $1,937$5,034 million and $2,346$3,230 million at December 31, 20192021 and 2018,2020, respectively. TheseOf these investments, are primarily owned by GE Capital businesses, $621$1,481 million and $1,670$1,141 million of which were owned by EFS, comprised ofcomprising equity method investments, primarily renewable energy tax equity investments, at December 31, 2021 and $8962020, respectively. In addition, $3,333 million and 0 of which$1,833 million were owned by our run-off insurance operations, primarily comprising investment securities at December 31, 20192021 and 2018,2020, respectively. The increase in investments in unconsolidated VIEs in our run-off insurance operations reflects implementation of our revised reinvestment plan, which incorporates the introduction of strategic initiatives to invest in higher-yielding asset classes. Our maximum exposure to loss in respect of unconsolidated VIEs is increased by our commitments to make additional investments in these entities described in Note 23.22.



GE2019 FORM 10-K 104

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23.22. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES
COMMITMENTS.The GECAS business within our Capital segment has placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list prices approximating $36,313 million, excluding pre-delivery payments made in advance, (including 366 new aircraft with delivery dates of 16% in 2020, 19% in 2021 and 65% in 2022 through 2026) and secondary orders with airlines for used aircraft of approximately $2,419 million (including 55 used aircraft with delivery dates of 71% in 2020, 20% in 2021 and 9% in 2022) at December 31, 2019. When we purchase aircraft, it is at a contractual price, which is usually less than the aircraft manufacturer’s list price. As of December 31, 2019, we have made $2,934 million of pre-delivery payments to aircraft manufacturers.

GE Capital We had total investment commitments of $2,648$3,130 million at December 31, 2019.2021. The commitments primarily comprise project financing investments in thermal and wind energy projects of $1,225 million and investments by our run-off insurance operations in investment securities and other assets of $1,394$3,069 million and included within these commitments are obligations to make additional investments in unconsolidated VIEs of $217 million and $996 million, respectively.$2,996 million. See Note 2221 for further information.


As of December 31, 2019,2021, in our Aviation segment, we have committed to provide financing assistance of $2,269$2,058 million of future customer acquisitions of aircraft equipped with our engines.

GUARANTEES.At December 31, 2019,2021, we were committed under the following guarantee arrangements:

Credit Support.support. At December 31, 2019,2021, we have provided $1,565$1,252 million of credit support on behalf of certain customers or associated companies, predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance guarantees. The liability for such credit support was $35 million at December 31, 2019.  $42 million.

Indemnification Agreements –agreements - Continuing OperationsOperations.. At December 31, 2019,2021, we have $1,611$965 million of other indemnification commitments, including representations and warranties in sales of businesses orbusiness assets, for which we recorded a liability of $192$95 million.
2021 FORM 10-K 79

Indemnification Agreements –agreements - Discontinued Operations. At December 31, 2019,2021, we have provided specific indemnities to buyers of GE Capital’s assets of our business that, in the aggregate, represent a maximum potential claim of $1,032$562 million with the related reserves of $142 million, which incorporates our evaluation of risk and the likelihood of making payments under the indemnities. The recognized liabilities represent the estimated fair value of the indemnities when issued as adjusted for any subsequent probable and estimable losses. Approximately 44% of these exposures are expected to be resolved within the next year, while substantially all indemnifications are expected to be resolved within the next ten years.$93 million.

PRODUCT WARRANTIES.We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information, mostly historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.
(In millions)2019
2018
2017
    
Balance at January 1$2,192
$2,103
$1,743
Current-year provisions713
945
929
Expenditures(715)(788)(708)
Other changes(26)(69)139
Balance at December 31$2,165
$2,192
$2,103


202120202019
Balance at January 1$2,054 $2,165 $2,192 
Current-year provisions862 788713
Expenditures(945)(913)(715)
Other changes(81)14 (26)
Balance at December 31$1,891 $2,054 $2,165 

GE2019 FORM 10-K 105
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LEGAL MATTERS. InIn the normal course of our business, we are involved from time to time in various arbitrations, class actions, commercial litigation, investigations and other legal, regulatory or governmental actions, including the significant matters described below that could have a material impact on our results of operations. In many proceedings, including the specific matters described below, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss, and accruals for legal matters are not recorded until a loss for a particular matter is considered probable and reasonably estimable. Given the nature of legal matters and the complexities involved, it is often difficult to predict and determine a meaningful estimate of loss or range of loss until we know, among other factors, the particular claims involved, the likelihood of success of our defenses to those claims, the damages or other relief sought, how discovery or other procedural considerations will affect the outcome, the settlement posture of other parties and other factors that may have a material effect on the outcome. For these matters, unless otherwise specified, we do not believe it is possible to provide a meaningful estimate of loss at this time. Moreover, it is not uncommon for legal matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated.

WMC.During the fourth quarter of 2007, we completed the sale of WMC, our U.S. mortgage business. WMC substantially discontinued all new loan originations by the second quarter of 2007, and was never a loan servicer. In connection with the sale, WMC retained certain representation and warranty obligations related to loans sold to third parties prior to the disposal of the business and contractual obligations to repurchase previously sold loans that had an early payment default. All claims received by WMC for early payment default have either been resolved or are no longer being pursued. The remaining claims that were active during 2019 were brought by securitization trustees or administrators seeking recovery from WMC for alleged breaches of representations and warranties on mortgage loans that serve as collateral for residential mortgage-backed securities (RMBS). These claims were resolved as part of the Chapter 11 bankruptcy case described below.

In January 2019, we announced an agreement in principle with the United States to settle the investigation by the U.S. Department of Justice (DOJ) regarding potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) by WMC and GE Capital, and in April 2019, the parties entered into a definitive settlement agreement. Under the agreement, which concludes this investigation, GE, without admitting liability or wrongdoing, paid the United States a civil penalty of $1,500 million.

In April 2019, WMC commenced a case under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. WMC subsequently filed a Chapter 11 plan seeking an efficient and orderly resolution of all claims, demands, rights, and/or liabilities to be asserted by or against WMC as the debtor. GE Capital provided approximately $14 million of debtor-in-possession financing to fund administrative expenses associated with the Chapter 11 proceeding. In August 2019, we reached a settlement with WMC to resolve potential claims that WMC may have had against certain GE entities. This settlement was incorporated into and approved as part of the Chapter 11 plan that the Bankruptcy Court approved in November 2019. The Chapter 11 plan also incorporated the resolution of the claims at issue in the previously reported lawsuit that the TMI Trust Company (TMI), as successor to Law Debenture Trust Company of New York, brought against WMC in the United States District Court for the District of Connecticut with respect to approximately $800 million of mortgage loans. The Chapter 11 plan became effective in December 2019, and GE Capital’s membership interests in WMC were extinguished pursuant to the plan. In total, we paid approximately $207 million to WMC in connection with the settlement of potential claims that WMC may have had against us, as discussed above. As of December 31, 2019, we had no further liabilities to WMC. As a condition to the settlement agreement described above, GE Capital provided WMC $39.5 million of exit financing that is secured by other remaining assets of WMC.

Alstom legacy legal matters. OnIn November 2, 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. PriorAlstom, which prior to the acquisition the seller was the subject of 2 significant cases involving anti-competitive activities and improper payments: (1) in January 2007, Alstom was fined €65 million by the European Commission for participating in a gas insulated switchgear cartel that operated from 1988 to 2004 (that fine was later reduced to €59 million), and (2) in December 2014, Alstom pled guilty in the United States to multiple violations of the Foreign Corrupt Practices Act and paid a criminal penalty of $772 million.payments. As part of GE’s accounting for the acquisition, we established a reserve amounting to $858 million for legal and compliance matters related to the legacy business practices that were the subject of these and related cases in various jurisdictions, including the previously reported legal proceedings in Israel and Slovenia that are described below. The reserve balance was $875$567 million and $889$858 million at December 31, 20192021 and 2018,December 31, 2020, respectively.

Regardless of jurisdiction, The decrease in the allegationsreserve balance during 2021 was driven primarily by the cash payment in connection with the Šoštanj settlement described below. Allegations in these cases relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations and/or damages. Given the significant litigation and compliance activity related to these matters and our ongoing efforts to resolve them, it is difficult to assess whether the disbursements will ultimately be consistent with the reserve established. The estimation of this reserve involved significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations of this nature, and at this time we are unable to develop a meaningful estimate of the range of reasonably possible additional losses beyond the amount of this reserve. Damages sought may include disgorgement of profits on the underlying business transactions, fines and/or penalties, interest, or other forms of resolution. Factors that can affect the ultimate amount of losses associated with these and related matters include the way cooperation is assessed and valued, prosecutorial discretion in the determination of damages, formulas for determining disgorgement, fines andand/or penalties, the duration and amount of legal and investigative resources applied, political and social influences within each jurisdiction, and tax consequences of any settlements or previous deductions, among other considerations. Actual losses arising from claims in these, and related matters could exceed the amount provided.


GE2019 FORM 10-K 106

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In September 2013, the Israeli Antitrust Authority issued a decision whereby Alstom, Siemens AG and ABB Ltd. were held liable for an alleged anti-competitive arrangement in the gas-insulated switchgears market in Israel. While there was no fine in connection with that decision, claimants brought civil actions in 2013 seeking damages of approximately $950 million and $600 million, respectively, related to the alleged conduct underlying the decision that are pending before the Central District Court in Israel. The parties have been working to finalize a settlement, which is subject to court approval, and we anticipate a decision from the court in the first half of 2020. 

In connection with alleged improper payments by Alstom relating to contracts won in 2006 and 2008 for work on a state-owned power plant in Šoštanj, Slovenia, the power plant owner in January 2017 filed an arbitration claim for damages of approximately $430 million before the International Chamber of Commerce Court of Arbitration in Vienna, Austria. In February 2017,September 2020, the relevant Alstom legacy entity was served with an indictment, which we had anticipated as we had been working with the parties to resolve these matters. In March 2021, GE reached a government investigation in Sloveniasettlement of the same underlying conduct proceeded to an investigative phase overseenarbitration claim with the power plant owner for a mix of cash and services valued by the plant owner at approximately $307 million. In June and December 2021, respectively, GE entered a plea agreement with a judge of the Celje District Court.Court with respect to the indictment of the relevant Alstom legacy entity, and GE reached a related settlement with the European Investment Bank; the plea and settlement include total payments of approximately $34 million.

