UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 001-00035
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| New York | | 14-0689340 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | | |
| 5 Necco Street | Boston | MA | | 02210 |
| (Address of principal executive offices) | | (Zip Code) |
(Registrant’s telephone number, including area code) (617) 443-3000
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, par value $0.01 per share | GE | New York Stock Exchange |
| 1.250% Notes due 2023 | GE 23E | New York Stock Exchange |
| 0.875% Notes due 2025 | GE 25 | New York Stock Exchange |
| 1.875% Notes due 2027 | GE 27E | New York Stock Exchange |
| 1.500% Notes due 2029 | GE 29 | New York Stock Exchange |
| 7 1/2% Guaranteed Subordinated Notes due 2035 | GE /35 | New York Stock Exchange |
| 2.125% Notes due 2037 | GE 37 | New York Stock Exchange |
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 þ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
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 the 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 | ☐ |
| 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
There were 1,092,668,1401,088,960,029 shares of common stock with a par value of $0.01 per share outstanding at September 30, 2022.March 31, 2023.
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 planned and potential transactions, including our plan to pursue a spin-off of our portfolio of energy businesses that are planned to be combined as GE Vernova (Renewable Energy, Power, Digital and Energy Financial Services); the impacts of macroeconomic and market conditions and volatility 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; impacts related to the COVID-19 pandemic; planned and potential transactions, including our plan to pursue spin-offs of GE HealthCare and our portfolio of energy businesses that are planned to be combined as GE Vernova (Renewable Energy, Power, Digital and Energy Financial Services); 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 areas where risks or uncertainties could cause our actual results to be materially different than those expressed in our forward-looking statements include:
•our success in executing planned and completing asset dispositions or otherpotential transactions, including our plan to pursue spin-offsa spin-off of GE HealthCare and GE Vernova, and sales or other dispositions of our equity interests in Baker Hughes Company (Baker Hughes) and AerCap Holdings N.V. (AerCap) and our expected equity interest in GE HealthCare, after its spin-off, the timing for such transactions, the ability to satisfy any applicable pre-conditions, and the expected proceeds, consideration and benefits to GE;
•changes in macroeconomic and market conditions and market volatility, including impacts related to the COVID-19 pandemic, risk of recession, inflation, supply chain constraints or disruptions, rising interest rates, perceived weakness or failures of banks, the value of securities and other financial assets (including our equity interests in Baker Hughes and AerCap and our expected equity interest in GE HealthCare after its spin-off)HealthCare), oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on our business operations, financial results and financial position;
•global economic trends, competition and geopolitical risks, including impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, decreases in the rates of investment or economic growth globally or 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;
•the continuing severity, magnitude and duration of the COVID-19 pandemic, including impacts of virus variants and resurgences, and of government, business and individual responses, such as continued or new government-imposed lockdowns and travel restrictions, and in particular any adverse impacts to the aviation passenger confidence;industry and its participants;
•our capital allocation plans, including de-leveraging actions to reduce GE's indebtedness, the capital structures of the three public companies that we plan to form from our businesses with the planned spin-offs,spin-off, the timing and amount of dividends, share repurchases, acquisitions, 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 funding profile, costs, liquidity and competitive position;
•the amount and timing of our cash flows and earnings, which may be impacted by macroeconomic, 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 mortgage portfolio in Poland (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 impacts from the ongoing conflict between Russia and Ukraine and the related sanctions and other measures, decreases in the rates of investment or economic growth globally or 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 demand for air travel and other aviation industry dynamics related to the COVID-19 pandemic; pricing, cost, volume and the timing of customer investment by customers or industry participants 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; technology developments; and other shifts in the competitive landscape for our products and services;
•operational execution by our businesses, including the success at our Renewable Energy business in improving product quality and fleet availability, executing on cost reduction initiatives and other aspects of operational performance, as well as the performance of GE Aerospace 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 the impact of the Inflation Reduction Act and other policies), 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 improvements, 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, Bank BPH and other investigative and legal proceedings;
•the impact of actual or potential quality issues or failures of our products or third-party products with which our products are integrated, and related costs and 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 the "Risk Factors" section ofin our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, as such descriptions may be updated or amended in any future reports we file with the SEC.
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.
2022 3Q2023 1Q FORM 10-Q 3
ABOUT GENERAL ELECTRIC. General Electric Company (General Electric, GE or the Company) is a high-tech industrial company that operates worldwide through its fourthree segments, Aerospace, HealthCare, Renewable Energy, and Power. Our products include commercial and military aircraft engines and systems; healthcare systems and pharmaceutical diagnostics; wind and other renewable energy generation equipment and grid solutions; and gas, steam, nuclear and other power generation equipment. We have significant global installed bases of equipment across these sectors, and services to support these products are also an important part of our business alongside new equipment sales.
In November 2021, we announced a strategic plan to form three industry-leading, global, investment-grade public companies from (i) our (i) Aerospace business, (ii) HealthCare business and (iii) combinedour Renewable Energy, Power, Digital and Energy Financial Services businesses.businesses, which we plan to combine and refer to as GE Vernova, and (iii) our former HealthCare business. In July 2022, we announced the new brand names for our three planned future companies: GE Aerospace, GE HealthCare and GE Vernova. Therefore, forFor purposes of this report, we refer to our reporting segments as Aerospace, (previously Aviation), HealthCare (previously Healthcare), Renewable Energy and Power. The composition of these reporting segments is unchanged. On January 3, 2023, we completed the separation of the HealthCare business from GE through the spin-off of GE HealthCare Technologies Inc. (GE HealthCare). In the spin-off, GE made a pro-rata distribution of approximately 80.1% of the shares of GE HealthCare’s common stock to GE shareholders, retaining approximately 19.9% of GE HealthCare common stock.
The historical results of GE HealthCare and certain assets and liabilities included in the spin-off are now reported in GE's consolidated financial statements as discontinued operations. We continue to refer to our reporting segments of Renewable Energy and Power, each of which are expected to become GE Vernova businesses, reflecting the organization and management of these businesses within GE today. Additionally, on January 1, 2023, we retrospectively adopted Accounting Standards Update No. 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. See Note 1 for further information.
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 accountsLinkedIn and other social media accounts, 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A). The consolidated financial statements of General Electric Company 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.
In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial data but not presented in our financial statements prepared in accordance with GAAP. Certain of these data are considered “non-GAAP financial measures” under SEC rules. See the Non-GAAP Financial Measures section for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures.
CONSOLIDATED RESULTS
THIRDFIRST QUARTER 20222023 RESULTS. Total revenues were $19.1$14.5 billion, up $0.5$1.8 billion for the quarter, driven primarily by increases at Aerospace and HealthCare, partially offset by decreases at Renewable Energy and Power.
Continuing earnings (loss) per share was $(0.14).$5.56. Excluding the results from our run-off Insurance business, separation costs, restructuring costs, non-operating benefit costs, gains (losses) on equity securities and gains (losses) on purchases and sales of business interests, gains (losses) on equity securities, restructuring costs and separation costs, Adjusted earnings per share* was $0.35.$0.27. For the three months ended September 30, 2022,March 31, 2023, profit margin was (0.3)%44.8% and profit was down $0.6up $7.7 billion, primarily due to a net lossan increase in gains on the value of equity securities of $0.5$6.1 billion, compared to the prior year gain, a decreasenonrecurrence of the Steam asset sale impairment of $0.8 billion, an increase in segment profit of $0.4 billion, a decreasean increase in Insurance profitnon-operating benefit income of $0.4$0.3 billion and the nonrecurrence of Russia and Ukraine charges of $0.2 billion. These increases were partially offset by an increase in restructuring and other charges and separation costs of $0.2 billion, partially offset by a decrease in non-operating benefit costs of $0.6 billion and a net gain on purchases and sales of businesses of $0.2 billion compared to the prior year loss.billion. Adjusted organic profit* decreased $0.3increased $0.5 billion, (20%), driven primarily by a decreaseincreases at Aerospace, Renewable Energy partially offset by an increase at Aerospace and lower adjusted total corporate operating costs*.Power.
Cash flows from operating activities (CFOA) were $1.3$0.2 billion and $(1.5)$(0.9) billion for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively. Cash flows from operating activities increased primarily due to a decrease in cash collateral paid net of settlements on interest rate derivative contracts, an increase in net income (after adjusting for depreciation of property, plant, and equipment, amortization of intangible assets and non-cash (gains) losses related to our retained ownership interests in GE HealthCare, AerCap and Baker HughesHughes) and non-operating debt extinguishment costs) and an increasea decrease in cash from all other operating activities.used for working capital. Free cash flows* (FCF) were $0.5$0.1 billion and $(1.8)$(1.2) billion for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively. FCF* increased primarily due to the same reasons as noted for CFOA above, partially offset by an increase in cash used for working capital (after adjusting for the impact from discontinued factoring programs and eliminations related to our receivables factoring and supply chain finance programs).above. See the Capital Resources and Liquidity - Statement of Cash Flows section for further information.
*Non-GAAP Financial Measure
Remaining performance obligation (RPO) is unfilled customer orders for products and product services (expected life of contract sales for product services) excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty. See Note 8 for further information.
| | | RPO | RPO | September 30, 2022 | December 31, 2021 | | RPO | March 31, 2023 | December 31, 2022 | |
| | Equipment | Equipment | $ | 44,734 | | $ | 45,065 | | | Equipment | $ | 47,991 | | $ | 44,198 | | |
| Services | Services | 196,029 | | 194,755 | | | Services | 194,063 | | 192,385 | | |
| Total RPO | Total RPO | $ | 240,763 | | $ | 239,820 | | | Total RPO | $ | 242,054 | | $ | 236,582 | | |
*Non-GAAP Financial Measure
As of September 30, 2022March 31, 2023, RPO increased $0.9$5.5 billion (2%) from December 31, 2021,2022, primarily at Renewable Energy, from new orders at Grid and Onshore Wind exceeding sales; at Aerospace, from engines contracted under long-term service agreements that have now been put into service and contract modifications; partially offset by decreasesan increase in Commercial orders; and at Power, from the continued wind down of the Steam Power new build coal business and sales outpacing new orders indriven by Gas Power contractual services; at Renewable Energy, from the overall impact of a stronger U.S. dollar and sales exceeding new orders at Onshore Wind; and at HealthCare, from the impact of contract renewal timing in services.equipment.
| | REVENUES | REVENUES | Three months ended September 30 | | Nine months ended September 30 | | REVENUES | | Three months ended March 31 | |
| | 2022 | 2021 | | 2022 | 2021 | | | | 2023 | 2022 | |
| Equipment revenues | Equipment revenues | $ | 8,082 | | $ | 8,903 | | | $ | 22,549 | | $ | 25,172 | | | Equipment revenues | | $ | 5,287 | | $ | 4,608 | | |
| Services revenues | Services revenues | 10,356 | | 8,910 | | | 30,041 | | 26,427 | | | Services revenues | | 8,407 | | 7,302 | | |
| Insurance revenues | Insurance revenues | 646 | | 756 | | | 2,179 | | 2,295 | | | Insurance revenues | | 791 | | 764 | | |
| Total revenues | Total revenues | $ | 19,084 | | $ | 18,569 | | | $ | 54,769 | | $ | 53,893 | | | Total revenues | | $ | 14,486 | | $ | 12,675 | | |
For the three months ended September 30, 2022March 31, 2023, total revenues increased $0.5$1.8 billion (3%(14%). Equipment revenues decreased,increased, primarily at Renewable Energy, due to fewer wind turbine deliveries at Onshore Wind; and at Power, due to decreases in Gas Power HA turbine and aeroderivative deliveries and decreases in Steam Power equipment on the exit of new build coal; partially offset by increases at HealthCare, due to Imaging and Ultrasound, mainly due to strong growth in the U.S. and Europe, the Middle East and Africa; and at Aerospace, due to an increase in commercial install and spare engine unit shipments versus the prior year.shipments; at Renewable Energy, due to higher revenue at Grid and Offshore Wind; and at Power, due to higher Gas Power Heavy-duty gas turbine deliveries. Services revenues increased, primarily at Aerospace, due to higher prices, increased internal shop visit volume and higher volume of commercial spare part shipments;shipments and higher prices, and at Renewable Energy, primarilyPower, due to higher coregrowth in Gas Power non-contractual services, and more repower unit deliveries at Onshore Wind; and at HealthCare, primarily due to the continued growth of Pharmaceutical Diagnostics (PDx) and Healthcare Systems (HCS); partially offset by a decrease at Power,Renewable Energy, due to lower planned contractual services outagesfewer repower unit deliveries at Gas Power and prior year Steam Power services volume that did not repeat. Insurance revenues decreased $0.1 billion (15%).Onshore Wind.
Excluding the change in Insurance revenues, the net effects of acquisitions of $0.1 billion, the net effects ofand dispositions of $0.1 billion and the effects of a strongerweaker U.S. dollar of $0.6$0.2 billion, organic revenues* increased $1.3$2.0 billion (7%(17%), with equipment revenues down $0.5up $0.8 billion (6%(18%) and services revenues up $1.8$1.2 billion (20%(16%). Organic revenues* increased at Aerospace, Power and HealthCare, partially offset by decreases at Renewable Energy and Power.
For the nine months ended September 30, 2022, total revenues increased $0.9 billion (2%). Equipment revenues decreased, primarily at Renewable Energy, due to fewer wind turbine deliveries at Onshore Wind and lower revenue at Grid; at Power, due to a decrease in Steam Power equipment on the exit of new build coal; and at Aerospace, due to lower GEnx engine production rates and product transition with fewer engine shipments on legacy programs; partially offset by an increase at HealthCare, driven by Imaging, mainly due to strong growth in the U.S. and Europe, the Middle East and Africa, partially offset by China. Services revenues increased, primarily at Aerospace, due to higher prices, increased shop visit volume and higher volume of commercial spare part shipments; at Renewable Energy, primarily due to higher services revenue at Onshore Wind from a larger installed base and more repower unit deliveries; and at HealthCare, driven by the continued growth of HCS; partially offset by a decrease at Power, due to prior year Steam Power services volume that did not repeat. Insurance revenues decreased $0.1 billion (5%).
Excluding the change in Insurance revenues, the net effects of acquisitions of $0.2 billion, the net effects of dispositions of $0.2 billion and the effects of a stronger U.S. dollar of $1.3 billion, organic revenues* increased $2.3 billion (4%), with equipment revenues down $2.1 billion (8%) and services revenues up $4.4 billion (17%). Organic revenues* increased at Aerospace and HealthCare, partially offset by decreases at Renewable Energy and Power.Energy.
| | EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE | Three months ended September 30 | | Nine months ended September 30 | | EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE | | Three months ended March 31 | |
| (Per-share in dollars and diluted) | (Per-share in dollars and diluted) | 2022 | 2021 | | 2022 | 2021 | | (Per-share in dollars and diluted) | | 2023 | 2022 | |
| Continuing earnings (loss) attributable to GE common shareholders | Continuing earnings (loss) attributable to GE common shareholders | $ | (153) | | $ | 603 | | | $ | (1,609) | | $ | (1) | | | Continuing earnings (loss) attributable to GE common shareholders | | $ | 6,103 | | $ | (1,276) | | |
| Continuing earnings (loss) per share | Continuing earnings (loss) per share | $ | (0.14) | | $ | 0.54 | | | $ | (1.46) | | $ | (0.01) | | | Continuing earnings (loss) per share | | $ | 5.56 | | $ | (1.16) | | |
For the three months ended September 30, 2022March 31, 2023, continuing earnings decreased $0.8increased $7.4 billion, primarily due to a net lossan increase in gains on the value of equity securities of $0.5$6.1 billion, compared to the prior year gain, a decrease in segment profitnonrecurrence of $0.4 billion, a decrease in Insurance profit of $0.4 billion and separation costs of $0.2 billion, partially offset by a decrease in non-operating benefit costs of $0.6 billion and a net gain on purchases and sales of businesses of $0.2 billion compared to the prior year loss. Adjusted earnings* was $0.4 billion, a decrease of $0.2 billion. Profit margin was (0.3)%, a decrease from 3.1%. Adjusted profit* was $1.1 billion, a decrease of $0.3 billion organically*, due to a decrease at Renewable Energy, partially offset by an increase at Aerospace and lower adjusted total corporate operating costs*. Adjusted profit margin* was 5.8%, a decrease of 190 basis points organically*.
For the nine months ended September 30, 2022, continuing earnings decreased $1.6 billion primarily due to a net loss on the value of equity securities of $3.1 billion compared to the prior year gain, an increase in provision for income taxes of $0.9 billion, the Steam asset sale impairment of $0.8 billion, separation costs of $0.6 billion and Russia and Ukraine charges of $0.3 billion, partially offset by a decrease in non-operating benefit costs of $1.8 billion, the nonrecurrence of debt extinguishment costs of $1.4 billion, lower adjusted total corporate operating costs of $0.5 billion, lower interest and other financial charges of $0.3 billion and an increase in segment profit of $0.4 billion, an increase in non-operating benefit income of $0.3 billion and the nonrecurrence of Russia and Ukraine charges of $0.2 billion. These increases were partially offset by an increase in provision for income tax of $0.2 billion and an increase in restructuring and other charges and separation costs of $0.2 billion. Adjusted earnings* were $1.5$0.3 billion, an increase of $0.5$0.4 billion. Profit margin was (1.5)%44.8%, a decreasean increase from (0.4)(9.3)%. Adjusted profit* was $3.7$0.9 billion, an increase of $0.7$0.5 billion organically*, due to increases at Aerospace, and Power, and lower adjusted total corporate operating costs*, partially offset by decreases Renewable Energy and HealthCare.Power. Adjusted profit margin* was 7.0%6.4%, an increase of 100330 basis points organically*.
*Non-GAAP Financial Measure
We continue to experience inflation pressure in our supply chain, as well as delays in sourcing key materials needed for our products.products and skilled labor shortages. This has delayed our ability to convert RPO to revenue and negatively impacted our profit margins. While the impact of inflation is expected to be challenging, we are takingcontinue to take actions to limit this pressure, we may continueincluding lean initiatives to experience impacts in future periods.drive cost productivity, partnering with our suppliers and adjusting the pricing of our products and services. Also, geopolitical uncertainties, withincluding the ongoing Russia and Ukraine conflict, as well as recent COVID-19 impacts in China, are introducing additional challenges. As of September 30, 2022,March 31, 2023, we havehad approximately $0.5$0.3 billion of remaining assets in Russia and Ukraine, primarilymainly in our Power and HealthCare businesses,business, which primarily relate to activity not subject to sanctions or restricted under Company policy.
*Non-GAAP Financial Measure
SEGMENT OPERATIONS. Refer to our Annual Report on Form 10-K for the year ended December 31, 2021,2022 for further information regarding our determination of segment profit for continuing operations and for our allocations of corporate costs to our segments.
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| Three months ended September 30 | | Nine months ended September 30 | |
| SUMMARY OF REPORTABLE SEGMENTS | 2022 | 2021 | V | % | | 2022 | 2021 | V | % | |
| Aerospace | $ | 6,705 | | $ | 5,398 | | 24 | | % | | $ | 18,434 | | $ | 15,230 | | 21 | | % | |
| HealthCare | 4,613 | | 4,339 | | 6 | | % | | 13,494 | | 13,100 | | 3 | | % | |
| Renewable Energy | 3,594 | | 4,208 | | (15) | | % | | 9,564 | | 11,505 | | (17) | | % | |
| Power | 3,529 | | 4,026 | | (12) | | % | | 11,233 | | 12,242 | | (8) | | % | |
| Total segment revenues | 18,440 | | 17,970 | | 3 | | % | | 52,725 | | 52,076 | | 1 | | % | |
| Corporate | 643 | | 599 | | 7 | | % | | 2,044 | | 1,816 | | 13 | | % | |
| Total revenues | $ | 19,084 | | $ | 18,569 | | 3 | | % | | $ | 54,769 | | $ | 53,893 | | 2 | | % | |
| | | | | | | | | | |
| Aerospace | $ | 1,284 | | $ | 846 | | 52 | | % | | $ | 3,341 | | $ | 1,664 | | F | | |
| HealthCare | 712 | | 704 | | 1 | | % | | 1,901 | | 2,203 | | (14) | | % | |
| Renewable Energy | (934) | | (151) | | U | | | (1,786) | | (484) | | U | | |
| Power | 141 | | 204 | | (31) | | % | | 524 | | 416 | | 26 | | % | |
| Total segment profit (loss) | 1,204 | | 1,603 | | (25) | | % | | 3,980 | | 3,799 | | 5 | | % | |
| Corporate(a) | (960) | | (40) | | U | | | (3,947) | | 361 | | U | | |
| | | | | | | | | | |
| Interest and other financial charges | (377) | | (446) | | 15 | | % | | (1,146) | | (1,403) | | 18 | | % | |
| Debt extinguishment costs | — | | — | | F | | | — | | (1,416) | | F | | |
| Non-operating benefit income (cost) | 125 | | (427) | | F | | | 396 | | (1,374) | | F | | |
| Benefit (provision) for income taxes | (72) | | (35) | | U | | | (701) | | 211 | | U | | |
| Preferred stock dividends | (73) | | (52) | | (40) | | % | | (192) | | (180) | | (7) | | % | |
| Earnings (loss) from continuing operations attributable to GE common shareholders | (153) | | 603 | | U | | | (1,609) | | (1) | | U | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Earnings (loss) from discontinued operations attributable to GE common shareholders | (85) | | 602 | | U | | | (580) | | (2,856) | | 80 | | % | |
| Net earnings (loss) attributable to GE common shareholders | $ | (238) | | $ | 1,205 | | U | | | $ | (2,189) | | $ | (2,857) | | 23 | | % | |
| | | | | | | | | | | | | | | | | | | | |
| SUMMARY OF REPORTABLE SEGMENTS | Three months ended March 31 | | | |
| 2023 | 2022 | V | % | | | | | | |
| Aerospace | $ | 6,981 | | $ | 5,603 | | 25 | | % | | | | | | |
| Renewable Energy | 2,837 | | 2,871 | | (1) | | % | | | | | | |
| Power | 3,820 | | 3,501 | | 9 | | % | | | | | | |
| Total segment revenues | 13,638 | | 11,975 | | 14 | | % | | | | | | |
| Corporate | 848 | | 700 | | 21 | | % | | | | | | |
| Total revenues | $ | 14,486 | | $ | 12,675 | | 14 | | % | | | | | | |
| | | | | | | | | | |
| Aerospace | $ | 1,326 | | $ | 908 | | 46 | | % | | | | | | |
| Renewable Energy | (414) | | (434) | | 5 | | % | | | | | | |
| Power | 75 | | 63 | | 19 | | % | | | | | | |
| Total segment profit (loss) | 987 | | 538 | | 83 | | % | | | | | | |
| Corporate(a) | 5,456 | | (1,419) | | F | | | | | | | |
| Interest and other financial charges | (257) | | (371) | | 31 | | % | | | | | | |
| | | | | | | | | | |
| Non-operating benefit income (cost) | 385 | | 105 | | F | | | | | | | |
| | | | | | | | | | |
| Benefit (provision) for income taxes | (322) | | (76) | | U | | | | | | | |
| Preferred stock dividends | (145) | | (52) | | U | | | | | | | |
| Earnings (loss) from continuing operations attributable to GE common shareholders | 6,103 | | (1,276) | | F | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Earnings (loss) from discontinued operations attributable to GE common shareholders | 1,257 | | 88 | | F | | | | | | | |
| Net earnings (loss) attributable to GE common shareholders | $ | 7,360 | | $ | (1,188) | | F | | | | | | | |
(a) Includes interest and other financial charges of $13$12 million and $16 million and $45 million and $47 million; and benefit for income taxes of $52$51 million and $33 million, and $160 million and $111$47 million related to Energy Financial Services (EFS)EFS within Corporate for the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
GE AEROSPACE. Our results in the thirdfirst quarter of 20222023 reflect the continued recovery of thegrowth in demand for commercial markets from the effects of the COVID-19 pandemic. Global industrial supply chain disruptions in material and labor continued to affect performance, however, Aerospace saw signs of improved flow through our factories.air travel. A key underlying driver of our commercial engine and services business is global commercial air traffic. We regularly track global departures, which improved 19%21% during the thirdfirst quarter of 2023 compared to the first quarter of 2022, compared to the third quarter of 2021, and standnow stands at approximately 85%97% of 2019 levels as of September 30, 2022.levels.
Global supply chain constraintsThe air traffic growth trends vary by region given economic conditions, airline competition and labor shortages, in part driven by the pandemic, are causing disruptions for us and our suppliers, which have impacted our production and delivery. We continue to partner with our airline and leasing customers and collaborate with our airframe partners on future production rates. However, supply chain output improved this quarter, and we increased our Commercial and Military engine sales units by 32% compared to the second quarter of 2022 and 21% compared to the same quarter last year.
Government travel restrictions and COVID-19 virus variants have driven varied levels of recovery regionally. We remain confident in the recovery, and current trends are in line with our recovery forecast.government regulations. Consistent with updated industry projections, although overall traffic recovery remains unchanged, we now estimate both single-aislenarrowbody and twin-aislewidebody air traffic to recoverreturn to 2019 levels in late 2023.2023 and grow in line with the global economic conditions. We are in frequent dialogue with our airline, airframe, and maintenance, repair and overhaul customers about the outlook for commercial air travel, new aircraft production, fleet retirements, and after-market services, including shop visit and spare parts demand.
As it relates to the military environment, we continue to forecast strong military demand creating future growth opportunities for our Military business as thebusiness. The U.S. Department of Defense and foreign governments have continued flight operations, and have allocated budgets to upgrade and modernize their existing fleets. In September 2022, Aerospace and the U.S. Air Force successfully concluded testing on the second XA100 adaptive cycle engine, marking the final major contract milestone of the Air Force’s Adaptive Engine Transition Program (AETP).
We increased our Commercial engine sales units in the first quarter of 2023, however, Military engine sales units decreased compared to the first quarter of 2022 3Q FORM 10-Q 6partly due to material availability and supplier challenges. Global material availability and labor shortages continue to cause disruptions for us and our suppliers, and have impacted our production and delivery. We continue to partner with our customers on future production rates. Aerospace is proactively managing the impact of inflationary pressure by deploying lean initiatives to drive cost productivity, partnering with our suppliers and adjusting the pricing of our products and services. We expect the impact of inflation will continue and we are taking actions to mitigate the impact.
Total engineering, comprising company, customer and partner-funded and nonrecurring engineering costs, increased compared to the prior year. We continue to beremain committed to investmentinvesting in developing and maturing technologies that enable a more sustainable future of flight.
We continue to take actions to protect our ability to serve our customers now and as demand in the global airline industry recovers.increases. Our deep history of innovation and technology leadership and a commercial and military engine installed base, including units produced by joint ventures, of approximately 39,40067,000 units, with approximately 11,50011,800 units under long-term service agreements, and military engine installed base of approximately 26,200 units represents strong long-term fundamentals. We believe Aerospace is well-positioned to drive long-term profitable growth and higher cash generation over time.
| | | | | | | | | | | | | | | | | | |
| Three months ended September 30 | | Nine months ended September 30 |
| | | | |
| Sales in units, except where noted | 2022 | 2021 | | 2022 | 2021 | |
| Commercial Engines(a) | 489 | | 377 | | | 1,187 | | 1,119 | | |
| LEAP Engines(b) | 347 | | 226 | | | 812 | | 625 | | |
| Military Engines | 151 | | 154 | | | 466 | | 405 | | |
| Spare Parts Rate(c) | $ | 29.4 | | $ | 19.3 | | | $ | 25.2 | | $ | 15.8 | | |
(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. |
| | | | | | | | | |
| RPO | September 30, 2022 | December 31, 2021 | |
| Equipment | $ | 12,324 | | $ | 11,139 | | |
| Services | 117,785 | | 114,133 | | |
| Total RPO | $ | 130,109 | | $ | 125,272 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SEGMENT REVENUES AND PROFIT | Three months ended September 30 | | Nine months ended September 30 |
| 2022 | | 2021 | | | 2022 | | 2021 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Commercial Engines & Services | $ | 4,971 | | | $ | 3,602 | | | | $ | 13,130 | | | $ | 10,071 | | | | |
| Military | 1,027 | | | 1,107 | | | | 3,159 | | | 3,104 | | | | |
| Systems & Other | 707 | | | 689 | | | | 2,146 | | | 2,055 | | | | |
| Total segment revenues | $ | 6,705 | | | $ | 5,398 | | | | $ | 18,434 | | | $ | 15,230 | | | | |
| | | | | | | | | | | |
| Equipment | $ | 1,968 | | | $ | 1,837 | | | | $ | 5,379 | | | $ | 5,549 | | | | |
| Services | 4,736 | | | 3,562 | | | | 13,055 | | | 9,681 | | | | |
| Total segment revenues | $ | 6,705 | | | $ | 5,398 | | | | $ | 18,434 | | | $ | 15,230 | | | | |
| | | | | | | | | | | |
| Segment profit | $ | 1,284 | | | $ | 846 | | | | $ | 3,341 | | | $ | 1,664 | | | | |
| Segment profit margin | 19.1 | | % | 15.7 | | % | | 18.1 | | % | 10.9 | | % | | |
| | | | | | | | | | | | |
| Three months ended March 31 | | |
| Sales in units, except where noted | 2023 | 2022 | | | | |
| Commercial Engines(a) | 481 | | 343 | | | | | |
| LEAP Engines(b) | 366 | | 239 | | | | | |
| Military Engines | 80 | | 184 | | | | | |
| Spare Parts Rate(c) | $ | 31.1 | | $ | 22.8 | | | | | |
(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. |
| | | | | | | | | |
| RPO | March 31, 2023 | December 31, 2022 | |
| Equipment | $ | 14,316 | | $ | 13,748 | | |
| Services | 123,114 | | 121,511 | | |
| Total RPO | $ | 137,430 | | $ | 135,260 | | |
| | | | | | | | | | | | | | | | | | | | | |
| SEGMENT REVENUES AND PROFIT | Three months ended March 31 | | |
| 2023 | | 2022 | | | | | | | | |
| Commercial Engines & Services | $ | 5,194 | | | $ | 3,853 | | | | | | | | | |
| Military | 1,018 | | | 1,036 | | | | | | | | | |
| Systems & Other | 770 | | | 714 | | | | | | | | | |
| Total segment revenues | $ | 6,981 | | | $ | 5,603 | | | | | | | | | |
| | | | | | | | | | | |
| Equipment | $ | 1,974 | | | $ | 1,654 | | | | | | | | | |
| Services | 5,007 | | | 3,949 | | | | | | | | | |
| Total segment revenues | $ | 6,981 | | | $ | 5,603 | | | | | | | | | |
| | | | | | | | | | | |
| Segment profit | $ | 1,326 | | | $ | 908 | | | | | | | | | |
| Segment profit margin | 19.0 | | % | 16.2 | | % | | | | | | | |
For the three months ended September 30, 2022,March 31, 2023, segment revenues were up $1.3$1.4 billion (24%(25%) and segment profit was up $0.4 billion (52%(46%).
Revenues increased $1.3 billion (25%) organically*. Commercial Services revenues increased, primarily due to higher prices, increased shop visit volume and higher volume of commercial spare part shipments. Commercial Engines revenues increased, primarily driven by 112 more commercial install and spare engine unit shipments, including 121 more LEAP units, versus the prior year. Military revenues decreased, primarily due to product mix and 3 fewer engine shipments than the prior year.
Profit increased $0.4 billion (47%) organically*, primarily due to higher prices, increased shop visit volume and higher volume of commercial spare part shipments. These increases in profit were partially offset by lower profit on Commercial Engine shipments driven by product transition with fewer engine shipments on legacy programs and more shipments on newer programs, inflation in our supply chain and additional growth investment.
For the nine months ended September 30, 2022, segment revenues were up $3.2 billion (21%) and segment profit was up $1.7 billion.
RPO as of September 30, 2022March 31, 2023 increased $4.8$2.2 billion (4%(2%) from December 31, 2021,2022, due to increases in both equipment and services. Equipment increased primarily due to an increase in Commercial orders since December 31, 2021.2022. Services increased primarily as a result of engines contracted under long-term service agreements that have now been put into service and contract modifications.
Revenues increased $3.3$1.4 billion (21%(25%) organically*. Commercial Services revenues increased, primarily due to higher prices, increased internal shop visit volume and higher volume of commercial spare part shipments. Commercial Services revenues also increased due to a net favorable change of $0.1 billion for its long-term service agreements compared to a net unfavorable change of $0.3 billion for the same period in the prior year.shipments, and higher prices. Commercial Engines revenues increased, primarily driven by 68138 more commercial install and spare engine unit shipments, including 187127 more LEAP units versus the prior year, partially offset by lower GEnx engine production rates and product transition with fewer engine shipments on legacy programs.year. Military revenues increased,decreased, primarily due to growth in services and 61 more104 fewer engine shipments than the prior year, partially offset by product mix.
*Non-GAAP Financial Measure
mix and growth in services.Profit increased $1.6$0.4 billion (96%(43%) organically*, primarily due to higher prices, increased internal shop visit volume and higher volume of commercial spare part shipments. Profit also increased due to the impact of favorable contract margin reviews for long-term service agreements.shipments, higher prices, and cost productivity. These increases in profit were partially offset by lower profit on Commercial Engine shipments driven by product transition with fewer engine shipments on legacy programs and more shipments on newer programs, inflation in our supply chain, product mix and additional growth investment.
RENEWABLE ENERGY – will be part of GE HEALTHCARE. Vernova.Market The recently enacted Inflation Reduction Act of 2022 (IRA) introduces new and extends existing tax incentives for at least 10 years. The IRA is expected to resolve recent U.S. policy uncertainty that resulted in project delays and deferral of customer investments in Onshore Wind and significantly increase near- and longer-term demand and RPO conversion remain positive despite inflationary and supply challenges continuing to impact the industry. Global public spending in healthcare is solid, particularly in Europe and Asia. In the U.S., customers are taking a more cautious approach as they monitor for onshore and offshore wind projects. While the economic environment. Overall, continued patient demand is leading providersoffshore wind industry continues to invest in productsexpect global growth through the decade, cost pressures and services that increase productivity and reduce operating costs, an important dynamic as healthcare systems modernize post-pandemic and prepare for increased demand longer-term. Actions of our supply chain and engineering teams as well as proactive supplier engagement are driving fewer delays in securing key materials. However, shortages are still impacting ourthe ability to deliver certain products. Our expectationcompete with the rapid pace of innovation remain key challenges. Finally, our Grid Solutions business is that supply chain pressures will continuepositioned to improve. We have proactively managed inflation across materialsupport grid expansion and logistics costs. We have continued to adjust pricing of our products, manage discretionary and structural cost in our business, as well as prioritize research and development investments. Delivering for patients and our customers remains a top priority.modernization needs.
At Onshore Wind, we are focused on improving our overall quality and fleet availability through reducing product variants and deploying repairs and other corrective measures across the fleet. We continueintend to growoperate in fewer markets and invest in precision health, with a focus on creating new productsthose markets with better pricing and digital solutionsmargins. Approximately half of Onshore Wind’s equipment RPO is associated with U.S. projects where we expect to receive IRA benefits that would reduce product costs as well as expanding uses of existing offerings that are tailored to the different needs of our global customers. During the third quarter of 2022, we announced an equity investment in AliveCor, further deepening our ability to deliver connected care so clinicians can make faster, more informed decisions, and help improve patient outcomes. We also announced a collaboration with AMC Health allowing clinicians to offer remote monitoring as a virtual care solution that extends patient care to the home. We remain committed to innovate and invest to create more integrated, efficient and personalized precision care.
| | | | | | | | | |
| RPO | September 30, 2022 | December 31, 2021 | |
| Equipment | $ | 4,554 | | $ | 4,232 | | |
| Services | 9,557 | | 10,375 | | |
| Total RPO | $ | 14,110 | | $ | 14,606 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SEGMENT REVENUES AND PROFIT | Three months ended September 30 | | Nine months ended September 30 | | |
| 2022 | | 2021 | | | 2022 | | 2021 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Healthcare Systems (HCS) | $ | 4,086 | | | $ | 3,832 | | | | $ | 11,998 | | | $ | 11,572 | | | | |
| Pharmaceutical Diagnostics (PDx) | 527 | | | 507 | | | | 1,496 | | | 1,528 | | | | |
| | | | | | | | | | | |
| Total segment revenues | $ | 4,613 | | | $ | 4,339 | | | | $ | 13,494 | | | $ | 13,100 | | | | |
| | | | | | | | | | | |
| Equipment | $ | 2,352 | | | $ | 2,187 | | | | $ | 6,945 | | | $ | 6,671 | | | | |
| Services | 2,261 | | | 2,151 | | | | 6,549 | | | 6,429 | | | | |
| Total segment revenues | $ | 4,613 | | | $ | 4,339 | | | | $ | 13,494 | | | $ | 13,100 | | | | |
| | | | | | | | | | | |
| Segment profit | $ | 712 | | | $ | 704 | | | | $ | 1,901 | | | $ | 2,203 | | | | |
| Segment profit margin | 15.4 | | % | 16.2 | | % | | 14.1 | | % | 16.8 | | % | | |
| | | | | | | | | | | |
| | |
| | |
For the three months ended September 30, 2022, segment revenues were up $0.3 billion (6%) and segment profit was up 1%.
Revenues increased $0.4 billion (10%) organically*. Equipment revenues increased driven by Imaging and Ultrasound mainly due to strong growthqualifying turbines manufactured in the U.S. in 2023 are delivered. Concurrently, we are undertaking a restructuring program to reduce our fixed costs. Our financial results are dependent on costs to address fleet availability and Europe,quality at Onshore Wind and the Middle Eastexecution of cost reduction initiatives and Africa. Services revenues increased, driven bypricing actions to mitigate the continued growth of PDx and HCS.
Profit increased 4% organically*, driven by increased volume and HCS price, partially offset by material inflation and logistics costinflationary environment across all product lines. We also continued to make planned research and development and commercial investments.
For the nine months ended September 30, 2022, segment revenues were up $0.4 billion (3%) and segment profit was down $0.3 billion (14%).
RPO as of September 30, 2022 decreased $0.5 billion (3%) from December 31, 2021, primarily due to an increase in equipment orders, more than offset by the impact of contract renewal timing in services.
Revenues increased $0.7 billion (5%) organically*. Equipment revenues increased, driven by Imaging, mainly due to strong growth in the U.S. and Europe, the Middle East and Africa, partially offset by China. Services revenues increased, driven by the continued growth of HCS, offset by PDx, primarily due to China.
