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, 2020March 31, 2021
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
ge-20210331_g1.jpg
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
New York14-0689340
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
5 Necco StreetBostonMA02210
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code) (617) 443-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.06 per shareGENew York Stock Exchange
0.375% Notes due 2022GE 22ANew York Stock Exchange
1.250% Notes due 2023GE 23ENew York Stock Exchange
0.875% Notes due 2025GE 25New York Stock Exchange
1.875% Notes due 2027GE 27ENew York Stock Exchange
1.500% Notes due 2029GE 29New York Stock Exchange
7 1/2% Guaranteed Subordinated Notes due 2035GE /35New York Stock Exchange
2.125% Notes due 2037GE 37New York Stock Exchange
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 8,759,873,0008,778,641,000 shares of common stock with a par value of $0.06 per share outstanding at September 30, 2020.March 31, 2021.



TABLE OF CONTENTS
Page
3
34
34
Consolidated Results
34
Segment Operations
87
Corporate Items and Eliminations
1712
Other Consolidated Information
1913
Capital Resources and Liquidity
2014
Critical Accounting Estimates
2518
Other ItemsNew Accounting Standards
2518
Non-GAAP Financial Measures
2919
3523
3523
23
3624
Statement of Earnings (Loss)
3624
Statement of Financial Position
4026
Statement of Cash Flows
4228
Consolidated Statement of Comprehensive Income (Loss)
4430
Consolidated Statement of Changes in Shareholders' Equity
4430
Note 1 Basis of Presentation and Summary of Significant Accounting Policies
4531
Note 2 Businesses Held for Sale and Discontinued Operations
4631
Note 3 Investment Securities
4733
Note 4 Current and Long-Term Receivables
4934
Note 5 Financing Receivables and Allowances
5036
Note 6 Inventories, Including Deferred Inventory Costs
5036
Note 7 Property, Plant and Equipment
5036
Note 8 Goodwill and Other Intangible Assets
5136
Note 9 Revenues
5237
Note 10 Contract and Other Deferred Assets & Progress Collections and Deferred Income
5338
Note 11 BorrowingsAll Other Assets
5538
Note 1212 Borrowings
39
Note 13 Insurance Liabilities and Annuity Benefits
5639
Note 1314 Postretirement Benefit Plans
57
Note 14 Income Taxes
5740
Note 15 Shareholders' EquityCurrent and All Other Liabilities
5840
Note 16 Income Taxes
40
Note 17 Shareholders' Equity
41
Note 18 Earnings Per Share Information
5942
Note 1719 Financial Instruments
5942
Note 1820 Variable Interest Entities
6244
Note 1921 Commitments, Guarantees, Product Warranties and Other Loss Contingencies
6245
Note 2022 Intercompany Transactions
6448
Note 21 Baker Hughes Summarized Financial Information
652
Note 223 Other Income
65
6648
6749
6749
6749


ABOUT GENERAL ELECTRIC
FORWARD-LOOKING STATEMENTS. Our public communications and SEC filings may contain statements related to future, not past, events. These forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "estimate," "forecast," "target," "preliminary," or "range." Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the impacts of the COVID-19 pandemic on our business operations, financial results and financial position and on the world economy; our expected financial performance, including cash flows, revenues, organic growth, margins, earnings and earnings per share; macroeconomic and market conditions and volatility; planned and potential business or asset dispositions, including our plan to combine our GE Capital Aviation Services (GECAS) business with AerCap Holdings N.V. (AerCap); our de-leveraging plans, including leverage ratios and targets, the timing and nature of actions to reduce indebtedness and our credit ratings and outlooks; GE's and GE Capital's funding and liquidity; our businesses’ cost structures and plans to reduce costs; restructuring, goodwill impairment or other financial charges; or tax rates.
For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
•the continuing severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic, of businesses’ and governments’ responses to the pandemic and of individual factors such as aviation passenger confidence on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains;
•the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives;
•our success in executing and completing asset dispositions or other transactions, including our plan to combine our GECAS business with AerCap and our plan to exit our equity ownership position in Baker Hughes, the timing of closing for such transactions, the ability to secure regulatory approvals and satisfy other closing conditions (as applicable), and the expected proceeds, consideration and benefits to GE;
•changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including interest rates, the value of securities and other financial assets (including our equity ownership position in Baker Hughes and the equity ownership position that we will hold in AerCap after completing our announced plan to combine GECAS with AerCap), oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on our financial position and businesses;
•our de-leveraging and capital allocation plans, including with respect to actions to reduce our indebtedness, the timing and amount of GE dividends, organic investments, and other priorities;
•further downgrades of our current short- and long-term credit ratings or ratings outlooks, or changes in rating application or methodology, and the related impact on our liquidity, funding profile, costs and competitive position;
•GE’s liquidity and the amount and timing of our GE Industrial cash flows and earnings, which may be impacted by customer, supplier, competitive, contractual and other dynamics and conditions;
•GE Capital's capital and liquidity needs, including in connection with GE Capital’s run-off insurance operations and discontinued operations such as Bank BPH, the amount and timing of any required capital contributions and any strategic actions that we may pursue; the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets; the availability and cost of funding; and GE Capital's exposure to particular counterparties and markets, including through GECAS to the aviation sector and adverse impacts related to COVID-19;
•global economic trends, competition and geopolitical risks, including changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses' global supply chains and strategies;
•market developments or customer actions that may affect levels of demand and the financial performance of the major industries and customers we serve, such as secular, cyclical and competitive pressures in our Power business, pricing and other pressures in the renewable energy market, levels of demand for air travel and other dynamics related to the COVID-19 pandemic, conditions in key geographic markets and other shifts in the competitive landscape for our products and services;
•operational execution by our businesses, including the operations and execution of our Power and Renewable Energy businesses, and the performance of our Aviation business;
•changes in law, regulation or policy that may affect our businesses, such as trade policy and tariffs, regulation related to climate change, and the effects of tax law changes;
•our decisions about investments in new products, services and platforms, and our ability to launch new products in a cost-effective manner;
•our ability to increase margins through implementation of operational changes, restructuring and other cost reduction measures;
•the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of Alstom and other investigative and legal proceedings;
•the impact of actual or potential failures of our products or third-party products with which our products are integrated, and related reputational effects;
•the impact of potential information technology, cybersecurity or data security breaches at GE or third parties; and
•the other factors that are described in the "Risk Factors" section of this report and of our Annual Report on Form 10-K for the year ended December 31, 2020, 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.