Shareholder and related lawsuits. Since November 2017, several putative shareholder class actions under the federal securities laws have been filed against GE and certain affiliated individuals and consolidated into a single action currently pending in the U.S. District Court for the Southern District of New York (the Hachem case). In October 2019, the lead plaintiff filed a fifth amended consolidated class action complaint naming as defendants GE and current and former GE executive officers. It alleges violations of Sections 10(b) and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 related to insurance reserves and accounting for long-term service agreements and seeks damages on behalf of shareholders who acquired GE stock between February 27, 2013 and January 23, 2018. GE filed a motion to dismiss in December 2019. In January 2021, the court granted defendants’ motion to dismiss as to the majority of the claims. Specifically, the court dismissed all claims related to insurance reserves, as well as all claims related to accounting for long-term service agreements, with the exception of certain claims about historic disclosures related to factoring in the Power business that survive as to GE and its former CFO Jeffrey S. Bornstein. All other individual defendants have been dismissed from the case. In addition, the court denied the plaintiffs’ request to amend their complaint again.
2021 FORM 10-K 80

Since February 2018, multiple shareholder derivative lawsuits have also been filed against current and former GE executive officers and members of GE’s Board of Directors and GE (as nominal defendant). NaN shareholder derivative lawsuits are currently pending: the Bennett case, which was filed in Massachusetts state court, and the Cuker case, which was filed in New York state court. These lawsuits have alleged violations of securities laws, breaches of fiduciary duties, unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement, although the specific matters underlying the allegations in the lawsuits have varied. Two shareholder derivative lawsuits are currently pending: the Lindsey and Priest/Tola cases, which were filed in New York state court. The allegations in the Bennett casethese two cases relate to substantially the same facts as those underlying the securities class action described above, and the allegations in the Cuker case relate to alleged corruption in China. The Bennett complaint also includes a claim for professional negligence and accounting malpractice against GE’s auditor, KPMG.Hachem case. The plaintiffs seek unspecified damages and improvements in GE’s corporate governance and internal procedures. The BennettLindsey case has been stayed pending final resolutionby agreement of another shareholder derivative lawsuit (the Gammel case) that was previously dismissed. In August 2019, the Cuker plaintiffs filed an amended complaint. In September 2019,parties, and GE filed a motion to dismiss the amended complaint. 

Priest/Tola complaint in March 2021.
In June 2018, a lawsuit (the Bezio case) was filed in New York state court derivatively on behalf of participants in GE’s 401(k) plan (the GE Retirement Savings Plan (RSP)), and alternatively as a class action on behalf of shareholders who acquired GE stock between February 26, 2013 and January 24, 2018, alleging violations of Section 11 of the Securities Act of 1933 based on alleged misstatements and omissions related to insurance reserves and performance of GE’s business segments in a GE RSP registration statement and documents incorporated therein by reference. In November 2018, the plaintiffs filed an amended derivative complaint naming as defendants GE, former GE executive officers and Fidelity Management Trust Company, as trustee for the GE RSP. In January 2019, GE filed a motion to dismiss, and in November 2019, the court dismissed the remaining claims and the plaintiffs filed a notice of appeal. In December 2019, the plaintiffs filed a second amended derivative complaint, and in January 2020, GE filed a motion to dismiss.

In July 2018, a putative class action (the Mahar case) was filed in New York state court naming as defendants GE, former GE executive officers, a former member of GE’s Board of Directors and KPMG. It alleged violations of Sections 11, 12 and 15 of the Securities Act of 1933 based on alleged misstatements related to insurance reserves and performance of GE’s business segments in GE Stock Direct Plan registration statements and documents incorporated therein by reference and seeks damages on behalf of shareholders who acquired GE stock between July 20, 2015 and July 19, 2018 through the GE Stock Direct Plan. In February 2019, this case was dismissed. In March 2019, plaintiffs filed an amended derivative complaint naming the same defendants. In April 2019, GE filed a motion to dismiss the amended complaint. In October 2019, the court denied GE's motion to dismiss and stayed the case pending the outcome of the Hachem case. In November 2019, the plaintiffs moved to re-argue to challenge the stay, and GE cross-moved to re-argue the denial of the motion to dismiss and filed a notice of appeal.
In October 2018, a putative class action (the Houston case) was filedThe court denied both motions for re-argument, and in New York state court naming as defendants GE, certain GE subsidiaries and current and former GE executive officers and employees. It alleges violationsNovember 2020, the Appellate Division First Department affirmed the court's denial of Sections 11, 12 and 15 of the Securities Act of 1933 and seeks damages on behalf of purchasers of senior notes issued in 2016 and rescission of transactions involving those notes. This case has been stayed pending resolution of theGE's motion to dismiss the Hachem case.

dismiss. In December 2018, a putative class action (the Varga case) was filed in the U.S. District Court for the Northern District of New York naming GE and a former GE executive officer as defendants in connection with the oversight of the GE RSP. It alleges that the defendants breached fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) by failing to advise GE RSP participants that GE Capital insurance subsidiaries were allegedly under-reserved and continued to retain a GE stock fund as an investment option in the GE RSP. The plaintiffs seek unspecified damages on behalf of a class of GE RSP participants and beneficiaries from January 1, 2010 through January 19, 2018 or later. In April 2019,2021, GE filed a motion for leave to dismiss.


GE2019 FORM 10-K 107
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In February 2019, 2 putative class actions (the Birnbaum case andappeal to the Sheet Metal Workers Local 17 Trust Funds case) were filed in the U.S. District Court for the Southern District of New York naming as defendants GECourt of Appeals, and current and former GE executive officers. In April 2019, the court issued an order consolidating these two actions. In June 2019, the lead plaintiff filed an amended consolidated complaint. It alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged misstatements regarding GE's H-class turbines and goodwill related to GE's Power business. The lawsuit seeks damages on behalf of shareholders who acquired GE stock between December 4, 2017 and December 6, 2018. In August 2019, the lead plaintiff filed a second amended complaint. In September 2019, GE filed athat motion to dismiss the second amended complaint.was denied in March 2021.

In February 2019, a securities action (the Touchstone case) was filed in the U.S. District Court for the Southern District of New York naming as defendants GE and current and former GE executive officers. It alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 1707.43 of the Ohio Securities Act and common law fraud based on alleged misstatements regarding insurance reserves, GE Power’s revenue recognition practices related to long term service agreements, GE’s acquisition of Alstom, and the goodwill recognized in connection with that transaction. The lawsuit seeks damages on behalf of 6six institutional investors who purchased GE common stock between August 1, 2014 and October 30, 2018 and rescission of those purchases. This case has been stayed pending resolution of the motion to dismiss the Hachem case. In May 2021, the plaintiffs filed an amended complaint, and GE in June 2021 filed a motion to dismiss that complaint.

As previously reported by Baker Hughes, in March 2019, 2 derivative lawsuits were filed in the Delaware Court of Chancery naming as defendants GE, directors of Baker Hughes (including former members of GE’s Board of Directors and current and former GE executive officers) and Baker Hughes (as nominal defendant), and the court issued an order consolidating these two actions (the Schippnick case). The complaint as amended in May 2019 alleges, among other things, that GE and the Baker Hughes directors breached their fiduciary duties, and that GE was unjustly enriched by entering into transactions and agreements related to GE's sales of approximately 12% of its ownership interest in Baker Hughes in November 2018. The complaint seeks declaratory relief, disgorgement of profits, an award of damages, pre- and post-judgment interest and attorneys’ fees and costs. In May 2019, the plaintiffs voluntarily dismissed their claims against the directors who were members of the Baker Hughes Conflicts Committee and a former Baker Hughes director. In October 2019, the Court denied the remaining defendants’ motions to dismiss, except with respect to the unjust enrichment claim against GE, which has been dismissed. In November 2019, the defendants filed their answer to the complaint, and a special litigation committee of the Baker Hughes Board of Directors moved for an order staying all proceedings in this action pending completion of the committee's investigation of the allegations and claims asserted in the complaint. In December 2019,October 2020, the court granted a six-month stay.

In August 2019, a putative class action (the Tri-State case) was filed in the Delaware Court of Chancery naming as defendants GE and the former Board of Directors of Baker Hughes Incorporated (BHI). It alleges fraud, aiding and abetting breaches of fiduciary duty, and aiding and abetting breaches of duty of disclosure by GE based on allegations regarding financial statements that GE provided the former BHI board, management and shareholders in connection with BHI’s merger with GE’s Oil and Gas Business in July 2017. The plaintiff seeks damages on behalf of BHI shareholders during the period between October 7, 2016 and July 5, 2017. In October 2019, the City of Providencespecial litigation committee filed a complaint containing allegations substantially similar to those in the Tri-State complaint. The cases were consolidated in November 2019, and in December 2019, the plaintiffs filed an amended consolidated complaint which is similar to the prior complaints but does not include fraud claims against GE.

These cases are at an early stage; we believe we have defenses to the claims and are responding accordingly.

SEC investigation.In late November 2017, staff of the Boston office of the U.S. Securities & Exchange Commission (SEC) notified us that they are conducting an investigation of GE’s revenue recognition practices and internal controls over financial reporting related to long-term service agreements. Following our investor update in January 2018 about the increase in future policy benefit reserves for GE Capital’s run-off insurance operations, the SEC staff expanded the scope of its investigation to encompass the reserve increase and the process leading to the reserve increase. Following our announcement in October 2018 about the expected non-cash goodwill impairment charge related to GE’s Power business, the SEC expanded the scope of its investigation to include that charge as well. We are providing documents and other information requested by the SEC staff, and we are cooperatingreport with the ongoing investigation. Staff fromCourt recommending that the DOJ are also investigating these matters, and we are providing them with requested documents and information as well. derivative action be terminated. In January 2021, the special committee filed a motion to terminate the action.

Other GE Retirement Savings Plan class actions. NaN putative class action lawsuits have been filed regarding the oversight of the GE RSP, and those class actions have been consolidated into a single action in the U.S. District Court for the District of Massachusetts. The consolidated complaint names as defendants GE, GE Asset Management, current and former GE and GE Asset Management executive officers and employees who served on fiduciary bodies responsible for aspects of the GE RSP during the class period. Like similar lawsuits that have been brought against other companies in recent years, this action alleges that the defendants breached their fiduciary duties under ERISA in their oversight of the GE RSP, principally by retaining 5five proprietary funds that plaintiffs allege were underperforming as investment options for plan participants and by charging higher management fees than some alternative funds. The plaintiffs seek unspecified damages on behalf of a class of GE RSP participants and beneficiaries from September 26, 2011 through the date of any judgment. In August and December 2018, the court issued orders dismissing 1one count of the complaint and denying GE's motion to dismiss the remaining counts. We believe we have defenses to the claims and are responding accordingly.


GE2019 FORM 10-K 108

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Bank BPH. As previously reported, GE Capital’s subsidiary Bank BPH, along with other Polish banks, has been subject to ongoing litigation in Poland related to its portfolio of floating rate residential mortgages,mortgage loans, with cases brought by individual borrowers seeking relief related to their foreign currency-denominated mortgagescurrency denominated mortgage loans in various courts throughout Poland. Approximately 86%At December 31, 2021, approximately 87% of the Bank BPH portfolio is indexed to or denominated in foreign currencies (primarily Swiss francs), and the total portfolio had a carrying value, net of $2.5 billion at December 31, 2019. In October 2019, the European Courtreserves, of Justice (ECJ) issued a decision about the approach$1,799 million. We continue to remedy in a case involving another Polish bank’s foreign currency loans, and in January 2020, a pending case involving a Bank BPH loan was referred to the ECJ. While there remains significant uncertainty as to how the prior ECJ decision, or a future decision on the Bank BPH case, will influence the Polish courts as they consider individual cases, we are observingobserve an increase in the number of lawsuits being brought against Bank BPH and other banks in Poland, with similar portfolios that mayand we expect this to continue in future reporting periods.