Profit decreased $0.2 billion (8%) organically*, driven by increased material inflation and logistics cost across all product lines, partially offset by increased volume and price. We also continued to make planned research and development and commercial investments.
*Non-GAAP Financial Measure
2022 3Q2023 1Q FORM 10-Q 87
RENEWABLE ENERGY – will be part of GE Vernova, GE’s portfolio of energy businesses. Overall U.S. policy uncertainty, rising inflation and permitting challenges has resulted in project delays and deferral of customer investments in Onshore Wind. During the third quarter, the Inflation Reduction Act of 2022 was signed into law, which includes various tax incentives expected to increase longer term demand in the U.S. for onshore and offshore wind projects. The offshore wind industry continues to expect strong global growth through the decade and our Grid business is positioned to support grid expansion and modernization needs. We have experienced significant cost inflation in materials and logistics costs across the entire business that impact price and customer demand. At Onshore Wind, based on experience across our fleet, we are deploying repairs and other corrective measures to improve our overall quality and fleet availability resulting in higher warranty and related reserves. Concurrently, we are undertaking a restructuring program reflecting our selectivity strategy to operate in fewer markets and to simplify and standardize product variants. Our financial results are dependent on costs to address fleet availability, execution of cost reduction initiatives, the inflationary environment, improved selectivity and pricing, and U.S. Treasury tax implementation guidance.
New product introductions account for a large portion of our RPO in Onshore and Offshore Wind, driven by significant demand for larger turbines that decrease the levelized cost of energy, such as our 5 MW Cypress and 3 MW Sierraand 5 MW Onshore units, and our 12-14 MW Haliade-X Offshore units. We expect to start shipping Haliade-X units for our first commercial project in the fourth quarter of this year. Improving Onshore fleet availability whileand reducing the cost of these new product platforms and blade technologies remains aremain key priority. priorities. We are also focused on our production capabilities and execution of our initial Haliade-X projects given the complexity and challenging nature of these new product introductions.
At Grid, Solutions, we observed strong European demand for High Voltage Direct Current (HVDC) solutions and are securing our position in the highrapid growth offshore and onshore interconnection marketmarkets with products meeting the 2GW high voltage direct current (HVDC)HVDC solution standard and developing new technology such as flexible transformers and eco-friendly g³ switchgears that solvesolves for a denser, more resilient, stable and efficient electric grid and lower greenhouse gas emissions.
| | | Three months ended September 30 | | Nine months ended September 30 | | | | Three months ended March 31 | |
| | Onshore and Offshore sales in units | Onshore and Offshore sales in units | 2022 | 2021 | | 2022 | 2021 | | Onshore and Offshore sales in units | | 2023 | 2022 | |
| Wind Turbines | Wind Turbines | 640 | | 1,083 | | | 1,703 | | 2,748 | | | Wind Turbines | | 405 | | 502 | | |
| Wind Turbine Gigawatts | Wind Turbine Gigawatts | 2.2 | | 3.6 | | | 5.8 | | 8.9 | | | Wind Turbine Gigawatts | | 1.5 | | 1.7 | | |
| Repower units | Repower units | 140 | | 27 | | | 415 | | 276 | | | Repower units | | 50 | | 151 | | |
| | RPO | RPO | September 30, 2022 | December 31, 2021 | | RPO | March 31, 2023 | December 31, 2022 | |
| Equipment | Equipment | $ | 17,493 | | $ | 18,639 | | | Equipment | $ | 23,019 | | $ | 20,142 | | |
| Services | Services | 12,221 | | 12,872 | | | Services | 12,775 | | 12,688 | | |
| Total RPO | Total RPO | $ | 29,715 | | $ | 31,511 | | | Total RPO | $ | 35,795 | | $ | 32,830 | | |
| | SEGMENT REVENUES AND PROFIT | SEGMENT REVENUES AND PROFIT | Three months ended September 30 | | Nine months ended September 30 | | | SEGMENT REVENUES AND PROFIT | | Three months ended March 31 | | |
| | 2022 | | 2021 | | | 2022 | | 2021 | | | | | 2023 | | 2022 | | |
| | Onshore Wind | Onshore Wind | $ | 2,445 | | | $ | 3,047 | | | $ | 6,403 | | | $ | 8,048 | | | | Onshore Wind | | $ | 1,502 | | | $ | 1,906 | | | |
| Grid Solutions equipment and services | Grid Solutions equipment and services | 744 | | | 759 | | | 2,145 | | | 2,330 | | | | Grid Solutions equipment and services | | 824 | | | 668 | | | |
| | Hydro, Offshore Wind and Hybrid Solutions | 405 | | | 401 | | | 1,016 | | | 1,126 | | | | |
| Offshore Wind, Hydro and Hybrid Solutions | | Offshore Wind, Hydro and Hybrid Solutions | | 511 | | | 297 | | | |
| Total segment revenues | Total segment revenues | $ | 3,594 | | | $ | 4,208 | | | $ | 9,564 | | | $ | 11,505 | | | | Total segment revenues | | $ | 2,837 | | | $ | 2,871 | | | |
| | Equipment | Equipment | $ | 2,887 | | | $ | 3,695 | | | $ | 7,505 | | | $ | 9,844 | | | | Equipment | | $ | 2,311 | | | $ | 2,173 | | | |
| Services | Services | 707 | | | 512 | | | 2,059 | | | 1,661 | | | | Services | | 527 | | | 698 | | | |
| Total segment revenues | Total segment revenues | $ | 3,594 | | | $ | 4,208 | | | $ | 9,564 | | | $ | 11,505 | | | | Total segment revenues | | $ | 2,837 | | | $ | 2,871 | | | |
| | Segment profit (loss) | Segment profit (loss) | $ | (934) | | | $ | (151) | | | $ | (1,786) | | | $ | (484) | | | | Segment profit (loss) | | $ | (414) | | | $ | (434) | | | |
| Segment profit margin | Segment profit margin | (26.0) | | % | (3.6) | | % | | (18.7) | | % | (4.2) | | % | | Segment profit margin | | (14.6) | | % | (15.1) | | % | |
For the three months ended September 30, 2022,March 31, 2023, segment revenues were down $0.6 billion (15%)1% and segment losses were up $0.8 billion.down 5%.
RPO as of March 31, 2023 increased $3.0 billion (9%) from December 31, 2022 primarily from new HVDC orders at Grid and orders exceeding revenue at Onshore Wind, primarily in North America.
Revenues decreased $0.4increased $0.1 billion (10%(5%) organically*, primarily from 443higher revenue at Grid and Offshore Wind, partially offset by fewer wind turbine deliveries, primarily at Onshore Wind in the U.S., partially offset by higher core services and 113 more repower unit deliveries at Onshore Wind, primarily attributable to customer delays and deferrals during 2022 due to U.S. tax policy uncertainty.
Segment losses decreased 10% organically*, primarily attributable to higher volume at Grid and improved pricing across all businesses.
Segment losses increased $0.8 billion organically*, primarily from higher warranty and related reserves of $0.5 billion in response to the deployment of corrective measures and repair campaigns for operating units within our fleet, and lower U.S. volume at Onshore Wind and cost inflation across all businesses. These increases were partially offset by higher volumes and the impact of cost reduction initiatives at Grid and improved pricing across all businesses.
For the nine months ended September 30, 2022, segment revenues were down $1.9 billion (17%) and segment losses were up $1.3 billion.
RPO as of September 30, 2022 decreased $1.8 billion (6%) from December 31, 2021 primarily from the overall impact of a stronger U.S. dollar and sales exceeding new orders at Onshore Wind, partially offset by new orders at Grid and Hydro exceeding sales. The decline in new equipment orders at Onshore Wind is primarily attributable to the U.S. market decline and inflation-related pricing increases negatively impacting near-term demand.
*Non-GAAP Financial Measure
Revenues decreased $1.5 billion (13%) organically*, primarily from 1,045 fewer wind turbine deliveries, primarily at Onshore Wind and lower revenue at Grid, due to increased commercial selectivity, partially offset by higher services revenuelosses at Offshore Wind associated with Haliade-X ramp up and lower volume at Onshore Wind from a larger installed base and 139 more repower unit deliveries.
Segment losses increased $1.4 billion organically*, primarily from lower U.S. volume and higher warranty and related reserves of $0.5 billion in the third quarter of 2022 in response to the deployment of corrective measures and repair campaigns for operating units within our fleet at Onshore Wind and cost inflation across all businesses, partially offset by the impact of cost reduction initiatives. Onshore Wind results were also adversely impacted by execution of lower margin RPO and the impact of transitioning to newer product offerings internationally.Wind.
POWER – will be part of GE Vernova, GE’s portfolio of energy businesses.Vernova. During the ninethree months ended September 30, 2022, globalMarch 31, 2023, GE gas generation and GEturbine utilization grew mid-singlelow-single digits with strength in Europe and the U.S. The, while global electricity demand was down mid-single digits due to a milder winter. Utilization of the fleet continues to follow growing gas power generation despite lower demand, capturing shortfallsdecreases coming from nuclear outages, coal retirements and hydro and supply disruptions.resilient asset usage with a dynamic Europe environment. Looking ahead, we anticipate H-class units to be commissioned into the power market toserviceable installed base. As we continue to work in emerging markets, there could be impacted by overcapacityuncertainty in the industry, continued price pressure from competition on servicing the installed base, and the uncertain timing of deal closures due to financing and other complexities. Power has proactively managed the complexitiesimpact of working in emerging markets, as well asinflationary pressure by deploying lean initiatives to drive cost productivity, partnering with our suppliers and adjusting the ongoing impactspricing of COVID-19.our products and services. We expect the impact of inflation will continue to be challenging and we will continue to take actions to manage. Although market factors related to the energy transition such as greater renewable energy penetration and the adoption of climate change-related policies continue to impact long-term demand (and related financing), we expect the gas power market to remain stable over the next decade with gas power generation continuing to grow low-single-digits. We believe gas power will play a critical role in the energy transition. We remain focused on our underwriting discipline and risk management to ensure we are securing deals that meet our financial hurdles and we have high confidence to deliver for our customers.
In the first quarter of 2022, we signed a non-binding memorandum of understanding for GE Steam Power to sell a portion of its business to Électricité de France S.A. (EDF), which resulted in a reclassification of that business to held for sale. WeIn the fourth quarter of 2022, we signed a binding agreement and expect to complete the sale, subject to regulatory approval,approvals and other customary closing conditions, in the firstsecond half of 2023. In the second quarter of 2022, we announced thatOn April 3, 2023, our Gas Power intends to acquirebusiness acquired Nexus Controls, a business specializing in aftermarket control system upgrades and controls field services. The deal, which is subject to customary closing conditions including regulatory approval and mandatory information and consultation processes with employees and their representatives,services that is expected to close in the second quarterstrengthen our quality, service, and delivery of 2023.our customers' assets.
*Non-GAAP Financial Measure
We continue to invest in new product development, such asdevelopment. In Nuclear we are investing in the design of small modular reactors where we signed an agreement in the period for the deployment of the technology. In Gas Power, our HA-Turbines and Nuclear small modular reactors.have over 1.8 million operating hours across the installed base. Our fundamentals remain strong with approximately $67.5$69.4 billion in RPO, including 28 HA-Turbines, and a gas turbine installed base greater thanof approximately 7,000 units, including 80 HA-Turbines, which has nearly doubled since 2019, and approximately 1,800 units under long-term service agreements.
| | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30 | | Nine months ended September 30 | |
| | | | | |
| Sales in units | 2022 | 2021 | | 2022 | 2021 | | |
| GE Gas Turbines | 20 | | 22 | | | 69 | | 47 | | | |
| Heavy-Duty Gas Turbines(a) | 14 | | 14 | | | 37 | | 34 | | | |
| HA-Turbines(b) | 3 | | 5 | | | 6 | | 11 | | | |
| Aeroderivatives(a) | 6 | | 8 | | | 32 | | 13 | | | |
| | | | | | | |
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines. | |
| | | | | | | | | |
| RPO | September 30, 2022 | December 31, 2021 | |
| Equipment | $ | 11,611 | | $ | 12,169 | | |
| Services | 55,848 | | 56,569 | | |
| Total RPO | $ | 67,459 | | $ | 68,738 | | |
| | | | | | | | | | | | | |
| | | Three months ended March 31 | |
| | | | | |
| Sales in units | | | | 2023 | 2022 | | |
| GE Gas Turbines | | | | 23 | | 20 | | | |
| Heavy-Duty Gas Turbines(a) | | | | 18 | | 13 | | | |
| HA-Turbines(b) | | | | 4 | | 2 | | | |
| Aeroderivatives(a) | | | | 5 | | 7 | | | |
| | | | | | | |
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SEGMENT REVENUES AND PROFIT | Three months ended September 30 | | Nine months ended September 30 | | |
| 2022 | | 2021 | | | 2022 | | 2021 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Gas Power | $ | 2,612 | | | $ | 2,861 | | | | $ | 8,234 | | | $ | 8,739 | | | | |
| Steam Power | 571 | | | 790 | | | | 1,898 | | | 2,327 | | | | |
| Power Conversion, Nuclear and other | 346 | | | 376 | | | | 1,101 | | | 1,176 | | | | |
| Total segment revenues | $ | 3,529 | | | $ | 4,026 | | | | $ | 11,233 | | | $ | 12,242 | | | | |
| | | | | | | | | | | |
| Equipment | $ | 954 | | | $ | 1,368 | | | | $ | 3,116 | | | $ | 3,680 | | | | |
| Services | 2,575 | | | 2,658 | | | | 8,117 | | | 8,561 | | | | |
| Total segment revenues | $ | 3,529 | | | $ | 4,026 | | | | $ | 11,233 | | | $ | 12,242 | | | | |
| | | | | | | | | | | |
| Segment profit (loss) | $ | 141 | | | $ | 204 | | | | $ | 524 | | | $ | 416 | | | | |
| Segment profit margin | 4.0 | | % | 5.1 | | % | | 4.7 | | % | 3.4 | | % | | |
| | | | | | | | | |
| RPO | March 31, 2023 | December 31, 2022 | |
| Equipment | $ | 12,056 | | $ | 11,561 | | |
| Services | 57,382 | | 57,420 | | |
| Total RPO | $ | 69,438 | | $ | 68,981 | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| SEGMENT REVENUES AND PROFIT | | | Three months ended March 31 | | |
| | | | | | 2023 | | 2022 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Gas Power | | | | | | $ | 2,867 | | | $ | 2,489 | | | | |
| Steam Power | | | | | | 541 | | | 636 | | | | |
| Power Conversion, Nuclear and other | | | | | | 412 | | | 377 | | | | |
| Total segment revenues | | | | | | $ | 3,820 | | | $ | 3,501 | | | | |
| | | | | | | | | | | |
| Equipment | | | | | | $ | 1,102 | | | $ | 965 | | | | |
| Services | | | | | | 2,718 | | | 2,536 | | | | |
| Total segment revenues | | | | | | $ | 3,820 | | | $ | 3,501 | | | | |
| | | | | | | | | | | |
| Segment profit (loss) | | | | | | $ | 75 | | | $ | 63 | | | | |
| Segment profit margin | | | | | | 2.0 | | % | 1.8 | | % | | |
*Non-GAAP Financial Measure
For the three months ended September 30, 2022,March 31, 2023, segment revenues were down $0.5up $0.3 billion (12%) and segment profit was down $0.1 billion (31%).
Revenues decreased $0.2 billion (5%) organically*, primarily due to decreases in Gas Power HA turbine and aeroderivative deliveries, lower planned contractual services outages at Gas Power and decreases in Steam Power equipment on the exit of new build coal and prior year Steam Power services volume that did not repeat, partially offset by favorable price escalation in our long-term service agreements.
Profit decreased 23% organically* primarily due to lower planned contractual services outages and unfavorable equipment mix at Gas Power, partially offset by favorable price escalation in our long-term service agreements.
For the nine months ended September 30, 2022, segment revenues were down $1.0 billion (8%(9%) and segment profit was up $0.1 billion (26%)19%.
RPO as of September 30, 2022 decreased $1.3March 31, 2023 increased $0.5 billion (2%(1%) from December 31, 2021,2022, 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 the impact of the Russia and Ukraine conflict at Power Conversion.equipment.
Revenues decreased $0.2increased $0.4 billion (2%(11%) organically*, primarily due to growth in Gas Power non-contractual services and Aeroderivatives and higher Gas Power Heavy-duty gas turbine deliveries, partially offset by a reduction in Steam Power equipment on the exit of new build coal and prior year Steam Power services volume that did not repeat, partially offset by higher Gas Power aeroderivative deliveries and favorable price escalation in our long-term service agreements.coal.
Profit increased $0.1 billion (27%)35% organically* primarily due to prior year project and legal charges at Steam Power that did not repeat, favorable price escalationgrowth in our long-term service agreements and higher Gas Power aeroderivative deliveries, partially offset by lower planned contractual services outages and unfavorable equipment mix at Gas Power.non-contractual services.
CORPORATE. The Corporate amounts related to revenues and earnings include the results of disposed businesses, certain amounts not included in operating segment results because they are excluded from measurement of their operating performance for internal and external purposes and the elimination of intersegment activities. In addition, the Corporate amounts related to earnings include certain costs of our principal retirement plans, significant, higher-cost restructuring programs, separation costs, and other costs reported in Corporate.
Corporate includes the results of the GE Digital business and our remaining GE Capital businesses, our former financial services business, including our run-off Insurance business (see Other Items - InsuranceNote 13 for further information).
| | | | | | | | | | | | | | | | | | |
| REVENUES AND OPERATING PROFIT (COST) | Three months ended September 30 | | Nine months ended September 30 | |
| 2022 | 2021 | | 2022 | 2021 | |
| Corporate revenues | $ | 210 | | $ | 237 | | | $ | 635 | | $ | 693 | | |
| Insurance revenues | 646 | | 756 | | | 2,179 | | 2,295 | | |
| Eliminations and other | (212) | | (394) | | | (769) | | (1,171) | | |
| Total Corporate revenues | $ | 643 | | $ | 599 | | | $ | 2,044 | | $ | 1,816 | | |
| | | | | | |
| Gains (losses) on purchases and sales of business interests | $ | 22 | | $ | (156) | | | $ | 28 | | $ | (159) | | |
| Gains (losses) on equity securities | (89) | | 412 | | | (1,859) | | 1,256 | | |
| Restructuring and other charges | (183) | | (64) | | | (253) | | (395) | | |
| Separation costs | (227) | | — | | | (553) | | — | | |
| Steam asset sale impairment (Notes 6 and 7) | — | | — | | | (825) | | — | | |
| Russia and Ukraine charges | (33) | | — | | | (263) | | — | | |
| | | | | | |
| | | | | | |
| Insurance profit (loss) (Note 12) | (310) | | 55 | | | 87 | | 426 | | |
| Adjusted total corporate operating costs (Non-GAAP) | (140) | | (287) | | | (307) | | (767) | | |
| Total Corporate operating profit (cost) (GAAP) | $ | (960) | | $ | (40) | | | $ | (3,947) | | $ | 361 | | |
| Less: gains (losses), impairments, Insurance, and restructuring & other | (820) | | 247 | | | (3,640) | | 1,128 | | |
| Adjusted total corporate operating costs (Non-GAAP) | $ | (140) | | $ | (287) | | | $ | (307) | | $ | (767) | | |
| | | | | | |
| Functions & operations | $ | (127) | | $ | (173) | | | $ | (258) | | $ | (541) | | |
| Environmental, health and safety (EHS) and other items | (22) | | (100) | | | (81) | | (184) | | |
| Eliminations | 9 | | (13) | | | 32 | | (42) | | |
| Adjusted total corporate operating costs (Non-GAAP) | $ | (140) | | $ | (287) | | | $ | (307) | | $ | (767) | | |
*Non-GAAP Financial Measure
| | | | | | | | | | | | |
| REVENUES AND OPERATING PROFIT (COST) | Three months ended March 31 | | |
| 2023 | 2022 | | | | |
| GE Digital revenues | $ | 237 | | $ | 220 | | | | | |
| Insurance revenues (Note 13) | 791 | | 764 | | | | | |
| Eliminations and other | (181) | | (284) | | | | | |
| Total Corporate revenues | $ | 848 | | $ | 700 | | | | | |
| | | | | | |
| Gains (losses) on purchases and sales of business interests | $ | (55) | | $ | 4 | | | | | |
| Gains (losses) on equity securities | 5,906 | | (219) | | | | | |
| Restructuring and other charges (Note 20) | (151) | | (35) | | | | | |
| Separation costs (Note 20) | (205) | | (99) | | | | | |
| Steam asset sale impairment | — | | (824) | | | | | |
| Russia and Ukraine charges | — | | (230) | | | | | |
| | | | | | |
| Insurance profit (loss) (Note 13) | 70 | | 106 | | | | | |
| Adjusted total Corporate operating costs (Non-GAAP) | (109) | | (122) | | | | | |
| Total Corporate operating profit (cost) (GAAP) | $ | 5,456 | | $ | (1,419) | | | | | |
| Less: gains (losses), impairments, Insurance, and restructuring & other | 5,565 | | (1,297) | | | | | |
| Adjusted total Corporate operating costs (Non-GAAP) | $ | (109) | | $ | (122) | | | | | |
| | | | | | |
| Functions & operations | $ | (145) | | $ | (71) | | | | | |
| Environmental, health and safety (EHS) and other items | 30 | | (51) | | | | | |
| Eliminations | 6 | | (1) | | | | | |
| Adjusted total Corporate operating costs (Non-GAAP) | $ | (109) | | $ | (122) | | | | | |
Adjusted total corporate operating costs* excludes gains (losses) on purchases and sales of business interests, significant, higher-cost restructuring programs, separation costs, gains (losses) on equity securities, impairments and 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
For the three months ended September 30, 2022, March 31, 2023, revenues remained relatively flat due to $0.2 billion of lower inter-segment eliminations offsetincreased by $0.1 billion ofdue to lower revenue in our run-off insurance business. intersegment eliminations. Corporateoperating profit decreasedincreased by $0.9$6.9 billion due to a $0.5$6.1 billion change inof higher gains (losses) on equity securities, primarily related to $0.6 billion of higher mark-to-market lossesa gain on our Baker Hughes shares partially offset by $0.1 billion of mark-to-market gains on our AerCap shares. Operating profit also decreased due to $0.2 billion of separation costs and $0.1 billion of higher restructuring and other charges primarily related to our Renewable Energy andGE HealthCare segments. Corporate operating profit also decreased by $0.4 billion in our run-off Insurance business, primarily due to a charge related to terminating several reinsurance contracts (see Other Items - Insurance). These decreases were partially offset by $0.2 billion ofinvestment, lower losses on purchases and sales of business interests due to a $0.2 billion held for sale loss within our Power segment in 2021.
Adjusted total corporate operating costs* decreased by $0.1 billion due to cost favorability in our functions and lower costs associated with EHS and other items.
For the nine months ended September 30, 2022, revenues increased by $0.2 billion due to $0.4 billion of lower intersegment eliminations partially offset by $0.1 billion of lower revenue in our run-off Insurance business and $0.1 billion of lower revenue in our Digital business. Corporate operating profit decreased by $4.3 billion due to a $3.1 billion change in gains (losses) on equity securities, primarily related to $2.7 billion of mark-to-market losses on our AerCap shares and note and $0.3 billion ofinvestments, partially offset by lower mark-to-market gains on our Baker Hughes shares. In addition,investments. Corporate operating profit decreased due toincreased as the result of a $0.8 billion of non-cash impairment charges related to property, plant and equipment and intangible assets as a result of reclassification of a portion of our Steam Power business to held for sale in the first quarter of 2022 (see Note 2) and $0.3 billion of lower operating profit in our run-off Insurance business, primarily due to a charge related to terminating several reinsurance contracts (see Other Items - Insurance).2022. Corporate operating profit also decreased as the result of $0.6 billion of separation costs and $0.3increased due to $0.2 billion of charges from contracts and recoverability of assets in connection with the conflict between Russia and Ukraine and resulting sanctions, primarily within our Aerospace and Power businesses.businesses in the first quarter of 2022. These decreases were partially offset by $0.2$0.1 billion of lower losses on purchases and sales of business interests due to a $0.2 billion held for sale loss within our Power segment in 2021higher separation costs and $0.1 billion of lowerhigher restructuring and other charges.
Adjusted total corporate operating costs* decreased by $0.5 billion primarily as the result of $0.3 billion of lower functional costs, includingremained relatively flat due to core reductions and favorability from market andhigher bank interest, partially offset by foreign exchange dynamics, $0.1 billion of lower costs associated with EHS and other items and $0.1 billion due to lower intercompany eliminations.dynamics.
OTHER CONSOLIDATED INFORMATION
RESTRUCTURING.RESTRUCTURING AND SEPARATION COSTS. This table is inclusive of all restructuring charges in our segments and at Corporate, and the charges are shown below for the business where they originated. Separately, in our reported segment results, significant,Significant, higher-cost restructuring programs are excluded from measurement of segment operating performance for internal and external purposes; those excluded amounts are reported in Restructuring and other charges for Corporate (see the Corporate section).
| | | | | | | | | | | | | | | | | | |
| RESTRUCTURING AND OTHER CHARGES | Three months ended September 30 | | Nine months ended September 30 | |
| 2022 | 2021 | | 2022 | 2021 | |
| Workforce reductions | $ | 76 | | $ | 132 | | | $ | 113 | | $ | 634 | | |
| Plant closures & associated costs and other asset write-downs | 110 | | 23 | | | 165 | | 87 | | |
| Acquisition/disposition net charges and other | 14 | | 9 | | | 41 | | 16 | | |
| Other | — | | — | | | (3) | | — | | |
| Total restructuring and other charges | $ | 200 | | $ | 164 | | | $ | 316 | | $ | 736 | | |
| | | | | | |
| Cost of equipment/services | $ | 86 | | $ | 61 | | | $ | 135 | | $ | 349 | | |
| Selling, general and administrative expenses | 114 | | 103 | | | 184 | | 393 | | |
| Other (income) loss | — | | — | | | (3) | | (7) | | |
| Total restructuring and other charges | $ | 200 | | $ | 164 | | | $ | 316 | | $ | 736 | | |
| | | | | | |
| Aerospace | $ | 6 | | $ | 3 | | | $ | 16 | | $ | 64 | | |
| HealthCare | 88 | | 68 | | | 110 | | 127 | | |
| Renewable Energy | 66 | | 14 | | | 78 | | 149 | | |
| Power | 30 | | 65 | | | 97 | | 341 | | |
| Corporate | 10 | | 14 | | | 15 | | 55 | | |
| | | | | | |
| | | | | | |
| Total restructuring and other charges | $ | 200 | | $ | 164 | | | $ | 316 | | $ | 736 | | |
| Restructuring and other charges cash expenditures | $ | 76 | | $ | 152 | | | $ | 332 | | $ | 565 | | |
Liabilities associated with restructuring activities were approximately $0.9 billion and $1.0 billion, including actuarial determined post-employment severance benefits of $0.5 billion and $0.5 billion as of September 30, 2022 and December 31, 2021, respectively.
During the third quarter of 2022, we announced plans to undertake a restructuring program across our businesses planned to be part of GE Vernova, primarily reflecting the selectivity strategy to operate in fewer markets and to simplify and standardize product variants at Renewable Energy. The estimated cost of this multi-year restructuring program is approximately $0.6 billion, with the majority to be recognized in the first half of 2023. In October 2022, the company announced restructuring plans to reflect lower Corporate shared-service and footprint needs as GE HealthCare becomes independent. The estimated cost of this multi-year restructuring program is approximately $0.7 billion, with the majority to be recognized in the fourth quarter of 2022.
*Non-GAAP Financial Measure
SEPARATION COSTS. In November 2021, the company announced its plan to form three industry-leading, global public companies focused on the growth sectors of aviation, healthcare, and energy. As a result of this plan, we expect to incur separation, transition, and operational costs of approximately $2 billion and net tax costs of less than $0.5 billion, which will depend on specifics of the transactions.
We incurred pre-tax separation costs of $227 million and $553 million, primarily related to employee costs, costs to establish certain stand-alone functions and information technology systems, professional fees, and other transformation and transaction costs to transition to three stand-alone public companies, for the three and nine months ended September 30, 2022, respectively. These costs are presented as separation costs in our consolidated Statement of Earnings (Loss).Corporate. In addition, we incurred $51 million and $59 million of net tax benefit, including taxesincur costs associated with planned legal entityseparation activities, which are also excluded from measurement of segment operating performance for internal and external purposes. See Note 20 for further information on restructuring and changes to indefinite reinvestment of foreign earnings, for the three and nine months ended September 30, 2022, respectively. We spent $96 million and $118 million in cash for the three and nine months ended September 30, 2022, respectively.separation costs.
INTEREST AND OTHER FINANCIAL CHARGES were $0.4$0.3 billion and $0.5$0.4 billion for the three months ended March 31, 2023 and $1.2 billion and $1.4 billion for the nine months ended September 30, 2022, and 2021, respectively. The decrease was primarily due to lower average borrowings balances, partially offset by a lower allocation of interest expense to discontinued operations. Inclusive of interest expense in discontinued operations, total interest and other financial charges were $0.4 billion and $0.6 billion for the three months ended and $1.2 billion and $2.0 billion for the nine months ended September 30, 2022 and 2021, respectively.balances. The primary components of interest and other financial charges are interest on short- and long-term borrowings.
POSTRETIREMENT BENEFIT PLANS. Refer to Note 1314 for information about our pension and retiree benefit plans.
INCOME TAXES. For the three months ended September 30, 2022,March 31, 2023, the income tax rate was (38.2)%4.2% compared to 0.3%(2.5)% for the three months ended September 30, 2021.March 31, 2022. The negative tax rate for 2022 reflects a tax expense on a pre-tax loss.
The provision for income taxes was $0.3 billion for the three months ended March 31, 2023 and an insignificant amount for both the three months ended September 30, 2022 and 2021.March 31, 2022. The increase in tax was primarily due to the nonrecurrencetax effect of the tax benefit associated with an internal restructuring to recognize stock losses in the third quarter of 2021, partially offset by the decreaseincrease in pre-tax income excluding the net loss in 2022gains (losses) on our interestinterests in AerCap and Baker Hughes. There was an insignificant tax effect on the net loss in 2022 onGE HealthCare, AerCap and Baker Hughes because of our excess capital loss position.and separation costs.
For the three months ended September 30, 2022,March 31, 2023, the adjusted income tax rate* was 27.7%28.0% compared to 25.3%500.0% for the three months ended September 30, 2021.March 31, 2022. The adjusted income tax rate* increased primarily due to higher tax expense related to stock-based compensation.
For the nine months ended September 30, 2022,the income tax rate was (65.6)% compared to 149.5% for the nine months ended September 30, 2021. The tax rate for 2022 reflects a tax expense on a pre-tax loss. The tax rate for 2021 reflects a tax benefit on a pre-tax loss.
The provision (benefit) for income taxestaxes* was $0.5$0.2 billion for the nine months ended September 30, 2022 compared to $(0.3) billion for the nine months ended September 30, 2021.in 2023 and an insignificant amount in 2022. The increase in tax was primarily due to the nonrecurrencetax effect of tax benefits associated with internal restructurings to recognize deductible stock and loan losses in 2021 and the increase in pre-tax income excluding the net loss in 2022 on our interest in AerCap and Baker Hughes and asset impairments. There was an insignificant tax effect on the net loss in 2022 on AerCap and Baker Hughes because of our excess capital loss position.adjusted earnings before taxes*.
*Non-GAAP Financial Measure
For the nine months ended September 30, 2022, the adjusted income tax rate* was 27.4% compared to 24.5% for the nine months ended September 30, 2021. The adjusted income tax rate* increased primarily due to the nonrecurrence of a 2021 benefit from planning to utilize non-U.S. loss carryovers.
DISCONTINUED OPERATIONS primarily comprise our former GE HealthCare business, our mortgage portfolio in Poland, our GE Capital Aviation Services (GECAS) business, discontinued in 2021, our mortgage portfolio in Poland, and other trailing assets and liabilities associated with prior dispositions. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented and the notes to the financial statements have been adjusted on a retrospective basis. See Note 2 for further information regarding our businesses in discontinued operations.
CAPITAL RESOURCES AND LIQUIDITY
FINANCIAL POLICY. We intend to maintain a disciplined financial policy with a sustainable investment-grade long-term credit rating. In the fourth quarter of 2021, the Company announced plans to form three industry-leading, global, investment-grade companies, each of which will determine their own financial policies, including capital allocation, dividend, mergers and acquisitions and share buyback decisions.
During the first quarter of 2023, the financial markets experienced disruption due to certain bank failures. Given the diversification and credit profile of GE’s exposure to banking counterparties, we do not foresee any material financial impact from this disruption at this time, we will continue to monitor and will take action as needed.
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. We believe that our consolidated liquidity and availability under our revolving credit facilities will be sufficient to meet our liquidity needs.
*Non-GAAP Financial Measure
CONSOLIDATED LIQUIDITY. Our 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, timing of Aerospace-related customer allowances, market conditions and our ability to execute dispositions. Total cash, cash equivalents and restricted cash was $12.6$12.0 billion at September 30, 2022,March 31, 2023, of which $7.8$8.0 billion was held in the U.S. and $4.8$4.0 billion was held outside the U.S.
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. With regards to our announcement to form three public companies, we expect thatthe planning for and execution of this separation willthe separations has impacted and is expected to continue to impact indefinite reinvestment. The impact of that changesuch changes will be recorded when there is a specific change in ability and intent to reinvest earnings.
Cash, cash equivalents and restricted cash at September 30, 2022March 31, 2023 included $2.3$1.6 billion of cash held in countries with currency control restrictions (including a total of $0.1 billion in Russia and Ukraine) and $0.4$0.8 billion of restricted use cash. Cash held in countries with currency controls represents amounts held in countries that 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 funds restricted in connection with certain ongoing litigation matters. Excluded from cash, cash equivalents and restricted cash was $0.4$0.7 billion of cash in our run-off Insurance business, which was classified as All other assets in the Statement of Financial Position.
In connection withDuring the program we launched in 2020 to fully monetize our Baker Hughes position over approximately three years,first quarter of 2023, we received total proceeds of $4.1$1.8 billion duringfrom the first nine monthssale of 2022. In addition, weAerCap shares. We expect to fully monetize our stake in AerCap over time. We received proceeds of $0.2 billion in the first quarter of 2023, and have now fully monetized our Baker Hughes position. As part of the spin-off of GE HealthCare completed in the first quarter of 2023, we retained an approximately 19.9% stake of GE HealthCare common stock. We intend to exit our stake in GE HealthCare over time, in an orderly manner.
WeFollowing approval of a statutory permitted accounting practice in 2018 by our primary insurance regulator, the Kansas Insurance Department (KID), we provided a total of $11.4$13.2 billion of capital contributions to our insurance subsidiaries, since 2018, including $2.0$1.8 billion in the first quarter of 2022, and2023. We expect to provide furtherthe final capital contributionscontribution of approximately $3.6$1.8 billion through 2024. These contributions are subject to ongoing monitoring byin 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 resultsfirst quarter of reserve adequacy testing or a decision by KID to modify the schedule2024, pending completion of contributions set forth in January 2018. We are required to maintain specified capital levels at these insurance subsidiaries under capital maintenance agreements.our December 31, 2023 statutory reporting process. See Note 13 for further information.
On March 6, 2022, the Board of Directors authorized the repurchase of up to $3 billion of our common stock. In connection with this authorization, we repurchased 4.53.2 million shares for $0.3 billion and 9.1 million shares for $0.6 billion forduring the three months and nine months ended September 30, 2022, respectively.March 31, 2023. Additionally, during the first quarter of 2023, we elected to redeem 3 million of our outstanding shares of GE series D preferred stock for total cash spend of $3.0 billion.
BORROWINGS. Consolidated total borrowings were $30.4$22.4 billion and $35.2$24.1 billion at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, a decrease of $4.8$1.6 billion. The reduction in borrowings was driven primarily by $2.9$1.8 billion of net maturities and repayments of debt, and $1.7partially offset by $0.2 billion primarily related to changes in foreign exchange rates.
We have in place committed revolving credit facilities totaling $14.3$13.9 billion at September 30, 2022,March 31, 2023, comprising a $10.0 billion unused back-up revolving syndicated credit facility and a total of $4.3$3.9 billion of bilateral revolving credit facilities.
*Non-GAAP Financial Measure
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 our short- and long-term debt. Our credit ratings as of the date of this filing are set forth in the table below.following table.
| | | | | | | | | | | |
| Moody's | S&P | Fitch |
| Outlook | Negative | CreditWatch NegativeStable | Stable |
| Short term | P-2 | A-2 | F3F2 |
| Long term | Baa1 | BBB+ | BBB |
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 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. In connection with the planned spin-off of GE HealthCare, rating agencies are reviewing ratings for both GE HealthCare and GE. 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 our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Substantially all of the Company's debt agreements in place at September 30, 2022March 31, 2023 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 September 30, 2022.March 31, 2023.
*Non-GAAP Financial Measure
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 liquidity impact in the event of further downgrades below each stated ratings level.
| | | | | | |
| Triggers Below | At September 30, 2022March 31, 2023 |
| BBB+/A-2/P-2 | $ | 21518 | |
| BBB/A-3/P-3 | 650167 | |
| BBB- | 1,2241,197 | |
| BB+ and below | 592577 | |
Our most significant contractual ratings requirements are related to ordinary course commercial activities. The timing within the quarter of the potential liquidity impact of these areas may differ, as can the remedies to resolving any potential breaches of required ratings levels.
FOREIGN EXCHANGE.EXCHANGE AND INTEREST RATE RISK. 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 Chinese renminbi, the Indian rupee and the Japanese yen,British pound sterling, among others. The effects of foreign currency fluctuations on earnings was less than $0.1 billion for both the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022. See Note 1921 for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.
STATEMENT OF CASH FLOWS
CASH FLOWS FROM CONTINUING OPERATIONS. The most significant source of cash in CFOA is customer-related activities, the largest of which is collecting cash resulting from product or services sales. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and post retirement plans.