2021 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 four industrial segments, Power, Renewable Energy, Aviation and Healthcare, and its financial services segment, Capital. See the Consolidated ResultsSegment Operations section ofwithin Management’s Discussion and Analysis of Financial Condition (MD&A) for segment business descriptions and product and service offerings. See the Consolidated Results section within MD&A and Results of Operations and Note 2 to the consolidated financial statements for information regarding our results of operations and recent business portfolio actions. Results of segmentsbusinesses reclassified to discontinued operations have been recast for all periods presented.

GE’s Internet address at www.ge.com, Investor Relations website at www.ge.com/investor-relations and our corporate blog at www.gereports.com, as well as GE’s Facebook page, Twitter accounts and other social media, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A). TheSee Note 1 for a discussion of the basis of presentation for our consolidated financial statements of General Electric Company (the Company) combine the industrial manufacturing and services businesses of GE with the financial services businesses of GE Capital and are prepared in conformity with U.S. generally accepted accounting principles (GAAP). 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.MD&A. Discussions throughout 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. For purposes of the financial statement display of sales and costs of sales in our consolidated Statement of Earnings (Loss), “goods” is required by SEC regulations to include all sales of tangible products, and "services" must include all other sales, including other services activities. Throughout MD&A we refer to sales under product services agreements and sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs) as sales of “services,” which is an important part of our operations.

We believe investors will gain a better understanding of our company if they understand how we measure and talk about our results. Because of the diversity in our businesses, we present our financial statements in a three-column format, which allows investors to see our GE Industrial operations separately from our GE Capital operations. We believe that this provides useful information to investors. When used in this report, unless otherwise indicated by the context, we use these terms to mean the following:

Consolidated – the adding together of GE and GE Capital, giving effect to the elimination of transactions between the two. We present consolidated results in the left-side column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
GE – the adding together of all affiliates except GE Capital, whose continuing operations are presented on a one-line basis, giving effect to the elimination of transactions among such affiliates. As GE presents the continuing operations of GE Capital on a one-line basis, any intercompany profits resulting from transactions between GE and GE Capital are eliminated at the GE level. We present the results of GE in the center column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
GE Capital – the adding together of all affiliates of GE Capital giving effect to the elimination of transactions among such affiliates. We present the results of GE Capital in the right-side column of our consolidated Statements of Earnings (Loss), Financial Position and Cash Flows.
GE Industrial – GE excluding the continuing operations of GE Capital. We believe that this provides investors with a view as to the results of our industrial businesses and corporate items.

This document contains “forward-looking statements” - for details about the uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements, see the Forward-Looking Statements section.

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
SIGNIFICANT DEVELOPMENTS. Coronavirus Disease 2019 (COVID-19) Pandemic. The COVID-19 pandemic has significantly impacted global economies, resulting in workforce and travel restrictions, supply chain and production disruptions and reduced demand and spending across many sectors. Since the latter part of the first quarter of 2020, these factors have had a material adverse impact on our operations and financial performance, and prices of our securities, as well as on the operations and financial performance of many of the customers and suppliers in industries that we serve. This section provides a brief overview of how we are responding to current and potential impacts related to COVID-19 on GE’s operations and financial condition and results, with additional details provided throughout the MD&A and other relevant sections of this report.
2020 3Q FORM 10-Q 3
MD&ACONSOLIDATED RESULTS
We have adopted operational and governance rhythms across the Company, and with our Board of Directors, to coordinate and oversee actions related to the COVID-19 pandemic, including an internal task force to protect the health and safety of our employees globally and maintain business continuity; the assessment of financial and operating impacts, financial planning and mitigating cost, cash, and other actions in response; funding and liquidity management and related treasury actions; enterprise risk management and other functional activities across our global commercial, supply chain, human resources, controllership, government affairs, and other organizations. In particular, we took a series of actions during the second quarter to enhance and extend our liquidity at both GE and GE Capital (as described under "Debt offerings and tenders" below), and we continue to evaluate market conditions as they evolve and take precautionary measures to strengthen our financial position. We ended the third quarter of 2020 with $39.2 billion of consolidated cash, cash equivalents and restricted cash, in addition to our available credit lines. See the Capital Resources and Liquidity section for further information.