2021 FORM 10-K 81

We also believe thereestimate potential losses for Bank BPH in connection with borrower litigation cases that are pending by recording legal reserves, as well as in connection with potential future cases or other adverse developments as part of our ongoing valuation of the Bank BPH portfolio, which we record at the lower of cost or fair value, less cost to sell. The total amount of such estimated losses was $755 million and $315 million at December 31, 2021 and December 31, 2020, respectively. We update our assumptions underlying the amount of estimated losses based primarily on the number of lawsuits filed and estimated to be filed in the future, whether liability will be established in lawsuits and the nature of the remedy ordered by courts if liability is a potential for unifying rulesestablished. The increase in the amount of decisionestimated losses during 2021 was driven primarily by increases in the number of lawsuits estimated to emerge regarding bothbe filed in the findingfuture and increased findings of liability. We expect the trends we have previously reported of an increasing number of lawsuits being filed, more findings of liability and approachmore severe remedies being ordered against Polish banks (including Bank BPH) to remedy that could change ourcontinue in future reporting periods, although Bank BPH is unable at this time to develop a meaningful estimate of reasonably possible losses associated with active and inactive Bank BPH mortgage loans beyond the potential effectsamounts currently recorded. Additional factors may also affect our estimated losses over time, including: potentially significant judicial decisions or binding resolutions by the European Court of Justice (ECJ) or the Polish Supreme Court; the impact of any of these or other future or recent decisions or resolutions (including the ECJ decision in April 2021 on a case involving a Bank BPH mortgage loan, and the Polish Supreme Court binding resolution delivered verbally in May 2021 with written reasoning issued in July 2021) on how Polish courts will interpret and apply the law in particular cases and how borrower litigation.behavior may change in response, neither of which are known immediately upon the issuance of a decision or resolution; uncertainty related to a proposal by the Chairman of the Polish Financial Supervisory Authority in December 2020 that banks voluntarily offer borrowers an opportunity to convert their foreign currency denominated mortgage loans to Polish zlotys using an exchange rate applicable at the date of loan origination, and about the various settlement strategies or other approaches that Polish banks have adopted or will adopt, or that Bank BPH may adopt in the future, in response to this proposal or other factors, and the approaches that regulators and other government authorities will adopt in response; and uncertainty arising from investigations of the Polish Office of Competition and Consumer Protection (UOKiK), including existing or anticipated UOKiK decisions resulting from those investigations. Future adverse developments inrelated to any of the potential for legislative reliefforegoing, or in litigation acrossother adverse developments such as actions by regulators or other governmental authorities, likely would have a material adverse effect on Bank BPH and the Polish banking industrycarrying value of its mortgage loan portfolio as a result of ECJ decisions or otherwise couldwell as result in additional required capital contributions to Bank BPH or significant losses related to these loans in future reporting periods.beyond the amounts that we currently estimate.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS.MATTERS. Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws and nuclear decommissioning regulations. We have obligations for ongoing and future environmental remediation activities, such as the Housatonic River cleanup described below, and may incur additional liabilities in connection with previously remediated sites, such as natural resource damages for the Hudson River where GE completed dredging in 2019. Additionally, like many other industrial companies, we and our subsidiaries are defendants in various lawsuits related to alleged worker exposure to asbestos or other hazardous materials. Liabilities for environmental remediation, nuclear decommissioning and worker exposure claims exclude possible insurance recoveries. It is reasonably possible that our exposure will exceed amounts accrued. However, due to uncertainties about the status of laws, regulations, technology and information related to individual sites and lawsuits, such amounts are not reasonably estimable. Total reserves related to environmental remediation, nuclear decommissioning and worker exposure claims were $2,484$2,660 million and $2,172$2,569 million at December 31, 20192021 and 2018,2020, respectively.

As previously reported, in 2000, GE and the Environmental Protection Agency (EPA) entered into a consent decree relating to PCB cleanup of the Housatonic River in Massachusetts. Following the EPA’s release in September 2015 of an intended final remediation decision, GE and the EPA engaged in mediation and the first step of the dispute resolution process contemplated by the consent decree. In October 2016, the EPA issued its final decision pursuant to the consent decree, which GE and several other interested parties appealed to the EPA’s Environmental Appeals Board (EAB). The EAB issued its decision in January 2018, affirming parts of the EPA’s decision and granting relief to GE on certain significant elements of its challenge. The EAB remanded the decision back to the EPA to address those elements and reissue a revised final remedy, and the EPA convened a mediation process with GE and interested stakeholders. In February 2020, the EPA announced an agreement between the EPA and many of the mediation stakeholders, including GE, concerning a revised Housatonic River remedy. Based on the mediated resolution, the EPA will next propose this remedy forsolicited public comment on a draft permit and then finalizeissued the final revised permit effective in January 2021. In March 2021, two local environmental advocacy groups filed a joint petition to the EAB challenging portions of the revised remedy.permit, and EPA and GE are defending that appeal. As of December 31, 2019,2021, and based on its assessment of current facts and circumstances and its defenses, GE believes that it has recorded adequate reserves to cover future obligations associated with the proposed final remedy.

Expenditures for site remediation, nuclear decommissioning and worker exposure claims amounted to approximately $236$193 million, $214$180 million and $227$236 million for the years ended December 31, 2019, 2018,2021, 2020 and 2017,2019, respectively. We presently expect that such expenditures will be approximately $350 million and $250 million in 20202022 and 2021,2023, respectively.


GE2019 FORM 10-K 109
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 24. CASH FLOWS INFORMATION
Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.

Amounts reported in the Proceeds from sales of discontinued operations and Proceeds from principal business dispositions captions in our consolidated Statement of Cash Flows are net of cash transferred and included certain deal-related costs. Amounts reported in the Net cash from (payments for) principal businesses purchased caption are net of cash acquired and included certain deal-related costs and debt assumed and immediately repaid in acquisitions.
GE For the years ended December 31 (In millions)
2019
2018
2017




Increase (decrease) in employee benefit liabilities(a)$227
$587
$(68)
Other gains on investing activities(723)(378)(138)
Restructuring and other charges(b)1,144
2,244
2,781
Restructuring and other cash expenditures(1,157)(1,474)(1,484)
Increase (decrease) in equipment project accruals(314)(939)(212)
Baker Hughes Class B dividends received282
494
251
Other(c)613
142
374
All other operating activities$72
$676
$1,504
    
Derivative settlements (net)$(14)$(947)$(1,016)
Investments in intangible assets (net)(30)(496)(321)
Other investments (net)(d)791
726
(1,404)
Sales of retained ownership interests in Wabtec3,383
—
—
Other(e)(455)77
(6,698)
All other investing activities$3,675
$(640)$(9,439)
    
Disposition of Baker Hughes noncontrolling interests$—
$4,373
$308
Acquisition of noncontrolling interests(f)(28)(3,345)(135)
Other(g)(284)79
117
All other financing activities$(312)$1,107
$290
    
Open market purchases under share repurchase program$(10)$(245)$(3,506)
Other purchases(47)(23)(67)
Dispositions84
250
1,021
Net dispositions (purchases) of GE shares for treasury$29
$(17)$(2,550)
(a)Included non-cash adjustments for stock-based compensation expenses.
(b)Excluded non-cash adjustments reflected as Depreciation and amortization of property, plant and equipment or Amortization of intangible assets in our consolidated Statement of Cash Flows.
(c)
Included other adjustments to net income, such as write-downs of assets and the impacts of acquisition accounting and changes in other assets and other liabilities classified as operating activities, such as the timing of payments of customer allowances.
(d)Included the provision of a promissory note to Baker Hughes in 2017 and subsequent principal collections in 2018 and 2019. See Note 2.
(e)
Included net activity related to settlements between our continuing operations and discontinued operations. In 2017, this was primarily driven by funding in order to complete the Baker Hughes acquisition.
(f)
Primarily included the acquisition of Alstom's interest in the grid technology, renewable energy, and global nuclear and French steam power joint ventures for $(3,105) million in the fourth quarter of 2018. See Note 16.
(g)
Primarily included debt tender expenditures of $(255) million incurred to purchase GE long-term debt in 2019.


GE2019 FORM 10-K 110

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GE CAPITAL For the years ended December 31 (In millions)
2019
2018
2017




Cash collateral and settlements received (paid) on derivative contracts$1,263
$(708)$836
Increase (decrease) in other liabilities(1,470)240
(798)
Other(a)811
627
11,076
All other operating activities$605
$158
$11,114




Increase in loans to customers$(15,022)$(30,207)$(45,251)
Principal collections from customers - loans18,083
37,237
47,471
Investment in equipment for financing leases(18)(306)(585)
Principal collections from customers - financing leases(b)—
802
1,011
Sales of financing receivables345
2,458
251
Net decrease (increase) in GE Capital financing receivables$3,389
$9,986
$2,897




Purchases of investment securities$(6,205)$(5,775)$(2,867)
Dispositions and maturities of investment securities4,589
8,309
10,001
Decrease (increase) in other assets - investments1,347
(4,516)(8,497)
Other(c)2,886
2,464
4,375
All other investing activities$2,617
$482
$3,013




Short-term (91 to 365 days)$(10,515)$(14,251)$(18,591)
Long-term (longer than one year)(991)(5,460)(2,054)
Principal payments - non-recourse, leveraged leases(126)(125)(362)
Repayments and other reductions (maturities longer than 90 days)$(11,632)$(19,836)$(21,007)




Redemption of investment contracts$(279)$(268)$(344)
Settlements paid on derivative contracts(864)(2,235)(212)
Other324
95
276
All other financing activities$(819)$(2,408)$(280)
(a)
Primarily included non-cash adjustments for insurance-related charges recorded in 2019 and 2017.
(b)
In 2019, per ASU No. 2016-02, Leases, principal collections from customers on financing leases is classified as cash from operating activities.
(c)
Primarily included cash related to our current receivables and supply chain finance programs and net activity related to settlements between our continuing operations (primarily our treasury operations) and businesses in discontinued operations.




GE2019 FORM 10-K 111
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 25. INTERCOMPANY TRANSACTIONS
Transactions between related companies may include, but are not limited to, the following: GE Capital working capital services to GE, including current receivables and supply chain finance programs; GE Capital finance transactions, including related GE guarantees to GE Capital; GE Capital financing of GE long-term receivables; and aircraft engines, power equipment and renewable energy equipment manufactured by GE that are installed on GE Capital investments, including leased equipment.

In addition to the above transactions that primarily enable growth for the GE businesses, there are routine related party transactions, which include, but are not limited to, the following: expenses related to parent-subsidiary pension plans; buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions; information technology (IT) and other services sold to GE Capital by GE; settlements of tax liabilities; and various investments, loans and allocations of GE corporate overhead costs.