Cash from operating activities was $1.3$0.2 billion in 2022,2023, an increase of $2.81.1 billion compared to 2021,2022, primarily due to: a decrease in financial services-related cash collateral paid net of settlements on interest rate derivative contracts of $1.3 billion, which is a standard market practice to minimize derivative counterparty exposures; an increase in net income (after adjusting for depreciation of property, plant, and equipment, amortization of intangible assets and non-cash (gains) losses related to our retained ownership interests in GE HealthCare, AerCap, and Baker Hughes and non-operating debt extinguishment costs)Hughes) primarily in our Aerospace business; and a decrease in cash used for working capital of $0.2 billion; and an increase in cash from All other operating activities of $1.3$0.5 billion. The components of All other operating activities were as follows:
| | | | | | | | | |
| Nine months ended September 30 | 2022 | 2021 |
| Increase (decrease) in Aerospace-related customer allowance accruals | $ | 565 | | $ | 543 | |
| Net interest and other financial charges/(cash paid) | 7 | | (474) | |
| Increase (decrease) in employee benefit liabilities | (170) | | (111) | |
| Net restructuring and other charges/(cash expenditures) | (70) | | 144 | |
| Decrease in factoring related liabilities | (26) | | (501) | |
| Cash settlement of Alstom legacy legal matter | — | | (175) | |
| Other | (117) | | (543) | |
| All other operating activities | $ | 189 | | $ | (1,117) | |
| | | | | | | | | |
| Three months ended March 31 | 2023 | 2022 |
| Increase (decrease) in Aerospace-related customer allowance accruals | $ | 135 | | $ | 282 | |
| Net interest and other financial charges/(cash paid) | (79) | | 31 | |
| Increase (decrease) in employee benefit liabilities | 125 | | (113) | |
| Net restructuring and other charges/(cash expenditures) | (1) | | (106) | |
| Other | (54) | | (5) | |
| All other operating activities | $ | 125 | | $ | 89 | |
The cash impacts from changes in working capital compared to prior year were as follows: current receivables of $(3.6)$1.1 billion, driven by higher volume and lower collections, partially offset by the impact of decreases in sales of receivables to third parties in 2021;higher volume; inventories, including deferred inventory, of $(1.6)$(0.5) billion, driven by higher material purchases, and lowerpartially offset by higher liquidations; current contract assets of $0.3$(0.2) billion, driven by higher billings on our long-term service agreements, partially offset by lowerhigher revenue recognition on those agreements and net favorable changes in estimated profitability;agreements; accounts payable and equipment project accrualspayables of $2.3$0.1 billion, driven by lowerhigher volume, partially offset by higher disbursements related to purchases of materials in prior periods and higher volume;periods; and progress collections and current deferred income of $2.8 billion, driven by lower liquidations and higher collections, including $0.6 billion of increased customer collections on equipment orders to support production at our Aerospace business.less than $0.1 billion.
Cash from investing activities was $1.2$1.3 billion in 2022, a decrease2023, an increase of $1.7$1.3 billion compared to 2021,2022, primarily due to: higher cash paidreceived related to net settlements between our continuing operations and businesses in discontinued operations of $0.3$0.9 billion, in 2022,which primarily related to a capital contribution to Bank BPH, as compared to cash received of $1.8 billionGE HealthCare in 2021, primarily from our GECAS business (both componentsconnection with the spin-off (a component of All other investing activities); the nonrecurrence of deferred purchase price collections on our receivable facilities of $0.4 billion; partially offset byand an increase in proceeds of $1.1$0.7 billion from the sales of our retained ownership interestinterests in AerCap and Baker Hughes. Cash used for additions to property, plant and equipment and internal-use software, which are components of free cash flows*, was $1.0$0.3 billion in both 20222023 and 2021.2022.
Cash used for financing activities was $5.1$5.2 billion in 2022, a decrease2023, an increase of $7.4$3.8 billion compared to 2021,2022, primarily due to: the nonrecurrence of cash paid to repurchase long term debt of $8.7 billion, including cash paid for debt extinguishment costsredemption of $1.7GE preferred stock of $3.0 billion in 2021; partially offset by2023; higher cash paid on derivatives hedging foreign currencynet debt maturities of $0.6 billion (a component of All other financing activities);billion; and an increase in purchases of GE common stock for treasury of $0.6$0.3 billion.
*Non-GAAP Financial Measure
CASH FLOWS FROM DISCONTINUED OPERATIONS. OPERATIONS
Cash from investing activities in 2022 was primarily due to a capital contribution to Bank BPH from continuing operations. Cash fromused for operating activities of discontinued operations was $0.4 billion in 2023, an increase of $0.8 billion compared with 2022, primarily driven by higher disbursements related to purchases of materials in prior periods, a decrease in net income and cash used for investing activities in 2021 was primarily duehigher separation costs related to cash generated from earnings in our GECAS business and net settlements from GECAS to continuing operations, respectively.former GE HealthCare business.
SUPPLY CHAIN FINANCE PROGRAMSCash used for investing activities of discontinued operations. We facilitate voluntary supply chain finance programs was $3.1 billion in 2023, an increase of $2.7 billion compared with third parties, which provide participating suppliers2022, primarily driven by the opportunity to sell theirdeconsolidation of GE receivables to third parties at the sole discretionHealthCare cash and equivalents of both the suppliers and the third parties. At September 30, 2022 and December 31, 2021, included in accounts payable was $4.0$1.8 billion and $3.4higher net settlements between our discontinued operations and businesses in continuing operations of $0.9 billion.
Cash from financing activities of discontinued operations was $2.0 billion respectively,in 2023, an increase of supplier invoices that are subject to$2.0 billion compared with 2022, primarily driven by GE HealthCare's long-term debt issuance in connection with the third-party programs. Total supplier invoices paid through these third-party programs were $5.6 billion and $4.9 billion for the nine months ended September 30, 2022 and 2021, respectively.spin-off of $2.0 billion.
CRITICAL ACCOUNTING ESTIMATES. Refer to the Other Items - Insurance section for further discussion of the accounting estimates and assumptions in our insurance reserves and their sensitivity to change. See Notes 1 and 13 for further information. Please refer to the Critical Accounting Estimates and Other Items sections within MD&A and Note 1 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 20212022 for aadditional discussion of our accounting policies and critical accounting estimates.
OTHER ITEMS
INSURANCE. Premium Deficiency Testing The run-off insurance operations of North American Life and Health (NALH) include Employers Reassurance Corporation (ERAC) and Union Fidelity Life Insurance Company (UFLIC). ERAC primarily assumed 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 assumed 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.
On January 1, 2023, we adopted Accounting Standards Update No. 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (ASU 2018-12). See Notes 1 and 13 for further information.
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 (e.g., lifetime benefit periods, inflation protection options, and joint life policies) 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.
Presented in the table below are reserve balances and key attributes of our long-term care insurance portfolio.
| | | | | | | | | | | |
| December 31, 2022 | ERAC | UFLIC | Total |
| GAAP: Ending balance of reserves at locked-in rate | $ | 17,750 | | $ | 5,318 | | $ | 23,068 | |
| Gross statutory reserves(a) | 24,670 | | 6,354 | | 31,024 | |
| Number of policies in force | 181,700 | | 52,600 | | 234,300 | |
| Number of covered lives in force | 241,500 | | 52,600 | | 294,100 | |
| Average policyholder attained age | 77 | | 84 | | 79 | |
| GAAP: Ending balance of reserves at locked-in rate per policy (in actual dollars) | $ | 97,700 | | $ | 101,100 | | $ | 98,500 | |
| GAAP: Ending balance of reserves at locked-in rate per covered life (in actual dollars) | 73,500 | | 101,100 | | 78,400 | |
| Statutory: Gross reserves per policy (in actual dollars)(a) | 135,800 | | 120,800 | | 132,400 | |
| Statutory: Gross reserves per covered life (in actual dollars)(a) | 102,200 | | 120,800 | | 105,500 | |
| Percentage of policies with: | | | |
| Lifetime benefit period | 69 | % | 32 | % | 61 | % |
| Inflation protection option | 80 | % | 91 | % | 83 | % |
| Joint lives | 33 | % | — | % | 26 | % |
| Percentage of policies that are premium paying | 69 | % | 75 | % | 70 | % |
| Policies on claim | 9,700 | | 8,200 | | 17,900 | |
(a) Statutory balances reflect recognition of the estimated remaining statutory increase in reserves of approximately $1.8 billion through 2023 under the permitted accounting practice discussed further in Note 13.
*Non-GAAP Financial Measure
Structured settlement annuities. We reinsure approximately 26,000 structured settlement annuities with an average attained age of 55. These structured settlement annuities were primarily underwritten on impaired lives (i.e., shorter-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). Unlike long-term care insurance, structured settlement annuities offer no ability to require additional premiums or reduce benefits.
Life Insurance contracts. 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. At December 31, 2022, across our U.S. and Canadian life insurance portfolio, we reinsure approximately $59 billion of net amount at risk (i.e., difference between the death benefit and any accrued cash value) from approximately 1.4 million policies with an average attained age of 61. In 2022, our incurred claims were approximately $0.5 billion with an average individual claim of approximately $46,000. The covered products 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 17% of the net amount of risk, to lapse through 2024 as the policies reach the end of their 20-year level premium period.
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 benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums and are estimated based on actuarial assumptions such as mortality, morbidity, terminations, and expenses. The liability is measured for each group of contracts (i.e. cohorts) using current cash flow assumptions.
We completed our annual premium deficiency testingregularly monitor emerging experience in the aggregate across our run-off insurance portfoliooperations and industry developments to identify trends that may help us refine our reserve assumptions. We review at least annually in the third quarter, future policy benefit reserves cash flow assumptions, except related claim expenses which remain locked-in, and if the review concludes that the assumptions need to be updated, future policy benefit reserves are adjusted retroactively to the ASU2018-12 transition date based on the revised net premium ratio using actual historical experience, updated cash flow assumptions, and the locked-in discount rate with the effect of 2022. Thesethose changes recognized in current period earnings. Our annual review procedures includedinclude updating certain experience studies since our last test completed in the third quarter of 2021,review, independent actuarial analysis (principally on long-term care insurance exposures) and review of industry benchmarks. Using updatedThe review of experience and assumptions is a comprehensive and complex process that depends on a number of factors, many of which are interdependent and require evaluation individually and in the 2022 premium deficiency testing results indicated a positive marginaggregate across all insurance products. The vast majority of about 10%our run-off insurance operations consists of reinsurance from multiple ceding insurance entities pursuant to treaties having complex terms and conditions. The review 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 portfolio 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 relatedpolicies 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 cash flow assumptions used in the annual review include:
Morbidity. Morbidity assumptions used in estimating future policy benefit reserves recorded at September 30, 2022, or approximately equivalent toare based on estimates of expected incidences of disability among policyholders and the 2021 premium deficiency testing results. The premium deficiency testing margin in 2022 was impacted bycosts associated with these policyholders asserting claims under their contracts, and these estimates account for any expected future morbidity improvement. For long-term care insurance exposures, estimating expected future costs includes assessments of incidence (probability of a lower discount rate in our Employers Reassurance Corporation (ERAC) portfolio due to the recapture transaction, as explained below, partially offset by higher prevailing benchmark interest rates in the U.S. The portfolioclaim), utilization (amount of investment securitiesavailable benefits expected to be received fromincurred) and continuance (how long the recapture transaction were assumedclaim will last, including claim terminations due to be invested at yields below ERAC’s current portfolio yield before ultimately gradingdeath or recovery).
Rate of Change in Morbidity. Our review incorporates our best estimates of projected future changes in the morbidity rates reflected in our base claim incidence rates. 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 actuarial judgment considers factors such as the work performed by internal and external independent actuarial experts engaged to advise us in our annual review, the observed actual experience in our portfolios measured against our base assumptions, industry developments, and other trends, including advances in the state of medical care and health-care technology development.
Terminations. Terminations include active life mortality and lapse. 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. Lapse refers to the long-term average investment yield as we realignrate at which the portfolio over time. This effect was partially offsetunderlying policies are cancelled due to non-payment of premiums by the net impact from assumed moderately higher near-term mortality related to COVID-19a policyholder. Lapse rate assumptions used in the aggregate across our run-off insurance products (i.e., for life insurance products, higher mortality increasesestimating the present value of expected future policy benefit payments, while for annuityreserves are based on the results of our experience studies and reflect actuarial judgment.
Future long-term care insurance contracts, higher mortality decreases the present value of expected future benefit payments). Excluding the net impact from assumed moderately higher near-term mortality related to COVID-19, we have made no substantial change to our assumptions concerning morbidity, morbidity improvement, mortality, mortality improvement, terminations, or long-term care insurance premium rate increases in 2022. 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.
As noted below in Other Items - New Accounting Standards, we are in process of converting our long-term care insurance claim cost projection models to first principles models and expect to maintain a positive margin in connection with these changes.
In third quarter of 2022, we agreed to terminate substantially. Substantially all long-term care insurance exposures previously cededpolicies that are currently premium paying 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 single reinsurance company (recapture transaction). In connectionreinsurer, we rely upon the primary insurers that issued the underlying policies to file proposed premium rate increases on those policies with the recapture transaction, which is effective in the fourth quarter of 2022,relevant state insurance regulators. While we expecthave no direct ability to receive a portfolio of investment securities in complete settlement of reinsurance recoverables previously recognized under retrocession agreementsseek or to institute such premium rate increases, we often collaborate with the primary insurers in accordance with reinsurance company, which represent substantially allcontractual 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 reinsurance recoverables balance asceding companies along with state insurance regulatory processes and precedents in establishing our current expectations.
Included in Insurance losses and annuity benefits in our Statement of September 30, 2022. InEarnings (Loss) for the years ended December 31, 2022 and 2021, are favorable pre-tax adjustments of $404 million and $408 million, respectively, from updating the net premium ratio after updating for actual historical experience each quarter and updating of future cash flow assumptions in the third quarter of 2022, we recorded an increase to our allowance for credit losses on such reinsurance recoverables of $0.4 billion (pre-tax) ($0.3 billion (after-tax)), reflecting terms of the recapture transaction and the $2.5 billion estimated fair value of the portfolio of investment securities expected to be received in the fourth quarter of 2022, and is unrelated to changes in claim experience or projections of future policy benefit reserves. We expect to recoup this over time as the investment securities mature to par value.
The recapture transaction reduces both our financial and operational risks by removing the future inherent risk of collectability of reinsurance recoverables, eliminating retrocession contracts having complex terms and conditions, assuming direct control of the portfolio of investment securities held in a trust for our benefit and redeploying those assets consistent with our portfolio realignment strategy and establishing administration service standards intended to enhance claim administration and innovation efforts. The effect of the recapture agreement does not increase our long-term care insurance liabilities as under the existing retrocession agreements we were not previously relieved of our primary obligation to companies from which we originally assumed the liabilities. In addition, we do not expect changes to projected statutory funding as a result of the recapture transaction.each year.
GAAP Reserve Sensitivities. The following table provides sensitivities with respect to the impact of changes of key cash flow assumptions underlying our 2022 premium deficiency testing, exclusive offuture policy benefit reserves using the impacts of convertinglocked-in discount rate assumption and have been estimated across the entire product line rather than at an individual cohort level. As our long-term care insurance claim cost projection models to first principles models asoperations are in run-off, the conversion remains incompletelocked-in discount rate at the timeASU 2018-12 transition date is the discount rate used for the computation of our 2022 premium deficiency testing.interest accretion on future policy benefit reserves. 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 could result in materially different outcomes from those reflected below. In addition, the effects of changes to cash flow assumptions underlying our future policy benefit reserves may be partially or wholly reflected in the period in which the assumptions are changed and/or over future periods and may vary across cohorts.
| | | | | | | | | | | | | | |
| 2021 assumption | 2022 assumption | Hypothetical change in 2022 assumption | Estimated adverse impact to projected present value of future cash flows (In millions, pre-tax) |
| Long-term care insurance morbidity improvement | 1.25% per year over 12 to 20 years | 1.25% per year over 12 to 20 years | 25 basis point reduction
No morbidity improvement | $500 $2,500 |
| Long-term care insurance morbidity | Based on company experience | Based on company experience | 5% increase in dollar amount of paid claims | $900 |
| Long-term care insurance mortality improvement | 0.5% per year for 10 years with annual improvement graded to 0% over next 10 years | 0.5% per year for 10 years with annual improvement graded to 0% over next 10 years | 1.0% per year for 10 years with annual improvement graded to 0% over next 10 years | $400 |
| Total terminations: | | | | |
| Long-term care insurance mortality | Based on company experience | Based on company experience | Any change in termination assumptions that reduce total terminations by 10% | $900 |
| Long-term care insurance lapse rate | Varies 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 exhaustion | Based on company experience | Based on company experience |
| Long-term care insurance future premium rate increases | Varies by block based on filing experience | Varies by block based on filing experience | 25% adverse change in success rate on premium rate increase actions not yet approved | $200 |
| Overall discount rate | 6.15% | 6.20% | 25 basis point reduction | $700 |
| Life insurance mortality | Based on company experience | Based on company experience | 5% increase in mortality | $300 |
| | | | | | | | | | | | | | |
| 2021 assumption | 2022 assumption | Hypothetical change in 2022 assumption | Estimated adverse impact to projected present value of future cash flows (In millions, pre-tax) |
| Morbidity: | | | | |
| Long-term care insurance incidence rates | Based on company experience | Based on company experience | 5% increase in incidence rates | $600 |
| Long-term care insurance claim continuance | Based on company experience | Based on company experience | 5% reduction in disabled life deaths | $1,200 |
| Long-term care insurance utilization | Based on company experience and affected by future cost of care inflation | Based on company experience and affected by future cost of care inflation | 5% increase in utilization | $1,100 |
| Long-term care insurance morbidity improvement | Decreases with attained age, ends at age 100 | Decreases with attained age, ends at age 100 | 25 basis point reduction by age with 0% floor
No morbidity improvement | $300
$1,300 |
| Active life terminations: | | | | |
| Long-term care insurance mortality | Based on company experience | Based on company experience | 5% reduction in mortality | $300 |
| Long-term care insurance future premium rate increases | Varies by block based on filing experience | Varies by block based on filing experience | 25% adverse change in success rate on premium rate increase actions not yet approved | $200 |
| Life insurance mortality | Based on company experience | Based on company experience | 5% increase in mortality | $300 |
While higher assumed inflation, holding all other assumptions constant, would result in unfavorable impacts to the projected present value of future cash flows in the table above, it would be expected to be mitigated by a higher discount rate andmore long-term care insurance policies reaching contractual daily or monthly benefit caps.caps and by increased investment income from higher portfolio yields.
Our run-off insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices. 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 can differ in certain respects from GAAP and would result in several of the sensitivities described in the table above being less impactful on our statutory reserves.
See Other Items - New Accounting Standards, Note 12Capital Resources and Other Items within MD&A in our Annual Report on Form 10-K for the year ended December 31, 2021Liquidity and Notes 1, 3 and 13 for further information related to our run-off insurance operations.
NEW ACCOUNTING STANDARDS. The Financial Accounting Standards Board issued new guidance on accounting for long-duration insurance contracts that is effective for our interim and annual periods beginning January 1, 2023 and applied retrospectively to January 1, 2021 (i.e., the transition date). We will adopt the new guidance using the modified retrospective transition method where permitted. We expect adoption of the new guidance will significantly change the accounting for measurements of our long-duration insurance liabilities and reinsurance recoverables and materially affect our consolidated financial statements and require changes to our actuarial, accounting and financial reporting processes, systems, and internal controls. The new 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 warrant revision with any required changes recorded in earnings. These changes will result in the elimination of premium deficiency testing and shadow adjustments. Under the new guidance, the discount rate will be equivalent to the upper-medium grade (i.e., single A) fixed-income instrument yield reflecting the duration characteristics of our insurance liabilities and is required to be updated in each reporting period with changes recorded in Accumulated other comprehensive income (AOCI). As reinsurance recoverables are recognized in a manner consistent with the liabilities relating to the underlying reinsurance contracts, changes in reinsurance recoverables from updating the single A discount rate in each reporting period are also recognized in AOCI. The allowance for credit losses on reinsurance recoverables will continue to be based on the locked-in discount rate for purposes of assessing changes in each reporting period. As such, movements in the gross reinsurance recoverable balance resulting from changes in the single A discount rate will not impact the allowance for credit losses. Following the recapture transaction effective in the fourth quarter of 2022, as explained in Other Items – Insurance above, the remaining reinsurance recoverables are not expected to be material.
In conjunction with the adoption of the new guidance, we are in process of converting our long-term care insurance claim cost projection models to first principles models that are based on more granular assumptions of expected future experience and will facilitate the new guidance's requirements.
As we are approaching the effective date for the new accounting guidance, as well as our implementation of the first principles models, we have estimated the impact of those changes on Shareholders' equity as of the new guidance's transition date of January 1, 2021. We currently estimate a decrease in Shareholders’ equity at the transition date from adoption of the new guidance to be in an after-tax range of $7.0 billion to $8.0 billion, including approximately $5.5 billion to $6.0 billion in AOCI and $1.5 billion to $2.0 billion in Retained earnings. The decrease in AOCI is primarily attributable to remeasuring our insurance liabilities and reinsurance recoverables using the single A rate required under the new guidance, which is lower than our current locked-in discount rate, and the removal of shadow adjustments. The decrease in Retained earnings at the transition date is primarily attributable to certain long-term care insurance exposures where the projected present value of future cash flows exceeds the reserves at the transition date, based on the required lower level of grouping of contracts, combined with converting our long-term care insurance claim cost projection models to first principles models.
To demonstrate the sensitivity of market interest rates on both our insurance liabilities and related assets, if the January 1, 2021 transition date adjustment used rates as of September 30, 2022, while holding everything else constant, we estimate the decrease in Shareholders’ equity at the transition date would be in an after-tax range of $4.0 billion to $5.0 billion.
The new guidance is only applicable to the measurements of our long-duration insurance liabilities under GAAP. In addition, we do not expect changes to statutory insurance reserves, regulatory capital requirements or projected funding as a result of the implementation of the first principles models.
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 organic revenues by segment; organic revenues; and equipment and services organic revenues and (2) profit, specifically organic profit and profit margin by segment; Adjusted profit and profit margin; Adjusted organic profit and profit margin; Adjusted earnings (loss); Adjusted income tax rate; and Adjusted earnings (loss) per share (EPS), and (3) cash flows, specifically free cash flows (FCF). 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) |
| Revenues | | Segment profit (loss) | | Profit margin |
| Three months ended September 30 | 2022 | 2021 | V% | | 2022 | 2021 | V% | | 2022 | 2021 | V pts |
| Aerospace (GAAP) | $ | 6,705 | | $ | 5,398 | | 24 | % | | $ | 1,284 | | $ | 846 | | 52 | % | | 19.1 | % | 15.7 | % | 3.4pts |
| Less: acquisitions | — | | — | | | | — | | — | | | | | | |
| Less: business dispositions | — | | — | | | | — | | — | | | | | | |
| Less: foreign currency effect | (22) | | — | | | | 39 | | (2) | | | | | | |
| Aerospace organic (Non-GAAP) | $ | 6,726 | | $ | 5,398 | | 25 | % | | $ | 1,245 | | $ | 848 | | 47 | % | | 18.5 | % | 15.7 | % | 2.8pts |
| | | | | | | | | | | |
| HealthCare (GAAP) | $ | 4,613 | | $ | 4,339 | | 6 | % | | $ | 712 | | $ | 704 | | 1 | % | | 15.4 | % | 16.2 | % | (0.8)pts |
| Less: acquisitions | 61 | | — | | | | 2 | | — | | | | | | |
| Less: business dispositions | — | | — | | | | — | | — | | | | | | |
| Less: foreign currency effect | (232) | | — | | | | (20) | | 2 | | | | | | |
| HealthCare organic (Non-GAAP) | $ | 4,784 | | $ | 4,339 | | 10 | % | | $ | 731 | | $ | 702 | | 4 | % | | 15.3 | % | 16.2 | % | (0.9)pts |
| | | | | | | | | | | |
| Renewable Energy (GAAP) | $ | 3,594 | | $ | 4,208 | | (15) | % | | $ | (934) | | $ | (151) | | U | | (26.0) | % | (3.6) | % | (22.4)pts |
| Less: acquisitions | — | | (21) | | | | — | | (5) | | | | | | |
| Less: business dispositions | — | | — | | | | — | | — | | | | | | |
| Less: foreign currency effect | (231) | | (3) | | | | 16 | | (23) | | | | | | |
| Renewable Energy organic (Non-GAAP) | $ | 3,825 | | $ | 4,231 | | (10) | % | | $ | (950) | | $ | (123) | | U | | (24.8) | % | (2.9) | % | (21.9)pts |
| | | | | | | | | | | |
| Power (GAAP) | $ | 3,529 | | $ | 4,026 | | (12) | % | | $ | 141 | | $ | 204 | | (31) | % | | 4.0 | % | 5.1 | % | (1.1)pts |
| Less: acquisitions | — | | — | | | | — | | — | | | | | | |
| Less: business dispositions | — | | 158 | | | | — | | — | | | | | | |
| Less: foreign currency effect | (145) | | 5 | | | | (6) | | 13 | | | | | | |
| Power organic (Non-GAAP) | $ | 3,675 | | $ | 3,863 | | (5) | % | | $ | 148 | | $ | 192 | | (23) | % | | 4.0 | % | 5.0 | % | (1.0)pts |
| | | | | | | | | | | |
|
2022 3Q2023 1Q FORM 10-Q 1815
| | ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) | ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) | ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP) |
| | Revenue | | Segment profit (loss) | | Profit margin | | Revenues | | Segment profit (loss) | | Profit margin |
| Nine months ended September 30 | 2022 | 2021 | V% | | 2022 | 2021 | V% | | 2022 | 2021 | V pts | |
| Three months ended March 31 | | Three months ended March 31 | | 2023 | | 2022 | | V% | | 2023 | | 2022 | | V% | | 2023 | | 2022 | V pts |
| Aerospace (GAAP) | Aerospace (GAAP) | $ | 18,434 | | $ | 15,230 | | 21 | % | | $ | 3,341 | | $ | 1,664 | | F | | 18.1 | % | 10.9 | % | 7.2pts | Aerospace (GAAP) | | $ | 6,981 | | | $ | 5,603 | | | 25 | % | | $ | 1,326 | | | $ | 908 | | | 46 | % | | 19.0 | % | | 16.2 | % | 2.8pts |
| Less: acquisitions | Less: acquisitions | — | | — | | | — | | — | | | Less: acquisitions | | — | | | — | | | — | | | — | | |
| Less: business dispositions | Less: business dispositions | — | | — | | | — | | — | | | Less: business dispositions | | — | | | — | | | — | | | — | | |
| Less: foreign currency effect | Less: foreign currency effect | (50) | | 1 | | | 88 | | 5 | | | Less: foreign currency effect | | (6) | | | (1) | | | 30 | | | 4 | | |
| Aerospace organic (Non-GAAP) | Aerospace organic (Non-GAAP) | $ | 18,485 | | $ | 15,229 | | 21 | % | | $ | 3,253 | | $ | 1,658 | | 96 | % | | 17.6 | % | 10.9 | % | 6.7pts | Aerospace organic (Non-GAAP) | | $ | 6,987 | | | $ | 5,604 | | | 25 | % | | $ | 1,295 | | | $ | 904 | | | 43 | % | | 18.5 | % | | 16.1 | % | 2.4pts |
| | HealthCare (GAAP) | $ | 13,494 | | $ | 13,100 | | 3 | % | | $ | 1,901 | | $ | 2,203 | | (14) | % | | 14.1 | % | 16.8 | % | (2.7)pts | |
| Less: acquisitions | 175 | | — | | | (56) | | (5) | | | |
| Less: business dispositions | — | | — | | | — | | — | | | |
| Less: foreign currency effect | (484) | | — | | | (90) | | (17) | | | |
| HealthCare organic (Non-GAAP) | $ | 13,803 | | $ | 13,100 | | 5 | % | | $ | 2,047 | | $ | 2,225 | | (8) | % | | 14.8 | % | 17.0 | % | (2.2)pts | |
| | Renewable Energy (GAAP) | Renewable Energy (GAAP) | $ | 9,564 | | $ | 11,505 | | (17) | % | | $ | (1,786) | | $ | (484) | | U | | (18.7) | % | (4.2) | % | (14.5)pts | Renewable Energy (GAAP) | | $ | 2,837 | | | $ | 2,871 | | | (1) | % | | $ | (414) | | | $ | (434) | | | 5 | % | | (14.6) | % | | (15.1) | % | 0.5pts |
| Less: acquisitions | Less: acquisitions | — | | (43) | | | — | | (13) | | | Less: acquisitions | | — | | | — | | | — | | | — | | |
| Less: business dispositions | Less: business dispositions | — | | — | | | — | | — | | | Less: business dispositions | | — | | | — | | | — | | | — | | |
| Less: foreign currency effect | Less: foreign currency effect | (442) | | — | | | 73 | | (29) | | | Less: foreign currency effect | | (159) | | | 7 | | | (22) | | | — | | |
| Renewable Energy organic (Non-GAAP) | Renewable Energy organic (Non-GAAP) | $ | 10,006 | | $ | 11,547 | | (13) | % | | $ | (1,860) | | $ | (442) | | U | | (18.6) | % | (3.8) | % | (14.8)pts | Renewable Energy organic (Non-GAAP) | | $ | 2,997 | | | $ | 2,863 | | | 5 | % | | $ | (392) | | | $ | (434) | | | 10 | % | | (13.1) | % | | (15.2) | % | 2.1pts |
| | Power (GAAP) | Power (GAAP) | $ | 11,233 | | $ | 12,242 | | (8) | % | | $ | 524 | | $ | 416 | | 26 | % | | 4.7 | % | 3.4 | % | 1.3pts | Power (GAAP) | | $ | 3,820 | | | $ | 3,501 | | | 9 | % | | $ | 75 | | | $ | 63 | | | 19 | % | | 2.0 | % | | 1.8 | % | 0.2pts |
| Less: acquisitions | Less: acquisitions | — | | — | | | — | | — | | | Less: acquisitions | | — | | | — | | | — | | | — | | |
| Less: business dispositions | Less: business dispositions | — | | 476 | | | — | | — | | | Less: business dispositions | | — | | | — | | | — | | | — | | |
| Less: foreign currency effect | Less: foreign currency effect | (321) | | (4) | | | (24) | | (15) | | | Less: foreign currency effect | | (67) | | | (16) | | | (37) | | | (20) | | |
| Power organic (Non-GAAP) | Power organic (Non-GAAP) | $ | 11,553 | | $ | 11,770 | | (2) | % | | $ | 548 | | $ | 432 | | 27 | % | | 4.7 | % | 3.7 | % | 1.0pts | Power organic (Non-GAAP) | | $ | 3,887 | | | $ | 3,517 | | | 11 | % | | $ | 112 | | | $ | 83 | | | 35 | % | | 2.9 | % | | 2.4 | % | 0.5pts |
| | We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends. | 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. | 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. |
| | ORGANIC REVENUES (NON-GAAP) | ORGANIC REVENUES (NON-GAAP) | Three months ended September 30 | | Nine months ended September 30 | ORGANIC REVENUES (NON-GAAP) | Three months ended March 31 | |
| | 2022 | 2021 | V% | | 2022 | 2021 | V% | | 2023 | 2022 | V% | |
| Total revenues (GAAP) | Total revenues (GAAP) | $ | 19,084 | | $ | 18,569 | | 3 | % | | $ | 54,769 | | $ | 53,893 | | 2 | % | Total revenues (GAAP) | $ | 14,486 | | $ | 12,675 | | 14 | % | |
| Less: Insurance revenues | Less: Insurance revenues | 646 | | 756 | | | 2,179 | | 2,295 | | | Less: Insurance revenues | 791 | | 764 | | | |
| Adjusted revenues (Non-GAAP) | Adjusted revenues (Non-GAAP) | $ | 18,438 | | $ | 17,813 | | 4 | % | | $ | 52,591 | | $ | 51,598 | | 2 | % | Adjusted revenues (Non-GAAP) | $ | 13,695 | | $ | 11,910 | | 15 | % | |
| Less: acquisitions | Less: acquisitions | 61 | | (21) | | | 177 | | (42) | | | Less: acquisitions | — | | 1 | | | |
| Less: business dispositions | Less: business dispositions | — | | 70 | | | — | | 179 | | | Less: business dispositions | — | | — | | | |
| Less: foreign currency effect(a) | Less: foreign currency effect(a) | (638) | | 2 | | | (1,314) | | (3) | | | Less: foreign currency effect(a) | (235) | | (9) | | | |
| Organic revenues (Non-GAAP) | Organic revenues (Non-GAAP) | $ | 19,015 | | $ | 17,762 | | 7 | % | | $ | 53,728 | | $ | 51,465 | | 4 | % | Organic revenues (Non-GAAP) | $ | 13,929 | | $ | 11,919 | | 17 | % | |
| | (a) Foreign currency impact in 2022 was primarily driven by U.S. dollar appreciation against the euro, British pound and Japanese yen. | |
| (a) Foreign currency impact in 2023 was primarily driven by U.S. dollar appreciation against the euro, Chinese renminbi and British pound. | | (a) Foreign currency impact in 2023 was primarily driven by U.S. dollar appreciation against the euro, Chinese renminbi and British pound. |
| 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 revenues from our run-off Insurance business, acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends. | 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 revenues from our run-off Insurance business, acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends. | 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 revenues from our run-off Insurance business, acquisitions, dispositions and foreign currency, which includes translational and transactional impacts, as these activities can obscure underlying trends. |
| | EQUIPMENT AND SERVICES | Three months ended September 30 | | Nine months ended September 30 | |
| ORGANIC REVENUES (NON-GAAP) | 2022 | 2021 | V% | | 2022 | 2021 | V% | |
| EQUIPMENT AND SERVICES ORGANIC REVENUES (NON-GAAP) | | EQUIPMENT AND SERVICES ORGANIC REVENUES (NON-GAAP) | Three months ended March 31 | |
| | | 2023 | 2022 | V% | |
| Total equipment revenues (GAAP) | Total equipment revenues (GAAP) | $ | 8,082 | | $ | 8,903 | | (9) | % | | $ | 22,549 | | $ | 25,172 | | (10) | % | Total equipment revenues (GAAP) | $ | 5,287 | | $ | 4,608 | | 15 | % | |
| Less: acquisitions | Less: acquisitions | 61 | | — | | | 174 | | — | | | Less: acquisitions | — | | — | | | |
| Less: business dispositions | Less: business dispositions | — | | (45) | | | — | | (146) | | | Less: business dispositions | — | | — | | | |
| Less: foreign currency effect | Less: foreign currency effect | (401) | | — | | | (811) | | (1) | | | Less: foreign currency effect | (170) | | (1) | | | |
| Equipment organic revenues (Non-GAAP) | Equipment organic revenues (Non-GAAP) | $ | 8,423 | | $ | 8,947 | | (6) | % | | $ | 23,187 | | $ | 25,319 | | (8) | % | Equipment organic revenues (Non-GAAP) | $ | 5,458 | | $ | 4,609 | | 18 | % | |
| | Total services revenues (GAAP) | Total services revenues (GAAP) | $ | 10,356 | | $ | 8,910 | | 16 | % | | $ | 30,041 | | $ | 26,427 | | 14 | % | Total services revenues (GAAP) | $ | 8,407 | | $ | 7,302 | | 15 | % | |
| Less: acquisitions | Less: acquisitions | — | | (21) | | | 3 | | (42) | | | Less: acquisitions | — | | 1 | | | |
| Less: business dispositions | Less: business dispositions | — | | 114 | | | — | | 324 | | | Less: business dispositions | — | | — | | | |
| Less: foreign currency effect | Less: foreign currency effect | (236) | | 2 | | | (503) | | (2) | | | Less: foreign currency effect | (64) | | (8) | | | |
| Services organic revenues (Non-GAAP) | Services organic revenues (Non-GAAP) | $ | 10,592 | | $ | 8,815 | | 20 | % | | $ | 30,541 | | $ | 26,146 | | 17 | % | Services organic revenues (Non-GAAP) | $ | 8,471 | | $ | 7,309 | | 16 | % | |
| 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. | |
| 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. | | 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. |
2022 3Q2023 1Q FORM 10-Q 1916
| | ADJUSTED PROFIT AND PROFIT MARGIN (NON-GAAP) | ADJUSTED PROFIT AND PROFIT MARGIN (NON-GAAP) | Three months ended September 30 | | Nine months ended September 30 | ADJUSTED PROFIT AND PROFIT MARGIN (NON-GAAP) | | Three months ended March 31 | |
| | 2022 | 2021 | V% | | 2022 | 2021 | V% | | | 2023 | 2022 | V% | |
| Total revenues (GAAP) | Total revenues (GAAP) | $ | 19,084 | $ | 18,569 | 3% | | $ | 54,769 | $ | 53,893 | 2% | Total revenues (GAAP) | | $ | 14,486 | $ | 12,675 | 14% | |
| Less: Insurance revenues (Note 12) | 646 | 756 | | 2,179 | 2,295 | | |
| Less: Insurance revenues (Note 13) | | Less: Insurance revenues (Note 13) | | 791 | 764 | | |
| Adjusted revenues (Non-GAAP) | Adjusted revenues (Non-GAAP) | $ | 18,438 | $ | 17,813 | 4% | | $ | 52,591 | $ | 51,598 | 2% | Adjusted revenues (Non-GAAP) | | $ | 13,695 | $ | 11,910 | 15% | |
| | Total costs and expenses (GAAP) | Total costs and expenses (GAAP) | $ | 19,334 | $ | 18,337 | 5% | | $ | 54,653 | $ | 55,866 | (2)% | Total costs and expenses (GAAP) | | $ | 14,075 | $ | 13,904 | 1% | |
| Less: Insurance cost and expenses (Note 12) | 956 | 701 | | 2,092 | 1,869 | | |
| Less: Insurance cost and expenses (Note 13) | | Less: Insurance cost and expenses (Note 13) | | 722 | 658 | | |
| Less: interest and other financial charges(a) | Less: interest and other financial charges(a) | 377 | 446 | | 1,146 | 1,403 | | Less: interest and other financial charges(a) | | 257 | 371 | | |
| Less: non-operating benefit cost (income) | Less: non-operating benefit cost (income) | (125) | 427 | | (396) | 1,374 | | Less: non-operating benefit cost (income) | | (385) | (105) | | |