While factors related directly and indirectly to the COVID-19 pandemic have been impacting operations and financial performance at varying levels across all our businesses, the most significant impact to date has been at our Aviation segment and our GE Capital Aviation Services (GECAS) aircraft leasing business within our Capital segment. The pandemic is having a material adverse effect on the global airline industry, resulting in reduced flight schedules worldwide, an increased number of idle aircraft, lower utilization, workforce reductions and declining financial performance within the airline industry, as well as requests for government financial assistance by various industry participants. This has decreased demand for higher margin service revenues within our Aviation segment directly impacting our profitability and cash flows during 2020. Our Healthcare segment experienced increased demand for certain types of products and services, including ventilators, monitoring solutions, x-ray, anesthesia and point-of-care ultrasound product lines, partially offset by decreased demand in other parts of the business as patients have postponed certain procedures and hospitals have deferred spending. Our other businesses were also adversely impacted by market developments, including delays or cancellations of new projects, new orders and related down payments. In addition, workplace, travel and supply chain disruptions have caused delays of deliveries and the achievement of other billing milestones directly impacting our profitability and cash flows for the nine months ended September 30, 2020. We anticipate many of these impacts related to demand, profitability and cash flows will continue in future periods depending on the severity and duration of the pandemic.discontinued operations. For additional details about impacts related to Aviationour businesses and GECAS, Healthcare and our other businesses,actions we have taken in response, as applicable, refer to the respective segment sections within MD&A.

Each of GE's businesses and Corporate are taking cost and cash actions to manage risk and proactively mitigate the financial impact from COVID-19, as supply and demand dynamics We also continue to shift. In 2020, we are targeting more than $2evaluate market conditions as they evolve and take precautionary measures to strengthen our financial position. We ended the first quarter of 2021 with $31.8 billion of consolidated cash, cash equivalents and restricted cash, in operational cost outaddition to our available credit lines of $20.2 billion. See the Capital Resources and more than $3 billion in cash preservation actions across the company, including more than $1 billion in cost out and more than $2 billion in cash preservation actions at Aviation, to right-size its cost structure and preserve its ability to serve customers. To date, we have realized about 75% of savings from actions at the total company level. During the nine months ended September 30, 2020, excluding business dispositions, we reduced consolidated headcount by approximately 15,600, including 8,800 at Aviation and 2,100 at Power.

At this time, GE cannot forecast the full duration and magnitude of COVID-19 impacts, or the pace of recovery from the pandemic acrossLiquidity section for further information. We anticipate that our end markets, operations and supply chains. Seefinancial performance will continue to be impacted by the Risk Factors sectionCOVID-19 pandemic in our Quarterly Reportfuture periods. These impacts will ultimately depend on Form 10-Q for the quarter ended June 30, 2020 for further information about related risks and uncertainties.

BioPharma. On March 31, 2020, we completed the sale of our BioPharma businessmany factors that are not within our Healthcare segmentcontrol, including the severity and duration of the pandemic; governmental, business and individuals’ actions in response to Danaher Corporation. See the Segment Operations - Healthcare sectionpandemic; and Note 2 for further information.the development, availability and public acceptance of effective treatments and vaccines.

Asset impairmentsGECAS. On March 9, 2021, we announced an agreement to combine GECAS with AerCap Holdings N.V. (AerCap), for which the Company expects to receive $23.9 billion in cash, subject to contractual closing adjustments, 111.5 million shares of AerCap common stock (approximately 46% ownership interest) valued at approximately $6.6 billion based on the AerCap’s closing share price on March 31, 2021, and $1 billion in AerCap notes and/or cash upon closing. In connection with the thirdsigning of the transaction agreement, GE Capital recorded a non-cash after-tax charge of $2.8 billion in discontinued operations in the first quarter of 2020, we recognized non-cash pre-tax impairment charges2021, partially offset by $0.2 billion of $0.4 billion relatedearnings, and the results of GECAS are now presented in discontinued operations. Given the economics of GECAS accrue to property, plantAerCap in conjunction with the transaction, the net impact of GECAS (loss on sale and equipment and intangible assets at our Steam business within our Power segmentoperations) could change materially, mainly due to our recent announcementfluctuations in AerCap's closing share price. Completion of the transaction remains subject to exit the new build coal power market. We will continue to monitor the operating resultsAerCap shareholder approval, regulatory approvals and cash flow forecasts for the remaining business. In the second quarter of 2020, we recognized a non-cash pre-tax impairment charge of $0.9 billion related to goodwill at our Additive reporting unit within our Aviation segment. The Steam and Additive charges were recorded within earnings from continuing operations at Corporate. We recognized non-cash pre-tax impairments of $0.2 billion and $0.5 billion during the three and nine months ended September 30, 2020, respectively, on our GECAS leasing portfolio. In the second quarter of 2020, we also recognized a non-cash pre-tax impairment charge of $0.8 billion related to goodwill in our GECAS reporting unit within our Capital segment. See Segment Operations - Capital and Notes 7 and 8 for further information.other customary closing conditions.

Debt offeringsAfter completion of the transaction, we will elect to prospectively measure our investment in AerCap at fair value and tenders.expect to have continuing involvement with AerCap, primarily through our ownership interest and ongoing sales or leases of products and services. In the second quarteraddition, we expect to sell our stake in an orderly fashion over time. The remainder of 2020, we took a series of actions to enhance and extend our liquidity at both GE and GE Capital, issuing a total of $13.5 billion of longer-dated debtincluding Energy Financial Services (EFS) and reducing near-term debt maturities by $10.5 billion, with the remaining $3 billion to be leverage neutral by the end of 2021. See the Borrowings section of Capital Resources and Liquidity and Note 11 for further information.

SEC investigation. As previously reported, we have been cooperating with the staff of the SEC on its investigation of legacy matters related to long-term service agreements, GE Capital’sour run-off insurance operations, and the goodwill impairment charge in 2018 relatedwill be reported within Corporate. This means we will move from three-column to GE’s Power business. In the third quarter of 2020, the SEC staff issued a “Wells notice” in connection with the portion of its ongoing investigation related to GE Capital’s run-off insurance operations, advising GE that the staff is considering recommending to the commissioners that the SEC bring a civil action against GE for possible violations of the securities laws. We have recorded a reserve of $100 million as of September 30, 2020 related to the investigation in its entirety, encompassing all matters that are under investigation. See Note 19 for further information.one-column financial statement reporting.