Presented below is a walk of intercompany eliminations from the combined GE and GE Capital totals to the consolidated cash flows.
(In millions)2019
2018
2017
    
Combined GE and GE Capital cash from (used for) operating activities - continuing operations$6,495
$2,282
$13,853
  GE current receivables sold to GE Capital1,081
5
(4,435)
  GE long-term receivables sold to GE Capital468
1,079
(250)
Supply chain finance programs(a)2,289
(18)302
GE Capital common dividends to GE—
—
(4,016)
Other reclassifications and eliminations86
(138)387
Consolidated cash from (used for) operating activities-continuing operations$10,419
$3,210
$5,840
    
Combined GE and GE Capital cash from (used for) investing activities - continuing operations$13,509
$14,915
$(3,473)
  GE current receivables sold to GE Capital(1,677)(839)4,561
  GE long-term receivables sold to GE Capital(468)(1,079)250
Supply chain finance programs(a)(2,289)18
(302)
  GE Capital loans to GE—
6,479
7,271
  Repayment of GE Capital loans by GE(1,523)—
(1,329)
  Capital contribution from GE to GE Capital4,000
—
—
  Other reclassifications and eliminations(868)(570)(251)
Consolidated cash from (used for) investing activities-continuing operations$10,684
$18,925
$6,728
    
Combined GE and GE Capital cash from (used for) financing activities - continuing operations$(14,665)$(22,408)$(21,738)
  GE current receivables sold to GE Capital596
835
(127)
  GE Capital common dividends to GE—
—
4,016
  GE Capital loans to GE—
(6,479)(7,271)
  Repayment of GE Capital loans by GE1,523
—
1,329
Capital contribution from GE to GE Capital(4,000)—
—
  Other reclassifications and eliminations782
706
(136)
Consolidated cash from (used for) financing activities-continuing operations$(15,764)$(27,345)$(23,927)
(a)
Represents the reduction of the GE liability associated with the funded participation in a supply chain finance program with GE Capital, primarily as a result of GE Capital's sale of the program platform to MUFG Union Bank, N.A. (MUFG) in 2019.

GE current receivables sold to GE Capital excludes $303 million, $5,192 million and $4,411 million related to cash payments received on the Receivable facility deferred purchase price in the years ended December 31, 2019, 2018 and 2017, respectively, which are reflected as Cash from investing activities in the GE Capital and Consolidated columns of our consolidated Statement of Cash Flows. Sales of current and long-term receivables from GE to GE Capital are classified as Cash from operating activities in the GE column of our Statement of Cash Flows. See Note 4 for further information.  

GE2019 FORM 10-K 112

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 26.23. OPERATING SEGMENTS
BASIS FOR PRESENTATION. Our operating businesses are organized based on the nature of markets and customers. Segment accounting policies are the same as described and referenced in Note 1. Segment results for our financial services businesses reflect the discrete tax effect of transactions.

A description of our operating segments as of December 31, 2019,2021 can be found in the Summary of Operating SegmentsSegment Operations section within MD&A.

2021 FORM 10-K 82

 Years ended December 31
 Total revenues(a) Intersegment revenues(b) External revenues
REVENUES (In millions)
2019
2018
2017
 2019
2018
2017
 2019
2018
2017
            
Power$18,625
$22,150
$29,426
 $357
$152
$326
 $18,267
$21,997
$29,100
Renewable Energy15,337
14,288
14,321
 139
186
242
 15,198
14,102
14,080
Aviation32,875
30,566
27,013
 758
375
459
 32,117
30,191
26,554
Healthcare19,942
19,784
19,017
 —
—
—
 19,942
19,784
19,017
Total industrial segment revenues86,778
86,789
89,776
 1,254
714
1,027
 85,524
86,075
88,749
Capital8,741
9,551
9,070
 971
1,384
1,558
 7,770
8,167
7,512
Corporate items
and eliminations
(305)673
433
 (2,225)(2,097)(2,585) 1,920
2,770
3,018
Total$95,214
$97,012
$99,279
 $—
$—
$—
 $95,214
$97,012
$99,279
(a)Revenues of GE businesses include income from sales of goods and services to customers.
(b)Sales from one component to another generally are priced at equivalent commercial selling prices.

REVENUESTotal revenuesIntersegment revenuesExternal revenues
Years ended December 31202120202019202120202019202120202019
Aviation$21,310 $22,042 $32,875 $1,036 $1,445 $758 $20,274 $20,597 $32,117 
Healthcare17,725 18,009 19,942 1 1 — 17,724 18,008 19,942 
Renewable Energy15,697 15,666 15,337 138 142 139 15,559 15,523 15,198 
Power16,903 17,589 18,625 345 352 357 16,558 17,237 18,267 
Corporate2,561 2,528 3,442 (1,520)(1,941)(1,254)4,081 4,468 4,696 
Total$74,196 $75,833 $90,221 $— $— $— $74,196 $75,833 $90,221 
The
Years ended December 31
202120202019
EquipmentServicesTotalEquipmentServicesTotalEquipmentServicesTotal
Aviation$7,531 $13,780 $21,310 $8,582 $13,460 $22,042 $12,737 $20,138 $32,875 
Healthcare9,104 8,620 17,725 9,992 8,017 18,009 11,585 8,357 19,942 
Renewable Energy13,224 2,473 15,697 12,859 2,807 15,666 12,267 3,069 15,337 
Power5,035 11,868 16,903 6,707 10,883 17,589 6,247 12,378 18,625 
Total segment revenues$34,894 $36,741 $71,635 $38,140 $35,166 $73,306 $42,837 $43,942 $86,778 

SEGMENT REVENUESYears ended December 31
202120202019
Commercial Engines & Services$14,360 $14,479 $24,769 
Military4,136 4,572 4,389 
Systems & Other2,814 2,991 3,718 
Aviation$21,310 $22,042 $32,875 
Healthcare Systems$15,694 $15,387 $14,648 
Pharmaceutical Diagnostics2,031 1,792 2,005 
BioPharma— 830 3,289 
Healthcare$17,725 $18,009 $19,942 
Onshore Wind$11,026 $10,881 $10,421 
Grid Solutions equipment and services3,207 3,585 4,016 
Hydro, Offshore Wind and Hybrid Solutions1,464 1,200 900 
Renewable Energy$15,697 $15,666 $15,337 
Gas Power$12,080 $12,655 $13,122 
Steam Power3,241 3,557 4,021 
Power Conversion, Nuclear and other1,582 1,378 1,482 
Power$16,903 $17,589 $18,625 
Total segment revenues$71,635 $73,306 $86,778 
Corporate$2,561 $2,528 $3,442 
Total revenues$74,196 $75,833 $90,221 

Revenues are classified according to the region to which equipment and services revenues classification inare sold. For purposes of this analysis, the table belowU.S. is consistent with our segment MD&A presentation.
 Years ended December 31
 2019 2018 2017
(In millions)EquipmentServicesTotal EquipmentServicesTotal EquipmentServicesTotal
            
Power$6,247
$12,378
$18,625
 $8,077
$14,073
$22,150
 $12,909
$16,517
$29,426
            
Renewable Energy12,267
3,069
15,337
 11,419
2,870
14,288
 13,969
352
14,321
            
Aviation12,804
20,071
32,875
 11,499
19,067
30,566
 10,215
16,797
27,013
            
Healthcare11,585
8,357
19,942
 11,422
8,363
19,784
 10,771
8,246
19,017
            
Total industrial segment revenues$42,904
$43,875
$86,778
 $42,416
$44,372
$86,789
 $47,864
$41,913
$89,776
SEGMENT REVENUESYears ended December 31
 (In millions)
2019
 2018
 2017
      
Gas Power$13,122

$13,296

$17,100
Power Portfolio5,503

8,853

12,326
Power$18,625
 $22,150
 $29,426
      
Onshore Wind$10,421
 $8,220
 $8,055
Grid Solutions equipment and services4,062
 4,772
 5,117
Other855
 1,296
 1,149
Renewable Energy$15,337
 $14,288
 $14,321
      
Commercial$24,217
 $22,724
 $19,709
Military4,389
 4,103
 3,991
Systems & Other4,269
 3,740
 3,314
Aviation$32,875
 $30,566
 $27,013
      
Healthcare Systems$14,648
 $14,886
 $14,460
Life Sciences5,294
 4,898
 4,557
Healthcare$19,942
 $19,784
 $19,017
      
Total industrial segment revenues$86,778
 $86,789
 $89,776
Capital(a)8,741
 9,551
 9,070
Corporate items and eliminations(305) 673
 433
Consolidated revenues$95,214
 $97,012
 $99,279
(a) Substantially all of our revenues at GE Capital are outsidepresented separately from the remainder of the scope of ASC 606.Americas.

Revenues from customers located in the United States were $39,372 million, $39,876 million and $41,468 million for the years ended December 31, 2019, 2018 and 2017, respectively. Revenues from customers located outside the United States were $55,843 million, $57,136 million and $57,811 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Year ended December 31, 2021AviationHealthcareRenewable EnergyPowerCorporateTotal
U.S.$9,675 $7,229 $7,275 $6,186 $2,473$32,838 
Non-U.S.
Europe3,920 3,702 3,651 3,621 5214,946 
China region2,419 2,700 464 1,145 166,744 
Asia (excluding China region)1,758 2,345 1,959 2,090 (45)8,107 
Americas1,310 923 1,009 1,239 (4)4,476 
Middle East and Africa2,228 826 1,340 2,622 697,085 
Total Non-U.S.$11,635 $10,496 $8,422 $10,717 $88$41,358 
Total geographic revenues$21,310 $17,725 $15,697 $16,903 $2,561$74,196 
Non-U.S. revenues as a % of total revenues55 %59 %54 %63 %56 %
GE20192021 FORM 10-K 11383
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2020AviationHealthcareRenewable EnergyPowerCorporateTotal
U.S.$11,239 $7,611 $7,846 $6,186 $2,336$35,217 
Non-U.S.
Europe4,288 3,952 3,047 2,895 15914,342 
China region2,078 2,455 1,156 1,253 356,978 
Asia (excluding China region)1,842 2,264 1,484 2,707 (55)8,241 
Americas882 879 819 1,483 14,064 
Middle East and Africa1,713 848 1,314 3,064 526,991 
Total Non-U.S.$10,803 $10,398 $7,820 $11,403 $192$40,616 
Total geographic revenues$22,042 $18,009 $15,666 $17,589 $2,528$75,833 
Non-U.S. revenues as a % of total revenues49 %58 %50 %65 %54 %

Year ended December 31, 2019
U.S.$13,384 $8,526 $7,413 $5,992 $3,648$38,963 
Non-U.S.
Europe7,452 4,132 2,925 3,140 (131)17,519 
China region3,050 2,747 698 974 (27)7,442 
Asia (excluding China region)3,591 2,690 2,038 3,044 (102)11,260 
Americas1,593 1,056 1,064 1,915 (31)5,597 
Middle East and Africa3,805 792 1,198 3,560 869,441 
Total Non-U.S.$19,491 $11,416 $7,924 $12,633 $(206)$51,258 
Total geographic revenues$32,875 $19,942 $15,337 $18,625 $3,442$90,221 
Non-U.S. revenues as a % of total revenues59 %57 %52 %68 %57 %

REMAINING PERFORMANCE OBLIGATION. As of December 31, 2019,2021, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $245,434$239,820 million. We expect to recognize revenue as we satisfy our remaining performance obligations as follows: 1) equipment-related remaining performance obligation of $48,487$45,065 million of which 58%53%, 76%77% and 88%98% is expected to be recognized within 1, 2 and 5 years, respectively, and the remaining thereafter; and 2) services-related remaining performance obligations of $196,947$194,755 million of which 14%10%, 46%41%, 72%63% and 83%80% is expected to be recognized within 1, 5, 10 and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.

