General Electric 8K Results of Operations and Financial Condition | GE 30 Oct 18



GENERAL ELECTRIC COMPANY
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED)
	Consolidated								GE(a)								Financial Services (GE Capital)
Three months ended September 30	2018			2017			V%		2018			2017			V%		2018			2017			V%
Revenues
Sales of goods and services	$	27,465		$	28,764		(5	)%	$	27,456		$	28,774		(5	)%	$	37		$	39		(5	)%
GE Capital revenues from services	2,109			1,898					—			—					2,436			2,359
Total revenues	29,573			30,662			(4	)%	27,456			28,774			(5	)%	2,473			2,397			3	%
Costs and expenses
Cost of sales	22,846			23,672					22,349			23,099					530			621
Selling, general and administrative expenses	4,855			4,741					4,660			4,604					332			284
Interest and other financial charges	1,227			1,232					662			718					704			790
Investment contracts, insurance losses and
insurance annuity benefits	710			617					—			—					732			640
Goodwill impairment	21,973			947					21,973			947					—			—
Non-operating benefit costs	807			611					804			610					2			1
Other costs and expenses	98			261					—			—					115			271
Total costs and expenses	52,515			32,082			64	%	50,449			29,978			68	%	2,416			2,608			(7	)%

Other income	205			2,165					201			2,160					—			—
GE Capital earnings (loss) from continuing operations	—			—					19			24					—			—

Earnings (loss) from continuing operations
before income taxes	(22,736		)	746			U		(22,774		)	981			U		57			(211		)	F
Benefit (provision) for income taxes	(162		)	551					(205		)	281					43			270
Earnings (loss) from continuing operations	(22,899		)	1,297			U		(22,979		)	1,261			U		99			59			68	%
Earnings (loss) from discontinued
operations, net of taxes	39			(106		)			39			(105		)			40			(106		)
Net earnings (loss)	(22,859		)	1,191			U		(22,940		)	1,156			U		139			(47		)	F
Less net earnings (loss) attributable to
noncontrolling interests	(90		)	(169		)			(132		)	(168		)			42			(2		)
Net earnings (loss) attributable to the Company	(22,769		)	1,360			U		(22,808		)	1,324			U		98			(46		)	F
Preferred stock dividends	(39		)	(36		)			—			—					(39		)	(36		)
Net earnings (loss) attributable to
GE common shareowners	$	(22,808	)	$	1,324		U		$	(22,808	)	$	1,324		U		$	59		$	(81	)	F
Amounts attributable to GE common shareowners:
Earnings (loss) from continuing operations	$	(22,899	)	$	1,297		U		$	(22,979	)	$	1,261		U		$	99		$	59		68	%
Less net earnings (loss) attributable
to noncontrolling interests, continuing operations	(90		)	(169		)			(132		)	(168		)			42			(1		)
Earnings (loss) from continuing operations
attributable to the Company	(22,808		)	1,465			U		(22,847		)	1,429			U		58			60			(3	)%
Preferred stock dividends	(39		)	(36		)			—			—					(39		)	(36		)
Earnings (loss) from continuing operations
attributable to GE common shareowners	(22,847		)	1,429			U		(22,847		)	1,429			U		19			24			(21	)%
Earnings (loss) from discontinued
operations, net of taxes	39			(106		)			39			(105		)			40			(106		)
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations	—			(1		)			—			—					—			(1		)
Net earnings (loss) attributable to GE
common shareowners	$	(22,808	)	$	1,324		U		$	(22,808	)	$	1,324		U		$	59		$	(81	)	F
Per-share amounts - earnings (loss) from
continuing operations
Diluted earnings (loss) per share	$	(2.63	)	$	0.16		U
Basic earnings (loss) per share	$	(2.63	)	$	0.16		U
Per-share amounts - net earnings (loss)
Diluted earnings (loss) per share	$	(2.62	)	$	0.15		U
Basic earnings (loss) per share	$	(2.62	)	$	0.15		U
Total average equivalent shares
Diluted	8,694			8,732			—	%
Basic	8,694			8,665			—	%
Dividends declared per common share	$	0.12		$	0.24		(50	)%

(a) Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.