| Less: restructuring & other(a) | Less: restructuring & other(a) | 183 | 64 | | 256 | 402 | | Less: restructuring & other(a) | | 151 | 38 | | |
| Less: debt extinguishment costs (Note 11) | — | | — | 1,416 | | |
| | Less: separation costs(a) | Less: separation costs(a) | 227 | — | | 553 | — | | Less: separation costs(a) | | 205 | 99 | | |
| Less: Steam asset sale impairment(a) | Less: Steam asset sale impairment(a) | — | | 825 | — | | Less: Steam asset sale impairment(a) | | — | 824 | | |
| Less: Russia and Ukraine charges(a) | Less: Russia and Ukraine charges(a) | 33 | — | | 263 | — | | Less: Russia and Ukraine charges(a) | | — | 230 | | |
| | Add: noncontrolling interests | Add: noncontrolling interests | 4 | (73) | | 51 | (72) | | Add: noncontrolling interests | | (27) | 14 | | |
| Add: EFS benefit from taxes | Add: EFS benefit from taxes | (52) | (33) | | (160) | (111) | | Add: EFS benefit from taxes | | (51) | (47) | | |
| Adjusted costs (Non-GAAP) | Adjusted costs (Non-GAAP) | $ | 17,637 | $ | 16,592 | 6% | | $ | 49,805 | $ | 49,219 | 1% | Adjusted costs (Non-GAAP) | | $ | 13,047 | $ | 11,755 | 11% | |
| | Other income (loss) (GAAP) | Other income (loss) (GAAP) | $ | 195 | $ | 351 | (44)% | | $ | (941) | $ | 1,757 | U | Other income (loss) (GAAP) | | $ | 6,081 | $ | 49 | F | |
| Less: gains (losses) on equity securities(a) | Less: gains (losses) on equity securities(a) | (89) | 412 | | (1,859) | 1,256 | | Less: gains (losses) on equity securities(a) | | 5,906 | (219) | | |
| Less: restructuring & other(a) | Less: restructuring & other(a) | — | | 3 | 7 | | Less: restructuring & other(a) | | — | 3 | | |
| Less: gains (losses) on purchases and sales of business interests(a) | Less: gains (losses) on purchases and sales of business interests(a) | 22 | (156) | | 28 | (159) | | Less: gains (losses) on purchases and sales of business interests(a) | | (55) | 4 | | |
| Adjusted other income (loss) (Non-GAAP) | Adjusted other income (loss) (Non-GAAP) | $ | 263 | $ | 95 | F | | $ | 888 | $ | 653 | 36% | Adjusted other income (loss) (Non-GAAP) | | $ | 230 | $ | 260 | (12)% | |
| | Profit (loss) (GAAP) | Profit (loss) (GAAP) | $ | (55) | $ | 584 | U | | $ | (825) | $ | (216) | U | Profit (loss) (GAAP) | | $ | 6,492 | $ | (1,180) | F | |
| Profit (loss) margin (GAAP) | Profit (loss) margin (GAAP) | (0.3)% | 3.1% | (3.4)pts | | (1.5)% | (0.4)% | (1.1)pts | Profit (loss) margin (GAAP) | | 44.8% | (9.3)% | 54.1pts | |
| | Adjusted profit (loss) (Non-GAAP) | Adjusted profit (loss) (Non-GAAP) | $ | 1,064 | $ | 1,316 | (19)% | | $ | 3,673 | $ | 3,033 | 21% | Adjusted profit (loss) (Non-GAAP) | | $ | 877 | $ | 415 | F | |
| Adjusted profit (loss) margin (Non-GAAP) | Adjusted profit (loss) margin (Non-GAAP) | 5.8% | 7.4% | (1.6)pts | | 7.0% | 5.9% | 1.1pts | Adjusted profit (loss) margin (Non-GAAP) | | 6.4% | 3.5% | 2.9pts | |
| | (a) See the Corporate and Other Consolidated Information sections for further information. | (a) See the Corporate and Other Consolidated Information sections for further information. | (a) See the Corporate and Other Consolidated Information sections 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. |
| | ADJUSTED ORGANIC PROFIT (NON-GAAP) | ADJUSTED ORGANIC PROFIT (NON-GAAP) | Three months ended September 30 | | Nine months ended September 30 | ADJUSTED ORGANIC PROFIT (NON-GAAP) | Three months ended March 31 | |
| | 2022 | 2021 | V% | | 2022 | 2021 | V% | | 2023 | 2022 | V% | |
| Adjusted profit (loss) (Non-GAAP) | Adjusted profit (loss) (Non-GAAP) | $ | 1,064 | | $ | 1,316 | | (19) | % | | $ | 3,673 | | $ | 3,033 | | 21 | % | Adjusted profit (loss) (Non-GAAP) | $ | 877 | | $ | 415 | | F | |
| Less: acquisitions | Less: acquisitions | (5) | | (5) | | | (74) | | (17) | | | Less: acquisitions | (6) | | (5) | | | |
| Less: business dispositions | Less: business dispositions | — | | 5 | | | — | | 13 | | | Less: business dispositions | — | | — | | | |
| Less: foreign currency effect(a) | Less: foreign currency effect(a) | 21 | | 2 | | | 35 | | (21) | | | Less: foreign currency effect(a) | (81) | | (14) | | | |
| Adjusted organic profit (loss) (Non-GAAP) | Adjusted organic profit (loss) (Non-GAAP) | $ | 1,048 | | $ | 1,314 | | (20) | % | | $ | 3,712 | | $ | 3,058 | | 21 | % | Adjusted organic profit (loss) (Non-GAAP) | $ | 964 | | $ | 434 | | F | |
| | Adjusted profit (loss) margin (Non-GAAP) | Adjusted profit (loss) margin (Non-GAAP) | 5.8 | % | 7.4 | % | (1.6) | pts | | 7.0 | % | 5.9 | % | 1.1 | pts | Adjusted profit (loss) margin (Non-GAAP) | 6.4 | % | 3.5 | % | 2.9 | pts | |
| Adjusted organic profit (loss) margin (Non-GAAP) | Adjusted organic profit (loss) margin (Non-GAAP) | 5.5 | % | 7.4 | % | (1.9) | pts | | 6.9 | % | 5.9 | % | 1.0 | pts | Adjusted organic profit (loss) margin (Non-GAAP) | 6.9 | % | 3.6 | % | 3.3 | pts | |
| | (a) Included foreign currency negative effect on revenues of $638 million and $1,314 million and positive effect on operating costs and other income (loss) of $658 million and $1,349 million for the three and nine months ended September 30, 2022, respectively. | |
| 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. | |
| (a) Included foreign currency negative effect on revenues of $235 million and positive effect on operating costs and other income (loss) of $154 million for the three months ended March 31, 2023. | | (a) Included foreign currency negative effect on revenues of $235 million and positive effect on operating costs and other income (loss) of $154 million for the three months ended March 31, 2023. |
| 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. | | 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, which includes translational and transactional impacts, as these activities can obscure underlying trends. |
2022 3Q2023 1Q FORM 10-Q 2017
| | | | | | | | | | | | | | | | | | | | | | | |
| ADJUSTED EARNINGS (LOSS) AND | Three months ended September 30 | | Nine months ended September 30 |
| ADJUSTED INCOME TAX RATE (NON-GAAP) | 2022 | 2021 | V% | | 2022 | 2021 | V% |
| Earnings (loss) from continuing operations (GAAP) (Note 17) | $ | (150) | | $ | 593 | | U | | $ | (1,606) | | $ | (11) | | U |
| Insurance earnings (loss) (pre-tax) | (310) | | 56 | | | | 92 | | 430 | | |
| Tax effect on Insurance earnings (loss) | 63 | | (14) | | | | (24) | | (95) | | |
| Less: Insurance earnings (loss) (net of tax) (Note 12) | (247) | | 42 | | | | 68 | | 334 | | |
| Earnings (loss) excluding Insurance (Non-GAAP) | $ | 97 | | $ | 551 | | (82) | % | | $ | (1,674) | | $ | (345) | | U |
| Non-operating benefit (cost) income (pre-tax) (GAAP) | 125 | | (427) | | | | 396 | | (1,374) | | |
| Tax effect on non-operating benefit (cost) income | (26) | | 90 | | | | (83) | | 289 | | |
| Less: Non-operating benefit (cost) income (net of tax) | 99 | | (337) | | | | 313 | | (1,085) | | |
| Gains (losses) on purchases and sales of business interests (pre-tax)(a) | 22 | | (156) | | | | 28 | | (159) | | |
| Tax effect on gains (losses) on purchases and sales of business interests | 39 | | 30 | | | | 68 | | 31 | | |
| Less: Gains (losses) on purchases and sales of business interests (net of tax) | 61 | | (126) | | | | 95 | | (128) | | |
| Gains (losses) on equity securities (pre-tax)(a) | (89) | | 412 | | | | (1,859) | | 1,256 | | |
| Tax effect on gains (losses) on equity securities(b)(c) | (9) | | 78 | | | | (15) | | 155 | | |
| Less: Gains (losses) on equity securities (net of tax) | (98) | | 490 | | | | (1,874) | | 1,411 | | |
| Restructuring & other (pre-tax)(a) | (183) | | (64) | | | | (253) | | (395) | | |
| Tax effect on restructuring & other | 38 | | 7 | | | | 54 | | 36 | | |
| Less: Restructuring & other (net of tax) | (144) | | (57) | | | | (199) | | (359) | | |
| Debt extinguishment costs (pre-tax) (Note 11) | — | | — | | | | — | | (1,416) | | |
| Tax effect on debt extinguishment costs | — | | — | | | | — | | 298 | | |
| Less: Debt extinguishment costs (net of tax) | — | | — | | | | — | | (1,119) | | |
| Separation costs (pre-tax)(a) | (227) | | — | | | | (553) | | — | | |
| Tax effect on separation costs | 51 | | — | | | | 59 | | — | | |
| Less: Separation costs (net of tax) | (176) | | — | | | | (495) | | — | | |
| Steam asset sale impairment (pre-tax)(a) | — | | — | | | | (825) | | — | | |
| Tax effect on Steam asset sale impairment | — | | — | | | | 84 | | — | | |
| Less: Steam asset sale impairment (net of tax) | — | | — | | | | (741) | | — | | |
| Russia and Ukraine charges (pre-tax)(a) | (33) | | — | | | | (263) | | — | | |
| Tax effect on Russia and Ukraine charges | — | | — | | | | 15 | | — | | |
| Less: Russia and Ukraine charges (net of tax) | (33) | | — | | | | (248) | | — | | |
| Less: Accretion of redeemable noncontrolling interest (pre-tax and net of tax) (Note 17) | — | | (9) | | | | — | | (9) | | |
| Less: Accretion of preferred share repurchase (pre-tax and net of tax) (Note 17) | 3 | | — | | | | 3 | | — | | |
| Less: U.S. and foreign tax law change enactment | — | | — | | | | (37) | | 8 | | |
| Less: Tax loss related to GECAS transaction | — | | — | | | | — | | (44) | | |
| Adjusted earnings (loss) (Non-GAAP) | $ | 385 | | $ | 591 | | (35) | % | | $ | 1,509 | | $ | 980 | | 54 | % |
| | | | | | | |
| Earnings (loss) from continuing operations before taxes (GAAP) | $ | (55) | | $ | 584 | | | | $ | (825) | | $ | (216) | | |
| Less: Total adjustments above (pre-tax) | (695) | | (180) | | | | (3,239) | | (1,659) | | |
| Adjusted earnings before taxes (Non-GAAP) | $ | 640 | | $ | 763 | | | | $ | 2,414 | | $ | 1,443 | | |
| | | | | | | |
| Provision (benefit) for income taxes (GAAP) | $ | 21 | | $ | 2 | | | | $ | 541 | | $ | (323) | | |
| Less: Tax effect on adjustments above | (157) | | (191) | | | | (121) | | (677) | | |
| Adjusted provision (benefit) for income taxes (Non-GAAP) | $ | 177 | | $ | 193 | | | | $ | 662 | | $ | 354 | | |
| | | | | | | |
| Income tax rate (GAAP) | (38.2) | % | 0.3 | % | | | (65.6) | % | 149.5 | % | |
| Adjusted income tax rate (Non-GAAP) | 27.7 | % | 25.3 | % | | | 27.4 | % | 24.5 | % | |
| | | | | | | |
| (a) See the Corporate and Other Consolidated Information sections for further information. |
| (b) Includes tax benefits available to offset the tax on gains (losses) on equity securities. | | | | | |
| (c) Includes related tax valuation allowances. | | | | | | | |
| 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 the Adjusted income tax rate* provides management and investors a useful measure to evaluate the performance of the total company and increases period-to-period comparability. |
*Non-GAAP Financial Measure
| | ADJUSTED EARNINGS (LOSS) PER SHARE (EPS) (NON-GAAP) | Three months ended September 30 | | Nine months ended September 30 | |
| (In dollars) | 2022 | 2021 | V% | | 2022 | 2021 | V% | |
| Earnings (loss) per share from continuing operations (GAAP) (Note 17) | $ | (0.14) | | $ | 0.54 | | U | | $ | (1.46) | | $ | (0.01) | | U | |
ADJUSTED EARNINGS (LOSS) AND ADJUSTED INCOME TAX RATE (NON-GAAP) (Per-share amounts in dollars) | | ADJUSTED EARNINGS (LOSS) AND ADJUSTED INCOME TAX RATE (NON-GAAP) (Per-share amounts in dollars) | 2023 | | 2022 | |
| Three months ended March 31 | | Three months ended March 31 | Earnings | EPS | | Earnings | EPS | |
| Earnings (loss) from continuing operations (GAAP) (Note 18) | | Earnings (loss) from continuing operations (GAAP) (Note 18) | $ | 6,097 | $ | 5.56 | | $ | (1,276) | $ | (1.16) | |
| Insurance earnings (loss) (pre-tax) | Insurance earnings (loss) (pre-tax) | (0.28) | | 0.05 | | | 0.08 | | 0.39 | | | Insurance earnings (loss) (pre-tax) | 71 | 0.06 | | 108 | 0.10 | |
| Tax effect on Insurance earnings (loss) | Tax effect on Insurance earnings (loss) | 0.06 | | (0.01) | | | (0.02) | | (0.09) | | | Tax effect on Insurance earnings (loss) | (16) | (0.01) | | (24) | (0.02) | |
| Less: Insurance earnings (loss) (net of tax) (Note 12) | (0.23) | | 0.04 | | | 0.06 | | 0.30 | | | |
| Earnings (loss) per share excluding Insurance (Non-GAAP) | $ | 0.09 | | $ | 0.50 | | (82) | % | | $ | (1.53) | | $ | (0.31) | | U | |
| Less: Insurance earnings (loss) (net of tax) (Note 13) | | Less: Insurance earnings (loss) (net of tax) (Note 13) | 54 | 0.05 | | 84 | 0.08 | |
| Earnings (loss) excluding Insurance (Non-GAAP) | | Earnings (loss) excluding Insurance (Non-GAAP) | $ | 6,043 | $ | 5.51 | | $ | (1,360) | $ | (1.24) | |
| Non-operating benefit (cost) income (pre-tax) (GAAP) | Non-operating benefit (cost) income (pre-tax) (GAAP) | 0.11 | | (0.39) | | | 0.36 | | (1.25) | | | Non-operating benefit (cost) income (pre-tax) (GAAP) | 385 | 0.35 | | 105 | 0.10 | |
| Tax effect on non-operating benefit (cost) income | Tax effect on non-operating benefit (cost) income | (0.02) | | 0.08 | | | (0.08) | | 0.26 | | | Tax effect on non-operating benefit (cost) income | (81) | (0.07) | | (22) | (0.02) | |
| Less: Non-operating benefit (cost) income (net of tax) | Less: Non-operating benefit (cost) income (net of tax) | 0.09 | | (0.31) | | | 0.29 | | (0.99) | | | Less: Non-operating benefit (cost) income (net of tax) | 304 | 0.28 | | 83 | 0.08 | |
| Gains (losses) on purchases and sales of business interests (pre-tax)(a) | Gains (losses) on purchases and sales of business interests (pre-tax)(a) | 0.02 | | (0.14) | | | 0.03 | | (0.14) | | | Gains (losses) on purchases and sales of business interests (pre-tax)(a) | (55) | (0.05) | | 4 | — | |
| Tax effect on gains (losses) on purchases and sales of business interests | Tax effect on gains (losses) on purchases and sales of business interests | 0.04 | | 0.03 | | | 0.06 | | 0.03 | | | Tax effect on gains (losses) on purchases and sales of business interests | 1 | — | | (1) | — | |
| Less: Gains (losses) on purchases and sales of business interests (net of tax) | Less: Gains (losses) on purchases and sales of business interests (net of tax) | 0.06 | | (0.11) | | | 0.09 | | (0.12) | | | Less: Gains (losses) on purchases and sales of business interests (net of tax) | (53) | (0.05) | | 3 | — | |
| Gains (losses) on equity securities (pre-tax)(a) | Gains (losses) on equity securities (pre-tax)(a) | (0.08) | | 0.37 | | | (1.69) | | 1.14 | | | Gains (losses) on equity securities (pre-tax)(a) | 5,906 | 5.39 | | (219) | (0.20) | |
| Tax effect on gains (losses) on equity securities(b)(c) | Tax effect on gains (losses) on equity securities(b)(c) | (0.01) | | 0.07 | | | (0.01) | | 0.14 | | | Tax effect on gains (losses) on equity securities(b)(c) | — | | (20) | (0.02) | |
| Less: Gains (losses) on equity securities (net of tax) | Less: Gains (losses) on equity securities (net of tax) | (0.09) | | 0.44 | | | (1.71) | | 1.29 | | | Less: Gains (losses) on equity securities (net of tax) | 5,906 | 5.39 | | (239) | (0.22) | |
| Restructuring & other (pre-tax)(a) | Restructuring & other (pre-tax)(a) | (0.17) | | (0.06) | | | (0.23) | | (0.36) | | | Restructuring & other (pre-tax)(a) | (151) | (0.14) | | (35) | (0.03) | |
| Tax effect on restructuring & other | Tax effect on restructuring & other | 0.04 | | 0.01 | | | 0.05 | | 0.03 | | | Tax effect on restructuring & other | 32 | 0.03 | | 8 | 0.01 | |
| Less: Restructuring & other (net of tax) | Less: Restructuring & other (net of tax) | (0.13) | | (0.05) | | | (0.18) | | (0.33) | | | Less: Restructuring & other (net of tax) | (119) | (0.11) | | (27) | (0.02) | |
| Debt extinguishment costs (pre-tax) (Note 11) | — | | — | | | — | | (1.29) | | | |
| Tax effect on debt extinguishment costs | — | | — | | | — | | 0.27 | | | |
| Less: Debt extinguishment costs (net of tax) | — | | — | | | — | | (1.02) | | | |
| | Separation costs (pre-tax)(a) | Separation costs (pre-tax)(a) | (0.21) | | — | | | (0.50) | | — | | | Separation costs (pre-tax)(a) | (205) | (0.19) | | (99) | (0.09) | |
| Tax effect on separation costs | Tax effect on separation costs | 0.05 | | — | | | 0.05 | | — | | | Tax effect on separation costs | (56) | (0.05) | | (24) | (0.02) | |
| Less: Separation costs (net of tax) | Less: Separation costs (net of tax) | (0.16) | | — | | | | (0.45) | | — | | | Less: Separation costs (net of tax) | (261) | (0.24) | | (123) | (0.11) | |
| Steam asset sale impairment (pre-tax)(a) | Steam asset sale impairment (pre-tax)(a) | — | | — | | | (0.75) | | — | | | Steam asset sale impairment (pre-tax)(a) | — | | (824) | (0.75) | |
| Tax effect on Steam asset sale impairment | Tax effect on Steam asset sale impairment | — | | — | | | 0.08 | | — | | | Tax effect on Steam asset sale impairment | — | | 84 | 0.08 | |
| Less: Steam asset sale impairment (net of tax) | Less: Steam asset sale impairment (net of tax) | — | | — | | | (0.68) | | — | | | Less: Steam asset sale impairment (net of tax) | — | | (740) | (0.67) | |
| Russia and Ukraine charges (pre-tax)(a) | Russia and Ukraine charges (pre-tax)(a) | (0.03) | | — | | | (0.24) | | — | | | Russia and Ukraine charges (pre-tax)(a) | — | | (230) | (0.21) | |
| Tax effect on Russia and Ukraine charges | Tax effect on Russia and Ukraine charges | — | | — | | | 0.01 | | — | | | Tax effect on Russia and Ukraine charges | — | | 15 | 0.01 | |
| Less: Russia and Ukraine charges (net of tax) | Less: Russia and Ukraine charges (net of tax) | (0.03) | | — | | | (0.23) | | — | | | Less: Russia and Ukraine charges (net of tax) | — | | (215) | (0.20) | |
| Less: Accretion of redeemable noncontrolling interest (pre-tax and net of tax) (Note 17) | — | | (0.01) | | | — | | (0.01) | | | |
| Less: Accretion of preferred share repurchase (pre-tax and net of tax) (Note 17) | — | | — | | | — | | — | | | |
| Less: U.S. and foreign tax law change enactment | — | | — | | | (0.03) | | 0.01 | | | |
| Less: Tax loss related to GECAS transaction | — | | — | | | — | | (0.04) | | | |
| Adjusted earnings (loss) per share (Non-GAAP) | $ | 0.35 | | $ | 0.53 | | (34) | % | | $ | 1.38 | | $ | 0.89 | | 55 | % | |
| | Less: Excise tax on preferred stock redemption | | Less: Excise tax on preferred stock redemption | (30) | (0.03) | | — | |
| Adjusted earnings (loss) (Non-GAAP) | | Adjusted earnings (loss) (Non-GAAP) | $ | 296 | $ | 0.27 | | $ | (102) | $ | (0.09) | |
| | Earnings (loss) from continuing operations before taxes (GAAP) | | Earnings (loss) from continuing operations before taxes (GAAP) | $ | 6,492 | | $ | (1,180) | | |
| Less: Total adjustments above (pre-tax) | | Less: Total adjustments above (pre-tax) | 5,950 | | (1,190) | | |
| Adjusted earnings before taxes (Non-GAAP) | | Adjusted earnings before taxes (Non-GAAP) | $ | 542 | | $ | 9 | | |
| | Provision (benefit) for income taxes (GAAP) | | Provision (benefit) for income taxes (GAAP) | $ | 271 | | $ | 29 | | |
| Less: Tax effect on adjustments above | | Less: Tax effect on adjustments above | 119 | | (16) | | |
| Adjusted provision (benefit) for income taxes (Non-GAAP) | | Adjusted provision (benefit) for income taxes (Non-GAAP) | $ | 152 | | $ | 45 | | |
| | Income tax rate (GAAP) | | Income tax rate (GAAP) | 4.2% | | (2.5)% | | |
| Adjusted income tax rate (Non-GAAP) | | Adjusted income tax rate (Non-GAAP) | 28.0% | | 500.0% | | |
| | (a) See the Corporate and Other Consolidated Information sections for further information. | (a) See the Corporate and Other Consolidated Information sections for further information. | (a) See the Corporate and Other Consolidated Information sections for further information. |
| (b) Includes tax benefits available to offset the tax on gains (losses) on equity securities. | (b) Includes tax benefits available to offset the tax on gains (losses) on equity securities. | | (b) Includes tax benefits available to offset the tax on gains (losses) on equity securities. |
| (c) Includes related tax valuation allowances. | (c) Includes related tax valuation allowances. | | (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. | Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total. | 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 2022. | |
| 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 cost in Adjusted earnings* and the Adjusted tax rate* 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 2023. | | 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 cost in Adjusted earnings* and the Adjusted tax rate* 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 2023. |
*Non-GAAP Financial Measure
2022 3Q2023 1Q FORM 10-Q 2218
| | FREE CASH FLOWS (FCF) (NON-GAAP) | FREE CASH FLOWS (FCF) (NON-GAAP) | Nine months ended September 30 | | FREE CASH FLOWS (FCF) (NON-GAAP) | Three months ended March 31 |
| | 2022 | 2021 | V$ | | | 2023 | 2022 |
| CFOA (GAAP) | CFOA (GAAP) | $ | 1,293 | | $ | (1,527) | | $ | 2,820 | | | CFOA (GAAP) | $ | 155 | | $ | (924) | |
| Less: Insurance CFOA | Less: Insurance CFOA | 48 | | 40 | | | | Less: Insurance CFOA | 6 | | (15) | |
| CFOA excluding Insurance (Non-GAAP) | CFOA excluding Insurance (Non-GAAP) | $ | 1,245 | | $ | (1,568) | | $ | 2,813 | | | CFOA excluding Insurance (Non-GAAP) | $ | 149 | | $ | (909) | |
| Add: gross additions to property, plant and equipment | Add: gross additions to property, plant and equipment | (957) | | (895) | | | | Add: gross additions to property, plant and equipment | (279) | | (239) | |
| Add: gross additions to internal-use software | Add: gross additions to internal-use software | (78) | | (78) | | | | Add: gross additions to internal-use software | (20) | | (22) | |
| | Less: separation costs cash expenditures | (118) | | — | | | | |
| Less: separation cash expenditures | | Less: separation cash expenditures | (204) | | (3) | |
| Less: Corporate restructuring cash expenditures | | Less: Corporate restructuring cash expenditures | (32) | | — | |
| Less: taxes related to business sales | Less: taxes related to business sales | (143) | | (6) | | | | Less: taxes related to business sales | (16) | | — | |
| Less: CFOA impact from factoring programs discontinued in 2021 | — | | (3,067) | | | | |
| Less: CFOA impact from receivables factoring and supply chain finance eliminations | — | | 2,352 | | | | |
| Free cash flows (Non-GAAP) | Free cash flows (Non-GAAP) | $ | 471 | | $ | (1,819) | | $ | 2,290 | | | Free cash flows (Non-GAAP) | $ | 102 | | $ | (1,169) | |
| | | | We believe investors may find it useful to compare free cash flows* performance without the effects of CFOA related to our run-off Insurance business, separation costs cash expenditures and eliminations related to our receivables factoring and supply chain finance programs. We believe this measure will better allow management and investors to evaluate the capacity of our operations to generate free cash flows. 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. | |
| We believe investors may find it useful to compare free cash flows* performance without the effects of CFOA related to our run-off Insurance business, separation cash expenditures, Corporate restructuring cash expenditures (associated with the separation-related program announced in October 2022) and taxes related to business sales. We believe this measure will better allow management and investors to evaluate the capacity of our operations to generate free cash flows. | | We believe investors may find it useful to compare free cash flows* performance without the effects of CFOA related to our run-off Insurance business, separation cash expenditures, Corporate restructuring cash expenditures (associated with the separation-related program announced in October 2022) and taxes related to business sales. We believe this measure will better allow management and investors to evaluate the capacity of our operations to generate free cash flows. |
CONTROLS AND PROCEDURES. 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 (i) our disclosure controls and procedures were effective as of September 30, 2022,March 31, 2023, and (ii) no change in internal control over financial reporting occurred during the quarter ended September 30, 2022,March 31, 2023, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.
OTHER FINANCIAL DATA
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. On March 6, 2022, the Board of Directors authorized up to $3 billion of common share repurchases. We repurchased 4,5213,225 thousand shares for $314$276 million during the three months ended September 30, 2022March 31, 2023 under this authorization.
| | | | | | | | | | | | | | |
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of our share repurchase authorization | Approximate dollar value of shares that may yet be purchased under our share repurchase authorization |
| (Shares in thousands) | | | | |
| | | | |
| 2022 | | | | |
| July | 1,532 | | $ | 65.24 | | 1,532 | | |
| August | 1,226 | | 76.78 | | 1,226 | | |
| September | 1,763 | | 67.89 | | 1,763 | | |
| Total | 4,521 | | $ | 69.40 | | 4,521 | | $ | 2,352 | |
| | | | | | | | | | | | | | |
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of our share repurchase authorization | Approximate dollar value of shares that may yet be purchased under our share repurchase authorization |
| (Shares in thousands) | | | | |
| | | | |
| 2023 | | | | |
| January | — | | $ | — | | — | | |
| February | 1,786 | | 84.23 | | 1,786 | | |
| March | 1,438 | | 87.62 | | 1,438 | | |
| Total | 3,225 | | $ | 85.74 | | 3,225 | | $ | 1,749 | |
LEGAL PROCEEDINGS. We are reporting the following environmental matter in compliance with SEC requirements to disclose environmental proceedings where a governmental authority is a party and that involve potential monetary sanctions of $300,000 or greater. In July 2022, GE received a notice of intention to impose an administrative fine of approximately $0.6 million related to a December 2019 liquid hazardous waste event at our Rehovot, Israel site. The event involved clean room waste that spilled onto an unsealed floor, leading to an escape of a small amount of liquid to a third-party facility on a lower floor. The Israeli Ministry of Environmental Protection (MEP) concluded that the incident breached the site’s toxins permit. In accordance with local law, GE has responded to MEP’s notice of fine challenging both the basis for, and level of, the fine. A decision from MEP is pending. Refer to Legal Matters and Environmental, Health and Safety Matters in Note 21 to the consolidated financial statements for additional information relating to legal matters.
*Non-GAAP Financial Measure
2022 3Q2023 1Q FORM 10-Q 2319
| | STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | Three months ended September 30 | STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | Three months ended March 31 |
| (In millions, per-share amounts in dollars) | (In millions, per-share amounts in dollars) | 2022 | 2021 | (In millions, per-share amounts in dollars) | 2023 | 2022 |
| Sales of equipment | Sales of equipment | $ | 8,082 | | $ | 8,903 | | Sales of equipment | $ | 5,287 | | $ | 4,608 | |
| Sales of services | Sales of services | 10,356 | | 8,910 | | Sales of services | 8,407 | | 7,302 | |
| Insurance revenues (Note 12) | 646 | | 756 | | |
| Insurance revenues (Note 13) | | Insurance revenues (Note 13) | 791 | | 764 | |
| Total revenues (Note 8) | Total revenues (Note 8) | 19,084 | | 18,569 | | Total revenues (Note 8) | 14,486 | | 12,675 | |
| | Cost of equipment sold | Cost of equipment sold | 8,118 | | 8,128 | | Cost of equipment sold | 5,605 | | 5,148 | |
| Cost of services sold | Cost of services sold | 6,253 | | 5,274 | | Cost of services sold | 5,124 | | 4,626 | |
| Selling, general and administrative expenses | Selling, general and administrative expenses | 2,868 | | 2,745 | | Selling, general and administrative expenses | 2,142 | | 2,725 | |
| Separation costs | 227 | | — | | |
| Separation costs (Note 20) | | Separation costs (Note 20) | 205 | | 99 | |
| Research and development | Research and development | 686 | | 627 | | Research and development | 431 | | 403 | |
| Interest and other financial charges | Interest and other financial charges | 390 | | 462 | | Interest and other financial charges | 269 | | 387 | |
| Debt extinguishment costs (Note 11) | — | | — | | |
| Insurance losses, annuity benefits and other costs (Note 12) | 917 | | 674 | | |
| | Insurance losses, annuity benefits and other costs (Note 13) | | Insurance losses, annuity benefits and other costs (Note 13) | 684 | | 620 | |
| | Non-operating benefit cost (income) | Non-operating benefit cost (income) | (125) | | 427 | | Non-operating benefit cost (income) | (385) | | (105) | |
| | Total costs and expenses | Total costs and expenses | 19,334 | | 18,337 | | Total costs and expenses | 14,075 | | 13,904 | |
| | Other income (loss) (Note 18) | 195 | | 351 | | |
| Other income (loss) (Note 19) | | Other income (loss) (Note 19) | 6,081 | | 49 | |
| | Earnings (loss) from continuing operations before income taxes | Earnings (loss) from continuing operations before income taxes | (55) | | 584 | | Earnings (loss) from continuing operations before income taxes | 6,492 | | (1,180) | |
| Benefit (provision) for income taxes (Note 15) | (21) | | (2) | | |
| Benefit (provision) for income taxes (Note 16) | | Benefit (provision) for income taxes (Note 16) | (271) | | (29) | |
| Earnings (loss) from continuing operations | Earnings (loss) from continuing operations | (76) | | 582 | | Earnings (loss) from continuing operations | 6,221 | | (1,209) | |
| Earnings (loss) from discontinued operations, net of taxes (Note 2) | Earnings (loss) from discontinued operations, net of taxes (Note 2) | (85) | | 602 | | Earnings (loss) from discontinued operations, net of taxes (Note 2) | 1,257 | | 101 | |
| Net earnings (loss) | Net earnings (loss) | (160) | | 1,184 | | Net earnings (loss) | 7,478 | | (1,108) | |
| Less net earnings (loss) attributable to noncontrolling interests | Less net earnings (loss) attributable to noncontrolling interests | 4 | | (73) | | Less net earnings (loss) attributable to noncontrolling interests | (27) | | 28 | |
| Net earnings (loss) attributable to the Company | Net earnings (loss) attributable to the Company | (165) | | 1,257 | | Net earnings (loss) attributable to the Company | 7,506 | | (1,136) | |
| Preferred stock dividends | (73) | | (52) | | |
| Preferred stock dividends and other | | Preferred stock dividends and other | (145) | | (52) | |
| Net earnings (loss) attributable to GE common shareholders | Net earnings (loss) attributable to GE common shareholders | $ | (238) | | $ | 1,205 | | Net earnings (loss) attributable to GE common shareholders | $ | 7,360 | | $ | (1,188) | |
| | Amounts attributable to GE common shareholders | Amounts attributable to GE common shareholders | | Amounts attributable to GE common shareholders | |
| Earnings (loss) from continuing operations | Earnings (loss) from continuing operations | $ | (76) | | $ | 582 | | Earnings (loss) from continuing operations | $ | 6,221 | | $ | (1,209) | |
| Less net earnings (loss) attributable to noncontrolling interests, | Less net earnings (loss) attributable to noncontrolling interests, | | Less net earnings (loss) attributable to noncontrolling interests, | |
| continuing operations | continuing operations | 4 | | (73) | | continuing operations | (27) | | 14 | |
| Earnings (loss) from continuing operations attributable to the Company | Earnings (loss) from continuing operations attributable to the Company | (80) | | 655 | | Earnings (loss) from continuing operations attributable to the Company | 6,248 | | (1,224) | |
| Preferred stock dividends | (73) | | (52) | | |
| Preferred stock dividends and other | | Preferred stock dividends and other | (145) | | (52) | |
| Earnings (loss) from continuing operations attributable | Earnings (loss) from continuing operations attributable | | Earnings (loss) from continuing operations attributable | |
| to GE common shareholders | to GE common shareholders | (153) | | 603 | | to GE common shareholders | 6,103 | | (1,276) | |
| | Earnings (loss) from discontinued operations attributable | Earnings (loss) from discontinued operations attributable | | Earnings (loss) from discontinued operations attributable | |
| to GE common shareholders | to GE common shareholders | (85) | | 602 | | to GE common shareholders | 1,257 | | 88 | |
| Net earnings (loss) attributable to GE common shareholders | Net earnings (loss) attributable to GE common shareholders | $ | (238) | | $ | 1,205 | | Net earnings (loss) attributable to GE common shareholders | $ | 7,360 | | $ | (1,188) | |
| | Earnings (loss) per share from continuing operations (Note 17) | | |
| Earnings (loss) per share from continuing operations (Note 18) | | Earnings (loss) per share from continuing operations (Note 18) | |
| Diluted earnings (loss) per share | Diluted earnings (loss) per share | $ | (0.14) | | $ | 0.54 | | Diluted earnings (loss) per share | $ | 5.56 | | $ | (1.16) | |
| Basic earnings (loss) per share | Basic earnings (loss) per share | $ | (0.14) | | $ | 0.54 | | Basic earnings (loss) per share | $ | 5.60 | | $ | (1.16) | |
| | Net earnings (loss) per share (Note 17) | | |
| Net earnings (loss) per share (Note 18) | | Net earnings (loss) per share (Note 18) | |
| Diluted earnings (loss) per share | Diluted earnings (loss) per share | $ | (0.21) | | $ | 1.08 | | Diluted earnings (loss) per share | $ | 6.71 | | $ | (1.08) | |
| Basic earnings (loss) per share | Basic earnings (loss) per share | $ | (0.21) | | $ | 1.09 | | Basic earnings (loss) per share | $ | 6.76 | | $ | (1.08) | |
2022 3Q2023 1Q FORM 10-Q 2420
| | | | | | | | | |
| | | |
| | | |
| STATEMENT OF EARNINGS (LOSS) (UNAUDITED) | Nine months ended September 30 | |
| (In millions, per-share amounts in dollars) | 2022 | 2021 | |
| Sales of equipment | $ | 22,549 | | $ | 25,172 | | |
| Sales of services | 30,041 | | 26,427 | | |
| Insurance revenues (Note 12) | 2,179 | | 2,295 | | |
| | | |
| Total revenues (Note 8) | 54,769 | | 53,893 | | |
| | | |
| Cost of equipment sold | 22,017 | | 23,334 | | |
| Cost of services sold | 18,051 | | 16,224 | | |
| Selling, general and administrative expenses | 9,239 | | 8,503 | | |
| Separation costs | 553 | | — | | |
| Research and development | 2,023 | | 1,792 | | |
| Interest and other financial charges | 1,191 | | 1,450 | | |
| Debt extinguishment costs (Note 11) | — | | 1,416 | | |
| Insurance losses, annuity benefits and other costs (Note 12) | 1,975 | | 1,773 | | |
| | | |
| Non-operating benefit cost (income) | (396) | | 1,374 | | |
| | | |
| Total costs and expenses | 54,653 | | 55,866 | | |
| | | |
| Other income (loss) (Note 18) | (941) | | 1,757 | | |
| | | |
| Earnings (loss) from continuing operations before income taxes | (825) | | (216) | | |
| Benefit (provision) for income taxes (Note 15) | (541) | | 323 | | |
| Earnings (loss) from continuing operations | (1,366) | | 107 | | |
| Earnings (loss) from discontinued operations, net of taxes (Note 2) | (580) | | (2,856) | | |
| Net earnings (loss) | (1,946) | | (2,748) | | |
| Less net earnings (loss) attributable to noncontrolling interests | 51 | | (72) | | |
| Net earnings (loss) attributable to the Company | (1,997) | | (2,677) | | |
| Preferred stock dividends | (192) | | (180) | | |
| Net earnings (loss) attributable to GE common shareholders | $ | (2,189) | | $ | (2,857) | | |
| | | |
| Amounts attributable to GE common shareholders | | | |
| Earnings (loss) from continuing operations | $ | (1,366) | | $ | 107 | | |
| Less net earnings (loss) attributable to noncontrolling interests, | | | |
| continuing operations | 51 | | (72) | | |
| Earnings (loss) from continuing operations attributable to the Company | (1,417) | | 179 | | |
| Preferred stock dividends | (192) | | (180) | | |
| Earnings (loss) from continuing operations attributable | | | |
| to GE common shareholders | (1,609) | | (1) | | |
| | | |
| | | |
| | | |
| Earnings (loss) from discontinued operations attributable | | | |
| to GE common shareholders | (580) | | (2,856) | | |
| Net earnings (loss) attributable to GE common shareholders | $ | (2,189) | | $ | (2,857) | | |
| | | |
| Earnings (loss) per share from continuing operations (Note 17) | | | |
| Diluted earnings (loss) per share | $ | (1.46) | | $ | (0.01) | | |
| Basic earnings (loss) per share | $ | (1.46) | | $ | (0.01) | | |
| | | |
| Net earnings (loss) per share (Note 17) | | | |
| Diluted earnings (loss) per share | $ | (1.99) | | $ | (2.61) | | |
| Basic earnings (loss) per share | $ | (1.99) | | $ | (2.61) | | |
| | | | | | | | |
| STATEMENT OF FINANCIAL POSITION (UNAUDITED) | |
| (In millions) | March 31, 2023 | December 31, 2022 |
| | |
| | |
| Cash, cash equivalents and restricted cash | $ | 12,001 | | $ | 15,810 | |
| Investment securities (Note 3) | 12,814 | | 7,609 | |
| Current receivables (Note 4) | 14,212 | | 14,831 | |
| | |
| Inventories, including deferred inventory costs (Note 5) | 16,198 | | 14,891 | |
| | |
| | |
| Current contract assets (Note 9) | 2,244 | | 2,467 | |
| All other current assets (Note 10) | 1,464 | | 1,400 | |
| Assets of businesses held for sale (Note 2) | 1,353 | | 1,374 | |
| Current assets | 60,286 | | 58,384 | |
| | |
| Investment securities (Note 3) | 38,262 | | 36,027 | |
| | |
| | |
| Property, plant and equipment – net (Note 6) | 12,170 | | 12,192 | |
| | |
| Goodwill (Note 7) | 13,107 | | 12,999 | |
| Other intangible assets – net (Note 7) | 5,990 | | 6,105 | |
| Contract and other deferred assets (Note 9) | 5,631 | | 5,776 | |
| All other assets (Note 10) | 15,888 | | 15,477 | |
| Deferred income taxes (Note 16) | 10,344 | | 10,001 | |
| Assets of discontinued operations (Note 2) | 2,793 | | 31,890 | |
| Total assets | $ | 164,472 | | $ | 188,851 | |
| | |
| Short-term borrowings (Note 11) | $ | 2,262 | | $ | 3,739 | |
| | |
| Accounts payable and equipment project payables (Note 12) | 15,063 | | 15,399 | |
| Progress collections and deferred income (Note 9) | 16,586 | | 16,216 | |
| All other current liabilities (Note 15) | 12,313 | | 12,130 | |
| Liabilities of businesses held for sale (Note 2) | 1,953 | | 1,944 | |
| Current liabilities | 48,177 | | 49,428 | |
| | |
| Deferred income (Note 9) | 1,500 | | 1,409 | |
| Long-term borrowings (Note 11) | 20,159 | | 20,320 | |
| | |
| Insurance liabilities and annuity benefits (Note 13) | 39,082 | | 36,845 | |
| Non-current compensation and benefits | 10,244 | | 10,400 | |
| All other liabilities (Note 15) | 10,937 | | 11,063 | |
| Liabilities of discontinued operations (Note 2) | 1,551 | | 24,474 | |
| Total liabilities | 131,649 | | 153,938 | |
| | |
| Preferred stock (Note 17) | 3 | | 6 | |
| Common stock (Note 17) | 15 | | 15 | |
| Accumulated other comprehensive income (loss) – net attributable to GE (Note 17) | (3,289) | | (2,272) | |
| Other capital | 30,729 | | 34,173 | |
| Retained earnings | 84,955 | | 82,983 | |
| Less common stock held in treasury | (80,762) | | (81,209) | |
| Total GE shareholders’ equity | 31,652 | | 33,696 | |
| Noncontrolling interests | 1,171 | | 1,216 | |
| Total equity | 32,823 | | 34,912 | |
| Total liabilities and equity | $ | 164,472 | | $ | 188,851 | |
2022 3Q2023 1Q FORM 10-Q 2521
| | | | | | | | |
| STATEMENT OF FINANCIAL POSITION (UNAUDITED) | |
| (In millions, except share amounts) | September 30, 2022 | December 31, 2021 |
| | |
| | |
| Cash, cash equivalents and restricted cash(a) | $ | 12,596 | | $ | 15,770 | |
| Investment securities (Note 3) | 6,297 | | 12,297 | |
| Current receivables (Note 4) | 17,197 | | 15,620 | |
| | |
| Inventories, including deferred inventory costs (Note 5) | 17,536 | | 15,847 | |
| | |
| | |
| Current contract assets (Note 9) | 3,701 | | 4,881 | |
| All other current assets (Note 10) | 2,059 | | 1,933 | |
| Assets of businesses held for sale (Note 2) | 696 | | — | |
| Current assets | 60,082 | | 66,348 | |
| | |
| Investment securities (Note 3) | 33,624 | | 42,209 | |
| | |
| | |
| Property, plant and equipment – net (Note 6) | 14,295 | | 15,609 | |
| | |
| Goodwill (Note 7) | 25,275 | | 26,182 | |
| Other intangible assets – net (Note 7) | 7,725 | | 9,330 | |
| Contract and other deferred assets (Note 9) | 6,221 | | 6,124 | |
| All other assets (Note 10) | 19,166 | | 19,040 | |
| Deferred income taxes (Note 15) | 11,504 | | 10,855 | |
| Assets of discontinued operations (Note 2) | 2,985 | | 3,177 | |
| Total assets | $ | 180,877 | | $ | 198,874 | |
| | |
| Short-term borrowings (Note 11) | $ | 4,285 | | $ | 4,361 | |
| | |
| Accounts payable and equipment project accruals | 17,331 | | 16,243 | |
| Progress collections and deferred income (Note 9) | 16,445 | | 17,372 | |
| All other current liabilities (Note 14) | 15,094 | | 13,977 | |
| Liabilities of businesses held for sale (Note 2) | 1,503 | | — | |
| Current liabilities | 54,657 | | 51,953 | |
| | |
| Deferred income (Note 9) | 1,842 | | 1,989 | |
| Long-term borrowings (Note 11) | 26,121 | | 30,824 | |
| | |
| Insurance liabilities and annuity benefits (Note 12) | 33,435 | | 37,166 | |
| Non-current compensation and benefits | 19,201 | | 21,202 | |
| All other liabilities (Note 14) | 11,767 | | 13,240 | |
| Liabilities of discontinued operations (Note 2) | 1,103 | | 887 | |
| Total liabilities | 148,124 | | 157,262 | |
| | |
Preferred stock (5,835,763 and 5,939,875 shares outstanding at September 30, 2022
and December 31, 2021, respectively) | 6 | | 6 | |
Common stock (1,092,668,140 and 1,099,027,213 shares outstanding
at September 30, 2022 and December 31, 2021, respectively) | 15 | | 15 | |
| Accumulated other comprehensive income (loss) – net attributable to GE | (4,405) | | 1,582 | |
| Other capital | 34,254 | | 34,691 | |
| Retained earnings | 82,655 | | 85,110 | |
| Less common stock held in treasury | (81,049) | | (81,093) | |
| Total GE shareholders’ equity | 31,475 | | 40,310 | |
| Noncontrolling interests (Note 16) | 1,278 | | 1,302 | |
| Total equity | 32,753 | | 41,612 | |
| Total liabilities and equity | $ | 180,877 | | $ | 198,874 | |
(a) Excluded $476 million and $353 million at September 30, 2022 and December 31, 2021, respectively, primarily related to our run-off Insurance business, which is subject to regulatory restrictions, and is included in All other assets. See Note 10 for further information.