Total sales of goodsequipment and services to agencies of the U.S. Government were 5%6%, 7% and 5% and 4% of GEtotal revenues for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively. Within our Aviation segment, defense-related sales were 5%, 4%6% and 4% of GEtotal revenues for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, respectively.
PROFIT AND EARNINGS For the years ended December 31
202120202019
Aviation$2,882 $1,229 $6,812 
Healthcare2,966 3,060 3,737 
Renewable Energy(795)(715)(791)
Power726 274 291 
Total segment profit5,778 3,848 10,049 
Corporate(a)892 8,061 (2,537)
Goodwill impairments— (877)(1,486)
Interest and other financial charges(1,813)(2,018)(2,826)
Debt extinguishment costs(6,524)(301)(256)
Non-operating benefit costs(1,782)(2,430)(2,839)
Benefit (provision) for income taxes124 333 (718)
Preferred dividends(237)(474)(460)
Earnings (loss) from continuing operations attributable to GE common shareholders(3,562)6,141 (1,073)
Earnings (loss) from discontinued operations attributable to GE common shareholders(3,195)(911)(4,366)
Net earnings (loss) attributable to GE common shareholders$(6,757)$5,230 $(5,439)
PROFIT AND EARNINGS For the years ended December 31 (In millions)
2019
2018
2017
    
Power$386
$(808)$1,894
Renewable Energy(666)292
728
Aviation6,820
6,466
5,370
Healthcare3,896
3,698
3,488
Total industrial segment profit10,436
9,647
11,479
Capital(530)(489)(6,765)
Total segment profit9,906
9,158
4,714
Corporate items and eliminations(2,212)(2,837)(3,798)
GE goodwill impairments(1,486)(22,136)(1,165)
GE interest and other financial charges(2,115)(2,415)(2,538)
GE non-operating benefit costs(2,828)(2,740)(2,409)
GE provision for income taxes(1,309)(467)(3,493)
Earnings (loss) from continuing operations attributable to GE common shareholders(44)(21,438)(8,689)
Earnings (loss) from discontinued operations, net of taxes(5,335)(1,363)(312)
Less net earnings (loss) attributable to noncontrolling interests, discontinued operations60
1
(81)
Earnings (loss) from discontinued operations, net of taxes and noncontrolling interests(5,395)(1,364)(231)
Consolidated net earnings (loss) attributable to GE common shareholders$(5,439)$(22,802)$(8,920)
 Interest and other financial charges Benefit (provision) for income taxes
For the years ended December 31 (In millions)
2019
2018
2017
 2019
2018
2017
        
Capital$2,532
$2,982
$3,145
 $582
$374
$6,302
Corporate items and eliminations(a)1,695
1,784
1,510
 (1,309)(467)(3,493)
Total$4,227
$4,766
$4,655
 $(726)$(93)$2,808

(a)Included amounts for Power, Renewable Energy, Aviation and Healthcare, for which our measure of segment profit excludes(a) Includes interest and other financial charges and income taxes.

 Assets Property, plant and
equipment additions(a)		 Depreciation and amortization(b)
 At December 31 For the years ended December 31 For the years ended December 31
(In millions)2019
2018
2017
 2019
2018
2017
 2019
2018
2017
            
Power$26,731
$27,389
$55,827
 $277
$358
$1,018
 $880
$1,307
$1,228
Renewable Energy15,935
16,400
18,466
 455
303
677
 425
474
382
Aviation41,647
38,021
37,473
 1,031
1,070
1,426
 1,150
1,042
979
Healthcare30,514
28,048
28,408
 395
378
393
 702
832
806
Capital(c)117,546
119,329
150,805
 3,830
4,569
3,680
 2,083
2,163
2,342
Corporate items
and eliminations(d)
29,565
18,032
10,758
 (175)(46)(64) 355
763
456
Total continuing$261,939
$247,219
$301,737
 $5,813
$6,632
$7,130
 $5,595
$6,582
$6,193
(a)Additions to property, plant and equipment include amounts relating to principal businesses purchased.
(b)Included amortization expense related to intangible assets.
(c)Included Capital deferred income taxes that are presented as assets for purposes of our balance sheet presentation.
(d)Included GE deferred income taxes that are presented as assets for purposes of our balance sheet presentation.




GE2019 FORM 10-K 114

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total assets of Power, Renewable Energy, Aviation, Healthcare, Capital and Corporate at December 31, 2019, include investments in and advances to associated companies of $565$63 million, $630 million, $2,073 million, $245 million, $2,159$50 million and $45 million, respectively. Investments in and advances to associated companies contributed approximately $(4) million, $(2) million, $204 million, $19 million, $324$101 million and $(11)benefit for income taxes of $162 million, $154 million and $166 million related to pre-tax incomeEFS within Corporate for the yearyears ended December 31, 2019 of Power, Renewable Energy, Aviation, Healthcare, Capital2021, 2020, and Corporate,2019, respectively.

2021 FORM 10-K 84

AssetsProperty, plant and
equipment additions(a)		Depreciation and amortization
At December 31For the years ended December 31For the years ended December 31
202120202019202120202019202120202019
Aviation$38,298 $38,634 $41,083 $445 $737 $1,031 $1,074 $1,142 $1,150 
Healthcare24,770 22,229 30,503 278 256 395 641 628 702 
Renewable Energy14,804 15,927 15,935 349 302 455 432 413 425 
Power23,569 24,453 26,731 189 245 277 692 749 880 
Corporate(b)94,256 114,220 110,309 25 40 58 168 531 384 
Total continuing$195,697 $215,463 $224,562 $1,286 $1,579 $2,216 $3,009 $3,464 $3,541 
(a)Additions to property, plant and equipment include amounts relating to principal businesses purchased.
(b)Included deferred income taxes that are presented as assets for purposes of our Statement of Financial Position presentation.

We classify certain assets that cannot meaningfully be associated with specific geographic areas as “Other Global” for this purpose.
December 3120212020
U.S.$130,956 $139,768 
Non-U.S.
Europe42,213 50,121 
Asia11,534 12,974 
Americas6,406 7,084 
Other Global4,588 5,516 
Total Non-U.S.$64,741 $75,695 
Total assets (Continuing operations)$195,697 $215,463 
December 31 (In millions)
2019
2018
   
U.S.$144,405
$126,566
Non-U.S.  
Europe70,565
70,007
Asia22,089
22,355
Americas13,435
12,871
Other Global11,445
15,420
Total Non-U.S.$117,534
$120,653
Total assets (Continuing Operations)$261,939
$247,219


The increasedecrease in total continuing assets from December 31, 2018 to December 31, 2019 isin 2021 was primarily due to the deconsolidation of our Baker Hughes segment and classification of our retained interest in Baker Hughes within investment securities, as well asdriven by lower sales of receivablesvolume and the effectimpact of adopting new leasing standards.

COVID-19, higher net repayment of borrowings, and funding of the GE Pension Plan. Property, plant and equipment – net associated with operations based in the United States were $11,992 million, $11,868$8,411 million and $12,393$9,077 million at December 31, 2019, 20182021 and 2017,2020, respectively. Property, plant and equipment – net associated with operations based outside the United States were $31,298 million, $31,743$7,198 million and $33,576$7,622 million at December 31, 2019, 20182021 and 2017,2020, respectively.

NOTE 27. GUARANTOR FINANCIAL INFORMATION
GE Capital International Funding Company Unlimited Company (the Issuer) previously issued senior unsecured registered notes that are fully and unconditionally, jointly and severally guaranteed by both the Company and GE Capital International Holdings Limited (each a Guarantor, and together, the Guarantors). The Company is required to provide certain financial information regarding the Issuer and the Guarantors of the registered securities, specifically Condensed Consolidating Statements of Earnings and Comprehensive Income, Condensed Consolidating Statements of Financial Position and Condensed Consolidating Statements of Cash Flows for:

•
General Electric Company (the Parent Company Guarantor) – prepared with investments in subsidiaries accounted for under the equity method of accounting and excluding any inter-segment eliminations;
•
GE Capital International Funding Company Unlimited Company (the Subsidiary Issuer) – finance subsidiary that issued the guaranteed notes for debt;
•
GE Capital International Holdings Limited (GECIHL)(the Subsidiary Guarantor) – prepared with investments in non-guarantor subsidiaries accounted for under the equity method of accounting;
•
Non-Guarantor Subsidiaries – prepared on an aggregated basis excluding any elimination or consolidation adjustments and includes predominantly all non-cash adjustments for cash flows;
•
Consolidating Adjustments – adjusting entries necessary to consolidate the Parent Company Guarantor with the Subsidiary Issuer, the Subsidiary Guarantor and Non-Guarantor Subsidiaries and in the comparative periods, this category includes the impact of new accounting policies adopted as described in Note 1; and
•
Consolidated – prepared on a consolidated basis.

GE2019 FORM 10-K 115
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2019
 
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Sales of goods and services$28,078
$—
$—
$154,927
$(95,518)$87,487
GE Capital revenues from services—
964
64
9,949
(3,250)7,728
Total revenues28,078
964
64
164,876
(98,768)95,214
       
Interest and other financial charges1,612
980
1,405
1,975
(1,745)4,227
Other costs and expenses32,563
1
—
166,371
(106,876)92,059
Total costs and expenses34,175
981
1,406
168,346
(108,622)96,287
Other income(3,853)—
—
30,453
(24,378)2,222
Equity in earnings (loss) of affiliates5,923
—
1,290
75,445
(82,658)—
Earnings (loss) from continuing
operations before income taxes
(4,028)(17)(52)102,427
(97,182)1,149
Benefit (provision) for income taxes(1,143)1
—
(228)643
(726)
Earnings (loss) from continuing operations(5,170)(16)(52)102,200
(96,539)423
Earnings (loss) from discontinued
operations, net of taxes
192
—
59
—
(5,585)(5,335)
Net earnings (loss)(4,979)(16)7
102,200
(102,124)(4,912)
Less net earnings (loss) attributable to
noncontrolling interests
—
—
—
7
59
66
Net earnings (loss) attributable to
the Company
(4,979)(16)7
102,192
(102,184)(4,979)
Other comprehensive income2,681
—
(1,022)2,280
(1,258)2,681
Comprehensive income (loss) attributable to the Company$(2,297)$(16)$(1,015)$104,472
$(103,441)$(2,297)
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2018
 
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Sales of goods and services$34,972
$—
$—
$164,691
$(110,723)$88,940
GE Capital revenues from services—
917
1,038
9,531
(3,414)8,072
Total revenues34,972
917
1,038
174,222
(114,136)97,012
       