Amounts may not add due to rounding. Dollar amounts and share amounts in millions; per-share amounts in dollars.

"GE Capital" means GE Capital Global Holdings, LLC (GECGH) and all of their affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GE Capital)." Transactions between GE and GE Capital have been eliminated from the "Consolidated" column. See Note 1 to the 2017 consolidated financial statements at www.ge.com/ar2017 for further information about consolidation matters.



GENERAL ELECTRIC COMPANY
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED)
	Consolidated								GE(a)								Financial Services (GE Capital)
Nine months ended September 30	2018			2017			V%		2018			2017			V%		2018			2017			V%
Revenues
Sales of goods and services	$	82,432		$	80,456		2	%	$	82,429		$	80,683		2	%	$	100		$	101		(1	)%
GE Capital revenues from services	5,905			6,184					—			—					6,975			7,424
Total revenues	88,337			86,640			2	%	82,429			80,683			2	%	7,075			7,525			(6	)%
Costs and expenses
Cost of sales	66,795			65,525					65,253			64,101					1,651			1,753
Selling, general and administrative expenses	13,547			13,180					12,990			12,199					987			1,346
Interest and other financial charges	3,807			3,545					1,995			1,918					2,296			2,373
Investment contracts, insurance losses and
insurance annuity benefits	2,009			1,908					—			—					2,071			1,958
Goodwill impairment	21,973			947					21,973			947					—			—
Non-operating benefit costs	2,188			1,824					2,178			1,811					9			12
Other costs and expenses	286			584					—			—					328			629
Total costs and expenses	110,604			87,512			26	%	104,390			80,977			29	%	7,342			8,070			(9	)%

Other income	1,275			2,692					1,237			2,659					—			—
GE Capital earnings (loss) from continuing operations	—			—					(403		)	(195		)			—			—

Earnings (loss) from continuing operations
before income taxes	(20,992		)	1,820			U		(21,128		)	2,170			U		(268		)	(545		)	51	%
Benefit (provision) for income taxes	(677		)	693					(842		)	93					165			600
Earnings (loss) from continuing operations	(21,670		)	2,513			U		(21,970		)	2,263			U		(103		)	55			U
Earnings (loss) from discontinued
operations, net of taxes	(1,634		)	(490		)			(1,634		)	(497		)			(1,579		)	(494		)
Net earnings (loss)	(23,304		)	2,023			U		(23,604		)	1,766			U		(1,682		)	(439		)	U
Less net earnings (loss) attributable to
noncontrolling interests	(188		)	(312		)			(228		)	(316		)			40			5
Net earnings (loss) attributable to the Company	(23,116		)	2,334			U		(23,376		)	2,082			U		(1,722		)	(443		)	U
Preferred stock dividends	(260		)	(252		)			—			—					(260		)	(252		)
Net earnings (loss) attributable to
GE common shareowners	$	(23,376	)	$	2,082		U		$	(23,376	)	$	2,082		U		$	(1,982	)	$	(695	)	U
Amounts attributable to GE common shareowners:
Earnings (loss) from continuing operations	$	(21,670	)	$	2,513		U		$	(21,970	)	$	2,263		U		$	(103	)	$	55		U
Less net earnings (loss) attributable
to noncontrolling interests, continuing operations	(188		)	(318		)			(228		)	(316		)			40			(2		)
Earnings (loss) from continuing operations
attributable to the Company	(21,482		)	2,831			U		(21,742		)	2,579			U		(143		)	57			U
Preferred stock dividends	(260		)	(252		)			—			—					(260		)	(252		)
Earnings (loss) from continuing operations
attributable to GE common shareowners	(21,742		)	2,579			U		(21,742		)	2,579			U		(403		)	(195		)	U
Earnings (loss) from discontinued
operations, net of taxes	(1,634		)	(490		)			(1,634		)	(497		)			(1,579		)	(494		)
Less net earnings (loss) attributable to
noncontrolling interests, discontinued operations	—			6					—			—					—			6
Net earnings (loss) attributable to GE
common shareowners	$	(23,376	)	$	2,082		U		$	(23,376	)	$	2,082		U		$	(1,982	)	$	(695	)	U
Per-share amounts - earnings (loss) from
continuing operations
Diluted earnings (loss) per share	$	(2.50	)	$	0.29		U
Basic earnings (loss) per share	$	(2.50	)	$	0.30		U
Per-share amounts - net earnings (loss)
Diluted earnings (loss) per share	$	(2.69	)	$	0.24		U
Basic earnings (loss) per share	$	(2.69	)	$	0.24		U
Total average equivalent shares
Diluted	8,689			8,774			(1	)%
Basic	8,689			8,689			—	%
Dividends declared per common share	$	0.36		$	0.72		(50	)%

(a) Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.