4 2020 3Q2021 1Q FORM 10-Q4

MD&ACONSOLIDATED RESULTS
THIRDFIRST QUARTER 20202021 RESULTS. Consolidated revenues were $19.4$17.1 billion, down $3.9$2.4 billion for the quarter, driven by decreased GE Industrial andrevenues partially offset by increased GE Capital revenues. GE Industrial revenues decreased $3.6$2.5 billion (17%(13%), driven primarily by decreases at Aviation, Healthcare and Healthcare,Power, partially offset by increasesan increase at Renewable Energy and Power.Energy. GE Capital revenues decreased $0.4 billion.increased 5%.

Continuing earnings (loss) per share was $(0.13).$0.00. Excluding realized and unrealized gains (losses), Steam asset impairments, non-operating benefit costs, restructuring and other charges and U.S.a GE Capital tax reform,loss, Adjusted earnings per share* was $0.06.$0.03.

For the three months ended September 30, 2020,March 31, 2021, GE Industrial profit was $(1.3)$0.4 billion and profit margins were (7.2)%2.3%, down $0.8$6.2 billion, driven primarily by decreasesthe nonrecurrence of the $12.3 billion gain on the sale of our BioPharma business and lower profit at Aviation, and Healthcare, partially offset by increases at Power and Renewable Energy, a larger unrealizedlower net loss in the quarter on our investment in Baker Hughes of $0.6$6.0 billion, and legal reserves associated with the SEC investigation (see Note 19 for further information), partially offset by a decrease in goodwill impairmentsadjusted total Corporate operating costs* of $0.7$0.2 billion, a decrease in non-operating benefit cost of $0.2 billion, and lowera decrease in interest and other financial charges of $0.5$0.1 billion.Adjusted GE Industrial organic profit* decreased $0.8increased $0.1 billion, primarily as a result of the impacts of COVID-19, particularlyincreases at our Aviation segment,Healthcare, Renewable Energy and Power, and lower adjusted total Corporate operating costs*, were partially offset by increasesa decrease at our other industrial segments.Aviation.

GE Industrial cash flows from operating activities (CFOA) was $(3.2)were $(0.5) billion and $0.1$(1.7) billion for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively. GE CFOAIndustrial cash used for operating activities decreased primarily due to lower net income, primarily due to COVID-19 impacts, higher cash used for working capital and higher cash paid for taxes, partially offset by changesa decrease in contract and other deferred assets, and increases in equipment project cost accruals and deferred income. GE Industrial free cash flows (FCF)* were $(3.8) billion and $(1.6) billion for the nine months ended September 30, 2020 and 2019, respectively. GE Industrial FCF decreased primarily due to lower net income and higher cash used for working capital, partially offset by changesan increase in contractcash used for All other operating activities. GE Industrial free cash flows (FCF)* were $(0.8) billion and other deferred assets, increases$(2.2) billion for the three months ended March 31, 2021 and 2020, respectively. GE Industrial FCF increased primarily due to a decrease in equipment project cost accruals and deferred incomecash used for working capital, and a decrease in additions to property, plant and equipment and internal-use software.software, partially offset by an increase in cash used for All other operating activities. See the Capital Resources and Liquidity - Statement of Cash Flows section for further information.

Orders are contractual commitments with customers to provide specified goods or services for an agreed upon price.
GE INDUSTRIAL ORDERSGE INDUSTRIAL ORDERSThree months ended September 30Nine months ended September 30GE INDUSTRIAL ORDERSThree months ended March 31
(In millions)2020201920202019
20212020
EquipmentEquipment$7,510 $11,257 $23,847 $32,582 Equipment$8,208 $9,211 
ServicesServices7,984 11,262 24,899 32,771 Services8,800 10,274 
Total orders(a)Total orders(a)$15,494 $22,519 $48,745 $65,352 Total orders(a)$17,008 $19,485 
Total organic ordersTotal organic orders$15,497 $21,531 $48,971 $62,978 Total organic orders$16,720 $18,247 
(a) Included $0.8 billion related to BioPharmaOrders for the three months ended September 30, 2019, and $1.1 billion and $2.6 billion for the nine months ended September 30,March 31, 2020 and 2019, respectively.included $1,136 million related to BioPharma.

For the three months ended September 30, 2020March 31, 2021, orders decreased $7.0$2.5 billion (31%(13%) on a reported basis and decreased $6.0$1.5 billion (28%(8%) organically primarily at Aviation, driven by declines in both commercial equipment and service orders due to COVID-19 and the 737 MAX grounding, and at Renewable Energy, Power, and Healthcare primarily due to decreases in equipment orders. Equipment orders were down $2.8 billion (27%) organically and services orders, were down $3.2 billion (29%) organically.

For the nine months ended September 30, 2020, orders decreased $16.6 billion (25%) on a reported basis and decreased $14.0 billion (22%) organically with declines at Aviation, primarily driven by declines in both commercial equipment and service orders due to COVID-19 and the 737 MAX grounding, and at Power, and Renewable Energy primarily due to decreases in equipment orders, partially offset by an increaseincreases at Renewable Energy and Healthcare. Equipment orders were down $6.4$0.1 billion (21%(1%) organically and services orders were down $7.6$1.4 billion (23%) organically. Excluding BioPharma, orders decreased $14.2 billion (23%(14%) organically.