Interest and other financial charges1,728
911
2,560
2,459
(2,893)4,766
Other costs and expenses47,471
—
1
186,262
(118,180)115,554
Total costs and expenses49,199
911
2,561
188,721
(121,073)120,320
Other income3,910
—
—
29,268
(30,857)2,321
Equity in earnings (loss) of affiliates(11,404)—
1,554
240,036
(230,186)—
Earnings (loss) from continuing
operations before income taxes
(21,721)6
31
254,803
(254,106)(20,987)
Benefit (provision) for income taxes1,092
5
—
(2,381)1,191
(93)
Earnings (loss) from continuing operations(20,629)11
31
252,422
(252,915)(21,080)
Earnings (loss) from discontinued
operations, net of taxes
(1,726)—
(39)—
401
(1,363)
Net earnings (loss)(22,355)11
(8)252,422
(252,514)(22,443)
Less net earnings (loss) attributable to
noncontrolling interests
—
—
—
(204)116
(89)
Net earnings (loss) attributable to
the Company
(22,355)11
(8)252,627
(252,629)(22,355)
Other comprehensive income(10)—
(82)(2,840)2,922
(10)
Comprehensive income (loss) attributable to the Company$(22,364)$11
$(90)$249,786
$(249,707)$(22,364)

GE2019 FORM 10-K 116

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2017
 
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Sales of goods and services$35,551
$—
$—
$161,172
$(104,782)$91,942
GE Capital revenues from services—
703
800
9,888
(4,053)7,337
Total revenues35,551
703
800
171,060
(108,835)99,279
       
Interest and other financial charges1,644
652
2,006
3,343
(2,990)4,655
Other costs and expenses38,765
—
18
177,223
(107,954)108,052
Total costs and expenses40,409
653
2,023
180,566
(110,943)112,707
Other income(959)—
—
75,291
(72,249)2,083
Equity in earnings (loss) of affiliates553
—
1,938
109,521
(112,012)—
Earnings (loss) from continuing
operations before income taxes
(5,263)50
714
175,307
(182,152)(11,345)
Benefit (provision) for income taxes(2,896)(5)115
5,877
(282)2,808
Earnings (loss) from continuing operations(8,159)45
829
181,184
(182,435)(8,536)
Earnings (loss) from discontinued
operations, net of taxes
(325)—
41
4
(32)(312)
Net earnings (loss)(8,484)45
870
181,187
(182,467)(8,849)
Less net earnings (loss) attributable to
noncontrolling interests
—
—
—
(137)(228)(365)
Net earnings (loss) attributable to
the Company
(8,484)45
870
181,324
(182,239)(8,484)
Other comprehensive income4,184
—
567
(7,552)6,985
4,184
Comprehensive income (loss) attributable to the Company$(4,300)$45
$1,436
$173,773
$(175,254)$(4,300)

CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2019
 
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Cash, cash equivalents and restricted cash$10,591
$—
$—
$26,438
$(636)$36,394
Receivables - net47,170
17,726
230
61,026
(99,104)27,047
Investment in subsidiaries147,397
—
40,408
421,613
(609,418)—
All other assets28,377
236
—
291,995
(118,000)202,607
Total assets$233,535
$17,961
$40,638
$801,071
$(827,158)$266,048
       
Short-term borrowings$135,172
$—
$2,981
$9,712
$(125,792)$22,072
Long-term and non-recourse borrowings40,660
16,771
24,417
34,262
(47,301)68,809
All other liabilities66,808
161
70
146,972
(68,705)145,306
Total liabilities242,640
16,932
27,468
190,946
(241,799)236,187
       
Total liabilities and equity$233,535
$17,961
$40,638
$801,071
$(827,158)$266,048


GE2019 FORM 10-K 117
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2018
 
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Cash, cash equivalents and restricted cash$9,561
$—
$—
$25,975
$(4,412)$31,124
Receivables - net30,466
17,467
2,792
69,268
(90,504)29,488
Investment in subsidiaries176,239
—
45,832
733,535
(955,605)—
All other assets29,615
12
—
359,063
(138,230)250,460
Total assets$245,881
$17,479
$48,623
$1,187,841
$(1,188,751)$311,072
       
Short-term borrowings$150,426
$—
$9,854
$9,649
$(157,153)$12,776
Long-term and non-recourse borrowings59,800
16,115
24,341
41,066
(50,498)90,824
All other liabilities43,872
336
245
153,160
(41,622)155,992
Total liabilities254,098
16,452
34,439
203,875
(249,273)259,591
       
Total liabilities and equity$245,881
$17,479
$48,623
$1,187,841
$(1,188,751)$311,072

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2019
       
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Cash from (used for) operating activities(a)$5,526
$137
$(1,685)$33,515
$(28,721)$8,772
       
Cash from (used for) investing activities32,210
(137)6,223
400,190
(429,548)8,939
       
Cash from (used for) financing activities(36,706)—
(4,538)(436,933)462,045
(16,133)
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
—
—
—
(50)—
(50)
Increase (decrease) in cash, cash equivalents and restricted cash1,030
—
—
(3,277)3,776
1,529
Cash, cash equivalents and restricted cash at beginning of year9,561
—
—
30,399
(4,412)35,548
Cash, cash equivalents and restricted cash at end of year10,591
—
—
27,121
(636)37,077
Less cash, cash equivalents and restricted cash of discontinued operations at end of year—
—
—
638
—
638
Cash, cash equivalents and restricted cash of continuing operations at end of year$10,591
$—
$—
$26,484
$(636)$36,439

(a)Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of $(1,282) million.

GE2019 FORM 10-K 118

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2018
       
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Cash from (used for) operating activities(a)$42,950
$(387)$34,361
$328,029
$(399,976)$4,978
       
Cash from (used for) investing activities1,292
457
27,415
(297,621)286,736
18,280
       
Cash from (used for) financing activities(38,154)(70)(61,779)(48,782)116,979
(31,807)
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
—
—
—
(628)—
(628)
Increase (decrease) in cash, cash equivalents and restricted cash6,089
—
(3)(19,002)3,739
(9,176)
Cash, cash equivalents and restricted cash at beginning of year3,472
—
3
49,400
(8,151)44,724
Cash, cash equivalents and restricted cash at end of year9,561
—
—
30,399
(4,412)35,548
Less cash, cash equivalents and restricted cash of discontinued operations at end of year—
—
—
4,424
—
4,424
Cash, cash equivalents and restricted cash of continuing operations at end of year$9,561
$—
$—
$25,975
$(4,412)$31,124
(a)Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of $1,991 million.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2017
       
(In millions)
Parent
Company
Guarantor

Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
       
Cash from (used for) operating activities(a)$(29,441)$52
$4,305
$149,385
$(117,747)$6,554
       
Cash from (used for) investing activities(4,432)(52)(1,871)(222,298)234,032
5,379
       
Cash from (used for) financing activities34,616
—
(2,473)70,782
(121,410)(18,484)
Effect of currency exchange rate changes
on cash, cash equivalents and restricted cash
—
—
—
891
—
891
Increase (decrease) in cash, cash equivalents and restricted cash743
—
(39)(1,239)(5,125)(5,659)
Cash, cash equivalents and restricted cash at beginning of year2,729
—
41
50,640
(3,026)50,384
Cash, cash equivalents and restricted cash at end of year3,472
—
3
49,400
(8,151)44,724
Less cash, cash equivalents and restricted cash of discontinued operations at end of year—
—
—
7,901
—
7,901
Cash, cash equivalents and restricted cash of continuing operations at end of year$3,472
$—
$3
$41,499
$(8,151)$36,823

(a)Parent Company Guarantor cash flows included cash from (used for) operating activities of discontinued operations of $239 million.

NOTE 28. BAKER HUGHES24. SUMMARIZED FINANCIAL INFORMATION
In September 2019, we deconsolidated our Baker Hughes segment and elected to. We account for our remaining interest in Baker Hughes (comprising 377.4166.6 million shares and a promissory note receivable)with approximately 16% ownership interest as of December 31, 2021) at fair value. At December 31, 2019, theAs of November 3, 2021, our investment in BKR ownership reduced below 20%, and as a result, we no longer have significant influence in BKR. The fair value of our interest in Baker Hughes at December 31, 2021 and 2020 was $9,888 million. Since the date of deconsolidation, we have not sold any shares of Baker Hughes$4,010 million and $7,319 million, respectively. We recognized ana realized and unrealized pre-tax gain of $793$938 million for the period ended December 31, 2019($696 million after-tax) based on a share price of $25.63.$24.06, a realized and unrealized pre-tax loss of $2,037 million ($1,562 million after-tax) based on a share price of $20.85 and a pre-tax unrealized gain of $793 million ($626 million after-tax) based on a share price of $25.63 for the years ended December 31, 2021, 2020 and 2019, respectively. The 2021 gain and 2020 loss included a $129 million pre-tax derivative gain and a $54 million pre-tax derivative loss, respectively, associated with the forward sale of Baker Hughes shares pursuant to our previously announced program to monetize our Baker Hughes position. During the years ended December 31, 2021 and 2020, we completed forward sales of 183 million and 28 million shares and received proceeds of $4,145 million and $417 million, respectively. In February 2022, we completed a forward sale of 50 million shares and received proceeds of $1,302 million. See Notes 2 and 3 for further information. Summarized financial information of Baker Hughes is as follows.


For the years ended December 312021(a)20202019(b)
Revenues$16,997 $20,705 $7,751 
Gross Profit3,276 3,199 1,558 
Net income (loss)(546)(15,761)120 
Net income (loss) attributable to the entity(407)(9,940)60 
(a) Financial information is from January 1, 2021 to November 3, 2021 (date investment in BKR reduced below 20%).
(b) Financial information is from September 16, 2019 (date of deconsolidation) to December 31, 2019.
GE2019 FORM 10-K 119
As of December 312021(a)2020
Current$— $16,455 
Noncurrent— 21,552 
Total assets$— $38,007 
FINANCIAL STATEMENTSCurrentNOTES TO CONSOLIDATED FINANCIAL STATEMENTS$— $10,227 
Noncurrent— 9,538 
Total liabilities$— $19,765 
Noncontrolling interests$— $5,349 
(a) As of November 3, 2021 (date investment in BKR reduced below 20%). As a result, we no longer have significant influence in BKR.
2021 FORM 10-K 85


SummarizedOn November 1, 2021, we received 111.5 million ordinary shares of AerCap (approximately 46% ownership interest) and an AerCap senior note as partial consideration in conjunction with the GECAS transaction, for which we have adopted the fair value option. The fair value of our interest in AerCap, including the note, at December 31, 2021 was $8,287 million. See Notes 2 and 3 for further information. Given AerCap summarized financial information is not available as of Baker Hughes from the date of deconsolidation is as follows.this filing, this information will be reported on a lag in future periods beginning in 2022.
From September 16 to December 31, 2019 (In millions)
 
  
Revenues$7,751
Gross Profit1,558
Net income (loss)120
Net income (loss) attributable to the entity60
December 31, 2019 (In millions)
 
  
Current$15,222
Noncurrent38,147
Total assets$53,369
  
Current$10,014
Noncurrent8,857
Total liabilities$18,871
Noncontrolling interests$12,570


Baker Hughes is aand AerCap are SEC registrantregistrants with separate filing requirements, and itstheir respective financial information can be obtained from www.sec.gov or www.bakerhughes.com.www.sec.gov.