Amounts may not add due to rounding. Dollar amounts and share amounts in millions; per-share amounts in dollars.



GENERAL ELECTRIC COMPANY
SUMMARY OF OPERATING SEGMENTS (UNAUDITED)
	Three months ended September 30								Nine months ended September 30
(Dollars in millions)	2018			2017			V%		2018			2017			V%
Revenues(a)
Power	$	5,739		$	8,527		(33	)%	$	20,540		$	25,868		(21	)%
Renewable Energy	2,873			2,507			15	%	6,172			6,587			(6	)%
Aviation	7,480			6,696			12	%	22,111			20,003			11	%
Oil & Gas	5,670			5,311			7	%	16,609			11,394			46	%
Healthcare	4,707			4,710			—	%	14,387			13,703			5	%
Transportation	932			949			(2	)%	2,746			3,006			(9	)%
Lighting	385			472			(18	)%	1,272			1,407			(10	)%
Total industrial segment revenues	27,785			29,171			(5	)%	83,837			81,967			2	%
Capital	2,473			2,397			3	%	7,075			7,525			(6	)%
Total segment revenues	30,258			31,569			(4	)%	90,912			89,491			2	%
Corporate items and eliminations(a)	(685		)	(907		)	24	%	(2,575		)	(2,851		)	10	%
Consolidated revenues	$	29,573		$	30,662		(4	)%	$	88,337		$	86,640		2	%
Segment profit (loss)(a)
Power	$	(631	)	$	464		U		$	64		$	1,896		(97	)%
Renewable Energy	60			217			(72	)%	220			445			(51	)%
Aviation	1,665			1,335			25	%	4,743			3,982			19	%
Oil & Gas	180			(57		)	F		110			322			(66	)%
Healthcare	861			847			2	%	2,522			2,335			8	%
Transportation	162			141			15	%	448			420			7	%
Lighting	26			14			86	%	52			41			27	%
Total industrial segment profit	2,325			2,961			(21	)%	8,157			9,441			(14	)%
Capital	19			24			(21	)%	(403		)	(195		)	U
Total segment profit (loss)	2,344			2,985			(21	)%	7,753			9,246			(16	)%
Corporate items and eliminations(a)	(1,546		)	439			U		(2,507		)	(2,083		)	(20	)%
Goodwill impairment	(21,973		)	(947		)	U		(21,973		)	(947		)	U
GE interest and other financial charges	(662		)	(718		)	8	%	(1,995		)	(1,918		)	(4	)%
GE non-operating benefit costs	(804		)	(610		)	(32	)%	(2,178		)	(1,811		)	(20	)%
GE benefit (provision) for income taxes	(205		)	281			U		(842		)	93			U
Earnings (loss) from continuing operations
attributable to GE common shareowners	(22,847		)	1,429			U		(21,742		)	2,579			U
Earnings (loss) from discontinued operations,
net of taxes	39			(106		)	F		(1,634		)	(490		)	U
Less net earnings attributable to
noncontrolling interests, discontinued operations	—			(1		)	F		—			6			U
Earnings (loss) from discontinued operations,
net of tax and noncontrolling interests	39			(105		)	F		(1,634		)	(497		)	U
Consolidated net earnings (loss)
attributable to GE common shareowners	$	(22,808	)	$	1,324		U		$	(23,376	)	$	2,082		U

(a)