| | | | | | | | | |
| | | |
| STATEMENT OF CASH FLOWS (UNAUDITED) | Three months ended March 31 | |
| (In millions) | 2023 | 2022 | |
| | | |
| Net earnings (loss) | $ | 7,478 | | $ | (1,108) | | |
| | | |
| | | |
| (Earnings) loss from discontinued operations activities | (1,257) | | (101) | | |
| Adjustments to reconcile net earnings (loss) to cash from (used for) operating activities | | | |
| Depreciation and amortization of property, plant and equipment | 367 | | 403 | | |
| Amortization of intangible assets (Note 7) | 140 | | 922 | | |
| | | |
| | | |
| (Gains) losses on purchases and sales of business interests | 52 | | (15) | | |
| (Gains) losses on equity securities | (5,906) | | 206 | | |
| | | |
| Principal pension plans cost (Note 14) | (271) | | 94 | | |
| Principal pension plans employer contributions | (52) | | (49) | | |
| Other postretirement benefit plans (net) | (181) | | (224) | | |
| Provision (benefit) for income taxes | 271 | | 29 | | |
| Cash recovered (paid) during the year for income taxes | (172) | | (24) | | |
| Changes in operating working capital: | | | |
| Decrease (increase) in current receivables | 536 | | (610) | | |
| Decrease (increase) in inventories, including deferred inventory costs | (1,275) | | (732) | | |
| Decrease (increase) in current contract assets | 294 | | 473 | | |
| Increase (decrease) in accounts payable and equipment project payables | (201) | | (293) | | |
| Increase (decrease) in progress collections and current deferred income | 205 | | 173 | | |
| Financial services derivatives net collateral/settlement | 3 | | (155) | | |
| All other operating activities | 125 | | 89 | | |
| Cash from (used for) operating activities – continuing operations | 155 | | (924) | | |
| Cash from (used for) operating activities – discontinued operations | (413) | | 369 | | |
| Cash from (used for) operating activities | (259) | | (556) | | |
| | | |
| Additions to property, plant and equipment | (279) | | (239) | | |
| Dispositions of property, plant and equipment | 7 | | 28 | | |
| Additions to internal-use software | (20) | | (22) | | |
| | | |
| | | |
| | | |
| Sales of retained ownership interests | 2,025 | | 1,302 | | |
| Net (purchases) dispositions of insurance investment securities | (1,556) | | (1,344) | | |
| All other investing activities | 1,096 | | 239 | | |
| Cash from (used for) investing activities – continuing operations | 1,273 | | (37) | | |
| Cash from (used for) investing activities – discontinued operations | (3,068) | | (407) | | |
| Cash from (used for) investing activities | (1,796) | | (444) | | |
| | | |
| Net increase (decrease) in borrowings (maturities of 90 days or less) | 1 | | 45 | | |
| Newly issued debt (maturities longer than 90 days) | 9 | | — | | |
| Repayments and other debt reductions (maturities longer than 90 days) | (1,815) | | (1,267) | | |
| Dividends paid to shareholders | (203) | | (140) | | |
| | | |
| Redemption of GE preferred stock | (3,000) | | — | | |
| Purchases of GE common stock for treasury | (309) | | (39) | | |
| All other financing activities | 87 | | (30) | | |
| Cash from (used for) financing activities – continuing operations | (5,230) | | (1,431) | | |
| Cash from (used for) financing activities – discontinued operations | 1,999 | | (28) | | |
| Cash from (used for) financing activities | (3,232) | | (1,459) | | |
| Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | 65 | | (75) | | |
| Increase (decrease) in cash, cash equivalents and restricted cash | (5,220) | | (2,534) | | |
| Cash, cash equivalents and restricted cash at beginning of year | 19,092 | | 16,859 | | |
| Cash, cash equivalents and restricted cash at March 31 | 13,871 | | 14,325 | | |
| Less cash, cash equivalents and restricted cash of discontinued operations at March 31 | 1,180 | | 1,223 | | |
| Cash, cash equivalents and restricted cash of continuing operations at March 31 | $ | 12,691 | | $ | 13,101 | | |
| | | |
| | | |
| | | |
| | | |
2022 3Q2023 1Q FORM 10-Q 2622
| | | | | | | | | |
| | | |
| STATEMENT OF CASH FLOWS (UNAUDITED) | Nine months ended September 30 | |
| | | |
| (In millions) | 2022 | 2021 | |
| Net earnings (loss) | $ | (1,946) | | $ | (2,748) | | |
| | | |
| | | |
| (Earnings) loss from discontinued operations | 580 | | 2,856 | | |
| Adjustments to reconcile net earnings (loss) to cash from (used for) operating activities | | | |
| Depreciation and amortization of property, plant and equipment | 1,310 | | 1,390 | | |
| Amortization of intangible assets (Note 7) | 1,498 | | 860 | | |
| | | |
| | | |
| (Gains) losses on purchases and sales of business interests (Note 18) | (42) | | 155 | | |
| (Gains) losses on equity securities (Note 18) | 2,168 | | (1,035) | | |
| Debt extinguishment costs | — | | 1,416 | | |
| Principal pension plans cost (Note 13) | 412 | | 1,990 | | |
| Principal pension plans employer contributions | (242) | | (232) | | |
| Other postretirement benefit plans (net) (Note 13) | (917) | | (772) | | |
| Provision (benefit) for income taxes (Note 15) | 541 | | (323) | | |
| Cash recovered (paid) during the year for income taxes | (810) | | (1,048) | | |
| Changes in operating working capital: | | | |
| Decrease (increase) in current receivables | (2,678) | | 874 | | |
| Decrease (increase) in inventories, including deferred inventory costs | (2,774) | | (1,184) | | |
| Decrease (increase) in current contract assets | 764 | | 498 | | |
| Increase (decrease) in accounts payable and equipment project accruals | 2,107 | | (167) | | |
| Increase (decrease) in progress collections and current deferred income | 1,286 | | (1,509) | | |
| Financial services derivatives net collateral/settlement | (154) | | (1,431) | | |
| All other operating activities | 189 | | (1,117) | | |
| Cash from (used for) operating activities – continuing operations | 1,293 | | (1,527) | | |
| Cash from (used for) operating activities – discontinued operations | 124 | | 2,427 | | |
| Cash from (used for) operating activities | 1,417 | | 900 | | |
| | | |
| Additions to property, plant and equipment | (957) | | (895) | | |
| Dispositions of property, plant and equipment | 159 | | 128 | | |
| Additions to internal-use software | (78) | | (78) | | |
| | | |
| Proceeds from principal business dispositions | 15 | | 1 | | |
| Net cash from (payments for) principal businesses purchased | (30) | | (27) | | |
| Sales of retained ownership interests | 4,071 | | 2,961 | | |
| Net (purchases) dispositions of insurance investment securities | (1,189) | | (1,160) | | |
| All other investing activities | (774) | | 1,980 | | |
| Cash from (used for) investing activities – continuing operations | 1,218 | | 2,909 | | |
| Cash from (used for) investing activities – discontinued operations | 374 | | (2,683) | | |
| Cash from (used for) investing activities | 1,592 | | 226 | | |
| | | |
| Net increase (decrease) in borrowings (maturities of 90 days or less) | 67 | | (390) | | |
| Newly issued debt (maturities longer than 90 days) | 3 | | 364 | | |
| Repayments and other debt reductions (maturities longer than 90 days) | (3,182) | | (10,210) | | |
| Dividends paid to shareholders | (455) | | (431) | | |
| Cash paid for debt extinguishment costs | — | | (1,721) | | |
| Purchases of GE common stock for treasury | (688) | | (87) | | |
| All other financing activities | (872) | | (28) | | |
| Cash from (used for) financing activities – continuing operations | (5,127) | | (12,502) | | |
| Cash from (used for) financing activities – discontinued operations | — | | 101 | | |
| Cash from (used for) financing activities | (5,127) | | (12,401) | | |
| Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | (623) | | (136) | | |
| Increase (decrease) in cash, cash equivalents and restricted cash | (2,741) | | (11,412) | | |
| Cash, cash equivalents and restricted cash at beginning of year | 16,859 | | 37,608 | | |
| Cash, cash equivalents and restricted cash at September 30 | 14,118 | | 26,197 | | |
| Less cash, cash equivalents and restricted cash of discontinued operations at September 30 | 1,046 | | 435 | | |
| Cash, cash equivalents and restricted cash of continuing operations at September 30 | $ | 13,072 | | $ | 25,762 | | |
| | | |
| | | |
| | | | | | | | | | | | |
| | | | | | |
| STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | | | Three months ended March 31 | |
| (In millions) | | | | 2023 | 2022 | |
| | | | | | |
| Net earnings (loss) | | | | $ | 7,478 | | $ | (1,108) | | |
| Less: net earnings (loss) attributable to noncontrolling interests | | | | (27) | | 28 | | |
| Net earnings (loss) attributable to the Company | | | | $ | 7,506 | | $ | (1,136) | | |
| | | | | | |
| Currency translation adjustments | | | | 2,387 | | (181) | | |
| Benefit plans | | | | (2,319) | | 240 | | |
| Investment securities and cash flow hedges | | | | 706 | | (2,998) | | |
| Long-duration insurance contracts(a) | | | | (1,793) | | 3,682 | | |
| | | | | | |
| Less: other comprehensive income (loss) attributable to noncontrolling interests | | | | (3) | | (2) | | |
| Other comprehensive income (loss) attributable to the Company | | | | $ | (1,017) | | $ | 745 | | |
| | | | | | |
| Comprehensive income (loss) | | | | $ | 6,458 | | $ | (365) | | |
| Less: comprehensive income (loss) attributable to noncontrolling interests | | | | (30) | | 26 | | |
| Comprehensive income (loss) attributable to the Company | | | | $ | 6,489 | | $ | (391) | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | |
| STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | Three months ended September 30 | | Nine months ended September 30 | |
| | | | | | |
| (In millions, net of tax) | 2022 | 2021 | | 2022 | 2021 | |
| Net earnings (loss) | $ | (160) | | $ | 1,184 | | | $ | (1,946) | | $ | (2,748) | | |
| Less: net earnings (loss) attributable to noncontrolling interests | 4 | | (73) | | | 51 | | (72) | | |
| Net earnings (loss) attributable to the Company | $ | (165) | | $ | 1,257 | | | $ | (1,997) | | $ | (2,677) | | |
| | | | | | |
| Currency translation adjustments | (912) | | (158) | | | (1,858) | | 81 | | |
| Benefit plans | 259 | | 753 | | | 788 | | 2,372 | | |
| Investment securities and cash flow hedges | (1,904) | | 2,151 | | | (4,916) | | 2,222 | | |
| | | | | | |
| Less: other comprehensive income (loss) attributable to noncontrolling interests | (4) | | 4 | | | — | | 5 | | |
| Other comprehensive income (loss) attributable to the Company | $ | (2,553) | | $ | 2,742 | | | $ | (5,987) | | $ | 4,671 | | |
| | | | | | |
| Comprehensive income (loss) | $ | (2,717) | | $ | 3,930 | | | $ | (7,933) | | $ | 1,927 | | |
| Less: comprehensive income (loss) attributable to noncontrolling interests | — | | (69) | | | 51 | | (67) | | |
| Comprehensive income (loss) attributable to the Company | $ | (2,718) | | $ | 3,999 | | | $ | (7,984) | | $ | 1,994 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) | STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) | Three months ended September 30 | | Nine months ended September 30 | | STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) | | Three months ended March 31 | |
| (In millions) | | (In millions) | | 2023 | 2022 | |
| | (In millions) | 2022 | 2021 | | 2022 | 2021 | | |
Preferred stock issued | Preferred stock issued | $ | 6 | | $ | 6 | | | $ | 6 | | $ | 6 | | | Preferred stock issued | | $ | 3 | | $ | 6 | | |
| Common stock issued | Common stock issued | $ | 15 | | $ | 15 | | | $ | 15 | | $ | 15 | | | Common stock issued | | $ | 15 | | $ | 15 | | |
| | Beginning balance | Beginning balance | (1,852) | | (7,820) | | | 1,582 | | (9,749) | | | Beginning balance | | (2,272) | | (4,860) | | |
| | Currency translation adjustments | Currency translation adjustments | (909) | | (160) | | | (1,857) | | 80 | | | Currency translation adjustments | | 2,388 | | (177) | | |
| Benefit plans | Benefit plans | 259 | | 751 | | | 786 | | 2,369 | | | Benefit plans | | (2,317) | | 238 | | |
| Investment securities and cash flow hedges | Investment securities and cash flow hedges | (1,904) | | 2,151 | | | (4,916) | | 2,222 | | | Investment securities and cash flow hedges | | 706 | | (2,998) | | |
| Long-duration insurance contracts | | Long-duration insurance contracts | | (1,793) | | 3,682 | | |
| Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) | $ | (4,405) | | $ | (5,078) | | | $ | (4,405) | | $ | (5,078) | | | Accumulated other comprehensive income (loss) | | $ | (3,289) | | $ | (4,115) | | |
| Beginning balance | Beginning balance | 34,382 | | 34,032 | | | 34,691 | | 34,307 | | | Beginning balance | | 34,173 | | 34,691 | | |
| Gains (losses) on treasury stock dispositions | Gains (losses) on treasury stock dispositions | (115) | | (78) | | | (608) | | (571) | | | Gains (losses) on treasury stock dispositions | | (619) | | (396) | | |
| Stock-based compensation | Stock-based compensation | 90 | | 109 | | | 270 | | 322 | | | Stock-based compensation | | 73 | | 91 | | |
| Other changes(a) | Other changes(a) | (103) | | 689 | | | (99) | | 694 | | | Other changes(a) | | (2,898) | | 5 | | |
| Other capital | Other capital | $ | 34,254 | | $ | 34,751 | | | $ | 34,254 | | $ | 34,751 | | | Other capital | | $ | 30,729 | | $ | 34,391 | | |
| Beginning balance | Beginning balance | 82,981 | | 87,993 | | | 85,110 | | 92,247 | | | Beginning balance | | 82,983 | | 83,286 | | |
| Net earnings (loss) attributable to the Company | Net earnings (loss) attributable to the Company | (165) | | 1,257 | | | (1,997) | | (2,677) | | | Net earnings (loss) attributable to the Company | | 7,506 | | (1,136) | | |
Dividends and other transactions with shareholders | Dividends and other transactions with shareholders | (161) | | (152) | | | (457) | | (473) | | | Dividends and other transactions with shareholders | | (5,534) | | (141) | | |
| | Retained earnings | Retained earnings | $ | 82,655 | | $ | 89,098 | | | $ | 82,655 | | $ | 89,098 | | | Retained earnings | | $ | 84,955 | | $ | 82,009 | | |
| Beginning balance | Beginning balance | (80,883) | | (81,425) | | | (81,093) | | (81,961) | | | Beginning balance | | (81,209) | | (81,093) | | |
| Purchases | Purchases | (317) | | (4) | | | (701) | | (87) | | | Purchases | | (311) | | (39) | | |
| Dispositions | Dispositions | 150 | | 116 | | | 745 | | 733 | | | Dispositions | | 759 | | 459 | | |
| Common stock held in treasury | Common stock held in treasury | $ | (81,049) | | $ | (81,314) | | | $ | (81,049) | | $ | (81,314) | | | Common stock held in treasury | | $ | (80,762) | | $ | (80,673) | | |
| GE shareholders' equity balance | GE shareholders' equity balance | 31,475 | | 37,477 | | | 31,475 | | 37,477 | | | GE shareholders' equity balance | | 31,652 | | 31,631 | | |
| Noncontrolling interests balance | Noncontrolling interests balance | 1,278 | | 1,484 | | | 1,278 | | 1,484 | | | Noncontrolling interests balance | | 1,171 | | 1,278 | | |
| Total equity balance at September 30 | $ | 32,753 | | $ | 38,961 | | | $ | 32,753 | | $ | 38,961 | | | |
| Total equity balance at March 31 | | Total equity balance at March 31 | | $ | 32,823 | | $ | 32,909 | | |
(a) Included $687$3,000 million decrease substantially all in Other capital related to the change in par valueour redemption of issued commonGE Series D preferred stock from $0.06 to $0.01 in the three and nine months ended September 30, 2021.first quarter of 2023.
2022 3Q2023 1Q FORM 10-Q 2823
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. 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 cash flows. 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.
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.
On January 3, 2023, General Electric Company (the Company or GE) completed the previously announced separation (the Separation) of its HealthCare business, into a separate, independent publicly traded company. The historical results of GE HealthCare and certain assets and liabilities included in the spin-off are now reported in GE's consolidated financial statements as discontinued operations. See Note 2 for further information.
The accompanying consolidated financial statements and notes are unaudited. The results reported in these financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. These financial statements should be read in conjunction with the financial statements, notes and significant accounting policies included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
INSURANCE. 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. Insurance revenues are comprised primarily of premiums and investment income. 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, administration and surrender. Interest credited to policyholder accounts is charged to expense.
Future policy benefit reserves represent the present value of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums. The liability is measured by each group of contracts (i.e., cohorts) using current cash flow assumptions. As a run-off insurance operation consisting substantially all of reinsurance, contracts are grouped into cohorts by legal entity and product type, based on the date the reinsurance contract was consummated. Future policy benefit reserves are adjusted each period as a result of updating lifetime net premium ratios for differences between actual and expected experience with the retroactive effect of those variances recognized in current period earnings. We review at least annually in the third quarter, future policy benefit reserves cash flow assumptions, except related claim expenses which remain locked-in, and if the review concludes that the assumptions need to be updated, future policy benefit reserves are adjusted retroactively based on the revised net premium ratio using actual historical experience, updated cash flow assumptions, and the locked-in discount rate with the effect of those changes recognized in current period earnings.
As our insurance operations are in run-off, the locked-in discount rate is the discount rate used for the computation of interest accretion on future policy benefit reserves recognized in earnings. However, cash flows used to estimate future policy benefit reserves are also discounted using an upper-medium grade (i.e., low credit risk) fixed-income instrument yield reflecting the duration characteristics of the liabilities and is updated each reporting period with changes recorded in AOCI. As a result, changes in the current discount rate at each reporting period will be recognized as an adjustment to AOCI and not earnings each period, whereas changes relating to cash flow assumptions will be recognized in the Statement of Earnings (Loss).
Reinsurance recoverables are recorded when we cede insurance risk to third parties but are not relieved from our primary obligation to policyholders and cedents. As reinsurance recoverables are recognized in a manner consistent with the future policy benefit reserves relating to the underlying reinsurance contracts, changes in reinsurance recoverables from updating the discount rate in each reporting period are also recognized in AOCI. The allowance for credit losses on reinsurance recoverables is based on the locked-in future policy benefit reserves discount rate for purposes of assessing changes in each reporting period. As such, movements in the gross reinsurance recoverable balance resulting from changes in the discount rate do not impact the allowance for credit losses. Following the recapture transaction effective in the fourth quarter of 2022, the remaining reinsurance recoverables are not material.
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. See Note 13 for further information.
ADOPTIONS OF NEW ACCOUNTING STANDARDS. On January 1, 2023, we adopted Accounting Standards Update No. 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The new guidance for measuring the liability for future policy benefits and related reinsurance recoverable asset was adopted on a modified retrospective basis such that those balances were adjusted to conform to the new guidance at the January 1, 2021 transition date.
We recognized a $7,285 million after-tax decrease in Total equity at January 1, 2021 from the effect of transition date adjustments due to adoption of the new guidance, as presented in the following table.
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| Retained Earnings | AOCI |
| December 31, 2020 | $ | 92,247 | | $ | (9,749) | |
| Liability for future policy benefits, including removal of related balances in AOCI | (1,853) | | (8,806) | |
| Reinsurance recoverables, net of allowance for credit losses | 48 | | 3,542 | |
| Other contracts, including market risk benefits | (202) | | (14) | |
| Effect of transition adjustments | $ | (2,007) | | $ | (5,278) | |
| Adjusted balance, January 1, 2021 | $ | 90,240 | | $ | (15,027) | |
The following table summarizes the balance of and pre-tax changes to total Insurance liabilities and annuity benefits attributable to changes in the liability for future policy benefits and market risk benefits at the transition date, due to adoption of the new guidance.
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| Long-term care | Structured settlement annuities | Life | Other contracts(a) | Other adjustments | Total |
| December 31, 2020 | $ | 21,378 | | $ | 9,124 | | $ | 517 | | $ | 3,012 | | $ | 8,160 | | $ | 42,191 | |
| Change in discount rate assumptions | 14,654 | | 4,369 | | 283 | | — | | — | | 19,306 | |
| Change in cash flow assumptions (effect of insufficient gross premiums) and elimination of negative reserves | 1,545 | | 39 | | 761 | | — | | — | | 2,345 | |
| Adjustment for removal of related balances in AOCI | — | | — | | — | | — | | (8,160) | | (8,160) | |
| Market risk benefits and other | — | | — | | — | | 269 | | — | | 269 | |
| Adjusted balance, January 1, 2021 | 37,577 | | 13,532 | | 1,561 | | 3,281 | | — | | 55,951 | |
| Less: reinsurance recoverables, net | 7,036 | | — | | 15 | | 44 | | — | | 7,095 | |
| Adjusted balance, January 1, 2021, net of reinsurance recoverables | $ | 30,541 | | $ | 13,532 | | $ | 1,546 | | $ | 3,237 | | $ | — | | $ | 48,856 | |
(a) As of December 31, 2020, includes investment contracts ($2,049 million), claim reserves related to short-duration contracts at Electric Insurance Company (EIC), net of eliminations ($399 million), and other ($564 million). EIC is a property and casualty insurance company primarily providing insurance to GE and its employees.
For the liability for future policy benefits and related reinsurance recoverables, the new guidance transition adjustments are reflected in both AOCI and Retained earnings. The transition adjustment reflected in AOCI is related to the difference in the discount rate used pre-transition and the discount rate required under the new guidance, which is equivalent to an upper-medium grade fixed-income instrument yield reflecting the duration characteristics of our insurance liabilities, at January 1, 2021, and does not represent a change in our ultimate expected cash flows associated with the liability for future policy benefits or related reinsurance recoverables. The transition adjustment in AOCI also reflects removal of certain Other adjustments previously recorded in the liability for future policy benefits related to changes in net unrealized gains on investment securities.
Whereas pre-transition, we annually performed premium deficiency testing in the aggregate across our run-off insurance portfolio, the new guidance requires the grouping of contracts (i.e., cohorts) at a more granular level. Due to this lower level of aggregation, combined with the conversion of our long-term care insurance claim cost projection models to first principles models, we identified certain cohorts at transition having insufficient gross premiums in our long-term care insurance portfolio. A first principles model separates morbidity assumptions such as incidence (probability of a claim), continuance (length of a claim) and utilization (percentage of the daily benefit maximum used) into individual assumptions. We also eliminated negative reserves, as required by the new guidance, on certain cohorts in our life portfolio. As a result, we increased the liability for future policy benefits and reflected this transition adjustment in Retained earnings.
At the transition date, reinsurance recoverables of $4,062 million increased by $4,483 million upon remeasurement to the updated discount rate, with an offsetting adjustment ($3,542 million after-tax) recognized in AOCI. As reinsurance recoverables are recognized in a manner consistent with the liabilities relating to the underlying reinsurance contracts, adjustments to the liability for future policy benefits due to the change in cash flow assumptions resulted in an increase to reinsurance recoverables of $629 million ($497 million after-tax) and an increase in the related allowance for credit losses of $569 million ($450 million after-tax), which was recorded as an adjustment to Retained earnings at the transition date. As a result, the adjusted balance of reinsurance recoverables at the transition date was $7,095 million, net of the allowance for credit losses of $2,079 million, and substantially all related to our long-term care insurance portfolio. Following the recapture transaction effective in the fourth quarter of 2022, the remaining reinsurance recoverables are not material.
The new guidance is only applicable to the measurements of our long-duration insurance liabilities and related reinsurance recoverables under GAAP and does not affect the accounting for our insurance reserves or the levels of capital and surplus under statutory accounting practices. See Note 13 for further information.
NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS. In the first quarter of 2022, we signed a non-binding memorandum of understanding to sell a portion of our Steam business within our Power segment to Électricité de France S.A. (EDF). WeIn the fourth quarter of 2022, we signed a binding agreement for this transaction, and we expect to complete the sale, subject to regulatory approval,approvals and other customary closing conditions, in the firstsecond half of 2023, and closing2023. Closing the transaction is expected to result in a significant gain.
In the thirdfourth quarter of 2021,2022, we signed an agreementclassified our captive industrial insurance subsidiary, with assets of $596 million and liabilities of $342 million as of March 31, 2023, into held for sale. We expect to exit GE's sharecomplete the sale of our boiler manufacturingthis business, subject to regulatory approvals, by the first half of 2024. In connection with the expected sale, in China in our Power segment andthe first quarter of 2023, we recorded a loss on the planned disposal of this business of $172$55 million in Other income (loss) in our consolidated Statement of Earnings (Loss). The transaction closed in the fourth quarter of 2021.Earnings.
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ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE | September 30, 2022 | December 31, 2021 |
Current receivables, inventories and contract assets | $ | 475 | | $ | — | |
Property, plant and equipment and intangible assets - net | 181 | | — | |
Other assets | 40 | | — | |
Assets of businesses held for sale | $ | 696 | | $ | — | |
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Progress collections and deferred income | $ | 1,101 | | $ | — | |
Accounts payable, equipment project accruals and other liabilities | 402 | | — | |
Liabilities of businesses held for sale | $ | 1,503 | | $ | — | |
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| ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE | March 31, 2023 | December 31, 2022 |
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| Current receivables, inventories and contract assets | $ | 527 | | $ | 495 | |
| Non-current captive insurance investment securities | 578 | | 554 | |
| Property, plant and equipment and intangible assets - net | 240 | | 232 | |
| Valuation allowance on disposal group classified as held for sale | (72) | | (17) | |
| All other assets | 80 | | 111 | |
| Assets of businesses held for sale | $ | 1,353 | | $ | 1,374 | |
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| Progress collections and deferred income | $ | 1,101 | | $ | 1,127 | |
| Insurance liabilities and annuity benefits | 340 | | 358 | |
| Accounts payable, equipment project payables and other current liabilities | 421 | | 371 | |
| All other liabilities | 90 | | 87 | |
| Liabilities of businesses held for sale | $ | 1,953 | | $ | 1,944 | |
DISCONTINUED OPERATIONS primarily comprise our former GE HealthCare business, our mortgage portfolio in Poland, our GE Capital Aviation Services (GECAS) business, discontinued in 2021, our mortgage portfolio in Poland, and other trailing assets and liabilities associated with prior dispositions. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented and the notes to the financial statements have been adjusted on a retrospective basis.
GECAS/AerCap.GE HealthCare. On November 1, 2021,January 3, 2023, we completed the combinationpreviously announced separation of our GECASHealthCare business, into a separate, independent, publicly traded company, GE HealthCare Technologies Inc. (GE HealthCare). The Separation was structured as a tax-free spin-off, and was achieved through GE's pro-rata distribution of approximately 80.1% of the outstanding shares of GE HealthCare to holders of GE common stock. In connection with AerCap Holdings N.V. (AerCap). We deconsolidated this business, reclassified itsthe Separation, the historical results toof GE HealthCare and certain assets and liabilities included in the Separation are reported in GE's consolidated financial statements as discontinued operations for all periods presented and recognized a non-cash after-tax loss of $3,638 million in discontinued operations for the nine months ended September, 30, 2021.operations.
We have continuing involvement with AerCap,GE HealthCare primarily through our ownership interest, ongoing sales or leases of products and services,trademark license and transition services that weagreements, through which GE and GE HealthCare will continue to provide certain services to AerCap.each other for a period of time following the Separation. For the ninethree months ended September 30, 2022,March 31, 2023, we had direct and indirect salescollected net cash of $100$160 million to and purchases of $124 million from AerCap, primarily related to engine sales and engine leases, respectively.these activities.
2022 3Q2023 1Q FORM 10-Q 2926
Bank BPH. The mortgage portfolio in Poland (Bank BPH) comprises floating rate residential mortgages, 88%86% of which are indexed to or denominated in foreign currencies (primarily Swiss francs). At September 30, 2022,March 31, 2023, the total portfolio had a carrying value, net of reserves, of $1,276$1,126 million. 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 foreign currency-denominated mortgages and other factors. Loss from discontinued operations for the nine months ended September 30, 2022 included $562$175 million and $233 million non-cash pre-tax charges for the three months ended March 31, 2023 and 2022, respectively, reflecting estimates with respect to ongoing litigation as well as market yields. To ensure appropriate capital levels, during the secondfirst quarter of 2022,2023, we made a non-cash capital contribution in the form of intercompany loan forgiveness of $198 million. We made a cash capital contribution of $530 million into Bank BPH.BPH in the twelve months ended December 31, 2022. Future changes in the estimated legal liabilities or market yields could result in further losses and capital contributions related to these loansand losses in future reporting periods.periods beyond the amounts that we currently estimate. See Note 2123 for further information.
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| RESULTS OF DISCONTINUED OPERATIONS | | Three months ended September 30 | | Nine months ended September 30 |
| | 2022 | 2021 | | 2022 | 2021 |
| Operations | | | | | | |
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| Cost of equipment and services sold | | $ | — | | $ | (19) | | | $ | — | | $ | (394) | |
| Other income, costs and expenses | | (153) | | 593 | | | (608) | | 1,432 | |
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| Earnings (loss) of discontinued operations before income taxes | | $ | (153) | | $ | 575 | | | $ | (608) | | $ | 1,037 | |
| Benefit (provision) for income taxes | | (22) | | (208) | | | (36) | | (287) | |
| Earnings (loss) of discontinued operations, net of taxes(a) | | $ | (174) | | $ | 367 | | | $ | (644) | | $ | 750 | |
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| Disposal | | | | | | |
| Gain (loss) on disposal before income taxes | | $ | — | | $ | 174 | | | $ | (30) | | $ | (3,661) | |
| Benefit (provision) for income taxes(b) | | 90 | | 62 | | | 95 | | 55 | |
| Gain (loss) on disposal, net of taxes | | $ | 90 | | $ | 236 | | | $ | 64 | | $ | (3,606) | |
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| Earnings (loss) from discontinued operations, net of taxes | | $ | (85) | | $ | 602 | | | $ | (580) | | $ | (2,856) | |
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| 2023 | | 2022 |
RESULTS OF DISCONTINUED OPERATIONS Three months ended March 31 | GE HealthCare | | Bank BPH & Other | Total | | GE HealthCare | | Bank BPH & Other | Total |
| Total revenues | $ | — | | | $ | — | | $ | — | | | $ | 4,361 | | | $ | — | | $ | 4,361 | |
| Cost of equipment and services sold | — | | | — | | — | | | (2,679) | | | — | | (2,679) | |
| Other income, costs and expenses | (20) | | | (201) | | (221) | | | (1,146) | | | (250) | | (1,396) | |
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| Earnings (loss) of discontinued operations before income taxes | (20) | | | (201) | | (221) | | | 536 | | | (250) | | 286 | |
| Benefit (provision) for income taxes(a) | 1,479 | | | (1) | | 1,478 | | | (150) | | | (18) | | (167) | |
| Earnings (loss) of discontinued operations, net of taxes | 1,459 | | | (202) | | 1,257 | | | 387 | | | (268) | | 119 | |
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| Gain (loss) on disposal before income taxes | — | | | — | | — | | | — | | | (23) | | (23) | |
| Benefit (provision) for income taxes | — | | | — | | — | | | — | | | 5 | | 5 | |
| Gain (loss) on disposal, net of taxes | — | | | — | | — | | | — | | | (18) | | (18) | |
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| Earnings (loss) from discontinued operations, net of taxes | $ | 1,459 | | | $ | (202) | | $ | 1,257 | | | $ | 387 | | | $ | (286) | | $ | 101 | |
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(a) Included zero and $490 million from GECAS operationsThe tax benefit for the three months ended September 30, 2022 and 2021, respectively. Included zero and $1,163 million from GECAS operations, including zero and $359 million of depreciation and amortization,March 31, 2023 for GE HealthCare relates to preparatory steps for the nine months ended September 30, 2022spin-off, which resulted in taxable gain offset by a deferred tax asset and 2021, respectively.