Backlog is unfilled customer orders for products and product services (expected life of contract sales for product services).
GE INDUSTRIAL BACKLOG (In millions)
September 30, 2020December 31, 2019September 30, 2019
Equipment$71,139 $78,968 $80,019 
Services312,470 325,605 305,989 
Total backlog(a)$383,609 $404,572 $386,008 
(a) Backlog as of September 30, 2020 excludes the BioPharma business due to its disposition in the first quarter of 2020. Backlog as of both December 31, 2019 and September 30, 2019 included $1.2 billion related to BioPharma.
GE INDUSTRIAL BACKLOGMarch 31, 2021December 31, 2020March 31, 2020
Equipment$72,272 $73,286 $76,854 
Services311,134 313,234 324,216 
Total backlog$383,405 $386,520 $401,070 

As of September 30, 2020March 31, 2021, backlog decreased $21.0$3.1 billion (5%(1%) from December 31, 2019,2020, primarily driven byat Power, from sales outpacing new orders, and at Aviation, from cancellations of commercial engine and service orders. Renewable Energy decreased due to the effects of foreign currency fluctuations, and Healthcare decreased due to an increase in shorter cycle time products. Backlog decreased $17.7 billion (4%) from March 31, 2020, due to a decrease in equipment backlog of $4.6 billion (6%), primarily at Aviation, Power and Healthcare, and a decrease in services backlog of $13.1 billion (4%), primarily at Aviation, due to a reduction in our Commercial Services backlog and cancellations of commercial engine orders, in additionand at Power, due to sales outpacing new orders. The reduction in Commercial Services at Aviation reflects the cancellation of equipment unit orders, lower anticipated engine utilization, customer fleet restructuring and contract modifications. Power and Renewable Energy decreased due to sales outpacing new orders, and Healthcare decreased with the disposition of the BioPharma business of $1.2 billion. Backlog decreased $2.4 billion (1%) from September 30, 2019, due to a decrease in equipment backlog of $8.9 billion (11%), primarily at Aviation, Power and Healthcare, partially offset by an increase in services backlog of $6.5 billion (2%), primarily at Aviation, partially offset by Power. Excluding the BioPharma disposition, backlog decreased $1.2 billion from September 30, 2019.


*Non-GAAP Financial Measure
2020 3Q FORM 10-Q 5
MD&ACONSOLIDATED RESULTS
Remaining performance obligation (RPO), a defined term under GAAP, is backlog excluding any purchase order that provides the customer with the ability to cancel or terminate without incurring a substantive penalty. We planIn the second quarter of 2021, we expect to continue reportingreplace our quarterly disclosures of backlog with RPO as we believe that ita key metric, one commonly used across our industries, which will simplify our reporting. Our historical experience indicates the likelihood of cancellation of orders excluded from RPO is a useful metric for investors, given its relevance to total orders.remote. See Note 9 for further information.
September 30, 2020 (In millions)
EquipmentServicesTotal
Backlog$71,139 $312,470 $383,609 
Adjustments(26,505)(130,438)(156,943)
Remaining performance obligation$44,634 $182,032 $226,666 





*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 5

March 31, 2021EquipmentServicesTotal
Backlog$72,272 $311,134 $383,405 
Adjustments(31,321)(125,122)(156,443)
Remaining performance obligation$40,951 $186,012 $226,962 

Adjustments to reported backlog, primarily related to long-term contracts in excess of $156.9one year, of $156.4 billion as of September 30, 2020March 31, 2021 are largely driven by adjustments of $148.4$145.9 billion in our Aviation segment: (1) backlog includes engine contracts for which we have received purchase orders that are cancelable; (2) our services backlog includes contracts that are cancelable without substantive penalty, primarily time and materials contracts; and (3) backlog includes engines contracted under long-term service agreements, even if the engines have not yet been put into service. These adjustments to reported backlog are expected to be satisfied beyond one year.
REVENUESREVENUESThree months ended September 30Nine months ended September 30REVENUESThree months ended March 31
(In millions)2020201920202019
20212020
Consolidated revenuesConsolidated revenues$19,417 $23,360 $57,690 $68,976 Consolidated revenues$17,118 $19,490 
EquipmentEquipment9,625 10,996 26,928 30,873 Equipment7,971 9,097 
ServicesServices8,293 10,524 25,901 32,386 Services8,358 9,748 
GE Industrial revenuesGE Industrial revenues$17,918 $21,519 $52,828 $63,259 GE Industrial revenues$16,329 $18,844 
GE Capital revenuesGE Capital revenues$1,681 $2,097 $5,449 $6,645 GE Capital revenues$878 $837 

For the three months ended September 30, 2020March 31, 2021, Consolidated revenues were down $3.9$2.4 billion, driven by decreaseda decrease in GE Industrial revenues of $3.6$2.5 billion and decreasedpartially offset by an increase in GE Capital revenues of $0.4 billion.revenues.
GE Industrial revenues decreased $3.6$2.5 billion (17%(13%), with decreases in services and equipment. The decrease in services was primarily at Aviation, due to lower commercial spare part shipments and decreased shop visits, and the cumulative impact of changes in billing and cost assumptions in our long-term service agreements.partially offset by an increase at Power driven by Gas Power services revenues. The decrease in equipment was primarily at Aviation, due to fewer commercial install and spare engine unit shipments; and at Healthcare, due to the disposition of the BioPharma business; and at Power, due to decreases in Steam Power and Gas Power; partially offset by increasesan increase in Power related to higher extended scope shipments at Gas Power; and Renewable Energy, from more wind turbine shipments.Energy. The decrease in industrialGE Industrial revenues included the net effects of dispositions of $1.1 billion and an increase from foreign currency translation of $0.3 billion. Excluding the effects of acquisitions, dispositions and foreign currency translation, GE Industrial organic revenues* decreased $2.5$1.7 billion (12%(10%), with a decrease in services revenues of $2.1$1.4 billion (20%(14%) and equipment revenues of $0.4 billion (4%). GE Industrial organic revenues* decreased at Aviation, partially offset by increases at all other industrial segments. Healthcare organic revenue* increased $0.4 billion (10%) due to higher volume at Healthcare Systems (HCS).
GE Capital revenues decreased $0.4 billion (20%), as a result of volume declines, primarily at GECAS related to lower interest income attributable to the sale of PK Air Finance and lower rental revenue, and lower gains.