Segment revenues include sales of products and services related to the segment. Segment profit excludes results reported as discontinued operations and material accounting changes other than those applied retrospectively, goodwill impairment, restructuring and other charges (with the exception of Oil & Gas), the portion of earnings or loss attributable to noncontrolling interests of consolidated subsidiaries, and as such only includes the portion of earnings or loss attributable to our share of the consolidated earnings or loss of consolidated subsidiaries. Segment profit excludes or includes interest and other financial charges, non-operating benefit costs, income taxes, and preferred stock dividends according to how a particular segment's management is measured – excluded in determining segment profit for Power, Renewable Energy, Aviation, Oil & Gas, Healthcare, Transportation and Lighting; included in determining segment profit, which we sometimes refer to as "net earnings," for Capital. Other income is included in segment profit for the industrial segments. Certain corporate costs, such as shared services, employee benefits and information technology are allocated to our segments based on usage. A portion of the remaining corporate costs is allocated based on each segment's relative net cost of operations. Industrial segment revenues and profit include the sum of our seven industrial reporting segments without giving effect to the elimination of transactions among such segments and between these segments and our financial services segment. Total segment revenues and profit include the sum of our seven industrial segments and one financial services segment, without giving effect to the elimination of transactions among such segments. We believe that this provides investors with a view as to the results of all of our segments, without inter-segment eliminations and corporate items.

Amounts may not add due to rounding



GENERAL ELECTRIC COMPANY
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
	Consolidated				GE(a)				Financial Services (GE Capital)
	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
(Dollars in billions)	2018		2017		2018		2017		2018		2017
Assets
Cash, cash equivalents and restricted cash and marketable securities(b)(c)	$	61.7	$	82.7	$	14.7	$	19.4	$	47.0	$	63.4
Receivables	20.4		24.2		14.9		14.6		—		—
Inventories	20.6		19.4		20.6		19.3		0.1		0.1
GE Capital financing receivables - net	7.9		10.3		—		—		15.7		22.0
Property, plant & equipment - net	50.6		53.9		22.0		24.0		29.4		30.6
Receivable from GE Capital	—		—		23.3		39.8		—		—
Investment in GE Capital	—		—		11.7		13.5		—		—
Goodwill & intangible assets	79.2		104.2		78.0		103.0		1.2		1.2
Contract assets	20.9		20.4		20.9		20.4		—		—
Other assets	41.0		44.1		19.2		21.4		30.5		33.5
Assets of businesses held for sale	4.6		4.2		4.3		3.8		—		—
Assets of discontinued operations	4.7		5.9		—		—		4.7		5.9
Total assets	$	311.7	$	369.2	$	229.5	$	279.3	$	128.5	$	156.7
Liabilities and equity
Borrowings(d)	$	115.0	$	134.6	$	69.6	$	81.6	$	70.3	$	95.2
Investment contracts, insurance liabilities and
insurance annuity benefits	35.6		38.1		—		—		36.1		38.6
Non-current compensation and benefits	34.3		41.6		33.5		40.8		0.8		0.8
Other liabilities	75.2		76.0		76.7		78.9		7.8		7.7
Liabilities of businesses held for sale	1.4		1.2		1.4		1.2		—		—
Liabilities of discontinued operations	2.0		0.7		0.1		—		1.9		0.7
Redeemable noncontrolling interests	0.4		3.4		0.4		3.4		—		—
GE shareowners' equity	31.5		56.0		31.5		56.0		11.7		13.5
Noncontrolling interests	16.4		17.5		16.4		17.3		—		0.2
Total liabilities and equity	$	311.7	$	369.2	$	229.5	$	279.3	$	128.5	$	156.7


(a)	Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.

(b)

At September 30, 2018, GE Capital maintained liquidity sources of $13.8 billion that consisted of cash, cash equivalents and restricted cash of $13.1 billion, high-quality investments of $0.2 billion and cash, cash equivalents and restricted cash of $0.4 billion classified as discontinued operations. Additionally, at September 30, 2018, GE has $47.5 billion ($40.8 billion net of offset provisions) of committed credit lines, consisting primarily of a $20 billion unused syndicated credit facility extended by 36 banks expiring in 2021, a $19.8 billion unused syndicated credit facility extended by six banks expiring in 2020, and $3.6 billion of credit facilities extended by seven banks with expiration dates ranging from February 2019 to May 2019. GE Capital has the right to compel GE to borrow under certain of these credit lines and transfer the proceeds as loans to GE Capital, which would be subject to the same terms and conditions as those between GE and the lending banks.