(b) Included $90 million reduction in estimated income tax expense relating to the disposalreversal of our GECAS businessvaluation allowances for bothcapital loss carryovers utilized against a portion of the three months ended and nine months ended September 30, 2022.gain.
| | ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS | ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS | September 30, 2022 | December 31, 2021 | ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS | March 31, 2023 | December 31, 2022 |
| Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cash | $ | 1,046 | | $ | 736 | | Cash, cash equivalents and restricted cash | $ | 1,180 | | $ | 2,627 | |
| Financing receivables held for sale (Polish mortgage portfolio) | 1,276 | | 1,799 | | |
| Current receivables | | Current receivables | 13 | | 3,361 | |
| Inventories, including deferred inventory costs | | Inventories, including deferred inventory costs | — | | 2,512 | |
| Goodwill | | Goodwill | — | | 12,799 | |
| Other intangible assets - net | | Other intangible assets - net | — | | 1,520 | |
| Contract and other deferred assets | | Contract and other deferred assets | — | | 854 | |
| Financing receivables held for sale (Polish mortgage portfolio)(a) | | Financing receivables held for sale (Polish mortgage portfolio)(a) | 1,126 | | 1,200 | |
| Property, plant, and equipment - net | Property, plant, and equipment - net | 76 | | 88 | | Property, plant, and equipment - net | 69 | | 2,379 | |
| All other assets | All other assets | 587 | | 554 | | All other assets | 344 | | 2,109 | |
| Assets of discontinued operations | $ | 2,985 | | $ | 3,177 | | |
| Deferred income taxes | | Deferred income taxes | 62 | | 2,528 | |
| Assets of discontinued operations(b) | | Assets of discontinued operations(b) | $ | 2,793 | | $ | 31,890 | |
| | Accounts payable and all other liabilities | $ | 1,103 | | $ | 887 | | |
| Liabilities of discontinued operations | $ | 1,103 | | $ | 887 | | |
| Accounts payable and equipment project payables | | Accounts payable and equipment project payables | $ | 102 | | $ | 3,487 | |
| Progress collections and deferred income | | Progress collections and deferred income | — | | 2,499 | |
| Long-term borrowings | | Long-term borrowings | — | | 8,273 | |
| Non-current compensation and benefits | | Non-current compensation and benefits | 36 | | 5,658 | |
| All other liabilities(a) | | All other liabilities(a) | 1,413 | | 4,556 | |
| Liabilities of discontinued operations(b) | | Liabilities of discontinued operations(b) | $ | 1,551 | | $ | 24,474 | |
(a) Included $889 million of valuation allowance against financing receivables held for sale (including $645 million related to foreign currency-denominated mortgage litigation) and $895 million of litigation reserves recorded in All other liabilities in Poland at March 31, 2023.
(b) Included $133 million and $28,998 million of assets and $279 million and $23,337 million of liabilities for GE HealthCare as of March 31, 2023 and December 31, 2022, respectively.
NOTE 3. INVESTMENT SECURITIES. All of our debt securities are classified as available-for-sale and substantially all are investment-grade supporting obligations to annuitants and policyholders in our run-off insurance operations. On November 1, 2021, we received 111.5We 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. This process includes consideration of various asset allocation strategies and incorporates 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. 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. Our investment in GE HealthCare comprised 90.3 million shares (approximately 19.9% ownership interest) at March 31, 2023. Our investment in AerCap comprised 79.7 million ordinary shares of AerCap (approximately 46%33% ownership interest) at March 31, 2023 and an AerCap senior note, as partial consideration in conjunction with the GECAS transaction, for which we have adopted the fair value option. Our investmentWe sold our remaining shares in Baker Hughes (BKR) comprises 33.1 million shares (approximately 3% ownership interest) at September 30, 2022. Both ourduring the first quarter of 2023. Our GE HealthCare, AerCap and BKR investments are recorded as Equity securities with readily determinable fair values. Investment securities held within insurance entities are classified as non-current as they support the long-duration insurance liabilities.
| | | September 30, 2022 | | December 31, 2021 | | March 31, 2023 | | December 31, 2022 |
| | Amortized
cost | Gross
unrealized
gains | Gross
unrealized
losses | Estimated
fair value | | Amortized
cost | Gross
unrealized
gains | Gross
unrealized
losses | Estimated
fair value | | Amortized
cost | Gross
unrealized
gains | Gross
unrealized
losses | Estimated
fair value | | Amortized
cost | Gross
unrealized
gains | Gross
unrealized
losses | Estimated
fair value |
| Equity (GE HealthCare) | | Equity (GE HealthCare) | $ | — | | $ | — | | $ | — | | $ | 7,410 | | | $ | — | | $ | — | | $ | — | | $ | — | |
| Equity and note (AerCap) | Equity and note (AerCap) | $ | — | | $ | — | | $ | — | | $ | 5,602 | | | $ | — | | $ | — | | $ | — | | $ | 8,287 | | Equity and note (AerCap) | — | | — | | — | | 5,404 | | | — | | — | | — | | 7,403 | |
| Equity (Baker Hughes) | Equity (Baker Hughes) | — | | — | | — | | 695 | | | — | | — | | — | | 4,010 | | Equity (Baker Hughes) | — | | — | | — | | — | | | — | | — | | — | | 207 | |
| Current investment securities | Current investment securities | $ | — | | $ | — | | $ | — | | $ | 6,297 | | | $ | — | | $ | — | | $ | — | | $ | 12,297 | | Current investment securities | $ | — | | $ | — | | $ | — | | $ | 12,814 | | | $ | — | | $ | — | | $ | — | | $ | 7,609 | |
| Debt | Debt | | Debt | |
| U.S. corporate | U.S. corporate | $ | 26,038 | | $ | 483 | | $ | (2,571) | | $ | 23,950 | | | $ | 25,182 | | $ | 5,502 | | $ | (33) | | $ | 30,652 | | U.S. corporate | $ | 27,760 | | $ | 996 | | $ | (1,781) | | $ | 26,975 | | | $ | 26,921 | | $ | 675 | | $ | (2,164) | | $ | 25,432 | |
| Non-U.S. corporate | Non-U.S. corporate | 2,455 | | 12 | | (366) | | 2,101 | | | 2,361 | | 343 | | (4) | | 2,701 | | Non-U.S. corporate | 2,585 | | 26 | | (243) | | 2,369 | | | 2,548 | | 18 | | (300) | | 2,266 | |
| State and municipal | State and municipal | 2,741 | | 67 | | (236) | | 2,572 | | | 2,639 | | 573 | | (6) | | 3,205 | | State and municipal | 2,881 | | 106 | | (184) | | 2,803 | | | 2,898 | | 66 | | (241) | | 2,722 | |
| Mortgage and asset-backed | Mortgage and asset-backed | 3,978 | | 20 | | (288) | | 3,710 | | | 3,950 | | 117 | | (47) | | 4,019 | | Mortgage and asset-backed | 4,623 | | 39 | | (320) | | 4,341 | | | 4,442 | | 21 | | (290) | | 4,173 | |
| Government and agencies | Government and agencies | 1,087 | | 34 | | (142) | | 979 | | | 1,086 | | 104 | | (2) | | 1,188 | | Government and agencies | 1,641 | | 3 | | (139) | | 1,504 | | | 1,172 | | 2 | | (147) | | 1,026 | |
| Other equity | Other equity | 311 | | — | | — | | 311 | | | 443 | | — | | — | | 443 | | Other equity | 270 | | — | | — | | 270 | | | 408 | | — | | — | | 408 | |
| Non-current investment securities | Non-current investment securities | $ | 36,611 | | $ | 615 | | $ | (3,602) | | $ | 33,624 | | | $ | 35,662 | | $ | 6,639 | | $ | (92) | | $ | 42,209 | | Non-current investment securities | $ | 39,761 | | $ | 1,169 | | $ | (2,668) | | $ | 38,262 | | | $ | 38,388 | | $ | 781 | | $ | (3,143) | | $ | 36,027 | |
|
The amortized cost of debt securities excludes accrued interest of $454$490 million and $415$457 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, which is reported in All other current assets.
The estimated fair value of investment securities at September 30, 2022 decreasedMarch 31, 2023 increased since December 31, 2021,2022, primarily due to higherthe classification of our remaining equity interest in GE HealthCare within investment securities, new insurance investments, lower market yields and wideningtightening credit spreads, partially offset by AerCap and BKR share sales, and the mark-to-market effect on our equity interest in AerCap, partially offset by new insurance investments and the mark-to-market effect on our equity interest in BKR.AerCap.
Total estimated fair value of debt securities in an unrealized loss position were $22,173$20,685 million and $3,446$21,482 million, of which $1,679$14,044 million and $644$3,275 million had gross unrealized losses of $(380)$(2,344) million and $(42)$(835) million and had been in a loss position for 12 months or more at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. GrossAt March 31, 2023, the majority of our U.S. and Non-U.S. corporate securities' gross unrealized losses of $(3,602) million at September 30, 2022were in the consumer, electric, technology, energy and insurance industries. In addition, gross unrealized losses on our Mortgage and asset-backed securities included $(2,571) million related to U.S. corporate securities, $(162)$(194) million related to commercial mortgage-backed securities (CMBS) collateralized by pools of commercial mortgage loans on real estate, and $(118)$(125) million related to Asset-backedasset-backed securities. The majority of our U.S. corporate securities' gross unrealized losses were in the consumer, technology, electric and energy industries. The majority of our CMBS and Asset-backedasset-backed securities in an unrealized loss position have received investment-grade credit ratings from the major rating agencies. For our securities in an unrealized loss position, the losses are not indicative of credit losses, we currently do not intend to sell the investments, and it is not likely that we will be required to sell the investments before recovery of their amortized cost basis.
Net unrealized gains (losses) for equity securities with readily determinable fair values, which are recorded in Other income (loss) within continuing operations, were $(139)$6,040 million and $405$(370) million for the three months ended March 31, 2023 and $(1,989) million and $1,051 million for the nine months ended September 30, 2022, and 2021, respectively.
Proceeds from debt and equity securities sales and early redemptions by issuers and principal payments on the BKR promissory note totaled $693$3,008 million and $1,745$1,949 million for the three months ended March 31, 2023 and $6,116 million and $4,695 million for the nine months ended September 30, 2022, and 2021, respectively. Gross realized gains on debt securities were an insignificant amount$11 million and $16$24 million for the three months ended March 31, 2023 and $34 million and $59 million for the nine months ended September 30, 2022, and 2021, respectively. Gross realized losses and impairments on debt securities were $(14)$(21) million and an insignificant amount for the three months ended March 31, 2023 and $(29) million and $(10) million for the nine months ended September 30, 2022, and 2021, respectively.
Contractual maturities of our debt securities (excluding mortgage and asset-backed securities) at September 30, 2022March 31, 2023 are as follows:
| | | Amortized cost | Estimated fair value | | Amortized cost | Estimated fair value |
| Within one year | Within one year | $ | 339 | | $ | 367 | | Within one year | $ | 1,057 | | $ | 1,052 | |
| After one year through five years | After one year through five years | 4,201 | | 4,133 | | After one year through five years | 4,762 | | 4,753 | |
| After five years through ten years | After five years through ten years | 5,916 | | 5,786 | | After five years through ten years | 5,726 | | 5,793 | |
| After ten years | After ten years | 21,866 | | 19,317 | | After ten years | 23,323 | | 22,052 | |
We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.
The majority of our equity securities are classified within Level 1 and the majority of our debt securities are classified within Level 2, as their valuation is determined based on significant observable inputs. Investments with a fair value of $5,954$6,379 million and $7,222$6,421 million are classified within Level 3, as significant inputs to their valuation models are unobservable at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. During the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, there were no significant transfers into or out of Level 3.
In addition to the equity securities described above, we hold $728$714 million and $441$614 million of equity securities without readily determinable fair values at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, that are classified within non-current All other assets in our Statement of Financial Position. Fair value adjustments, including impairments, recorded in earnings were insignificant$9 million and $18 million for both the three months ended September 30,March 31, 2023 and 2022, and 2021, and $20 million and $34 million for the nine months ended September 30, 2022 and 2021, respectively.
NOTE 4. CURRENT AND LONG-TERM RECEIVABLES
| | | | | | | | |
| |
| | |
| CURRENT RECEIVABLES | September 30, 2022 | December 31, 2021 |
| | |
| | |
| | |
| | |
| | |
| Customer receivables | $ | 14,382 | | $ | 13,079 | |
| Revenue sharing program receivables(a) | 1,397 | | 1,166 | |
| Non-income based tax receivables | 1,201 | | 1,222 | |
| Supplier advances | 585 | | 596 | |
| | |
| Receivables from disposed businesses | 136 | | 148 | |
| Other sundry receivables | 349 | | 483 | |
| | |
| Allowance for credit losses(b) | (850) | | (1,074) | |
| Total current receivables | $ | 17,197 | | $ | 15,620 | |
| | | | | | | | |
| |
| | |
| CURRENT RECEIVABLES | March 31, 2023 | December 31, 2022 |
| | |
| | |
| | |
| | |
| | |
| Customer receivables | $ | 11,123 | | $ | 11,803 | |
| Revenue sharing program receivables(a) | 1,336 | | 1,326 | |
| Non-income based tax receivables | 1,190 | | 1,146 | |
| Supplier advances | 711 | | 691 | |
| Receivables from disposed businesses | 245 | | 115 | |
| Other sundry receivables | 393 | | 518 | |
| | |
| Allowance for credit losses(b) | (787) | | (768) | |
| Total current receivables | $ | 14,212 | | $ | 14,831 | |
(a) Revenue sharing program receivables in Aerospace are amounts due from third parties who participate in engine programs by developing and supplying certain engine components through the life of the program. The participants share in program revenues, receive a share of customer progress payments and share costs related to discounts and warranties.
(b) Allowance for credit losses decreasedincreased primarily due to net new provisions of $20 million, partially offset by write-offs, recoveries and foreign currency impact, partially offset by net new provisions of $36 million.impact.
| | | | | | | | |
| March 31, 2023 | December 31, 2022 |
| Aerospace | $ | 7,667 | | $ | 7,784 | |
| Renewable Energy | 2,129 | | 2,415 | |
| Power | 3,940 | | 4,229 | |
| Corporate | 477 | | 404 | |
| Total current receivables | $ | 14,212 | | $ | 14,831 | |
Sales of customer receivables. Previously, GE businesses sold customer receivables to our Working Capital Solutions (WCS) business. These programs were discontinued in 2021. Separately, the Company fromFrom time to time, the Company sells current or long-term receivables to third parties in response to customer-sponsored requests or programs, to facilitate sales, or for risk mitigation purposes. Activity related to current customer receivables sold by GE businesses is as follows:
| | | | | | | | | | | | | | | | | | | |
| | | 2022 | | 2021 |
| | | Third Parties | | WCS | | Third Parties |
| Balance at January 1 | | | $ | 161 | | | $ | 3,618 | | | $ | 2,992 | |
| GE businesses sales to WCS | | | — | | | 12,890 | | | — | |
| GE businesses sales to third parties(a) | | | 1,354 | | | — | | | 765 | |
| WCS sales to third parties | | | — | | | (9,933) | | | 9,933 | |
| Collections and other | | | (1,414) | | | (6,144) | | | (11,538) | |
| Reclassification from long-term customer receivables | | | 41 | | | 99 | | | — | |
| Balance at September 30 | | | $ | 142 | | | $ | 530 | | | $ | 2,152 | |
(a) The Company sold current customer receivables to third parties and subsequently collected $464 million and $347 million in the three months ended March 31, 2023 and 2022, respectively, related primarily to our participation in customer-sponsored supply chain finance programs. Within these programs, primarily in Renewable Energy and Aerospace, the Company has no continuing involvement, fees associated with the transferred receivables are covered by the customer and cash is received at the original invoice due date. Included in the sales of customer receivables in the first quarter of 2023, was $77 million in our Gas Power business, primarily for risk mitigation purposes.
| | | LONG-TERM RECEIVABLES | LONG-TERM RECEIVABLES | September 30, 2022 | December 31, 2021 | | LONG-TERM RECEIVABLES | March 31, 2023 | December 31, 2022 | |
| | Long-term customer receivables(a) | Long-term customer receivables(a) | $ | 531 | | $ | 521 | | | Long-term customer receivables(a) | $ | 448 | | $ | 457 | | |
| Supplier advances | | Supplier advances | 279 | | 266 | | |
| Non-income based tax receivables | | Non-income based tax receivables | 236 | | 213 | | |
| Financing receivables | Financing receivables | 495 | | 592 | | | Financing receivables | 147 | | 82 | | |
| Non-income based tax receivables | 255 | | 245 | | | |
| Supplier advances | 249 | | 309 | | | |
| Receivables from disposed businesses | 150 | | 150 | | | |
| Sundry receivables | Sundry receivables | 406 | | 440 | | | Sundry receivables | 429 | | 400 | | |
| | Allowance for credit losses | Allowance for credit losses | (233) | | (160) | | | Allowance for credit losses | (182) | | (183) | | |
| Total long-term receivables | Total long-term receivables | $ | 1,854 | | $ | 2,097 | | | Total long-term receivables | $ | 1,358 | | $ | 1,236 | | |
(a) The Company sold $85 millionzero and $32$79 million of long-term customer receivables to third parties infor the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively, primarily in our Gas Power business for risk mitigation purposes.
2022 3Q2023 1Q FORM 10-Q 3229
NOTE 5. INVENTORIES, INCLUDING DEFERRED INVENTORY COSTS
| | | | | | | | |
| September 30, 2022 | December 31, 2021 |
| Raw materials and work in process | $ | 10,244 | | $ | 8,710 | |
| Finished goods | 5,147 | | 4,927 | |
| Deferred inventory costs(a) | 2,145 | | 2,210 | |
| Inventories, including deferred inventory costs | $ | 17,536 | | $ | 15,847 | |
| | | | | | | | |
| March 31, 2023 | December 31, 2022 |
| Raw materials and work in process | $ | 10,000 | | $ | 9,191 | |
| Finished goods | 4,223 | | 3,937 | |
| Deferred inventory costs(a) | 1,975 | | 1,764 | |
| Inventories, including deferred inventory costs | $ | 16,198 | | $ | 14,891 | |
(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 Aerospace) and other costs for which the criteria for revenue recognition has not yet been met.
NOTE 6. PROPERTY, PLANT AND EQUIPMENT AND OPERATING LEASES
| | | | | | | | |
| September 30, 2022 | December 31, 2021 |
| Original cost | $ | 30,718 | | $ | 31,904 | |
| Less accumulated depreciation and amortization | (18,705) | | (18,901) | |
| Right-of-use operating lease assets | 2,282 | | 2,606 | |
| Property, plant and equipment – net | $ | 14,295 | | $ | 15,609 | |
In the first quarter of 2022, we signed a non-binding memorandum of understanding for GE Steam Power to sell a portion of its business to EDF, which resulted in a reclassification of that business to held for sale. As a result, we recognized a non-cash pre-tax impairment charge of $59 million related to property, plant and equipment at our remaining Steam business within our Power segment. This charge was recorded by Corporate in Selling, general, and administrative expenses in our consolidated Statement of Earnings (Loss). | | | | | | | | |
| March 31, 2023 | December 31, 2022 |
| Original cost | $ | 26,957 | | $ | 26,641 | |
| Less accumulated depreciation and amortization | (16,640) | | (16,303) | |
| Right-of-use operating lease assets | 1,853 | | 1,854 | |
| Property, plant and equipment – net | $ | 12,170 | | $ | 12,192 | |
Operating Lease Liabilities. Our consolidated operating lease liabilities, included in All other liabilities in our Statement of Financial Position, was $2,504$2,083 million and $2,848$2,089 million, as of September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. Expense on our operating lease portfolio, primarily from our long-term fixed leases, was $252$195 million and $287$227 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $784 million and $826 million for the nine months ended September 30, 2022 and 2021, respectively.
NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS
| | GOODWILL | GOODWILL | January 1, 2022 | | Dispositions | | Currency exchange
and other | Balance at September 30, 2022 | GOODWILL | January 1, 2023 | | Currency exchange
and other | Balance at March 31, 2023 |
| Aerospace | Aerospace | $ | 9,013 | | | $ | (6) | | | $ | (462) | | $ | 8,545 | | Aerospace | $ | 8,835 | | | $ | 64 | | $ | 8,899 | |
| HealthCare | 12,879 | | | — | | | (125) | | 12,754 | | |
| Renewable Energy | Renewable Energy | 3,231 | | | — | | | (209) | | 3,023 | | Renewable Energy | 3,201 | | | 42 | | 3,243 | |
| Power | Power | 145 | | | — | | | (1) | | 144 | | Power | 144 | | | — | | 144 | |
| | Corporate(a) | Corporate(a) | 914 | | | — | | | (104) | | 811 | | Corporate(a) | 818 | | | 2 | | 821 | |
| Total | Total | $ | 26,182 | | | $ | (6) | | | $ | (901) | | $ | 25,275 | | Total | $ | 12,999 | | | $ | 108 | | $ | 13,107 | |
(a) Corporate balance comprises our Digital business.
We assess 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. In the thirdfirst quarter of 2022,2023, we did not identify any reporting units that required an interim impairment test. However, we continue to monitor the operating results and cash flow forecasts of our Digital reporting unit at Corporate and our Additive reporting unit in our Aerospace segment as the fair value of these reporting units were not significantly in excess of their carrying values based on the results of our most recent annual impairment test, performed in the fourth quarter of 2022. At March 31, 2023, our Digital and Additive reporting units had goodwill of $821 million and $244 million, respectively.
Substantially all other intangible assets are subject to amortization. Intangible assets decreased $1,605$115 million during the ninethree months ended September 30, 2022,March 31, 2023, primarily as a result of amortization partially offset by changes in foreign exchange rates of $23 million and additions of capitalized software and patents & technology mainly at Aerospace and HealthCare of $158$20 million. Consolidated amortization expense was $237$140 million and $272$922 million in the three months ended March 31, 2023 and $1,498 million and $860 million in the nine months ended, September 30, 2022, and 2021, respectively. Included within consolidated amortization expense for the ninethree months ended September 30,March 31, 2022 was a non-cash pre-tax impairment charge of $765 million.
In the first quarter of 2022, we signed a non-binding memorandum of understanding for GE Steam Power to sell a portion of its business to EDF, which resulted in a reclassification of that business to held for sale. As a result, we recognized a For further information on this non-cash pre-tax impairment charge, of $765 million relatedrefer to intangible assets at our remaining Steam business within our Power segment. We determinedAnnual Report on Form 10-K for the fair value of these intangible assets using an income approach. This charge was recorded by Corporate in Selling, general, and administrative expenses in our consolidated Statement of Earnings (Loss).year ended December 31, 2022.
2022 3Q2023 1Q FORM 10-Q 3330
NOTE 8. REVENUES
| | | | | | | | | | | | | | | | | | | | | | | |
| EQUIPMENT & SERVICES REVENUES | |
| Three months ended September 30 | 2022 | | 2021 |
| Equipment | Services | Total | | Equipment | Services | Total |
| Aerospace | $ | 1,968 | | $ | 4,736 | | $ | 6,705 | | | $ | 1,837 | | $ | 3,562 | | $ | 5,398 | |
| HealthCare | 2,352 | | 2,261 | | 4,613 | | | 2,187 | | 2,151 | | 4,339 | |
| Renewable Energy | 2,887 | | 707 | | 3,594 | | | 3,695 | | 512 | | 4,208 | |
| Power | 954 | | 2,575 | | 3,529 | | | 1,368 | | 2,658 | | 4,026 | |
| | | | | | | |
| Total segment revenues | $ | 8,162 | | $ | 10,279 | | $ | 18,440 | | | $ | 9,087 | | $ | 8,883 | | $ | 17,970 | |
| | Nine months ended September 30 | 2022 | | 2021 | |
| EQUIPMENT & SERVICES REVENUES | | EQUIPMENT & SERVICES REVENUES | |
| Three months ended March 31 | | Three months ended March 31 | 2023 | | 2022 |
| | Equipment | Services | Total | | Equipment | Services | Total | | Equipment | Services | Total | | Equipment | Services | Total |
| Aerospace | Aerospace | $ | 5,379 | | $ | 13,055 | | $ | 18,434 | | | $ | 5,549 | | $ | 9,681 | | $ | 15,230 | | Aerospace | $ | 1,974 | | $ | 5,007 | | $ | 6,981 | | | $ | 1,654 | | $ | 3,949 | | $ | 5,603 | |
| HealthCare | 6,945 | | 6,549 | | 13,494 | | | 6,671 | | 6,429 | | 13,100 | | |
| | Renewable Energy | Renewable Energy | 7,505 | | 2,059 | | 9,564 | | | 9,844 | | 1,661 | | 11,505 | | Renewable Energy | 2,311 | | 527 | | 2,837 | | | 2,173 | | 698 | | 2,871 | |
| Power | Power | 3,116 | | 8,117 | | 11,233 | | | 3,680 | | 8,561 | | 12,242 | | Power | 1,102 | | 2,718 | | 3,820 | | | 965 | | 2,536 | | 3,501 | |
| | Total segment revenues | Total segment revenues | $ | 22,945 | | $ | 29,780 | | $ | 52,725 | | | $ | 25,744 | | $ | 26,333 | | $ | 52,076 | | Total segment revenues | $ | 5,387 | | $ | 8,252 | | $ | 13,638 | | | $ | 4,792 | | $ | 7,183 | | $ | 11,975 | |
|
| | REVENUES | REVENUES | Three months ended September 30 | | Nine months ended September 30 | REVENUES | Three months ended March 31 | |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | |
| Commercial Engines & Services | Commercial Engines & Services | $ | 4,971 | | | $ | 3,602 | | | $ | 13,130 | | | $ | 10,071 | | Commercial Engines & Services | $ | 5,194 | | | $ | 3,853 | | |
| Military | Military | 1,027 | | | 1,107 | | | 3,159 | | | 3,104 | | Military | 1,018 | | | 1,036 | | |
| Systems & Other | Systems & Other | 707 | | | 689 | | | 2,146 | | | 2,055 | | Systems & Other | 770 | | | 714 | | |
| Aerospace | Aerospace | $ | 6,705 | | | $ | 5,398 | | | $ | 18,434 | | | $ | 15,230 | | Aerospace | $ | 6,981 | | | $ | 5,603 | | |
| | Healthcare Systems | $ | 4,086 | | | $ | 3,832 | | | $ | 11,998 | | | $ | 11,572 | | |
| Pharmaceutical Diagnostics | 527 | | | 507 | | | 1,496 | | | 1,528 | | |
| HealthCare | $ | 4,613 | | | $ | 4,339 | | | $ | 13,494 | | | $ | 13,100 | | |
| | | Onshore Wind | Onshore Wind | $ | 2,445 | | | $ | 3,047 | | | $ | 6,403 | | | $ | 8,048 | | Onshore Wind | $ | 1,502 | | | $ | 1,906 | | |
| Grid Solutions equipment and services | Grid Solutions equipment and services | 744 | | | 759 | | | 2,145 | | | 2,330 | | Grid Solutions equipment and services | 824 | | | 668 | | |
| | Hydro, Offshore Wind and Hybrid Solutions | 405 | | | 401 | | | 1,016 | | | 1,126 | | |
| Offshore Wind, Hydro and Hybrid Solutions | | Offshore Wind, Hydro and Hybrid Solutions | 511 | | | 297 | | |
| Renewable Energy | Renewable Energy | $ | 3,594 | | | $ | 4,208 | | | $ | 9,564 | | | $ | 11,505 | | Renewable Energy | $ | 2,837 | | | $ | 2,871 | | |
| | Gas Power | Gas Power | $ | 2,612 | | | $ | 2,861 | | | $ | 8,234 | | | $ | 8,739 | | Gas Power | $ | 2,867 | | | $ | 2,489 | | |
| Steam Power | Steam Power | 571 | | | 790 | | | 1,898 | | | 2,327 | | Steam Power | 541 | | | 636 | | |
| Power Conversion, Nuclear and other | Power Conversion, Nuclear and other | 346 | | | 376 | | | 1,101 | | | 1,176 | | Power Conversion, Nuclear and other | 412 | | | 377 | | |
| Power | Power | $ | 3,529 | | | $ | 4,026 | | | $ | 11,233 | | | $ | 12,242 | | Power | $ | 3,820 | | | $ | 3,501 | | |
| | Total segment revenues | Total segment revenues | $ | 18,440 | | | $ | 17,970 | | | $ | 52,725 | | | $ | 52,076 | | Total segment revenues | $ | 13,638 | | | $ | 11,975 | | |
| | Corporate | Corporate | $ | 643 | | | $ | 599 | | | $ | 2,044 | | | $ | 1,816 | | Corporate | $ | 848 | | | $ | 700 | | |
| | Total revenues | Total revenues | $ | 19,084 | | | $ | 18,569 | | | $ | 54,769 | | | $ | 53,893 | | Total revenues | $ | 14,486 | | | $ | 12,675 | | |
| |
REMAINING PERFORMANCE OBLIGATION. As of September 30, 2022,March 31, 2023, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $240,763$242,054 million. We expect to recognize revenue as we satisfy our remaining performance obligations as follows: (1) equipment-related remaining performance obligation of $44,734$47,991 million, of which 59%55%, 80% and 98%97% is expected to be satisfied within 1, 2 and 5 years, respectively; and (2) services-related remaining performance obligation of $196,029$194,063 million, of which 13%12%, 46%43%, 71%68% and 85%83% is expected to be recognized within 1, 5, 10 and 15 years, respectively, and the remaining thereafter.
NOTE 9. CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract and other deferred assets decreased $1,084$368 million in the ninethree months ended September 30, 2022March 31, 2023 primarily due to decreaseda decrease in long-term service agreements, andpartially offset by the timing of billing milestonesrevenue recognition ahead of revenue recognitionbilling milestones on long-term equipment contracts. Our long-term service agreements decreased primarily due to billings of $8,413$3,155 million, partially offset by revenues recognized of $7,111$2,579 million and net favorable changes in estimated profitability of $98$53 million at Aerospace and $219net unfavorable changes in estimated profitability of $12 million at Power, primarily attributable to contractual increases in billings, partially offset by cost inflation.Power.
| | | | | | | | | | | | | | | | | |
| March 31, 2023 | Aerospace | Renewable Energy | Power | Corporate | Total |
| Revenues in excess of billings | $ | 2,603 | | $ | — | | $ | 5,317 | | $ | — | | $ | 7,920 | |
| Billings in excess of revenues | (7,288) | | — | | (1,807) | | — | | (9,095) | |
| Long-term service agreements | $ | (4,685) | | $ | — | | $ | 3,510 | | $ | — | | $ | (1,176) | |
| Short-term and other service agreements | 456 | | 129 | | 66 | | 277 | | 927 | |
| Equipment contract revenues | 27 | | 1,009 | | 1,457 | | — | | 2,493 | |
| Current contract assets | $ | (4,203) | | $ | 1,138 | | $ | 5,032 | | $ | 277 | | $ | 2,244 | |
| | | | | |
| Nonrecurring engineering costs(a) | 2,521 | | 19 | | 2 | | — | | 2,542 | |
| Customer advances and other(b) | 2,389 | | — | | 700 | | — | | 3,089 | |
| Non-current contract and other deferred assets | $ | 4,910 | | $ | 19 | | $ | 702 | | $ | — | | $ | 5,631 | |
| Total contract and other deferred assets | $ | 707 | | $ | 1,157 | | $ | 5,734 | | $ | 277 | | $ | 7,875 | |
2022 3Q2023 1Q FORM 10-Q 3431
| | September 30, 2022 | Aerospace | HealthCare | Renewable Energy | Power | Corporate | Total | |
| December 31, 2022 | | December 31, 2022 | Aerospace | Renewable Energy | Power | Corporate | Total |
| Revenues in excess of billings | Revenues in excess of billings | $ | 2,335 | | $ | — | | $ | — | | $ | 5,507 | | $ | — | | $ | 7,843 | | Revenues in excess of billings | $ | 2,363 | | $ | — | | $ | 5,403 | | $ | — | | $ | 7,766 | |
| Billings in excess of revenues | Billings in excess of revenues | (6,358) | | — | | — | | (1,632) | | — | | (7,990) | | Billings in excess of revenues | (6,681) | | — | | (1,763) | | — | | (8,443) | |
| Long-term service agreements | Long-term service agreements | $ | (4,023) | | $ | — | | $ | — | | $ | 3,876 | | $ | — | | $ | (147) | | Long-term service agreements | $ | (4,318) | | $ | — | | $ | 3,640 | | $ | — | | $ | (677) | |
| Short-term and other service agreements | Short-term and other service agreements | 414 | | 180 | | 117 | | 73 | | 22 | | 805 | | Short-term and other service agreements | 391 | | 108 | | 56 | | 245 | | 799 | |
| Equipment contract revenues | Equipment contract revenues | 22 | | 395 | | 985 | | 1,418 | | 222 | | 3,043 | | Equipment contract revenues | 42 | | 955 | | 1,348 | | — | | 2,345 | |
| Current contract assets | Current contract assets | $ | (3,586) | | $ | 575 | | $ | 1,102 | | $ | 5,366 | | $ | 244 | | $ | 3,701 | | Current contract assets | $ | (3,884) | | $ | 1,063 | | $ | 5,044 | | $ | 245 | | $ | 2,467 | |
| Nonrecurring engineering costs | Nonrecurring engineering costs | 2,555 | | 28 | | 15 | | 6 | | — | | 2,604 | | Nonrecurring engineering costs | 2,513 | | 17 | | 4 | | — | | 2,534 | |
Customer advances and other | Customer advances and other | 2,654 | | 187 | | — | | 776 | | — | | 3,617 | | Customer advances and other | 2,519 | | — | | 724 | | — | | 3,243 | |
| Non-current contract and other deferred assets | Non-current contract and other deferred assets | $ | 5,209 | | $ | 215 | | $ | 15 | | $ | 782 | | $ | — | | $ | 6,221 | | Non-current contract and other deferred assets | $ | 5,032 | | $ | 17 | | $ | 728 | | $ | — | | $ | 5,776 | |
| Total contract and other deferred assets | Total contract and other deferred assets | $ | 1,622 | | $ | 790 | | $ | 1,117 | | $ | 6,149 | | $ | 243 | | $ | 9,922 | | Total contract and other deferred assets | $ | 1,148 | | $ | 1,079 | | $ | 5,772 | | $ | 245 | | $ | 8,244 | |
| | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | | | | | |
| 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 agreements | 340 | | 166 | | 87 | | 80 | | 20 | | 692 | |
| Equipment contract revenues | 33 | | 287 | | 1,297 | | 1,709 | | 236 | | 3,562 | |
| Current contract assets | $ | (2,881) | | $ | 453 | | $ | 1,384 | | $ | 5,669 | | $ | 256 | | $ | 4,881 | |
| | | | | | |
| Nonrecurring engineering costs | 2,479 | | 31 | | 28 | | 12 | | — | | 2,550 | |
| Customer advances and other | 2,620 | | 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 | |
(b) Included amounts due from customers at Aerospace for the sales of engines, spare parts and services, and 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.
Progress collections and deferred income decreased $1,074increased $461 million primarily due to the reclassification of a portion of our GE Steam Power business to held for sale and revenue recognition in excess of new collections at Renewable Energy, partially offset by new collections received in excess of revenue recognition at Aerospace, including increased collections to support higher production.Power and Renewable Energy, partially offset by net liquidations at Aerospace. Revenues recognized for contracts included in a liability position at the beginning of the year were $11,099$4,468 million and $12,602$3,997 million for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
| | September 30, 2022 | Aerospace | HealthCare | Renewable Energy | Power | Corporate | Total | |
| March 31, 2023 | | March 31, 2023 | Aerospace | Renewable Energy | Power | Corporate | Total |
| Progress collections on equipment contracts | Progress collections on equipment contracts | $ | 80 | | $ | — | | $ | 1,731 | | $ | 3,737 | | $ | — | | $ | 5,548 | | Progress collections on equipment contracts | $ | 90 | | $ | 2,313 | | $ | 4,349 | | $ | — | | $ | 6,751 | |
| Other progress collections | Other progress collections | 5,557 | | 462 | | 2,415 | | 472 | | 98 | | 9,004 | | Other progress collections | 5,631 | | 3,071 | | 451 | | 131 | | 9,284 | |
| | Current deferred income | Current deferred income | 190 | | 1,333 | | 253 | | 21 | | 97 | | 1,893 | | Current deferred income | 216 | | 204 | | 12 | | 119 | | 550 | |
| Progress collections and deferred income | Progress collections and deferred income | $ | 5,827 | | $ | 1,794 | | $ | 4,398 | | $ | 4,230 | | $ | 195 | | $ | 16,445 | | Progress collections and deferred income | $ | 5,937 | | $ | 5,588 | | $ | 4,812 | | $ | 249 | | $ | 16,586 | |
| Non-current deferred income | Non-current deferred income | 1,061 | | 532 | | 149 | | 100 | | 1 | | 1,842 | | Non-current deferred income | 1,183 | | 206 | | 98 | | 12 | | 1,500 | |
| Total Progress collections and deferred income | Total Progress collections and deferred income | $ | 6,887 | | $ | 2,326 | | $ | 4,547 | | $ | 4,330 | | $ | 196 | | $ | 18,287 | | Total Progress collections and deferred income | $ | 7,120 | | $ | 5,794 | | $ | 4,910 | | $ | 262 | | $ | 18,086 | |
| | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | | | | | |
| Progress collections on equipment contracts | $ | 142 | | $ | — | | $ | 1,843 | | $ | 5,198 | | $ | — | | $ | 7,183 | |
| Other progress collections | 4,469 | | 522 | | 2,866 | | 385 | | 111 | | 8,354 | |
| | | | | | |
| Current deferred income | 170 | | 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 income | 1,090 | | 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, 2022 | | | | | |
| Progress collections on equipment contracts | $ | 74 | | $ | 2,464 | | $ | 3,973 | | $ | — | | $ | 6,511 | |
| Other progress collections | 5,740 | | 2,731 | | 541 | | 131 | | 9,143 | |
| | | | | |
| Current deferred income | 233 | | 208 | | 13 | | 107 | | 562 | |
| Progress collections and deferred income | $ | 6,047 | | $ | 5,404 | | $ | 4,527 | | $ | 238 | | $ | 16,216 | |
| Non-current deferred income | 1,110 | | 183 | | 104 | | 12 | | 1,409 | |
| Total Progress collections and deferred income | $ | 7,157 | | $ | 5,586 | | $ | 4,632 | | $ | 250 | | $ | 17,625 | |
NOTE 10. ALL OTHER ASSETS. All other current assets and All other assets primarily include equity method and other investments, long-term customer and sundry receivables (see Note 4), cash and cash equivalents and receivables in our run-off insurance operations and prepaid taxes and other deferred charges. All other non-current assets increased $126$412 million in the ninethree months ended September 30, 2022,March 31, 2023, primarily due to an increase in equity method and other investments of $536$180 million, partially offset by decreasesan increase in long-term receivables of $244$122 million and an increase in Insurance receivablescash and cash equivalents of $205$68 million. Insurance cash and cash equivalents was $687 million and $619 million at March 31, 2023 and December 31, 2022, respectively.