For the nine months ended September 30, 2020, Consolidated revenues were down $11.3 billion, driven by decreased GE Industrial revenues of $10.4 billion and decreased GE Capital revenues of $1.2 billion.
GE Industrial revenues decreased $10.4 billion (16%), with decreases in services and equipment. The decrease in services was primarily at Aviation, driven by lower commercial spare part shipments, decreased shop visits and the cumulative impact of changes in billing and cost assumptions in our long-term service agreements; as well as Power, due to declines in transactional part sales and upgrades at Gas Power. The decrease in equipment was primarily at Aviation, due to fewer commercial install and spare engine unit shipments; and at Healthcare, due to the disposition of the BioPharma business; partially offset by increases at Renewable Energy, primarily from Onshore Wind, with more wind turbine shipments than in the prior year; and Gas Power, due to an increase in Heavy-Duty gas turbine unit shipments. This decrease included the net effects of dispositions of $2.3 billion and the effects of a stronger U.S. dollar of $0.5 billion. Excluding the effects of acquisitions, dispositions and foreign currency translation, GE Industrial organic revenues* decreased $7.7 billion (13%), with a decrease in services revenues of $6.1 billion (19%) and a decrease in equipment revenues of $1.6 billion (5%). GE Industrial organic revenues* decreased at Aviation and Power, partially offset by increasesan increase at Renewable EnergyHealthcare. Healthcare organic revenue* increased $0.3 billion (7%) due to increased demand for Healthcare Systems (HCS) products, and Healthcare. Excluding the BioPharma disposition, GE Industrial organic revenues* decreased $7.8 billion (13%)a return to pre-pandemic volume in Pharmaceutical Diagnostics (PDx).
GE Capital revenues decreased $1.2 billion (18%)increased 5%, primarily as a result of volume declines,lower marks and impairments primarily in Insurance, partially offset by lower revenue at GECAS relatedWorking Capital Solutions (WCS) due to lower interest income attributable to the sale of PK Air Financevolume and lower rental revenue, lower gains and higher mark-to-market effects and impairments as a result of COVID-19 and related market impacts.
EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHAREThree months ended September 30Nine months ended September 30
(In millions; per-share in dollars and diluted)2020201920202019
Continuing earnings (loss)$(1,155)$(1,325)$2,991 $(707)
Continuing earnings per share (loss)$(0.13)$(0.15)$0.32 $(0.08)

project revenues at EFS.

EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHAREThree months ended March 31
(Per-share in dollars and diluted)20212020
Continuing earnings (loss)$20 $6,175 
Continuing earnings per share (loss)$— $0.70 

*Non-GAAP Financial Measure
6 2020 3Q FORM 10-Q
MD&ACONSOLIDATED RESULTS
For the three months ended September 30, 2020March 31, 2021, Consolidated continuing earnings increased $0.2decreased $6.2 billion due to a decrease in GE Industrial profit of $0.8 billion, more than offset by a decrease in GE Capital losses of $0.6 billion and a decrease in GE provision for income taxes of $0.4 billion.profit.
GE Industrial profit decreased $0.8$6.2 billion driven by decreasesthe nonrecurrence of the $12.3 billion gain on the sale of our BioPharma business and lower profit at Aviation, and Healthcare and increases at Power and Renewable Energy,partially offset by a larger unrealizedlower net loss in the quarter on our investment in Baker Hughes of $0.6$6.0 billion, impairment chargesa decrease in adjusted total Corporate operating costs* of $0.4$0.2 billion, related to property, plant and equipment and intangible assets at our Steam business and legal reserves associated with the SEC investigation (see Note 19 for further information), partially offset by lower goodwill impairmentsa decrease in non-operating benefit cost of $0.7$0.2 billion, and lowera decrease in interest and other financial charges of $0.5$0.1 billion. GE Industrial profit margin was (7.2)%2.3%, a decrease of 510 basis pointsfrom 34.9%, primarily due to the same net decreases as described above. Adjusted GE Industrial profit* was $1.0$0.8 billion, a decreasean increase of $0.8$0.1 billion organically*, due to increases at Healthcare, Renewable Energy and Power, partially offset by a decrease at Aviation, partially offset by increases at Power, Healthcare, and Renewable Energy.Aviation. Adjusted GE industrialIndustrial profit margin* was 5.6%5.1%, a decreasean increase of 310110 basis points organically*, primarily due to the same net decreasesincreases as described above. At Aviation, the primary drivers were lower volume on commercial spare part and commercial spare engine shipments, and decreased shop visits in our service agreements. At Power, the primary drivers were higher equipment revenues and better project execution in equipment contractsincrease was driven by growth in Gas Power services revenues and improved cost productivity.margins, and continued efforts to streamline the business. At Healthcare, the increase was primarily due to cost reductions and increased demand for HCS products and increases in HCSPDx volume, and at Renewable Energy, the increase was due to improved pricing andproduct cost deflation, at Onshore Windthe favorable impact of cost reduction measures and lower cost across the segment.improved project execution.
GE Capital continuing losses decreased $0.6 billion primarily due to the nonrecurrence of a $1.0 billion pre-tax charge identified through the completion of our 2019 annual insurance premium deficiency review, higher tax benefits8% as lower claims, improved investment performance and lower excess interest costs,marks and impairments in Insurance were partially offset by volume declines, lower gains and higher mark-to-market effects and impairments, including on the GECAS fixed-wing aircraft portfolio as a result of COVID-19 and related market impacts. Gains were insignificant and $0.2 billion in the third quarters of 2020 and 2019, respectively, which primarily related to sales of GECAS aircraft and engines resulting in gains that were insignificant and $0.1 billion in the third quarters of 2020 and 2019, respectively.