(c)	Balance included consolidated restricted cash of $0.5 billion and $0.7 billion at September 30, 2018 and December 31, 2017, respectively. GE restricted cash was $0.4 billion and $0.6 billion at September 30, 2018 and December 31, 2017, respectively, and GE Capital restricted cash was $0.1 billion at both September 30, 2018 and December 31, 2017.


(d)	GE borrowings includes commercial paper of $3 billion at both September 30, 2018 and December 31, 2017. GE Capital borrowings includes commercial paper of $3 billion and $5 billion at September 30, 2018 and December 31, 2017, respectively.

Amounts may not add due to rounding

GENERAL ELECTRIC COMPANY

Financial Measures That Supplement GAAP

We sometimes use financial measures derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. The following non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure.


•	Adjusted earnings (loss)


•	Adjusted earnings (loss) per share (EPS)


•	Adjusted GE Industrial profit and profit margin (excluding certain items)


•	GE Industrial segment organic revenues


•	Healthcare organic revenues


•	Adjusted Oil & Gas segment profit and profit margin


•	GE Industrial free cash flows (FCF) and adjusted GE Industrial FCF

The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow. Certain columns, rows or percentages within these reconciliations may not add or recalculate due to the use of rounded numbers. Totals and percentages presented are calculated from the underlying numbers in millions.



ADJUSTED EARNINGS (LOSS) (NON-GAAP)
	Three months ended September 30								Nine months ended September 30
(In millions)	2018			2017			V%		2018			2017			V%

Consolidated earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	$	(22,847	)	$	1,429		U		$	(21,742	)	$	2,579		U
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	19			24					(403		)	(195		)
GE Industrial earnings (loss) (Non-GAAP)	(22,866		)	1,405			U		(21,339		)	2,774			U

Non-operating benefits costs (pre-tax) (GAAP)	(804		)	(610		)			(2,178		)	(1,811		)
Tax effect on non-operating benefit costs(a)	169			214					457			634
Less: non-operating benefit costs (net of tax)	(636		)	(397		)			(1,721		)	(1,177		)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)	207			1,885					450			1,887
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(b)	(89		)	(45		)			(190		)	(46		)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)	118			1,840					260			1,841
Restructuring & other (pre-tax)	(1,568		)	(1,347		)			(2,734		)	(3,029		)
Tax effect on restructuring & other(b)	337			448					398			953
Less: restructuring & other (net of tax)	(1,231		)	(898		)			(2,337		)	(2,076		)
Goodwill impairment (pre-tax)	(21,973		)	(947		)			(21,973		)	(947		)
Tax effect on goodwill impairment(b)	(246		)	7					(246		)	7
Less: goodwill impairment (net of tax)	(22,220		)	(940		)			(22,220		)	(940		)
Unrealized gains (losses) (pre-tax)	(73		)	—					193			—
Tax effect on unrealized gains (losses)(a)	15			—					(41		)	—
Less: unrealized gains (losses) (net of tax)	(58		)	—					153			—
Less: GE Industrial U.S. tax reform enactment adjustment	—			—					(55		)	—
Adjusted GE Industrial earnings (loss) (Non-GAAP)	$	1,160		$	1,801		(36	)%	$	4,581		$	5,127		(11	)%

GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)	19			24			(21	)%	(403		)	(195		)	U
Less: GE Capital U.S. tax reform enactment adjustment	—			—					(45		)	—
Adjusted GE Capital earnings (loss) (Non-GAAP)	$	19		$	24		(21	)%	$	(358	)	$	(195	)	(84	)%

Adjusted GE Industrial earnings (loss) (Non-GAAP)	$	1,160		$	1,801		(36	)%	$	4,581		$	5,127		(11	)%
Add: Adjusted GE Capital earnings (loss) (Non-GAAP)	19			24					(358		)	(195		)
Adjusted earnings (loss) (Non-GAAP)	$	1,179		$	1,825		(35	)%	$	4,223		$	4,932		(14	)%

