10-KPeriod: FY2016

GENERAL ELECTRIC CO Annual Report, Year Ended Dec 31, 2016

Filed February 24, 2017For Securities:GE

Summary

General Electric Company (GE) reported its 2016 annual results, highlighting a significant transformation driven by portfolio adjustments, including the acquisition of Alstom and the divestiture of its Appliances business. The company continued its GE Capital Exit Plan, substantially completing the dispositions of its financial services businesses, which led to a significant reduction in GE Capital's total assets and a substantial decrease in Financial Services losses. Industrial segments showed mixed performance, with Power and Aviation demonstrating revenue growth, while Oil & Gas experienced declines due to lower commodity prices. GE's strategic focus on becoming a simpler, more valuable digital industrial company was evident in its investments in digital capabilities and additive manufacturing, alongside efforts to improve operational efficiency and cost structures across its segments.

Financial Statements
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Key Highlights

  • 1GE completed a significant portion of its GE Capital Exit Plan, reducing GE Capital's total assets by 63% from December 31, 2014, to December 31, 2016.
  • 2The acquisition of Alstom's Thermal, Renewables, and Grid businesses in late 2015 contributed $13.0 billion in revenues in 2016, impacting the Power, Energy Connections & Lighting, and Renewable Energy segments.
  • 3The company reported a substantial decrease in Financial Services losses, primarily due to the absence of charges related to the GE Capital Exit Plan in 2015.
  • 4Industrial segment revenues saw an increase of 6%, driven by acquisitions and growth in Power, Renewable Energy, Aviation, and Healthcare, though partially offset by declines in Oil & Gas and Transportation.
  • 5GE returned $30.5 billion to shareholders in 2016 through $8.5 billion in dividends and $22.0 billion in stock buybacks.
  • 6The company announced strategic transactions in 2016, including the agreement to combine its Oil & Gas business with Baker Hughes and the planned acquisition of LM Wind Power.
  • 7GE invested in digital capabilities by acquiring Meridium Inc., Arcam AB, Concept Laser GmbH, Bit Stew, and Wise.io, aiming to enhance its Industrial Internet vision and machine learning offerings.

Frequently Asked Questions

In 2016, GE focused on portfolio transformation. Key actions included completing a significant portion of the GE Capital Exit Plan, divesting its Appliances business, and announcing major transactions such as the combination of its Oil & Gas business with Baker Hughes and the planned acquisition of LM Wind Power. The company also continued to invest in digital capabilities through several acquisitions.

The acquisition of Alstom's Thermal, Renewables, and Grid businesses, completed in late 2015, contributed $13.0 billion in revenues in 2016. While it significantly impacted the Power, Energy Connections & Lighting, and Renewable Energy segments, it also resulted in an operating loss of $0.3 billion for the Alstom business within GE's results, partly due to purchase accounting and acquisition-related charges.

GE substantially completed its GE Capital Exit Plan in 2016, having signed agreements for $197 billion of GE Capital's net investment (excluding liquidity), with $190 billion closed by year-end. This plan led to a significant reduction in GE Capital's total assets (down 63% from $500 billion in 2014 to $183 billion in 2016) and a substantial decrease in Financial Services losses, primarily due to the absence of 2015 charges related to the plan.

GE demonstrated a strong commitment to returning capital to shareholders in 2016, distributing a total of $30.5 billion. This was achieved through $8.5 billion in dividends paid to shareholders and $22.0 billion repurchased through share buyback programs, including significant amounts under accelerated share repurchase (ASR) agreements.