For the nine months ended September 30, 2020, Consolidated continuing earnings increased $3.7 billion due to an increase in GE Industrial profit of $4.1 billion, an increase in GE Capital losses of $1.0 billion and a decrease in GE provision for income taxes of $0.3 billion.
GE Industrial profit increased $4.1 billion driven primarily by the gain on the sale of our BioPharma business of $12.4 billion, decreased goodwill impairments of $0.6 billion, and lower interest and other financial charges of $0.6 billion, partially offset by decreasesproject revenues at our industrial segments, a larger unrealized loss on our investment in Baker Hughes of $4.5 billion, impairment charges of $0.4 billion related to property, plant and equipment and intangible assets at our Steam business, and legal reserves associated with the SEC investigation (see Note 19 for further information).GE Industrial profit margin was 8.3%, an increase of 790 basis points, primarily due to the same net increases as described above. Adjusted GE Industrial profit* was $1.6 billion, a decrease of 70% organically*, primarily due to decreases at our Aviation, Power and Renewable Energy segments, partially offset by an increase at Healthcare and a decrease in Adjusted corporate operating costs*. Adjusted GE industrial profit margin* was 3.0%, a decrease of 570 basis points organically*, primarily due to the same net decreases as described above. At Aviation, the primary drivers were lower volume on commercial spare part and commercial spare engine shipments, and decreased shop visits and net unfavorable changes of $0.9 billion to the estimated profitability in its long-term service agreements. At Power, the primary drivers were lower revenues and a charge of approximately $0.1 billion related to an under-performing JV, partially offset by better equipment project execution in Gas Power. At Renewable Energy, higher sales volume at Onshore Wind and the favorable impact of cost reduction measures were more than offset by the nonrecurrence of a $0.1 billion non-cash gain from the termination of two Offshore Wind contracts in the first quarter of 2019. At Healthcare, the primary drivers were cost reductions and increased demand for HCS products used directly in response to COVID-19, partially offset by decreases in Pharmaceutical Diagnostics (PDx) volume.
GE Capital continuing losses increased $1.0 billion primarily due to an impairment of goodwill, volume declines, higher mark-to-market effects and other impairments, including on the GECAS fixed-wing aircraft portfolio as a result of COVID-19 and related market impacts, lower gains, debt tender costsEFS and the nonrecurrence of a 2019 tax reform enactment adjustment. These increased losses were partially offset by the nonrecurrence of a $1.0 billion pre-tax charge identified through the completion of our 2019 annual insurance premium deficiency review, higher tax benefits including the tax benefit related to the BioPharma sale and lower excess interest cost. Gains were $0.3 billion and $0.5 billion in the nine months ended September 30, 2020 and 2019, respectively, which primarily related to salesfirst quarter of GECAS aircraft and engines resulting in gains of $0.2 billion and $0.3 billion in the nine months ended September 30, 2020 and 2019, respectively, and the nonrecurrence of a sale of an equity method investment resulting in a gain of $0.1 billion in 2019 at Energy Financial Services (EFS).2020.

AVIATION AND GECAS 737 MAX.
Aviation develops, produces, and sells LEAP aircraft engines to Boeing, Airbus and COMAC through CFM International (CFM), a company jointly owned by GE and Safran Aircraft Engines, a subsidiary of the Safran Group of France. The LEAP-1B engine is the exclusive engine for the Boeing 737 MAX. In March 2019, global regulatory authorities ordered a temporary fleet grounding of the Boeing 737 MAX. During the second quarter of 2019, Boeing announced a temporary reduction in the 737 MAX production rate, and CFM reduced its production rate for the LEAP-1B to meet Boeing's revised aircraft build rate. In December 2019, Boeing announced that it would temporarily suspend production of the 737 MAX beginning in January 2020. Aviation commercial equipment backlog as of September 30, 2020 includes approximately 10,000 LEAP-1A and 1B engines, including the impact of approximately 1,100 LEAP-1B unit order cancellations since year-end. See the Segment Operations - Aviation section for further information. During 2020, CFM and Boeing reached an agreement to align production rates for 2020 and secure payment terms for engines delivered in 2019 and 2020, net of progress collections, and accordingly received net payments of $0.2 billion during the three months ended September 30, 2020. In May 2020, Boeing resumed production of the 737 MAX. CFM and Boeing continue to work closely to ensure a successful reentry into service, with a strong commitment to safety while navigating near term industry disruption.


*Non-GAAP Financial Measure
2020 3Q2021 1Q FORM 10-Q 76
MD&ACONSOLIDATED RESULTS
As of September 30, 2020, GECAS owned 29 of these aircraft, 26 of which are contracted for lease to various airlines that remain obligated to make contractual rental payments. In addition, GECAS has made pre-delivery payments to Boeing related to 77 of these aircraft on order and has made financing commitments to acquire a further 17 aircraft under purchase and leaseback contracts with airlines. During 2020, GECAS agreed with Boeing to restructure its 737 MAX orderbook including previously canceled positions, resulting in 77 orders now remaining.

As of September 30, 2020, we had approximately $2.5 billion of net assets ($4.4 billion of assets and $1.8 billion of liabilities) related to the 737 MAX program that primarily comprised Aviation accounts receivable offset by progress collections and GECAS pre-delivery payments and owned aircraft subject to lease. No impairment charges were incurred related to the 737 MAX aircraft and related balances, as we continue to believe these assets are recoverable over their contractual or useful lives. We continue to monitor 737 MAX return to service and return to delivery developments with our airline customers, lessees and Boeing.