2022 3Q2023 1Q FORM 10-Q 3532
NOTE 11. BORROWINGS
| | | | September 30, 2022 | | December 31, 2021 | | | | March 31, 2023 | | December 31, 2022 | |
| | Current portion of long-term borrowings | Current portion of long-term borrowings | | | | | | Current portion of long-term borrowings | | | | | |
| Senior notes issued by GE | Senior notes issued by GE | | $ | 1,095 | | | $ | 1,249 | | | Senior notes issued by GE | | $ | 609 | | | $ | 464 | | |
| Senior and subordinated notes assumed by GE | Senior and subordinated notes assumed by GE | | 1,964 | | | 1,645 | | | Senior and subordinated notes assumed by GE | | 947 | | | 1,973 | | |
| Senior notes issued by GE Capital | Senior notes issued by GE Capital | | 1,097 | | | 1,370 | | | Senior notes issued by GE Capital | | 592 | | | 1,188 | | |
| Other | Other | | 129 | | | 97 | | | Other | | 114 | | | 115 | | |
| Total short-term borrowings | Total short-term borrowings | | $ | 4,285 | | | $ | 4,361 | | | Total short-term borrowings | | $ | 2,262 | | | $ | 3,739 | | |
| | | Senior notes issued by GE | Senior notes issued by GE | | $ | 4,451 | | | $ | 5,373 | | | Senior notes issued by GE | | $ | 4,653 | | | $ | 4,724 | | |
| Senior and subordinated notes assumed by GE | Senior and subordinated notes assumed by GE | | 9,482 | | | 11,306 | | | Senior and subordinated notes assumed by GE | | 8,383 | | | 8,406 | | |
| Senior notes issued by GE Capital | Senior notes issued by GE Capital | | 11,271 | | | 13,274 | | | Senior notes issued by GE Capital | | 6,262 | | | 6,289 | | |
| Other | Other | | 916 | | | 870 | | | Other | | 861 | | | 901 | | |
| Total long-term borrowings | Total long-term borrowings | | $ | 26,121 | | | $ | 30,824 | | | Total long-term borrowings | | $ | 20,159 | | | $ | 20,320 | | |
| Total borrowings | Total borrowings | | $ | 30,405 | | | $ | 35,186 | | | Total borrowings | | $ | 22,421 | | | $ | 24,059 | | |
The Company has provided a full and unconditional guarantee on the payment of the principal and interest on all senior and subordinated outstanding long-term debt securities issued by subsidiaries of GE Capital, our former financial services business. This guarantee applied to $11,514$3,379 million and $13,719$5,258 million of senior notes and other debt issued by GE Capital at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively.
See Note 1921 for further information about borrowings and associated interest rate swaps.hedges.
NOTE 12. ACCOUNTS PAYABLE AND EQUIPMENT PROJECT PAYABLES
| | | | | | | | |
| March 31, 2023 | December 31, 2022 |
| Trade payables | $ | 10,049 | | $ | 10,033 | |
| Supply chain finance programs | 3,454 | | 3,689 | |
| Equipment project payables(a) | 1,109 | | 1,236 | |
| Non-income based tax payables | 451 | | 441 | |
| Accounts payable and equipment project payables | $ | 15,063 | | $ | 15,399 | |
(a) Primarily related to projects in our Power and Renewable Energy segments.
We facilitate voluntary supply chain finance programs with third parties, which provide participating suppliers the opportunity to sell their GE receivables to third parties at the sole discretion of both the suppliers and the third parties. Total supplier invoices paid through these third-party programs were $2,079 million and $1,856 million for the three months ended March 31, 2023 and 2022, respectively.
NOTE 12.13. INSURANCE LIABILITIES AND ANNUITY BENEFITS. Insurance liabilities and annuity benefits comprise substantially all obligations to annuitants and insureds in our run-off insurance operations. Our insurance operations (net of eliminations) generated revenues of $646$791 million and $756$764 million, profit (loss) of $(310)was $70 million and $55$106 million and net earnings (loss) of $(247)was $54 million and $42$84 million for the three months ended September 30,March 31, 2023 and 2022, respectively. For the years ended December 31, 2022 and 2021 respectively. For the nine months ended September 30, 2022 and 2021,our insurance operations (net of eliminations) generated revenues were $2,179of $2,957 million and $2,295$3,101 million, profit was $87$205 million and $426$798 million and net earnings was $68$159 million and $334$627 million, respectively. These operations were supported by assets of $43,488$47,981 million, $45,031 million and $49,894$56,037 million at September 30,March 31, 2023, December 31, 2022 and December 31, 2021, respectively. A summary of our insurance contractsliabilities and annuity benefits is presented below:
| | September 30, 2022 | Long-term care | Structured settlement annuities & life | Other contracts | Other adjustments(a) | Total | |
| March 31, 2023 | | March 31, 2023 | Long-term care | Structured settlement annuities | Life | Other contracts(a) | Total |
| Future policy benefit reserves | Future policy benefit reserves | $ | 17,016 | | $ | 8,707 | | $ | 187 | | $ | — | | $ | 25,910 | | Future policy benefit reserves | $ | 26,054 | | $ | 9,349 | | $ | 1,045 | | $ | 428 | | $ | 36,876 | |
| Claim reserves | 4,649 | | 235 | | 549 | | — | | 5,433 | | |
| Investment contracts | Investment contracts | — | | 883 | | 926 | | — | | 1,809 | | Investment contracts | — | | 846 | | — | | 821 | 1,667 |
| Unearned premiums and other | 11 | | 177 | | 96 | | — | | 283 | | |
| Other | | Other | — | | — | | 178 | 361 | 539 | |
| | Total | Total | $ | 21,676 | | $ | 10,001 | | $ | 1,758 | | $ | — | | $ | 33,435 | | Total | $ | 26,054 | | $ | 10,194 | | $ | 1,223 | | $ | 1,610 | | $ | 39,082 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 | | | | | |
| Future policy benefit reserves | $ | 17,097 | | $ | 8,902 | | $ | 188 | | $ | 3,394 | | $ | 29,581 | |
| Claim reserves | 4,546 | | 258 | | 585 | | — | | 5,389 | |
| Investment contracts | — | | 955 | | 954 | | — | | 1,909 | |
| Unearned premiums and other | 15 | | 184 | | 89 | | — | | 287 | |
| | | | | |
| | | | | |
| Total | $ | 21,658 | | $ | 10,299 | | $ | 1,815 | | $ | 3,394 | | $ | 37,166 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2022 | | | | | |
| Future policy benefit reserves | $ | 24,256 | | $ | 8,860 | | $ | 1,040 | | $ | 437 | | $ | 34,593 | |
| Investment contracts | — | | 860 | | — | | 849 | | 1,708 | |
| Other | — | | — | | 178 | | 365 | | 544 | |
| | | | | |
| | | | | |
| Total | $ | 24,256 | | $ | 9,720 | | $ | 1,218 | | $ | 1,651 | | $ | 36,845 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 | Long-term care | Structured settlement annuities | Life | Other contracts(a) | Total |
| Future policy benefit reserves | $ | 34,644 | | $ | 12,328 | | $ | 1,301 | | $ | 490 | | $ | 48,763 | |
| Investment contracts | — | | 950 | | — | | 907 | | 1,857 | |
| Other | — | | — | | 189 | | 761 | | 950 | |
| | | | | |
| | | | | |
| Total | $ | 34,644 | | $ | 13,278 | | $ | 1,490 | | $ | 2,158 | | $ | 51,570 | |
(a) As of December 31, 2021, Other includes reserves of $325 million related to short-duration contracts at EIC, net of eliminations.
The decreasefollowing tables summarize balances of and changes in Other adjustmentsfuture policy benefits reserves.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | March 31, 2022 |
| Present value of expected net premiums | Long-term care | Structured settlement annuities | Life | | | | Long-term care | Structured settlement annuities | Life | | |
| Balance, beginning of year | $ | 4,059 | | $ | — | | $ | 4,828 | | | | | $ | 5,652 | | $ | — | | $ | 6,622 | | | |
| Beginning balance at locked-in discount rate | 3,958 | | — | | 5,210 | | | | | 4,451 | | — | | 5,443 | | | |
| Effect of changes in cash flow assumptions | — | | — | | — | | | | | — | | — | | — | | | |
| Effect of actual variances from expected experience | 29 | | — | | (35) | | | | | (130) | | — | | 2 | | | |
| Adjusted beginning of year balance | 3,987 | | — | | 5,175 | | | | | 4,321 | | — | | 5,445 | | | |
| Interest accrual | 53 | | — | | 50 | | | | | 59 | | — | | 52 | | | |
| Net premiums collected | (103) | | — | | (73) | | | | | (113) | | — | | (83) | | | |
| Effect of foreign currency | — | | — | | (23) | | | | | — | | — | | 73 | | | |
| Ending balance at locked-in discount rate | 3,937 | | — | | 5,129 | | | | | 4,267 | | — | | 5,487 | | | |
| Effect of changes in discount rate assumptions | 281 | | — | | (149) | | | | | 696 | | — | | 396 | | | |
| Balance, end of year | $ | 4,217 | | $ | — | | $ | 4,979 | | | | | $ | 4,963 | | $ | — | | $ | 5,883 | | | |
| | | | | | | | | | | |
| Present value of expected future policy benefits | | | | | | | | | | | |
| Balance, beginning of year | $ | 28,316 | | $ | 8,860 | | $ | 5,868 | | | | | $ | 40,296 | | $ | 12,328 | | $ | 7,923 | | | |
| Beginning balance at locked-in discount rate | 27,026 | | 8,790 | | 6,247 | | | | | 27,465 | | 9,024 | | 6,560 | | | |
| Effect of changes in cash flow assumptions | (11) | | — | | — | | | | | — | | — | | — | | | |
| Effect of actual variances from expected experience | 30 | | (1) | | 2 | | | | | (130) | | (3) | | 19 | | | |
| Adjusted beginning of year balance | 27,046 | | 8,789 | | 6,250 | | | | | 27,335 | | 9,021 | | 6,579 | | | |
| Interest accrual | 363 | | 115 | | 60 | | | | | 365 | | 119 | | 62 | | | |
| Benefit payments | (309) | | (174) | | (138) | | | | | (274) | | (162) | | (148) | | | |
| Effect of foreign currency | — | | — | | (24) | | | | | — | | — | | 77 | | | |
| Ending balance at locked-in discount rate | 27,100 | | 8,730 | | 6,148 | | | | | 27,425 | | 8,978 | | 6,570 | | | |
| Effect of changes in discount rate assumptions | 3,171 | | 619 | | (123) | | | | | 7,852 | | 1,870 | | 488 | | | |
| Balance, end of year | $ | 30,271 | | $ | 9,349 | | $ | 6,025 | | | | | $ | 35,277 | | $ | 10,848 | | $ | 7,058 | | | |
| Net future policy benefit reserves | $ | 26,054 | | $ | 9,349 | | $ | 1,045 | | | | | $ | 30,314 | | $ | 10,848 | | $ | 1,175 | | | |
| Less: Reinsurance recoverables, net of allowance for credit losses | (204) | | — | | (57) | | | | | (5,154) | | — | | (81) | | | |
| Net future policy benefit reserves, after reinsurance recoverables | $ | 25,850 | | $ | 9,349 | | $ | 988 | | | | | $ | 25,160 | | $ | 10,848 | | $ | 1,094 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 | December 31, 2021 |
| Present value of expected net premiums | Long-term care | Structured settlement annuities | Life | | | | Long-term care | Structured settlement annuities | Life | | |
| Balance, beginning of year | $ | 5,652 | | $ | — | | $ | 6,622 | | | | | $ | 6,397 | | $ | — | | $ | 7,205 | | | |
| Beginning balance at locked-in discount rate | 4,451 | | — | | 5,443 | | | | | 4,822 | | — | | 5,518 | | | |
| Effect of changes in cash flow assumptions | (9) | | — | | 91 | | | | | (91) | | — | | 191 | | | |
| Effect of actual variances from expected experience | (290) | | — | | 6 | | | | | (68) | | — | | (69) | | | |
| Adjusted beginning of year balance | 4,152 | | — | | 5,540 | | | | | 4,663 | | — | | 5,640 | | | |
| Interest accrual | 223 | | — | | 203 | | | | | 241 | | — | | 203 | | | |
| Net premiums collected | (417) | | — | | (357) | | | | | (453) | | — | | (392) | | | |
| Effect of foreign currency | — | | — | | (176) | | | | | — | | — | | (9) | | | |
| Ending balance at locked-in discount rate | 3,958 | | — | | 5,210 | | | | | 4,451 | | — | | 5,443 | | | |
| Effect of changes in discount rate assumptions | 101 | | — | | (381) | | | | | 1,201 | | — | | 1,179 | | | |
| Balance, end of year | $ | 4,059 | | $ | — | | $ | 4,828 | | | | | $ | 5,652 | | $ | — | | $ | 6,622 | | | |
| | | | | | | | | | | |
| Present value of expected future policy benefits | | | | | | | | | | | |
| Balance, beginning of year | $ | 40,296 | | $ | 12,328 | | $ | 7,923 | | | | | $ | 43,974 | | $ | 13,531 | | $ | 8,767 | | | |
| Beginning balance at locked-in discount rate | 27,465 | | 9,024 | | 6,560 | | | | | 27,745 | | 9,163 | | 6,797 | | | |
| Effect of changes in cash flow assumptions | (413) | | (23) | | 120 | | | | | (509) | | 58 | | 207 | | | |
| Effect of actual variances from expected experience | (320) | | (11) | | 40 | | | | | (147) | | (11) | | (43) | | | |
| Adjusted beginning of year balance | 26,732 | | 8,990 | | 6,720 | | | | | 27,089 | | 9,210 | | 6,961 | | | |
| Interest accrual | 1,446 | | 471 | | 243 | | | | | 1,435 | | 491 | | 248 | | | |
| Benefit payments | (1,152) | | (671) | | (531) | | | | | (1,058) | | (678) | | (638) | | | |
| Effect of foreign currency | — | | — | | (185) | | | | | — | | — | | (10) | | | |
| Ending balance at locked-in discount rate | 27,026 | | 8,790 | | 6,247 | | | | | 27,465 | | 9,024 | | 6,560 | | | |
| Effect of changes in discount rate assumptions | 1,290 | | 70 | | (380) | | | | | 12,831 | | 3,305 | | 1,363 | | | |
| Balance, end of year | $ | 28,316 | | $ | 8,860 | | $ | 5,868 | | | | | $ | 40,296 | | $ | 12,328 | | $ | 7,923 | | | |
| Net future policy benefit reserves | $ | 24,256 | | $ | 8,860 | | $ | 1,040 | | | | | $ | 34,644 | | $ | 12,328 | | $ | 1,301 | | | |
| Less: Reinsurance recoverables, net of allowance for credit losses | (171) | | — | | (67) | | | | | (6,473) | | — | | (87) | | | |
| Net future policy benefit reserves, after reinsurance recoverables | $ | 24,085 | | $ | 8,860 | | $ | 973 | | | | | $ | 28,171 | | $ | 12,328 | | $ | 1,214 | | | |
The Statement of $3,394Earnings (Loss) for the three months ended March 31, 2023 and 2022, included gross premiums or assessments of $214 million isand $229 million and interest accretion of $435 million and $436 million, respectively. For the three months ended March 31, 2023 and 2022, gross premiums or assessments was substantially all related to long-term care of $124 million and $123 million and life of $84 million and $98 million while interest accretion was substantially all related to long-term care of $310 million and $306 million and structured settlement annuities of $115 million and $119 million, respectively.
The Statement of Earnings (Loss) for the years ended December 31, 2022 and 2021, included gross premiums or assessments of $935 million and $967 million and interest accretion of $1,735 million and $1,730 million, respectively. For the years ended December 31, 2022 and 2021, gross premiums or assessments was substantially all related to long-term care of $490 million and $487 million and life of $415 million and $448 million while interest accretion was substantially all related to long-term care of $1,224 million and $1,194 million and structured settlement annuities of $471 million and $491 million, respectively.
The following table provides the amount of undiscounted and discounted expected future gross premiums and expected future benefits and expenses for nonparticipating traditional contracts.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | March 31, 2022 | December 31, 2022 | December 31, 2021 |
| Undiscounted | Discounted(a) | Undiscounted | Discounted(a) | Undiscounted | Discounted(a) | Undiscounted | Discounted(a) |
| Long-term care | | | | | | | | |
| Gross premiums | $ | 7,924 | | $ | 5,105 | | $ | 8,052 | | $ | 5,599 | | $ | 7,985 | | $ | 4,918 | | $ | 8,173 | | $ | 6,187 | |
| Benefit payments | 64,944 | | 30,271 | | 67,254 | | 35,277 | | 65,217 | | 28,316 | | 67,516 | | 40,296 | |
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| Structured settlement annuities | | | | | | | | |
| Benefit payments | 19,745 | | 9,349 | | 20,482 | | 10,848 | | 19,936 | | 8,860 | | 20,666 | | 12,328 | |
| Life | | | | | | | | |
| Gross premiums | 13,537 | | 6,104 | | 14,676 | | 7,311 | | 13,754 | | 5,916 | | 14,579 | | 8,275 | |
| Benefit payments | 11,800 | | 6,025 | | 12,709 | | 7,058 | | 12,020 | | 5,868 | | 12,702 | | 7,923 | |
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(a) Determined using the current discount rate as of March 31, 2023 and 2022 and December 31, 2022 and 2021.
The following table provides the weighted-average durations of and weighted-average interest rates for the liability for future policy benefits.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | March 31, 2022 | December 31, 2022 | December 31, 2021 |
| Long-term care | Structured settlement annuities | Life | Long-term care | Structured settlement annuities | Life | Long-term care | Structured settlement annuities | Life | Long-term care | Structured settlement annuities | Life |
| Duration (years)(a) | 13.2 | 11.2 | 5.3 | 14.6 | 12.2 | 6.1 | 13.0 | 10.7 | 5.0 | 15.5 | 13.2 | 6.3 |
| Interest accretion rate | 5.5% | 5.4% | 5.1% | 5.5% | 5.4% | 5.1% | 5.5% | 5.4% | 4.9% | 5.3% | 5.5% | 4.8% |
| Current discount rate | 5.0% | 5.0% | 4.8% | 4.0% | 4.0% | 3.8% | 5.6% | 5.5% | 5.4% | 3.1% | 3.1% | 2.6% |
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(a) Duration determined using the current discount rate as of March 31, 2023 and 2022 and December 31, 2022 and 2021.
We completed our annual review of future policy benefit reserves cash flow assumptions in our run-off insurance portfolio in the third quarter of 2022 and 2021. As a result of our 2022 review, we made changes to assumptions, principally related to assumed moderately higher near-term mortality related to COVID-19. Our 2021 review resulted in changes to our assumptions principally related to favorable adjustments to long-term care claim continuance and utilization, unfavorable emerging lapse experience associated with 20-year level term life policies following the decline in unrealized gains on investment securities.end of their 20-year level premium period, and unfavorable structured settlement annuity mortality at older ages for impaired lives.
Claim reserve activity included incurred claimsIncluded in Insurance losses and annuity benefits in our Statement of $1,236 million and $1,264 million, of which insignificant amounts related toEarnings (Loss) for the recognition of adjustments to prior year claim reserves arising from our periodic reserve evaluation in the nine monthsyears ended September 30,December 31, 2022 and 2021 respectively. Paid claims were $1,261are favorable pre-tax adjustments of $404 million and $1,290$408 million, respectively, from updating the net premium ratio after updating for actual historical experience each quarter and updating of future cash flow assumptions in the nine monthsthird quarter of each year. Included in these amounts for the years ended September 30,December 31, 2022 and 2021, are unfavorable adjustments of $190 million and $58 million, respectively, due to insufficient gross premiums (i.e., net premium ratio exceeded 100%), related to certain cohorts in our long-term care and life insurance portfolios in 2022 and our life portfolio in 2021. These adjustments are primarily attributable to adverse claim experience and delays in premium rate increase approvals in our long-term care insurance portfolio and moderately higher mortality experience and assumption changes related to COVID-19 in our life insurance portfolio.
At March 31, 2023 and 2022, policyholders account balances totaled $1,921 million and $2,095 million, respectively. As our insurance operations are in run-off, changes in policyholder account balances for the three months ended March 31, 2023 and 2022, are primarily attributed to surrenders, withdrawals, and benefit payments of $120 million and $115 million, partially offset by net additions from separate accounts and interest credited of $75 million and $81 million, respectively. Interest on policyholder account balances is being credited at minimum guaranteed rates, primarily between 3.0% and 6.0% at both March 31, 2023 and 2022.
At December 31, 2022 and 2021, policyholders account balances totaled $1,964 million and $2,124 million. As our insurance operations are in run-off, changes in policyholder account balances for the years ended December 31, 2022 and 2021, are primarily attributed to surrenders, withdrawals, and benefit payments of $441 million and $475 million, partially offset by net additions from separate accounts and interest credited of $271 million and $326 million, respectively. Interest on policyholder account balances is being credited at minimum guaranteed rates, primarily between 3.0% and 6.0% at both December 31, 2022 and 2021.
Reinsurance recoverables, net of allowances of $2,113 million and $1,654 million, are included in non-current All other assets in our Statement of Financial Position, and amounted to $2,305$277 million, $255 million and $2,651$6,596 million at September 30, 2022March 31, 2023 and December 31, 2022 and 2021, respectively. The vast majority of our remaining net reinsurance recoverables are secured by assets held in a trust for which we are the beneficiary.Allowances at March 31, 2023 and December 31, 2022 were insignificant and were $2,065 million at December 31, 2021.
In the third quarter of 2022, we agreed to terminate substantially all long-term care insurance exposures previously ceded to a single reinsurance company (recapture transaction). In connection with and recorded an increase to our allowance for credit losses on such reinsurance recoverables of $350 million (pre-tax) ($276 million (after-tax)) which is unrelated to changes in claim experience or projections of future policy benefit reserves. Upon closing of the recapture transaction which is effective in the fourth quarter of 2022, we expect to receivereceived a net portfolio of investment securities with an estimated fair value of $2,396 million in complete settlement of reinsurance recoverables previously recognized under retrocession agreements with the reinsurance company, which representrepresented substantially all of our reinsurance recoverables balance as of September 30, 2022. In the third quarter 2022 weand recorded an increase toincremental loss of $55 million (pre-tax) ($43 million (after-tax)).
The recapture transaction reduces both our allowance for credit losses on suchfinancial and operational risks by removing the future inherent risk of collectability of reinsurance recoverables, of $415 million (pre-tax) ($328 million (after-tax)), reflectingeliminating retrocession contracts having complex terms of the recapture transaction and the $2,464 million estimated fair valueconditions, assuming direct control of the portfolio of investment securities expectedheld in a trust for our benefit and redeploying those assets consistent with our portfolio realignment strategy and establishing administration service standards intended to be receivedenhance claim administration and innovation efforts. The effect of the recapture agreement does not increase our long-term care insurance liabilities as under the existing retrocession agreements we were not previously relieved of our primary obligation to companies from which we originally assumed the liabilities.
Statutory accounting practices, not GAAP, determine the required statutory capital levels of our 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. We annually perform statutory asset adequacy testing, the fourth quarter 2022, and is unrelatedresults of which may affect the amount or timing of capital contributions from GE to changes in claim experience or projections of future policy benefit reserves.the insurance legal entities.
Premium Deficiency Testing
2023 1Q FORM 10-Q . We completed36
Following approval of a statutory permitted accounting practice in 2018 by our annual premium deficiency testing inprimary regulator, the aggregate acrossKansas Insurance Department (KID), we provided a total of $13,215 million of capital contributions to our run-off insurance portfoliosubsidiaries, including $1,815 million in the thirdfirst quarter of 2022. These procedures included updating certain experience studies since our last test completed2023. In accordance with the terms of the 2018 statutory permitted accounting practice, we expect to provide the final capital contribution of approximately $1,820 million in the thirdfirst quarter of 2021, independent actuarial analysis (principally on long-term care2024, pending completion of our December 31, 2023 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 exposures) and reviewsubsidiaries under which GE is required to maintain their statutory capital levels at 300% of industry benchmarks. Using updated assumptions, the 2022 premium deficiency testing results indicated a positive margin of about 10% of the related future policy benefit reserves recorded at September 30, 2022, or approximately equivalenttheir year-end Authorized Control Level risk-based capital requirements as defined from time to the 2021 premium deficiency testing results. The premium deficiency testing margin in 2022 was impacted by a lower discount rate in our Employers Reassurance Corporation (ERAC) portfolio due to the recapture transaction, as explained above, partially offset by higher prevailing benchmark interest rates in the U.S. The portfolio of investment securities expected to be received from the recapture transaction were assumed to be invested at yields below ERAC’s current portfolio yield before ultimately grading to the long-term average investment yield as we realign the portfolio over time. This effect was partially offsettime by the net impact from assumed moderately higher near-term mortalityNAIC.
See Notes 1 and 3 for further information related to COVID-19 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). Excluding the net impact from assumed moderately higher near-term mortality related to COVID-19, we have made no substantial change to our assumptions concerning morbidity, morbidity improvement, mortality, mortality improvement, terminations, or long-term care insurance premium rate increases in 2022. 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.
We are in process of converting our long-term care insurance claim cost projection models to first principles models and expect to maintain a positive margin in connection with these changes.operations.
NOTE 13.14. 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. Please refer to Note 1213 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 20212022 for further information.information about our plans before the Separation. In connection with the Separation, certain of these plans were split into three and net liabilities of approximately $4.0 billion associated with GE’s postretirement benefit plans were transferred to GE HealthCare. Information about the plans remaining with GE after the Separation is provided below.
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| DESCRIPTION OF OUR PLANS | | |
| Plan Category | Participants | Funding | Comments |
| Principal Pension Plans | GE Energy Pension Plan and GE Aerospace Pension Plan | Covers U.S. participants ~115,000 retirees and beneficiaries, ~50,000 vested former employees and ~16,500 active employees | Our 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. | Closed to new participants since 2012. Benefits for 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 October 2019). |
| GE Energy Supplementary Pension Plan GE Aerospace Supplementary Pension Plan | Provides supplementary benefits to higher-level, longer-service U.S. employees | 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 employees who became executives before 2011 were frozen effective January 1, 2021, and thereafter these employees accrue the installment benefit. |
| Other Pension Plans(a) | 35 U.S. and non-U.S. pension plans with pension assets or obligations that have reached $50 million | Covers ~42,500 retirees and beneficiaries, ~29,500 vested former employees and ~8,000 active employees | Our 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 Plans | Provides health and life insurance benefits to certain eligible participants | Covers U.S. participants of Power and Renewable Energy (will be part of GE Vernova, GE's portfolio of energy businesses) and Aerospace ~93,500 retirees and dependents and ~15,500 active employees | We 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. |
(a) Plans for Power and Renewable Energy (will be part of GE Vernova) and Aerospace that reach $50 million. Plans are not removed from the presentation unless part of a disposition or plan termination.
The components of benefit plans cost other than the service cost are included in the caption Non-operating benefit costs in our consolidated Statement of Earnings (Loss).
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| PRINCIPAL PENSION PLANS | Three months ended September 30 | | Nine months ended September 30 |
| 2022 | 2021 | | 2022 | 2021 |
| Service cost for benefits earned | $ | 48 | | $ | 57 | | | $ | 146 | | $ | 179 | |
| Prior service cost amortization | 1 | | 8 | | | 4 | | 22 | |
| Expected return on plan assets | (785) | | (763) | | | (2,356) | | (2,288) | |
| Interest cost on benefit obligations | 518 | | 488 | | | 1,551 | | 1,464 | |
| Net actuarial loss amortization | 355 | | 871 | | | 1,067 | | 2,613 | |
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| Benefit plans cost | $ | 137 | | $ | 661 | | | $ | 412 | | $ | 1,990 | |
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| PRINCIPAL PENSION PLANS | Three months ended March 31 |
| 2023 | 2022 |
| Service cost for benefits earned | $ | 21 | | $ | 49 | |
| | |
| Expected return on plan assets | (594) | | (786) | |
| Interest cost on benefit obligations | 474 | | 517 | |
| Net actuarial loss amortization and other | (172) | | 363 | |
| Net periodic expense (income) | (271) | | 143 | |
| Less discontinued operations | $ | — | | $ | 49 | |
| Continuing operations – net periodic expense (income) | $ | (271) | | $ | 94 | |
Principal retiree benefit plans income was $53 million and $43$36 million for the three months ended September 30, 2022March 31, 2023 and 2021, and $158$52 million, and $125of which $33 million is from continuing operations, for the ninethree months ended September 30, 2022 and 2021, respectively.March 31, 2022. Other pension plans income was $94 million and $57$29 million for the three months ended September 30, 2022March 31, 2023 and 2021, and $310$117 million, and $44of which $89 million is from continuing operations, for the ninethree months ended September 30, 2022 and 2021, respectively, which includes a curtailment loss of $77 million in 2021 resulting from freezing the UK pension plans.March 31, 2022.
We also have a defined contribution plan for eligible U.S. employees that provides employer contributions whichcontributions. Defined contribution plan costs were $109 million and $99$77 million for the three months ended September 30, 2022March 31, 2023 and 2021, and $333$110 million, and $321of which $79 million is from continuing operations, for the ninethree months ended September 30, 2022 and 2021, respectively.March 31, 2022.
2022 3Q FORM 10-Q 37Post Separation, we expect to pay approximately $230 million in total for benefit payments under our GE Energy Supplementary Pension Plan and GE Aerospace Supplementary Pension Plan and administrative expenses of our principal pension plans and expect to contribute approximately $100 million to other pension plans in 2023. We fund retiree health benefits on a pay-as-you-go basis and the retiree life insurance trust at our discretion. Post Separation, we would expect to contribute approximately $230 million in 2023 to fund such benefits.
NOTE 14.15. CURRENT AND ALL OTHER LIABILITIES. All other current liabilities and All other liabilities primarily includes liabilities for customer sales allowances, equipment project and commercial liabilities, loss contracts, employee compensation and benefits, income taxes payable and uncertain tax positions, operating lease liabilities (see Note 6), environmental, health and safety remediations and product warranties (see Note 21)23). All other current liabilities increased $1,117$183 million in the ninethree months ended September 30, 2022,March 31, 2023, primarily due to increases in fair markettaxes payable of derivative liabilities$175 million, sales discounts and allowances of $889$135 million and sales allowances, equipment projects and other commercial liabilities of $537$120 million partially offset by a decrease in employee compensation and benefitsderivative instruments of $454$195 million. All other liabilities decreased $1,474$125 million in the ninethree months ended September 30, 2022,March 31, 2023, primarily due to decreases in uncertaindecreased equipment projects and other income taxes and relatedcommercial liabilities of $688 million, operating lease liabilities of $344 million and interest payable of $178$181 million.
NOTE 15.16. INCOME TAXES. Our income tax rate was (65.6)%4.2% and 149.5%(2.5)% for the ninethree months ended September 30,March 31, 2023 and 2022, respectively. The low tax rate for 2023 was primarily due to the unrealized gain on our investment in GE HealthCare, which is expected to be recovered tax-free. We intend to dispose of our investment in a manner consistent with the tax-free treatment confirmed in our Internal Revenue Service (IRS) ruling in connection with the spin of GE HealthCare. This was partially offset by separation income tax costs including disallowed expenses and 2021, respectively.valuation allowances related to the spin of GE HealthCare and by losses in foreign jurisdictions that are not likely to be utilized. The tax rate for 2022 reflects a tax provision on a pre-tax loss. The rate was negative primarily due to non-tax benefited asset impairment charges, losses in foreign jurisdictions that are not likely to be utilized and the net unrealized capital loss on our interest in AerCap and Baker Hughes for which the loss could not be tax benefited, losses in foreign jurisdictions where they are not likely to be utilized, non-tax benefited asset impairment charges and the global intangible minimum tax provisions partially offset by U.S. business credits. The tax rate for 2021 reflects a tax benefit on a pre-tax loss. The rate for 2021 is higher than the U.S. statutory rate on the loss primarily due to tax benefits associated with internal restructurings to recognize deductible stock and loan losses. This was partially offset by the cost of global activities, including the global intangible minimum tax provisions and an adjustment to increase the 2021 nine-month tax rate to be in-line with the expected full-year rate.benefited.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act that includes a new alternative minimum taxCorporate Alternative Minimum Tax (CAMT) based upon financial statement income, (book minimum tax), an excise tax on stock buybacks and tax incentives for energy and climate initiatives, among other provisions. The new book minimum taxCAMT is expected to slow but not eliminate the favorable tax impact of our deferred tax assets, resulting in higher cash tax in some years that would generate future tax credits.benefits. The impact of the book minimum taxCAMT will depend on our facts in each year and anticipated guidance from the U.S. Department of the Treasury. Separately, we are assessing the tax incentivesWe currently do not expect to incur CAMT in the legislation which could change our pre-tax or after-tax amounts and impact our tax rate.2023.
The Internal Revenue Service (IRS)IRS is currently auditing our consolidated U.S. income tax returns for 2016-2018.
NOTE 16.17. SHAREHOLDERS’ EQUITY
| | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | Three months ended September 30 | | Nine months ended September 30 | | |
| (Dividends per share in dollars) | 2022 | 2021 | | 2022 | 2021 | | |
| | | | Three months ended March 31 | |
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Dividends per share in dollars) | | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Dividends per share in dollars) | | 2023 | 2022 | |
| | Beginning balance | Beginning balance | $ | (5,510) | | $ | (4,146) | | | $ | (4,562) | | $ | (4,386) | | | Beginning balance | | $ | (5,893) | | $ | (4,569) | | |
| AOCI before reclasses – net of taxes of $69, $5, $204 and $(51) | (912) | | (158) | | | (1,858) | | 82 | | | |
| Reclasses from AOCI – net of taxes of $—, $—, $— and $— | — | | — | | | — | | — | | | |
| AOCI before reclasses – net of taxes of $(5) and $90 | | AOCI before reclasses – net of taxes of $(5) and $90 | | 152 | | (181) | | |
| Reclasses from AOCI – net of taxes of $(626) and $0(a) | | Reclasses from AOCI – net of taxes of $(626) and $0(a) | | 2,234 | | — | | |
| AOCI | AOCI | (912) | | (158) | | | (1,858) | | 81 | | | AOCI | | 2,387 | | (181) | | |
| Less AOCI attributable to noncontrolling interests | Less AOCI attributable to noncontrolling interests | (4) | | 1 | | | (2) | | 1 | | | Less AOCI attributable to noncontrolling interests | | (1) | | (4) | | |
| Currency translation adjustments AOCI | Currency translation adjustments AOCI | $ | (6,419) | | $ | (4,305) | | | $ | (6,419) | | $ | (4,305) | | | Currency translation adjustments AOCI | | $ | (3,505) | | $ | (4,746) | | |
| | Beginning balance | Beginning balance | $ | 4,173 | | $ | (3,777) | | | $ | 3,646 | | $ | (5,395) | | | Beginning balance | | $ | 6,531 | | $ | 3,646 | | |
| AOCI before reclasses – net of taxes of $24, $16, $81 and $(5) | 66 | | 91 | | | 217 | | 264 | | | |
| Reclasses from AOCI – net of taxes of $53, $192, $159 and $592 | 193 | | 662 | | | 571 | | 2,108 | | | |
| AOCI before reclasses – net of taxes of $(13) and $25 | | AOCI before reclasses – net of taxes of $(13) and $25 | | (84) | | 54 | | |
| Reclasses from AOCI – net of taxes of $(594) and $55(a) | | Reclasses from AOCI – net of taxes of $(594) and $55(a) | | (2,235) | | 186 | | |
| AOCI | AOCI | 259 | | 753 | | | 788 | | 2,372 | | | AOCI | | (2,319) | | 240 | | |
| Less AOCI attributable to noncontrolling interests | Less AOCI attributable to noncontrolling interests | — | | 2 | | | 2 | | 4 | | | Less AOCI attributable to noncontrolling interests | | (2) | | 2 | | |
| Benefit plans AOCI | Benefit plans AOCI | $ | 4,432 | | $ | (3,026) | | | $ | 4,432 | | $ | (3,026) | | | Benefit plans AOCI | | $ | 4,214 | | $ | 3,884 | | |
| | Beginning balance | Beginning balance | $ | (514) | | $ | 103 | | | $ | 2,498 | | $ | 32 | | | Beginning balance | | $ | (1,927) | | $ | 5,172 | | |
| AOCI before reclasses –net of taxes of $(494), $576, $(1,302) and $566(a) | (1,894) | | 2,152 | | | (4,920) | | 2,201 | | | |
| Reclasses from AOCI – net of taxes of $3, $3, $10 and $13 | (10) | | (1) | | | 4 | | 21 | | | |
| AOCI before reclasses – net of taxes of $188 and $(801) | | AOCI before reclasses – net of taxes of $188 and $(801) | | 718 | | (2,993) | | |
| Reclasses from AOCI – net of taxes of $0 and $1(a) | | Reclasses from AOCI – net of taxes of $0 and $1(a) | | (12) | | (5) | | |
| AOCI | AOCI | (1,904) | | 2,151 | | | (4,916) | | 2,222 | | | AOCI | | 706 | | (2,998) | | |
| | Investment securities and cash flow hedges AOCI | Investment securities and cash flow hedges AOCI | $ | (2,418) | | $ | 2,254 | | | $ | (2,418) | | $ | 2,254 | | | Investment securities and cash flow hedges AOCI | | $ | (1,222) | | $ | 2,174 | | |
| | AOCI at September 30 | $ | (4,405) | | $ | (5,078) | | | $ | (4,405) | | $ | (5,078) | | | |
| Beginning balance | | Beginning balance | | $ | (983) | | $ | (9,109) | | |
| AOCI before reclasses – net of taxes of $(477) and $979 | | AOCI before reclasses – net of taxes of $(477) and $979 | | (1,793) | | 3,682 | | |
| | AOCI | | AOCI | | (1,793) | | 3,682 | | |
| Long-duration insurance contracts AOCI | | Long-duration insurance contracts AOCI | | $ | (2,776) | | $ | (5,427) | | |
| | AOCI at March 31 | | AOCI at March 31 | | $ | (3,289) | | $ | (4,115) | | |
| | Dividends declared per common share | Dividends declared per common share | $ | 0.08 | | $ | 0.08 | | | $ | 0.24 | | $ | 0.24 | | | Dividends declared per common share | | $ | 0.08 | | $ | 0.08 | | |
(a) Included adjustmentsThe total reclassification from AOCI included $195 million, including currency translation of zero$2,234 million and $2,456benefit plans of $(2,030) million, for thenet of taxes, in three months ended September 30, 2022 and 2021, respectively and $2,681 million and $3,350 million for the nine months ended September 30, 2022 and 2021, respectivelyMarch 31, 2023 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 12 for further information.spin-off of GE HealthCare.