NOTE 29.25. QUARTERLY INFORMATION (UNAUDITED)
First quarterSecond quarterThird quarterFourth quarter
(Per-share amounts in dollars)20212020202120202021202020212020
Total revenues$17,071 $19,380 $18,253 $16,811 $18,569 $18,609 $20,303 $21,033 
Sales of equipment and services16,316 18,791 17,470 16,048 17,813 17,866 19,492 20,264 
Cost of equipment and services sold12,538 14,426 13,618 13,633 13,401 14,042 14,338 15,770 
Earnings (loss) from continuing operations97 6,254 (571)(1,138)582 (1,137)(3,504)2,479 
Earnings (loss) from discontinued operations(2,894)(21)(564)(993)602 (58)(339)161 
Net earnings (loss)(2,798)6,233 (1,135)(2,132)1,184 (1,195)(3,843)2,640 
Less net earnings (loss) attributable to
noncontrolling interests
5 34 (3)(145)(73)(51)1 3 
Net earnings (loss) attributable to the Company$(2,802)$6,199 $(1,131)$(1,987)$1,257 $(1,144)$(3,843)$2,636 
Per-share amounts – earnings (loss) from
continuing operations
Diluted earnings (loss) per share$0.02 $5.63 $(0.57)$(1.21)$0.54 $(1.04)$(3.24)$2.05 
Basic earnings (loss) per share0.02 5.64 (0.57)(1.21)0.54 (1.04)(3.24)2.07 
Per-share amounts – earnings (loss)
from discontinued operations
Diluted earnings (loss) per share(2.62)(0.02)(0.51)(0.91)0.54 (0.05)(0.31)0.13 
Basic earnings (loss) per share(2.64)(0.02)(0.51)(0.91)0.55 (0.05)(0.31)0.14 
Per-share amounts – net earnings (loss)
Diluted earnings (loss) per share(2.60)5.61 (1.08)(2.12)1.08 (1.09)(3.55)2.19 
Basic earnings (loss) per share(2.62)5.62 (1.08)(2.12)1.09 (1.09)(3.55)2.22 
Dividends declared0.08 0.08 0.08 0.08 0.08 0.08 0.08 0.08 
 First quarter Second quarter Third quarter Fourth quarter
(In millions; per-share amounts in dollars)2019
2018
 2019
2018
 2019
2018
 2019
2018
            
Consolidated operations           
Earnings (loss) from continuing operations$983
$446
 $(115)$791
 $(1,290)$(23,014) $845
$697
Earnings (loss) from discontinued operations2,663
(1,559) 219
(122) (8,093)155
 (123)163
Net earnings (loss)3,645
(1,113) 104
669
 (9,383)(22,859) 721
860
Less net earnings (loss) attributable to
noncontrolling interests
57
34
 (23)(132) 40
(90) (7)99
Net earnings (loss) attributable to
the Company
$3,588
$(1,147) $127
$800
 $(9,423)$(22,769) $728
$761
Per-share amounts – earnings (loss) from
continuing operations
           
Diluted earnings (loss) per share$0.10
$0.03
 $(0.03)$0.08
 $(0.15)$(2.64) $0.07
$0.06
Basic earnings (loss) per share0.10
0.03
 (0.03)0.08
 (0.15)(2.64) 0.08
0.06
Per-share amounts – earnings (loss)
from discontinued operations
           
Diluted earnings (loss) per share0.30
(0.17) 0.03
(0.01) (0.93)0.02
 (0.02)0.01
Basic earnings (loss) per share0.30
(0.17) 0.03
(0.01) (0.93)0.02
 (0.01)0.01
Per-share amounts – net earnings (loss)           
Diluted earnings (loss) per share0.40
(0.14) (0.01)0.07
 (1.08)(2.62) 0.06
0.07
Basic earnings (loss) per share0.41
(0.14) (0.01)0.07
 (1.08)(2.62) 0.06
0.07
Dividends declared0.01
0.12
 0.01
0.12
 0.01
0.12
 0.01
0.01
            
Selected data           
GE           
Sales of goods and services$20,324
$21,138
 $21,416
$22,190
 $21,519
$21,273
 $24,460
$24,437
Gross profit from sales4,494
4,879
 4,500
5,100
 4,660
3,924
 5,780
4,261
GE Capital           
Total revenues2,227
2,173
 2,321
2,429
 2,097
2,473
 2,096
2,476
Earnings (loss) from continuing operations
  attributable to the Company
175
(179) 99
(22) (603)58
 259
101


For GE, gross profit from sales is sales of goods and services less costs of goods and services sold.

Earnings-per-share amounts are computed independently each quarter for earnings (loss) from continuing operations, earnings (loss) from discontinued operations and net earnings (loss). As a result, the sum of each quarter’s per-share amount may not equal the total per-share amount for the respective year; and the sum of per-share amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings (loss) for the respective quarters.

GE20192021 FORM 10-K 12086
FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS
Our public communications and SEC filings may contain statements related to future, not past, events. These forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our expected financial performance, including cash flows, revenues, organic growth, margins, earnings and earnings per share; macroeconomic and market conditions; planned and potential business or asset dispositions; our de-leveraging plans, including leverage ratios and targets, the timing and nature of actions to reduce indebtedness and our credit ratings and outlooks; GE's and GE Capital's funding and liquidity; our businesses’ cost structures and plans to reduce costs; restructuring, goodwill impairment or other financial charges; or tax rates.

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
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 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 and market 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 positions 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;
the length and severity of the recent coronavirus outbreak, including its impacts across our businesses on demand, operations in China and our global supply chains;
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 this form 10-K report.

These or other uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially.


GE2019 FORM 10-K 121
OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about our Executive Officers (As of February 1, 2020)
2022)
Date assumed
Executive
NamePositionAgeOfficer Position
Date assumed
Executive
NamePositionAgeOfficer Position
H. Lawrence Culp, Jr.Chairman of the Board & Chief Executive Officer5658October 2018
Jamie S. MillerCarolina Dybeck HappeSenior Vice President & Chief Financial Officer5149November 2017March 2020
L. Kevin CoxSenior Vice President, Chief Human Resources Officer58February 2019
Michael J. HolstonSenior Vice President, General Counsel & Secretary5759April 2018
David L. JoycePeter J. ArduiniVice Chairman of General Electric Company;63September 2016
President & CEO, GE Aviation
L. Kevin CoxSenior Vice President, Chief Human Resources Officer56February 2019
Kieran P. MurphySenior Vice President of General Electric Company;5657September 2018January 2022
President & CEO, GE Healthcare
Jérôme X. PécresseSenior Vice President of General Electric Company;5254September 2018
President & CEO, GE Renewable Energy
Russell StokesJohn SlatterySenior Vice President of General Electric Company;4853September 20182020
President & CEO, GE Power PortfolioAviation
Scott L. StrazikRussell StokesSenior Vice President of General Electric Company;4150January 2019September 2018
President & CEO, GE Gas PowerAviation Services
Scott L. StrazikSenior Vice President of General Electric Company;43January 2019
President & CEO, GE Power
Thomas S. TimkoVice President, Controller & Chief Accounting Officer5153September 2018

All Executive Officers are elected by the Board of Directors for an initial term that continues until the Board meeting immediately preceding the next annual statutory meeting of shareholders, and thereafter are elected for one-year terms or until their successors have been elected. AllOther than Messrs. Culp, Cox, Holston, Arduini, Slattery and Timko and Ms. Dybeck Happe, the Executive Officers have been executives of General Electric Company for the lastat least five years except for Messrs. Culp, Cox, Holston, Pécresse and Timko.years.

Prior to joining GE in April 2018 as an independent director and being elected to the position of Chairman and CEO in October 2018, Mr. Culp served as CEO at Danaher Corp. (2001-2014); as a senior advisor at Danaher Corp. (2014-2016); as a senior lecturer at Harvard Business School (2015-2018); and as a senior adviser at Bain Capital Private Equity, LP (2017-2018).

Prior to joining GE in March 2020, Ms. Dybeck Happe had been Chief Financial Officer of A.P. Moller - Maersk A/S since 2019 after serving as Chief Financial Officer of Assa Abloy AB since 2012 until 2018.

Prior to joining GE in February 2019, Mr. Cox had been Chief Human Resources Officer at American Express since 2005.

Prior to joining GE in April 2018, Mr. Holston had been general counsel at Merck since 2015, after joining the drugmaker as chief ethics and compliance officer in 2012.

Prior to joining GE in November 2015 withDecember 2021, Mr. Arduini had been President and Chief Executive Officer of Integra LifeSciences since January 2012.

Prior to joining GE in July 2020, Mr. Slattery had been President and Chief Executive Officer of Commercial Aviation for Embraer, S.A. since 2016 after serving as the acquisition of Alstom, Mr. Pécresse was an Executive Vice President of AlstomChief Commercial Officer for Embraer Commercial Aviation since June 2011.2012.

Prior to joining GE in September 2018, Mr. Timko was Vice President, Controller and Chief Accounting Officer at General Motors since 2013.

The remaining information called for by this item is incorporated by reference to “Election of Directors,” “Other Governance Policies & Practices” and “Board Operations” in our definitive proxy statement for our 20202022 Annual Meeting of Shareholders to be held May 5, 2020,4, 2022, which will be filed within 120 days of the end of our fiscal year ended December 31, 20192021 (the 20202022 Proxy Statement).

GE20192021 FORM 10-K 12287

OTHER INFORMATION


EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)1. Financial Statements
Included in the “Financial Statements and Supplementary Data” section of this report:
Management’s Annual Report on Internal Control Over Financial Reporting
ReportReports of Independent Registered Public Accounting FirmFirms
Statement of Earnings (Loss) for the years ended December 31, 2019, 20182021, 2020 and 20172019
Statement of Financial Position at December 31, 20192021 and 20182020
Statement of Cash Flows for the years ended December 31, 2019, 20182021, 2020 and 20172019
Statement of Comprehensive Income (Loss) for the years ended December 31, 2019, 20182021, 2020 and 20172019
Statement of Changes in Shareholders' Equity for the years ended December 31, 2019, 20182021, 2020 and 20172019
Notes to consolidated financial statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations - Summary of Operating Segments

(a)2. Financial Statement Schedules
The schedules listed in Reg. 210.5-04 have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