(a) The tax effect was calculated using a 21% and 35% U.S. federal statutory tax rate in 2018 and 2017, respectively, based on its applicability to such cost.
(b) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges.
Adjusted earnings (loss)* excludes non-operating benefit costs, gains (losses) and impairments for disposed or held for sale businesses, restructuring and other, goodwill impairment, and unrealized gains (losses), after tax, excluding the effects of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. Prior to the third quarter of 2018, goodwill impairment was included as a component of restructuring and other charges; for the third quarter of 2018, on a comparable basis, we reported it separately in the Statement of Earnings (Loss) because of the significance of the charge that quarter, and Adjusted earnings (loss)* continues to exclude amounts related to goodwill impairment as separate from the ongoing operations of our businesses. We believe that the retained costs in Adjusted earnings (loss)* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We believe that presenting Adjusted Industrial earnings (loss) separately for our financial services businesses also provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.

*Non-GAAP Financial Measure



ADJUSTED EARNINGS (LOSS) PER SHARE (EPS) (NON-GAAP)
	Three months ended September 30								Nine months ended September 30
	2018			2017			V%		2018			2017			V%

Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP)	$	(2.63	)	$	0.16		U		(2.50		)	0.29			U
Less: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)	—			—					(0.05		)	(0.02		)
GE Industrial EPS (Non-GAAP)	$	(2.63	)	$	0.16		U		$	(2.46	)	$	0.32		U

Non-operating benefits costs (pre-tax) (GAAP)	(0.09		)	(0.07		)			(0.25		)	(0.21		)
Tax effect on non-operating benefit costs(a)	0.02			0.02					0.05			0.07
Less: non-operating benefit costs (net of tax)	(0.07		)	(0.05		)			(0.20		)	(0.13		)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)	0.02			0.22					0.05			0.21
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(b)	(0.01		)	(0.01		)			(0.02		)	(0.01		)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)	0.01			0.21					0.03			0.21
Restructuring & other (pre-tax)	(0.18		)	(0.15		)			(0.31		)	(0.34		)
Tax effect on restructuring & other(b)	0.04			0.05					0.05			0.11
Less: restructuring & other (net of tax)	(0.14		)	(0.10		)			(0.27		)	(0.24		)
Goodwill impairment (pre-tax)	(2.53		)	(0.11		)			(2.53		)	(0.11		)
Tax effect on goodwill impairment(b)	(0.03		)	—					(0.03		)	—
Less: goodwill impairment (net of tax)	(2.56		)	(0.11		)			(2.56		)	(0.11		)
Unrealized gains (losses) (pre-tax)	(0.01		)	—					0.02			—
Tax effect on unrealized gains (losses)(a)	—			—					—			—
Less: unrealized gains (losses) (net of tax)	(0.01		)	—					0.02			—
Less: GE Industrial U.S. tax reform enactment adjustment	—			—					(0.01		)	—
Adjusted GE Industrial EPS (Non-GAAP)	$	0.13		$	0.21		(38	)%	$	0.53		$	0.58		(9	)%

GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)	—			—			—	%	(0.05		)	(0.02		)	U
Less: GE Capital U.S. tax reform enactment adjustment	—			—					(0.01		)	—
Adjusted GE Capital EPS (Non-GAAP)	$	—		$	—		—	%	$	(0.04	)	$	(0.02	)	(100	)%

Adjusted GE Industrial EPS (Non-GAAP)	$	0.13		$	0.21		(38	)%	$	0.53		$	0.58		(9	)%
Add: Adjusted GE Capital EPS (Non-GAAP)	—			—					(0.04		)	(0.02		)
Adjusted EPS (Non-GAAP)(c)	$	0.14		$	0.21		(33	)%	$	0.49		$	0.56		(13	)%