From time to time we repurchase outstanding shares ofPreferred stock. GE preferred stock shares outstanding were 2,795,444 and we repurchased $1045,795,444 at March 31, 2023 and December 31, 2022, respectively. We redeemed $3,000 million of GE Series D preferred stock in the thirdfirst quarter of 2022.2023.
Common stock. GE common stock shares outstanding were 1,088,960,029 and 1,089,107,878 at March 31, 2023 and December 31, 2022, respectively. For further information on our common and preferred stock issuances, and redeemable noncontrolling interests, please refer to our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
NOTE 17.18. EARNINGS PER SHARE INFORMATION
| | | | | | | | | | | | | | | | | |
| Three months ended September 30 | 2022 | | 2021 |
| (Earnings for per-share calculation, shares in millions, per-share amounts in dollars) | Diluted | Basic | | Diluted | Basic |
| Earnings (loss) from continuing operations | $ | (80) | | $ | (80) | | | $ | 654 | | $ | 654 | |
| Preferred stock dividends | (73) | | (73) | | | (52) | | (52) | |
| Accretion of redeemable noncontrolling interests, net of tax | — | | — | | | (9) | | (9) | |
| Accretion of preferred share repurchase | 3 | | 3 | | | — | | — | |
| Earnings (loss) from continuing operations attributable to common shareholders | (150) | | (150) | | | 593 | | 593 | |
| Earnings (loss) from discontinued operations | (85) | | (85) | | | 602 | | 602 | |
| Net earnings (loss) attributable to GE common shareholders | (234) | | (234) | | | 1,195 | | 1,195 | |
| | | | | |
| Shares of GE common stock outstanding | 1,095 | | 1,095 | | | 1,098 | | 1,098 | |
| Employee compensation-related shares (including stock options) | — | | — | | | 7 | | — | |
| Total average equivalent shares | 1,095 | | 1,095 | | | 1,105 | | 1,098 | |
| | | | | |
| Earnings (loss) per share from continuing operations | $ | (0.14) | | $ | (0.14) | | | $ | 0.54 | | $ | 0.54 | |
| Earnings (loss) per share from discontinued operations | (0.08) | | (0.08) | | | 0.54 | | 0.55 | |
| Net earnings (loss) per share | (0.21) | | (0.21) | | | 1.08 | | 1.09 | |
| | | | | |
| Potentially dilutive securities(a) | 49 | | | | 37 | | |
| | Nine months ended September 30 | 2022 | | 2021 | | |
| Three months ended March 31 | | Three months ended March 31 | 2023 | | 2022 |
| (Earnings for per-share calculation, shares in millions, per-share amounts in dollars) | (Earnings for per-share calculation, shares in millions, per-share amounts in dollars) | Diluted | Basic | | Diluted | Basic | | (Earnings for per-share calculation, shares in millions, per-share amounts in dollars) | Diluted | Basic | | Diluted | Basic |
| Earnings (loss) from continuing operations | | Earnings (loss) from continuing operations | $ | 6,242 | | $ | 6,248 | | | $ | (1,224) | | $ | (1,224) | |
| Preferred stock dividends and other(a) | | Preferred stock dividends and other(a) | (145) | | (145) | | | (52) | | (52) | |
| | | Earnings (loss) from continuing operations | $ | (1,417) | | $ | (1,417) | | | $ | 179 | | $ | 179 | | | |
| Preferred stock dividends | (192) | | (192) | | | (180) | | (180) | | | |
| Accretion of redeemable noncontrolling interests, net of tax | — | | — | | | (9) | | (9) | | | |
| Accretion of preferred share repurchase | 3 | | 3 | | | — | | — | | | |
| Earnings (loss) from continuing operations attributable to common shareholders | Earnings (loss) from continuing operations attributable to common shareholders | (1,606) | | (1,606) | | | (11) | | (11) | | | Earnings (loss) from continuing operations attributable to common shareholders | 6,097 | | 6,103 | | | (1,276) | | (1,276) | |
| Earnings (loss) from discontinued operations | Earnings (loss) from discontinued operations | (580) | | (580) | | | (2,856) | | (2,856) | | | Earnings (loss) from discontinued operations | 1,257 | | 1,257 | | | 88 | | 88 | |
| Net earnings (loss) attributable to GE common shareholders | Net earnings (loss) attributable to GE common shareholders | (2,186) | | (2,186) | | | (2,866) | | (2,866) | | | Net earnings (loss) attributable to GE common shareholders | 7,354 | | 7,360 | | | (1,188) | | (1,188) | |
| | Shares of GE common stock outstanding | Shares of GE common stock outstanding | 1,097 | | 1,097 | | | 1,097 | | 1,097 | | | Shares of GE common stock outstanding | 1,089 | | 1,089 | | | 1,100 | | 1,100 | |
| Employee compensation-related shares (including stock options) | Employee compensation-related shares (including stock options) | — | | — | | | — | | — | | | Employee compensation-related shares (including stock options) | 8 | | — | | | — | | — | |
| Total average equivalent shares | Total average equivalent shares | 1,097 | | 1,097 | | | 1,097 | | 1,097 | | | Total average equivalent shares | 1,097 | | 1,089 | | | 1,100 | | 1,100 | |
| | Earnings (loss) from continuing operations | $ | (1.46) | | $ | (1.46) | | | $ | (0.01) | | $ | (0.01) | | | |
| Earnings (loss) from discontinued operations | (0.53) | | (0.53) | | | (2.60) | | (2.60) | | | |
| Earnings (loss) per share from continuing operations | | Earnings (loss) per share from continuing operations | $ | 5.56 | | $ | 5.60 | | | $ | (1.16) | | $ | (1.16) | |
| Earnings (loss) per share from discontinued operations | | Earnings (loss) per share from discontinued operations | 1.15 | | 1.15 | | | 0.08 | | 0.08 | |
| Net earnings (loss) per share | Net earnings (loss) per share | (1.99) | | (1.99) | | | (2.61) | | (2.61) | | | Net earnings (loss) per share | 6.71 | | 6.76 | | | (1.08) | | (1.08) | |
| | Potentially dilutive securities(a) | 46 | | | 42 | | | | |
| Potentially dilutive securities(b) | | Potentially dilutive securities(b) | 38 | | | 43 | | |
(a) For the three months ended March 31, 2023, included $(30) million related to excise tax on preferred share redemption.
(b) Outstanding stock awards not included in the computation of diluted earnings (loss) per share because their effect was 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 three and nine months ended September 30,March 31, 2023, application of this treatment had an insignificant effect. For the three months ended March 31, 2022, as a result of the loss from continuing operations, losses were not allocated to the participating securities. For the three months ended September 30, 2021, application of this treatment had an insignificant effect. For the nine months ended September 30, 2021, as a result of the loss from continuing operations, losses were not allocated to the participating securities.
NOTE 18. OTHER INCOME (LOSS)
| | | | | | | | | | | | | | | | | |
| | | | |
| Three months ended September 30 | | Nine months ended September 30 |
| 2022 | 2021 | | 2022 | 2021 |
| Purchases and sales of business interests(a) | $ | 22 | | $ | (153) | | | $ | 42 | | $ | (155) | |
| Licensing and royalty income | 57 | | 54 | | | 157 | | 141 | |
| Equity method income | 16 | | (149) | | | 141 | | (112) | |
| Investment in Baker Hughes realized and unrealized gain (loss) | (238) | | 359 | | | 818 | | 1,028 | |
| Investment in and note with AerCap unrealized gain (loss) | 138 | | — | | | (2,669) | | — | |
| Other net interest and investment income (loss) | 125 | | 133 | | | 256 | | 517 | |
| Other items | 76 | | 108 | | | 314 | | 339 | |
| Total other income (loss) | $ | 195 | | $ | 351 | | | $ | (941) | | $ | 1,757 | |
(a) Included a pre-tax loss of $172 million related to the sale of our boiler manufacturing business in China in our Power segment for the three and nine months ended September 30, 2021. See Note 2 for further information.
2022 3Q2023 1Q FORM 10-Q 39
NOTE 19. OTHER INCOME (LOSS)
| | | | | | | | | | | | |
| | | Three months ended March 31 | |
| | | | 2023 | 2022 | |
| | | | | | |
| Licensing and royalty income | | | | $ | 34 | | $ | 57 | | |
| Equity method income | | | | — | | 38 | | |
| Investment in GE HealthCare unrealized gain (loss) | | | | 6,093 | | — | | |
| Investment in and note with AerCap realized and unrealized gain (loss) | | | | (195) | | (1,736) | | |
| Investment in Baker Hughes realized and unrealized gain (loss) | | | | 10 | | 1,515 | | |
| | | | | | |
| Other net interest and investment income (loss) | | | | 186 | | 93 | | |
| Other items | | | | (48) | | 82 | | |
| Total other income (loss) | | | | $ | 6,081 | | $ | 49 | | |
Our investment in GE HealthCare comprises 90.3 million shares (approximately 19.9% ownership interest) at March 31, 2023. Our investment in AerCap comprises 79.7 million ordinary shares (approximately 33% ownership interest) at March 31, 2023 and an AerCap senior note. During the first quarter of 2023, we received total proceeds of $1,808 million from the sale of AerCap shares. During the first quarter of 2023, we received proceeds of $216 million from the sale of Baker Hughes shares and have now fully monetized our position.
NOTE 20. RESTRUCTURING CHARGES AND SEPARATION COSTS
RESTRUCTURING AND OTHER CHARGES. This table is inclusive of all restructuring charges in our segments and at Corporate, and the charges are shown below for the business where they originated. Separately, in our reported segment results, significant, higher-cost restructuring programs are excluded from measurement of segment operating performance for internal and external purposes; those excluded amounts are reported in Restructuring and other charges for Corporate.
| | | | | | | | | | | | |
| | | Three months ended March 31 | |
| RESTRUCTURING AND OTHER CHARGES | | | | 2023 | 2022 | |
| Workforce reductions | | | | $ | 66 | | $ | 13 | | |
| Plant closures & associated costs and other asset write-downs | | | | 82 | | 26 | | |
| Acquisition/disposition net charges and other | | | | 12 | | 9 | | |
| Total restructuring and other charges | | | | $ | 161 | | $ | 48 | | |
| | | | | | |
| Cost of equipment/services | | | | $ | 36 | | $ | 27 | | |
| Selling, general and administrative expenses | | | | 125 | | 25 | | |
| Other (income) loss | | | | — | | (3) | | |
| Total restructuring and other charges | | | | $ | 161 | | $ | 48 | | |
| | | | | | |
| Aerospace | | | | $ | 4 | | $ | 5 | | |
| Renewable Energy | | | | 65 | | 6 | | |
| Power | | | | 19 | | 34 | | |
| Corporate | | | | 72 | | 3 | | |
| Total restructuring and other charges | | | | $ | 161 | | $ | 48 | | |
| Restructuring and other charges cash expenditures | | | | $ | 137 | | $ | 127 | | |
An analysis of changes in the liability for restructuring follows.
| | | | | | | | | | | | |
| | | | 2023 | 2022 | |
| Balance at January 1 | | | | $ | 977 | | $ | 825 | | |
| Additions | | | | 86 | | 9 | | |
| Payments | | | | (87) | | (115) | | |
| Effect of foreign currency and other | | | | — | | (9) | | |
| Balance at March 31(a) | | | | $ | 976 | | $ | 710 | | |
(a) Includes actuarial determined post-employment severance benefits reserve of $353 million and $322 million as of March 31, 2023 and 2022, respectively. Also includes $64 million reserve in discontinued operations related to a GE technology contract which is indemnified by GE HealthCare as of March 31, 2023.
For the three months ended March 31, 2023, restructuring and other initiatives primarily included exit activities related to the restructuring program announced in the fourth quarter of 2022 reflecting lower Corporate shared-service and footprint needs as a result of the GE HealthCare spin-off. It also includes exit activities associated with the plan announced in the fourth quarter of 2022 to undertake a restructuring program across our businesses planned to be part of GE Vernova, primarily reflecting the selectivity strategy to operate in fewer markets and to simplify and standardize product variants at Renewable Energy. We recorded total charges of $161 million, consisting of $75 million primarily in non-cash impairment, accelerated depreciation and other charges, not reflected in the table above, and $86 million primarily in employee workforce reduction and contract related charges, which are reflected in the table above. We incurred $137 million in cash outflows related to restructuring actions, primarily for employee severance payments.
For the three months ended March 31, 2022, restructuring and other initiatives primarily included exit activities at our Power business related to our new coal build wind-down actions announced in the third quarter of 2021, which included the exit of certain product lines, closing certain manufacturing and office facilities, and workforce reduction programs. We recorded total charges of $48 million, consisting of $39 million primarily in non-cash impairment, accelerated depreciation and other charges, not reflected in the table above, and $9 million primarily in employee workforce reduction charges, which are reflected in the table above. We incurred $127 million in cash outflows related to restructuring actions, primarily for employee severance payments.
SEPARATION COSTS. In November 2021, the company announced its plan to form three industry-leading, global public companies focused on the growth sectors of aviation, healthcare, and energy. As a result of this plan, we expect to incur separation, transition, and operational costs, which will depend on specifics of the transactions.
For the three months ended March 31, 2023, we incurred pre-tax separation expense of $205 million and paid $204 million in cash primarily related to employee costs, professional fees, costs to establish certain stand-alone functions and information technology systems, and other transformation and transaction costs to transition to three stand-alone public companies. These costs are presented as separation costs in our consolidated Statement of Earnings (Loss). In addition, we incurred $56 million of net tax expense, including taxes associated with planned legal entity restructuring and changes to indefinite reinvestment of foreign earnings. For the three months ended March 31, 2022, we incurred pre-tax separation costs of $99 million, spent $3 million in cash, and recognized $24 million of net tax expense related to separation activities.
As discussed in Note 2, GE completed the previously announced separation of its HealthCare business into a separate, independent publicly traded company, GE HealthCare Technologies Inc. (GE HealthCare). As a result, pre-tax separation costs specifically identifiable to GE HealthCare are now reflected in discontinued operations. We incurred $20 million in pre-tax costs and recognized $4 million of tax benefits for both the three months ended March 31, 2023 and 2022, and spent $85 million in cash related to GE HealthCare for the three months ended March 31, 2023.
NOTE 19.21. FINANCIAL INSTRUMENTS. 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.
| | | September 30, 2022 | | December 31, 2021 | | March 31, 2023 | | December 31, 2022 |
| | Carrying
amount
(net) | Estimated
fair value | | Carrying
amount
(net) | Estimated
fair value | | Carrying
amount
(net) | Estimated
fair value | | Carrying
amount
(net) | Estimated
fair value |
| Assets | Assets | Loans and other receivables | $ | 2,799 | | $ | 2,657 | | | $ | 2,706 | | $ | 2,853 | | Assets | Loans and other receivables | $ | 2,427 | | $ | 2,275 | | | $ | 2,557 | | $ | 2,418 | |
| | Liabilities | Liabilities | Borrowings (Note 11) | $ | 30,405 | | $ | 29,198 | | | $ | 35,186 | | $ | 41,207 | | Liabilities | Borrowings (Note 11) | $ | 22,421 | | $ | 21,586 | | | $ | 24,059 | | $ | 22,849 | |
| | Investment contracts (Note 12) | 1,809 | | 1,877 | | | 1,909 | | 2,282 | | | Investment contracts (Note 13) | 1,667 | | 1,736 | | | 1,708 | | 1,758 | |
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. We use derivatives to manage currency risks related to foreign exchange, and interest rate and currency risk between financial assets and liabilities, and certain equity investments and commodity prices.
| | | | | | | | | | | | | | | | | | | | | | | |
| FAIR VALUE OF DERIVATIVES | September 30, 2022 | | December 31, 2021 |
| Gross Notional | All other assets | All other liabilities | | Gross Notional | All other assets | All other liabilities |
| Currency exchange contracts | $ | 6,477 | | $ | 330 | | $ | 262 | | | $ | 7,214 | | $ | 114 | | $ | 122 | |
| Interest rate contracts | 50 | | 2 | | 1 | | | 2,071 | | 75 | | 4 | |
| Derivatives accounted for as hedges | $ | 6,527 | | $ | 333 | | $ | 263 | | | $ | 9,285 | | $ | 188 | | $ | 126 | |
| | | | | | | |
| Currency exchange contracts | $ | 53,416 | | $ | 1,682 | | $ | 2,390 | | | $ | 64,097 | | $ | 794 | | $ | 756 | |
| Interest rate contracts | 155 | 8 | 0 | | 1369 | 5 | 1 |
| Other contracts | 1,662 | | 218 | | 53 | | | 1,674 | | 387 | | 10 | |
| Derivatives not accounted for as hedges | $ | 55,234 | | $ | 1,909 | | $ | 2,443 | | | $ | 67,140 | | $ | 1,186 | | $ | 767 | |
| | | | | | | |
| Gross derivatives | $ | 61,761 | | $ | 2,241 | | $ | 2,706 | | | $ | 76,425 | | $ | 1,374 | | $ | 893 | |
| | | | | | | |
| Netting and credit adjustments | | $ | (1,433) | | $ | (1,433) | | | | $ | (637) | | $ | (639) | |
| Cash collateral adjustments | | — | | (173) | | | | (54) | | (42) | |
| Net derivatives recognized in statement of financial position | | $ | 808 | | $ | 1,101 | | | | $ | 684 | | $ | 212 | |
| | | | | | | |
| Net accrued interest | | $ | — | | $ | — | | | | $ | 10 | | $ | 5 | |
| Securities held as collateral | | — | | — | | | | (2) | | — | |
| Net amount | | $ | 808 | | $ | 1,101 | | | | $ | 691 | | $ | 217 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| FAIR VALUE OF DERIVATIVES | March 31, 2023 | | December 31, 2022 |
| Gross Notional | All other assets | All other liabilities | | Gross Notional | All other assets | All other liabilities |
| Currency exchange contracts | $ | 4,648 | | $ | 138 | | $ | 100 | | | $ | 5,112 | | $ | 132 | | $ | 146 | |
| | | | | | | |
| Derivatives accounted for as hedges | $ | 4,648 | | $ | 138 | | $ | 100 | | | $ | 5,112 | | $ | 132 | | $ | 146 | |
| | | | | | | |
| Currency exchange contracts | $ | 58,595 | | $ | 917 | | $ | 871 | | | $ | 51,885 | | $ | 946 | | $ | 1,082 | |
| Interest rate contracts | 30 | | — | | — | | | 43 | | — | | 1 | |
| Other contracts | 652 | | 154 | | 9 | | | 858 | | 197 | | 13 | |
| Derivatives not accounted for as hedges | $ | 59,277 | | $ | 1,071 | | $ | 880 | | | $ | 52,786 | | $ | 1,143 | | $ | 1,095 | |
| | | | | | | |
| Gross derivatives | $ | 63,925 | | $ | 1,208 | | $ | 980 | | | $ | 57,898 | | $ | 1,275 | | $ | 1,241 | |
| | | | | | | |
| Netting and credit adjustments | | $ | (756) | | $ | (755) | | | | $ | (821) | | $ | (820) | |
| | | | | | | |
| Net derivatives recognized in statement of financial position | | $ | 452 | | $ | 225 | | | | $ | 454 | | $ | 420 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
FAIR VALUE HEDGES. At September 30, 2022,As of March 31, 2023, all fair value hedges were terminated due to exposure management actions, including debt maturities. Gains (losses) associated with the terminated hedging relationships will continue to amortize into interest expense until the bondshedged borrowings mature. The cumulative amount of hedging adjustments of $1,693$1,226 million (all on discontinued hedging relationships) was included in the carrying amount of the previously hedged liability of $13,825$8,817 million. At September 30, 2021,March 31, 2022, the cumulative amount of hedging adjustments of $3,788$1,931 million (including $2,579$2,011 million on discontinued hedging relationships) was included in the carrying amount of the previously hedged liability of $32,679$15,636 million. The cumulative amount of hedging adjustments was primarily recorded in long-term borrowings.
CASH FLOW HEDGES AND NET INVESTMENT HEDGES
| | Gain (loss) recognized in AOCI for the three months ended September 30 | | Gain (loss) recognized in AOCI for the nine months ended September 30 | |
| Gain (loss) recognized in AOCI | | Gain (loss) recognized in AOCI | | Three months ended March 31 |
| | 2022 | 2021 | | 2022 | 2021 | | | | 2023 | 2022 | |
| Cash flow hedges(a) | Cash flow hedges(a) | $ | (64) | | $ | (30) | | | $ | (187) | | $ | 1 | | | Cash flow hedges(a) | | $ | 28 | | $ | (47) | | |
| Net investment hedges(b) | Net investment hedges(b) | 396 | | 191 | | | 691 | | 290 | | | Net investment hedges(b) | | (62) | | 112 | | |
(a) Primarily related to currency exchange and interest rate contracts.
(b) The carrying value of foreign currency debt designated as net investment hedges was $3,019$3,398 million and $4,449$3,934 million at September 30,as of March 31, 2023 and 2022, and 2021, respectively. The total reclassified from AOCI into earnings was insignificantzero for both the three and nine months ended September 30, 2022March 31, 2023 and 2021.2022.
Changes in the fair value of cash flow hedges are recorded in AOCI and recorded in earnings in the period in which the hedged transaction occurs. The total amount in AOCI related to cash flow hedges of forecasted transactions was a $108$25 million loss at September 30, 2022.as of March 31, 2023. We expect to reclassify $72$8 million of loss to earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. At September 30, 2022,As of March 31, 2023, the maximum term of derivative instruments that hedge forecasted transactions was approximately 1312 years.
The table below presents the gains (losses) of our derivative financial instruments in the Statement of Earnings (Loss):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, 2022 | | Three months ended September 30, 2021 |
| Revenues | | Interest Expense | SG&A | Other(a) | | Revenues | Debt Extinguishment Costs | Interest Expense | SG&A | Other(a) |
| $ | 19,084 | | | $ | 390 | | $ | 2,868 | | $ | 14,567 | | | $ | 18,569 | | $ | — | | $ | 462 | | $ | 2,745 | | $ | 13,752 | |
| | | | | | | | | | | |
Effect of cash flow
hedges | $ | (3) | | | $ | (4) | | $ | (1) | | $ | 6 | | | $ | 6 | | | $ | (7) | | $ | — | | $ | (18) | |
| | | | | | | | | | | |
| Hedged items | | | | | | | | | 190 | | | |
| Derivatives designated as hedging instruments | | | | | | | | | (241) | | | |
| Effect of fair value hedges | | | | | | | | | $ | (52) | | | |
| | | | | | | | | | | |
Currency exchange
contracts | $ | — | | | | $ | 59 | | $ | (521) | | | $ | 2 | | | $ | (18) | | $ | (66) | | $ | (149) | |
Interest rate, commodity
and equity contracts(b) | 1 | | | | (26) | | 56 | | | — | | | 2 | | 1 | | 41 | |
| Effect of derivatives not designated as hedges | $ | 1 | | | $ | — | | $ | 33 | | $ | (465) | | | $ | 2 | | $ | — | | $ | (17) | | $ | (65) | | $ | (109) | |
| | | | Three months ended March 31, 2023 | | Three months ended March 31, 2022 |
| | Nine months ended September 30, 2022 | | Nine months ended September 30, 2021 | |
| | Revenues | | Interest Expense | SG&A | Other(a) | | Revenues | Debt Extinguishment Costs | Interest Expense | SG&A | Other(a) | | Revenues | | Interest Expense | SG&A | Other(a) | | Revenues | | Interest Expense | SG&A | Other(a) |
| | $ | 54,769 | | | $ | 1,191 | | $ | 9,239 | | $ | 39,127 | | | $ | 53,893 | | $ | 1,416 | | $ | 1,450 | | $ | 8,503 | | $ | 41,315 | | | $ | 14,486 | | | $ | 269 | | $ | 2,142 | | $ | 16,810 | | | $ | 12,675 | | | $ | 387 | | $ | 2,725 | | $ | 9,823 | |
| | Effect of cash flow hedges | Effect of cash flow hedges | $ | 1 | | | $ | (17) | | $ | (1) | | $ | (46) | | | $ | 20 | | | $ | (29) | | $ | 1 | | $ | (38) | | Effect of cash flow hedges | $ | 1 | | | $ | (2) | | $ | — | | $ | (2) | | | $ | 3 | | | $ | (7) | | $ | — | | $ | (32) | |
| | Hedged items | Hedged items | | | 127 | | | 1,375 | | | Hedged items | | | | | 78 | | |
| Derivatives designated as hedging instruments | Derivatives designated as hedging instruments | | | (143) | | | (1,510) | | | Derivatives designated as hedging instruments | | | | | (87) | | |
| Effect of fair value hedges | Effect of fair value hedges | | | $ | (16) | | | $ | (135) | | | Effect of fair value hedges | | | | | $ | (9) | | |
| | Currency exchange contracts | Currency exchange contracts | $ | — | | | | $ | (236) | | $ | (829) | | | $ | (4) | | | $ | (18) | | $ | 48 | | $ | 251 | | Currency exchange contracts | $ | 2 | | | $ | — | | $ | 76 | | $ | (47) | | | $ | 1 | | | | $ | (68) | | $ | (81) | |
Interest rate, commodity
and equity contracts(b) | Interest rate, commodity
and equity contracts(b) | 3 | | | | (185) | | 226 | | | 2 | | 48 | | — | | 113 | | 160 | | Interest rate, commodity
and equity contracts(b) | | | — | | 39 | | (11) | | | 1 | | | | (37) | | 15 | |
| Effect of derivatives not designated as hedges | Effect of derivatives not designated as hedges | $ | 3 | | | $ | — | | $ | (421) | | $ | (603) | | | $ | (1) | | $ | 48 | | $ | (19) | | $ | 161 | | $ | 411 | | Effect of derivatives not designated as hedges | $ | 2 | | | $ | — | | $ | 115 | | $ | (58) | | | $ | 1 | | | $ | — | | $ | (105) | | $ | (66) | |
|
(a) Amounts are inclusive of cost of sales and other income (loss).
(b) SG&A was primarily driven by hedges of deferred incentive compensation, and other income (loss) by hedges of Baker Hughes equity sale. Bothremeasurement of monetary assets and liabilities. These hedging programs were to offset the earnings impact of the underlying.
COUNTERPARTY CREDIT RISK. Our exposures to counterparties (including accrued interest), net of collateral we held, was $473were $325 million and $564$306 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. Counterparties' exposures to our derivative liability (including accrued interest), net of collateral posted by us, was $905were $170 million and $159$365 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively.
NOTE 20.22. VARIABLE INTEREST ENTITIES. In our Statement of Financial Position, we have assets of $434$404 million and $491$401 million and liabilities of $204$192 million and $206 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, in consolidated Variable Interest Entities (VIEs). 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.
Our investments in unconsolidated VIEs were $5,596$6,088 million and $5,034$5,917 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. Of these investments, $1,412$1,462 million and $1,481 million were owned by EFS, comprising equity method investments, primarily renewable energy tax equity investments, at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. In addition, $3,970$4,411 million and $3,333$4,219 million were owned by our run-off insurance operations, primarily comprising investment securitiesequity method investments at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. The increase in investments in unconsolidated VIEs in our run-off insurance operations reflects 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 21.23.
NOTE 21.23. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES
COMMITMENTS. We had total investment commitments of $4,131$3,966 million at September 30, 2022.March 31, 2023. The commitments primarily comprise investments by our run-off insurance operations in investment securities and other assets of $3,915$3,868 million and included within these commitments are obligations to make investments in unconsolidated VIEs of $3,843$3,761 million. See Note 2022 for further information.
As of September 30, 2022,March 31, 2023, in our Aerospace segment, we have committed to provide financing assistance of $2,390 million of future customer acquisitions of aircraft equipped with our engines.
GUARANTEES. Indemnification agreements - Discontinued Operations. Following the Separation of GE HealthCare on January 3, 2023, GE has remaining performance and bank guarantees on behalf of its former HealthCare business. Under the Separation Distribution Agreement (SDA) entered into by the Company and GE HealthCare in connection with the Separation, GE HealthCare is obligated to use reasonable best efforts to replace GE as the guarantor on or terminate all such credit support instruments. Until such termination or replacement, in the event of non-fulfillment of contractual obligations by the relevant obligor(s), GE could be obligated to make payments under the applicable instruments. Under the SDA, GE HealthCare is obligated to reimburse and indemnify GE for any such payments. As of March 31, 2023, GE’s maximum aggregate exposure under such credit support instruments was $76 million. Most of these guarantees are not expected to remain in effect as of December 31, 2023. GE also has obligations under the Transition Services Agreement to indemnify GE HealthCare for certain of its technology costs of $70 million, which are expected to be incurred by GE HealthCare within the first year following the Separation and are fully reserved, and under the Tax Matters Agreement to indemnify GE HealthCare for certain tax costs of $47 million, which are fully reserved. In addition, we have provided specific indemnities to other buyers of assets of our business that, in the aggregate, represent a maximum potential claim of $706 million with related reserves of $76 million.
Indemnification agreements – Continuing Operations.GE has obligations under the Tax Matters Agreement to indemnify GE HealthCare for certain tax costs and other indemnifications of $49 million, which are fully reserved. In addition, we have $520 million of other indemnification commitments, including representations and warranties in sales of business assets, for which we recorded a liability of $78 million.
For further information on credit support and indemnification agreements, see our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
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 theThe liability for product warranties follows.
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| 2022 | 2021 |
| Balance at January 1 | $ | 1,891 | | $ | 2,054 | |
| Current-year provisions(a) | 1,017 | | 628 |
| Expenditures | (712) | | (696) | |
| Other changes | (145) | | (72) | |
| Balance as of September 30 | $ | 2,051 | | $ | 1,914 | |
(a) The increase in current-year provisions is primarily related to Renewable Energy, which was substantially all due to changes in estimates on pre-existing warranties$1,932 million and related to the deployment of repairs$1,960 million at March 31, 2023 and other corrective measures.December 31, 2022, respectively.
LEGAL MATTERS. The following information supplements and amends the discussion of Legal Matters in Note 2224 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021 and Note 21 to the consolidated financial statements in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022; refer to those discussionsthat discussion for information about previously reported legal matters that are not updated below. In 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.
Alstom legacy legal matters. In 2015, we acquired the Steam Power, Renewables and Grid businesses from Alstom, which prior to our acquisition were the subject of significant cases involving anti-competitive activities and improper payments. We had reserves of $492$420 million and $567$455 million at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, for legal and compliance matters related to the legacy business practices that were the subject of cases in various jurisdictions. Allegations in these cases relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations 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 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. 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 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.
Shareholder and related lawsuits. Bank BPHSince 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 April 2022, the court granted the plaintiffs' motion for class certification for shareholders who acquired stock between February 26, 2016 and January 23, 2018, and granted the plaintiffs’ request to amend their complaint. In September 2022, GE filed a motion for summary judgment on the plaintiffs' remaining claims.
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 six institutional investors who purchased GE common stock between August 1, 2014 and October 30, 2018 and rescission of those purchases. In May 2021, the plaintiffs filed an amended complaint, and GE in June 2021 filed a motion to dismiss that complaint. In September 2022, the court granted GE’s motion to the dismiss the plaintiffs’ case with no opportunity to replead their case.
GE Retirement Savings Plan class actions. Four 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 the Employee Retirement Income Security Act (ERISA) in their oversight of the GE RSP, principally by retaining five 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 one count of the complaint and denying GE's motion to dismiss the remaining counts. In September 2022, both GE and the plaintiffs filed motions for summary judgment on the remaining claims.
Bank BPH. As previously reported, Bank BPH, along with other Polish banks, has been subject to ongoing litigation in Poland related to its portfolio of floating rate residential mortgage loans, with cases brought by individual borrowers seeking relief related to their foreign currency indexed or denominated mortgage loans in various courts throughout Poland. At September 30, 2022,March 31, 2023, approximately 88%86% 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 reserves, of $1,276$1,126 million. We continue to observe an increase in the number of lawsuits being brought against Bank BPH and other banks in Poland by current and former borrowers, and we expect this to continue in future reporting periods.
We estimate 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. At September 30, 2022,March 31, 2023, the total amount of such estimated losses was $1,117$1,540 million. 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 established. The increase in the amount of estimated losses during the thirdfirst quarter of 20222023 was driven primarily by increased findings of liability and increases in the number of lawsuits filed and estimated to be filed in the future and increased findings of liability.filed. We expect the trends we have previously reported of an increasing number of lawsuits being filed and estimated to be filed in the future, more findings of liability and more severe remedies being ordered against Polish banks (including Bank BPH) to continue 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 amounts 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 an expected ECJ ruling that could adversely impact the remedy cost to Polish banks upon a finding of liability and the Polish Supreme Court binding resolution delivered verbally in May 2021 with written reasoning issued in July 2021)encourage more borrower lawsuits) on how Polish courts will interpret and apply the law in particular cases and how borrower behavior may change in response, neither of which are known immediately upon the issuance of a decision or resolution; financial, economic and other conditions in Poland that may adversely affect borrowers; 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 indexed or denominated mortgage loans to Polish zlotys using an exchange rate applicable at the date of loan origination, and about the success of the various settlement strategies or other approaches that Polish banks have increasingly adopted or will adopt, or that Bank BPH may adopt in the future, in response to this proposal, regulatory encouragement or other factors, the approaches that regulators and other government authorities will adopt in response, and the receptivity of borrowers to settlement offers.offers; the financial and capital impact on banks that adopt settlement programs; the ability of banks, including Bank BPH, to continue collecting installment payments under existing loans, including principal, interest and foreign exchange margins; the ability of banks, including Bank BPH, to recover from borrowers the original principal amount of loans invalidated by Polish courts; and any potential legislation that may be passed in Poland relating to foreign exchange indexed or denominated mortgage loans. In addition, there is continued uncertainty arising from investigations of the Polish Office of Competition and Consumer Protection (UOKiK), including existing or anticipated UOKiK and court decisions resulting from those investigations, particularly UOKiK's investigation into the adequacy of disclosure of foreign exchange risk by banks (including Bank BPH) and the legality under Polish law of unlimited foreign exchange risk on customers. Future adverse developmentschanges related to any of the foregoing or in Bank BPH's approach, or other adverse developments such as actions by regulators, legislators or other governmental authorities (including UOKiK), likely would have a material adverse effect on Bank BPH and the carrying value of its mortgage loan portfolio as well as result in additional required capital contributions to Bank BPH or significant losses beyond the amounts that we currently estimate.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS. For further information about environmental, health and safety matters, see the Legal Proceedings section of this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022.
2022 3Q2023 1Q FORM 10-Q 4344
EXHIBITS
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| Exhibit 101. The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022,March 31, 2023, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, (ii) Statement of Financial Position at September 30, 2022March 31, 2023 and December 31, 2021,2022, (iii) Statement of Cash Flows for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, (iv) Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, (v) Statement of Changes in Shareholders' Equity for the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, and (vi) Notes to Consolidated Financial Statements. |
| Exhibit 104. Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| | *Filed electronically herewith |
†Certain portions of this exhibit have been redacted pursuant to Item 601(b)(2)(ii) and Item 601(b)(10)(iv) of Regulation S-K, as applicable. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.
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| FORM 10-Q CROSS REFERENCE INDEX | | Page(s) |
| Part I – FINANCIAL INFORMATION |
| Item 1. | | Financial Statements | | |
| Item 2. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | |
| Item 3. | | Quantitative and Qualitative Disclosures About Market Risk | | 14, 4112, 42 |
| Item 4. | | Controls and Procedures | | |
Part II – OTHER INFORMATION |
| Item 1. | | Legal Proceedings | | |
| Item 1A. | | Risk Factors | | Not applicable(a) |
| Item 2. | | Unregistered Sales of Equity Securities and Use of Proceeds | | |
| Item 3. | | Defaults Upon Senior Securities | | Not applicable |
| Item 4. | | Mine Safety Disclosures | | Not applicable |
| Item 5. | | Other Information | | Not applicable |
| Item 6. | | Exhibits | | |
| Signatures | | |
(a) There have been no material changes to our risk factors since March 31, 2022. For a discussion of our risk factors, refer to our Annual Report on Form 10-K for the year ended December 31, 2021, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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OctoberApril 25, 20222023 | | /s/ Thomas S. Timko |
| Date | | Thomas S. Timko Vice President, Chief Accounting Officer and Controller Principal Accounting Officer |
2022 3Q2023 1Q FORM 10-Q 4445