(a)3. Exhibit Index
Exhibit
Number		Description
2(a)
2(b)
Amendment to Transaction Agreement and Plan of Merger dated March 27, 2017 between General Electric Company, Baker Hughes Incorporated, Bear Newco, Inc., Bear MergerSub, Inc., BHI Newco, Inc., and Bear MergerSub 2, Inc. (Incorporated by reference to Bear Newco, Inc.'s Registration Statement on Form S-4, pages A-II-I through G-16, filed pursuant to Rule 424(b)(3) on May 30, 2017 (Commission file number 333-216991)).
3(i)
The3(i)The Restated Certificate of Incorporation of General Electric Company (Incorporated(Incorporated by reference to Exhibit 3(i) to GE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013)2013), as amended by the Certificate of Amendment, dated December 2, 2015 (Incorporated(Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated December 3, 2015)2015), as further amended by the Certificate of Amendment, dated January 19, 2016 (Incorporated(Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated January 20, 2016)2016), as further amended by the Certificate of Change of General Electric Company (Incorporated(Incorporated by reference to Exhibit 3(1) to GE’s Current Report on Form 8-K, dated September 1, 20162016), as further amended by the Certificate of Amendment, dated May 13, 2019 (Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated May 13, 2019), and as further amended by the Certificate of Change of General Electric Company (Incorporated by reference to Exhibit 3.1 to GE’s Current Report on Form 8-K, dated December 9, 2019), as further amended by the Certificate of Amendment, dated July 30, 2021 (Incorporated by reference to Exhibit 3.1 to GE's Current Report on Form 8-K, dated July 30, 2021) (in each case, under Commission file number 001-00035).
The By-Laws of General Electric Company, as amended on May 13, 2019 (Incorporated by reference to Exhibit 3.2 to GE’s Current Report on Form 8-K dated May 13, 2019) (Commission file number 001-00035)).
4(a)
Amended and Restated General Electric Capital Corporation Standard Global Multiple Series Indenture Provisions dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(a) to General Electric Capital Corporation’s Registration Statement on Form S-3, File No. 333-59707 (Commission file number 001-06461)).
4(b)
Third Amended and Restated Indenture dated as of February 27, 1997, between General Electric Capital Corporation and The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit 4(c) to General Electric Capital Corporation’s Registration Statement on Form S-3, File No. 333-59707 (Commission file number 001-06461)).
4(c)
First Supplemental Indenture dated as of May 3, 1999, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(dd) to General Electric Capital Corporation’s Post-Effective Amendment No. 1 to Registration Statement on Form S-3, File No. 333-76479 (Commission file number 001-06461)).
4(d)
Second Supplemental Indenture dated as of July 2, 2001, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(f) to General Electric Capital Corporation’s Post-Effective Amendment No.1 to Registration Statement on Form S-3, File No. 333-40880 (Commission file number 001-06461)).
4(e)
Third Supplemental Indenture dated as of November 22, 2002, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(cc) to General Electric Capital Corporation’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-3, File No. 333‑100527 (Commission file number 001-06461)).
4(f)
Fourth Supplemental Indenture dated as of August 24, 2007, supplemental to Third Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(g) to General Electric Capital Corporation’s Registration Statement on Form S-3, File number 333-156929 (Commission file number 001-06461)).
4(g)
Senior Note Indenture, dated October 9, 2012, by and between the Company and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 of GE’s Current Report on Form 8-K dated October 9, 2012 (Commission file number 001-00035)).

GE2019 FORM 10-K 123
OTHER INFORMATION

4(h)
Indenture dated as of October 26, 2015, among GE Capital International Funding Company, as issuer, General Electric Company and General Electric Capital Corporation, as guarantors and The Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 99 to General Electric’s Current Report on Form 8-K filed on October 26, 2015 (Commission file number 001-00035)).
4(i)
Global Supplemental Indenture dated as of April 10, 2015, among General Electric Capital Corporation, General Electric Company and The Bank of New York Mellon, as trustee. (Incorporated by reference to Exhibit 4(i) to GE’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 2015)2015 (Commission file number 001-00035)).
4(j)
Second Global Supplemental Indenture dated as of December 2, 2015, among General Electric Capital Corporation, General Electric Company and The Bank of New York Mellon, as successor trustee (Incorporated by reference to Exhibit 4.2 to General Electric’s Current Report on Form 8-K filed on December 3, 2015 (Commission file number 001-00035)).
2021 FORM 10-K 88

4(k)
Agreement to furnish to the Securities and Exchange Commission upon request a copy of instruments defining the rights of holders of certain long-term debt of the registrant and consolidated subsidiaries.*
4(l)
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.*
(10)
Except for 10(aa)10(kk) and (bb)(ll) below, all of the following exhibits consist of Executive Compensation Plans or Arrangements:
(a)
General Electric Incentive CompensationExecutive Life Insurance Plan, as amended effective July January 1, 1991 (Incorporated by reference to Exhibit 10(a) to GE’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1991)2022.
(b)
General Electric Financial Planning Program, as amended through September 1993 (Incorporated by reference to Exhibit 10(h) to GE’s Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1993).*
(c)
(d)
(e)
General Electric Leadership Life Insurance Program, effective January 1, 1994 (Incorporated by reference to Exhibit 10(r) to GE’s Annual Report on Form 10-K2002 (Commission file number 001-00035) for the fiscal year ended December 31, 1993)).
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Form of Agreement for Annual Restricted Stock Unit Grants to Executive Officers under the General Electric Company 2007 Long-Term Incentive Plan, as amended February 7, 2014March 2021 (Incorporated by reference to Exhibit 10(a) to GE’s Quarterly Report on Form 10-Q for the quarter ended March 31, 201430, 2021 (Commission file number 001-00035)).
(p)
(q)

GE2019 FORM 10-K 124

OTHER INFORMATION

(r)
(x) Form of Agreement for Performance Stock Unit Grants to Executive Officers in 2019 under the General Electric Company 2007 Long-Term Incentive Plan.*
(s)
General Electric International Employee Stock Purchase Plan, as amended and restated on April 25, 2018 (Incorporated by reference to Exhibit 99.1 to GE’s Registration Statement on Form S-8, dated May 1, 2018, File No. 333-224587 (Commission file number 001-00035)).
2021 FORM 10-K 89

(t)
(u)
(v)
(w)
(x)
(y)
GE Performance Stock Unit Grant Agreement for David Joyce, effective December 23, 2019.*
(z)
Employment Agreement between Carolina Dybeck Happe and General Electric Company, effective November 24, 2019.*2019 (Incorporated by reference to Exhibit 10(z) to GE’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (Commission file number 001-00035)).
(aa)
(bb)
Statement re Computation of Per Share Earnings.**
Subsidiaries of Registrant.*
(23)
(24)
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.*
Certification Pursuant to 18 U.S.C. Section 1350.*
99(a)Undertaking for Inclusion in Registration Statements on Form S-8 of General Electric Company (Incorporated by reference to Exhibit 99(b) to General Electric Annual Report on Form 10-K (Commission file number 001-00035) for the fiscal year ended December 31, 1992).
99(b)
99(a)Computation of Ratio of Earnings to Fixed Charges (Incorporated by reference to Exhibit 12(a) to GE Capital’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (Commission file number 001-06461)).
99(c)
Supplement to Present Required Information in Searchable Format.*
(101)
The following materials from General Electric Company's Annual Report on Form 10-K for the year ended December 31, 2018,2021, formatted as Inline XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, (ii) Statement of Financial Position at December 31, 20192021 and 2018,2020, (iii) Statement of Cash Flows for the years ended December 31, 2019, 20182021, 2020 and 2017,2019, (iv) Statement of Comprehensive Income (Loss) for the years ended December 31, 2019, 20182021, 2020 and 2017,, (v) Statement of Changes in Shareholders' Equity for the years ended December 31, 2019, 20182021, 2020 and 2017,, and (vi) the Notes to Consolidated Financial Statements.*
(104)
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed electronically herewith.herewith
**
Information required to be presented in Exhibit 11 is provided in Note 1817 to the consolidated financial statements in this Form 10-K Report in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification 260, Earnings Per Share.

GE20192021 FORM 10-K 12590

OTHER INFORMATIONFORM 10-K CROSS REFERENCE INDEXPage(s)

FORM 10-K CROSS REFERENCE INDEX
Part I
Item 1.Business4-6, 10-15, 83-84
Item Number1A.Page(s)Risk Factors35-43
Part I
Item 1.Business3, 7, 9-20
Item 1A.Risk Factors50-57
Item 1B.Unresolved Staff CommentsNot applicable
Item 2.Properties34
Item 3.Legal Proceedings106-10980-82
Item 4.Mine Safety DisclosuresNot applicable
Part II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities5035
Item 6.Selected Financial Data[Reserved]49Not applicable
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations4-496-34
Item 7A.Quantitative and Qualitative Disclosures About Market Risk28-30, 102-10420-21, 77-79
Item 8.Financial Statements and Supplementary Data62-12047-86
Item 9.Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNot applicable
Item 9A.Controls and Procedures5843
Item 9B.Other InformationNot applicable
Part III
Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent InspectionsNot applicable
Part III
Item 10.Directors, Executive Officers and Corporate Governance12287
Item 11.Executive Compensation(a)
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters(b), 99-10075-76
Item 13.Certain Relationships and Related Transactions, and Director Independence(c)
Item 14.Principal Accountant Fees and Services(d)
Part IV
Item 15.Exhibits and Financial Statement Schedules123-12588-90
Item 16.Form 10-K SummaryNot applicable
Signatures127
(a)Item 16.Incorporated by reference to “Compensation” in the 2020 Proxy Statement.Form 10-K SummaryNot applicable
(b)SignaturesIncorporated by reference to “Stock Ownership Information” in the 2020 Proxy Statement.
(c)Incorporated by reference to “Related Person Transactions” and “How We Assess Director Independence” in the 2020 Proxy Statement.92
(d)Incorporated by reference to “Independent Auditor Information” in the 2020 Proxy Statement.
(a)Incorporated by reference to “Compensation” in the 2022 Proxy Statement.
(b)Incorporated by reference to “Stock Ownership Information” in the 2022 Proxy Statement.
(c)Incorporated by reference to “Related Person Transactions” and “How We Assess Director Independence” in the 2022 Proxy Statement.
(d)Incorporated by reference to “Independent Auditor Information” in the 2022 Proxy Statement for Deloitte and Touche LLP (PCAOB ID No. 34) and KPMG LLP (PCAOB ID No. 185).

GE20192021 FORM 10-K 12691



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K for the fiscal year ended December 31, 2019,2021, to be signed on its behalf by the undersigned, and in the capacities indicated, thereunto duly authorized in the City of Boston and Commonwealth of Massachusetts on the 2411th day of February 2020.2022.

General Electric Company
(Registrant)
By/s/ Jamie S. MillerCarolina Dybeck Happe
Jamie S. MillerCarolina Dybeck Happe
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SignerTitleDate
/s/ Carolina Dybeck HappePrincipal Financial OfficerFebruary 11, 2022
Carolina Dybeck Happe
Senior Vice President and
Chief Financial Officer
SignerTitleDate
/s/ Jamie S. MillerPrincipal Financial OfficerFebruary 24, 2020
Jamie S. Miller
Senior Vice President and
Chief Financial Officer
/s/ Thomas S. TimkoPrincipal Accounting OfficerFebruary 24, 202011, 2022
Thomas S. Timko

Vice President, Chief Accounting Officer and Controller
/s/ H. Lawrence Culp, Jr.Principal Executive OfficerFebruary 24, 202011, 2022
H. Lawrence Culp, Jr.*

Chairman of the Board of Directors
Sébastien M. Bazin*Director
Francisco D'Souza*Ashton B. Carter*Director
Francisco D'Souza*Director
Edward P. Garden*Director
Thomas W. Horton*Director
Risa Lavizzo-Mourey*Director
Catherine A. Lesjak*Director
Paula Rosput Reynolds*Director
Leslie F. Seidman*Director
James S. Tisch*Director
A majority of the Board of Directors
*By/s/ Christoph A. PereiraMichael J. Holston
Christoph A. PereiraMichael J. Holston
Attorney-in-fact
February 24, 202011, 2022

GE20192021 FORM 10-K 12792