(a) The tax effect was calculated using a 21% and 35% U.S. federal statutory tax rate in 2018 and 2017, respectively, based on its applicability to such cost.
(b) The tax effect presented includes both the rate for the relevant item as well as other direct and incremental tax charges.
(c) Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
Adjusted EPS* excludes non-operating benefit costs, gains (losses) and impairments for disposed or held for sale businesses, restructuring and other, goodwill impairment, and unrealized gains (losses), after tax, excluding the effects of U.S. tax reform enactment adjustment. The service cost of our pension and other benefit plans are included in adjusted earnings, which represents the ongoing cost of providing pension benefits to our employees. The components of non-operating benefit costs are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Gains and restructuring and other items are impacted by the timing and magnitude of gains associated with dispositions, and the timing and magnitude of costs associated with restructuring activities. Prior to the third quarter of 2018, goodwill impairment was included as a component of restructuring and other charges; for the third quarter of 2018, on a comparable basis, we reported it separately in the statement of earnings (loss) because of the significance of the charge that quarter, and Adjusted EPS* continues to exclude amounts related to goodwill impairment as separate from the ongoing operations of our businesses. We believe that the retained costs in Adjusted EPS* provides management and investors a useful measure to evaluate the performance of the total company, and increases period-to-period comparability. We also use Adjusted EPS* as a performance metric at the company level for our annual executive incentive plan for 2018. We believe that presenting Adjusted EPS separately for our financial services businesses also provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.

*Non-GAAP Financial Measure



ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGIN (EXCLUDING CERTAIN ITEMS) (NON-GAAP)
	Three months ended September 30						Nine months ended September 30
(Dollars in millions)	2018			2017			2018			2017

GE total revenues (GAAP)	$	27,456		$	28,774		$	82,429		$	80,683

Costs
GE total costs and expenses (GAAP)	$	50,449		$	29,978		$	104,390		$	80,977
Less: GE interest and other financial charges	662			718			1,995			1,918
Less: non-operating benefit costs	804			610			2,178			1,811
Less: restructuring & other	1,488			1,347			2,789			3,029
Less: goodwill impairment	21,973			947			21,973			947
Add: noncontrolling interests	(132		)	(168		)	(228		)	(316		)
Adjusted GE Industrial costs (Non-GAAP)	$	25,389		$	26,188		$	75,227		$	72,955

Other Income
GE other income (GAAP)	$	201		$	2,160		$	1,237		$	2,659
Less: unrealized gains (losses)	(73		)	—			193			—
Less: restructuring & other	(80		)	—			(80		)	—
Less: gains (losses) and impairments for disposed or held for sale businesses	207			1,885			450			1,887
Adjusted GE other income (Non-GAAP)	$	147		$	275		$	674		$	772

GE Industrial profit (GAAP)	$	(22,793	)	$	957		$	(20,725	)	$	2,365
GE Industrial profit margin (GAAP)	(83.0		)%	3.3		%	(25.1		)%	2.9		%

Adjusted GE Industrial profit (Non-GAAP)	$	2,213		$	2,861		$	7,875		$	8,500
Adjusted GE Industrial profit margin (Non-GAAP)	8.1		%	9.9		%	9.6		%	10.5		%

We have presented our Adjusted GE Industrial profit* and profit margin* excluding interest and other financial charges, non-operating benefit costs, restructuring and other, goodwill impairment, non-controlling interests, unrealized gains (loss) on Pivotal equity investment and gains (losses) and impairment for disposed or held for sale businesses. We believe that GE Industrial profit and profit margins adjusted for these items are meaningful measures because they increase the comparability of period-to-period results.

*Non-GAAP Financial Measure



GE INDUSTRIAL SEGMENT ORGANIC REVENUES (NON-GAAP)
	Three months ended September 30							Nine months ended September 30
(In millions)	2018			2017		V%		2018		2017		V%

GE Industrial segment revenues (GAAP)	$	27,785		$	29,171	(5	)%	$	83,837	$	81,967	2	%
Adjustments:
Less: acquisitions	4			1				5,588		92
Less: business dispositions (other than dispositions acquired for investment)	10			1,408				13		2,479
Less: Currency exchange rate(a)	(285		)	—				1,121		—
GE Industrial segment organic revenues (Non-GAAP)	$	28,057		$	27,762	1	%	$	77,116	$	79,396	(3	)%
(a) Translational foreign exchange

HEALTHCARE ORGANIC REVENUES (NON-GAAP)
	Three months ended September 30							Nine months ended September 30
(In millions)	2018			2017		V%		2018		2017		V%

Healthcare segment revenues (GAAP)	$	4,707		$	4,710	—	%	$	14,387	$	13,703	5	%
Adjustments:
Less: acquisitions	2			1				6		1
Less: business dispositions (other than dispositions acquired for investment)	10			113				13		154
Less: Currency exchange rate(a)	(44		)	—				243		—
Healthcare organic revenues (Non-GAAP)	$	4,738		$	4,596	3	%	$	14,125	$	13,548	4	%
(a) Translational foreign exchange

Organic revenues* measure revenues excluding the effects of acquisitions, business dispositions and currency exchange rates. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that presenting organic revenues* separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "organic revenues" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.

*Non-GAAP Financial Measure



ADJUSTED OIL & GAS SEGMENT PROFIT AND PROFIT MARGIN (NON-GAAP)
	Three months ended September 30								Nine months ended September 30
(In millions)	2018			2017			V%		2018			2017			V%

Reported segment profit (GAAP)	$	180		$	(57	)	F		$	110		$	322		(66	)%
Less: restructuring & other (GE share)	(67		)	(267		)			(540		)	(267		)
Adjusted Oil & Gas segment profit (Non-GAAP)	$	247		$	210		18	%	$	650		$	590		10	%

Reported Oil & Gas segment revenues (GAAP)	$	5,670		$	5,311		7	%	$	16,609		$	11,394		46	%

Reported Oil & Gas profit margin (GAAP)	3.2		%	(1.1		)%	4.3pts		0.7		%	2.8		%	(2.1)pts
Adjusted Oil & Gas profit margin (Non-GAAP)	4.4		%	4.0		%	0.4pts		3.9		%	5.2		%	(1.3)pts

Adjusted GE Oil & Gas segment profit* measures Oil & Gas reported segment profit excluding the effects of restructuring and other charges. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations of our Oil & Gas segment.



GE INDUSTRIAL FREE CASH FLOWS (FCF) AND ADJUSTED GE INDUSTRIAL FCF (NON-GAAP)
	Three months ended September 30									Nine months ended September 30
(Dollars in millions)	2018			2017			V$			2018			2017			V$
GE CFOA (GAAP)	$	(3,354	)	$	465		$	(3,820	)	$	(4,128	)	$	4,051		$	(8,179	)
Add: gross additions to PP&E	(769		)	(1,092		)				(2,419		)	(3,051		)
Add: gross additions to internal-use software	(90		)	(137		)				(262		)	(396		)
Less: common dividends from GE Capital	—			—						—			4,016
Less: GE Pension Plan funding	(5,079		)	(1,214		)				(6,000		)	(1,431		)
Less: taxes related to business sales	(74		)	(61		)				(91		)	(112		)
GE Industrial Free Cash Flows (Non-GAAP)	$	940		$	510		$	429		$	(718	)	$	(1,869	)	$	1,150

Less: Oil & Gas CFOA	236			(242		)				669			(242		)
Less: Oil & Gas gross additions to PP&E	(231		)	(250		)				(630		)	(250		)
Less: Oil & Gas gross additions to internal-use software	(6		)	(24		)				(23		)	(24		)
Add: BHGE Class B shareholder dividend	147			122						399			122
Adjusted GE Industrial Free Cash Flows (Non-GAAP)	$	1,088		$	1,149		$	(61	)	$	(335	)	$	(1,230	)	$	895

In 2018, GE transitioned from reporting an Adjusted GE Industrial CFOA metric to measuring itself on a GE Industrial Free Cash Flows basis*. This metric includes GE CFOA plus investments in property, plant and equipment and additions to internal-use software; this metric excludes any dividends received from GE Capital and any cash received from dispositions of property, plant and equipment.
We believe that investors may also find it useful to compare GE’s Industrial free cash flows* performance without the effects of cash used for taxes related to business sales and contributions to the GE Pension Plan. We believe that this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows. In addition, we report Adjusted GE Industrial Free Cash Flows* in order to provide a more fair representation of the cash that we are entitled to utilize in a given period. We also use Adjusted GE Industrial Free Cash Flows* as a performance metric at the company-wide level for our annual executive incentive plan for 2018.
Management recognizes that the term free cash flows may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.

*Non-GAAP Financial Measure

General Electric (GE) 8-KResults of Operations and Financial Condition