LEAP continues to be a strong engine program for us, and we delivered 622 engines for Boeing and Airbus platforms in the nine months ended September 30, 2020, and over 4,000 engines since inception.

SEGMENT OPERATIONS. Refer to our Annual Report on Form 10-K for the year ended December 31, 2019,2020, for further information regarding our determination of Industrial and Capital segment profit for continuing operations, and for our allocations of corporate costs to our segments.
SUMMARY OF REPORTABLE SEGMENTSSUMMARY OF REPORTABLE SEGMENTSThree months ended September 30Nine months ended September 30SUMMARY OF REPORTABLE SEGMENTSThree months ended March 31
(In millions)20202019V%20202019V%
20212020V%
PowerPower$4,025 $3,926 3 %$12,206 $13,224 (8)%Power$3,921 $4,025 (3)%
Renewable EnergyRenewable Energy4,525 4,425 2 %11,224 10,590 6 %Renewable Energy3,248 3,194 2 %
AviationAviation4,919 8,109 (39)%16,196 23,940 (32)%Aviation4,992 6,892 (28)%
HealthcareHealthcare4,565 4,923 (7)%13,185 14,540 (9)%Healthcare4,308 4,727 (9)%
CapitalCapital1,681 2,097 (20)%5,449 6,645 (18)%Capital878 837 5 %
Total segment revenuesTotal segment revenues19,716 23,480 (16)%58,260 68,938 (15)%Total segment revenues17,346 19,675 (12)%
Corporate items and eliminationsCorporate items and eliminations(299)(120)U(570)39 UCorporate items and eliminations(228)(185)(23)%
Consolidated revenuesConsolidated revenues$19,417 $23,360 (17)%$57,690 $68,976 (16)%Consolidated revenues$17,118 $19,490 (12)%
PowerPower$150 $(144)F$(19)$84 UPower$(87)$(131)34 %
Renewable EnergyRenewable Energy5 (98)F(493)(469)(5)%Renewable Energy(234)(327)28 %
AviationAviation356 1,718 (79)%681 4,764 (86)%Aviation641 1,003 (36)%
HealthcareHealthcare765 974 (21)%2,212 2,714 (18)%Healthcare698 867 (19)%
CapitalCapital(52)(645)92 %(1,558)(599)UCapital(172)(187)8 %
Total segment profit (loss)Total segment profit (loss)1,224 1,806 (32)%823 6,493 (87)%Total segment profit (loss)847 1,224 (31)%
Corporate items and eliminationsCorporate items and eliminations(1,606)(808)(99)%5,917 (2,013)FCorporate items and eliminations52 6,123 (99)%
GE goodwill impairments0 (740)F(877)(1,484)41 %
GE interest and other financial charges(313)(791)60 %(1,079)(1,693)36 %
GE non-operating benefit costs(603)(562)(7)%(1,815)(1,684)(8)%
GE benefit (provision) for income taxes143 (229)F22 (327)F
GE Industrial interest and other financial chargesGE Industrial interest and other financial charges(268)(370)28 %
GE Industrial non-operating benefit costsGE Industrial non-operating benefit costs(433)(616)30 %
GE Industrial benefit (provision) for income taxesGE Industrial benefit (provision) for income taxes(148)(187)21 %
Earnings (loss) from continuing operations attributable to GE common shareholdersEarnings (loss) from continuing operations attributable to GE common shareholders(1,155)(1,325)13 %2,991 (707)FEarnings (loss) from continuing operations attributable to GE common shareholders20 6,175 U
Earnings (loss) from discontinued operations, net of taxesEarnings (loss) from discontinued operations, net of taxes(35)(8,093)100 %(206)(5,212)96 %Earnings (loss) from discontinued operations, net of taxes(2,894)(21)U
Less net earnings attributable to noncontrolling interests, discontinued operations0 46 U(2)58 U
Less net earnings (loss) attributable to noncontrolling interests, discontinued operationsLess net earnings (loss) attributable to noncontrolling interests, discontinued operations0 (2)F
Earnings (loss) from discontinued operations, net of tax and noncontrolling interestEarnings (loss) from discontinued operations, net of tax and noncontrolling interest(35)(8,140)100 %(204)(5,270)96 %Earnings (loss) from discontinued operations, net of tax and noncontrolling interest(2,894)(19)U
Consolidated net earnings (loss) attributable to the GE common shareholdersConsolidated net earnings (loss) attributable to the GE common shareholders$(1,190)$(9,465)87 %$2,787 $(5,977)FConsolidated net earnings (loss) attributable to the GE common shareholders$(2,874)$6,156 U

POWER. We continue to execute for our customers through COVID-19, prioritizing safety first and foremost. From an operations perspective, we are working within our supply chain and with our suppliers to catch up on parts and project scope that were delayed as a result of COVID-19. Despite difficult travel and customer site restrictions, we continue to service our customers' installed base and expect to complete roughly 95% of all planned outages in the year. From a market perspective, both gas-based electricity generation and GE gas turbine utilization has remained stable. Our ability to close transactions, particularly services parts & upgrades, has been impacted by constrained customer budgets and access to financing due to oil prices and economic slowdown, especially in Gas Power. Although there may be market challenges in the near term, we believe gas will play a critical role in the energy transition and our view of the market has not materially changed, albeit timing on new orders is harder to forecast.

Power continues to right sizestreamline its business to better align with market demand and drivingdrive its businesses with an operational rigor and discipline that is focused on its customers’ lifecycle experience. In Gas Power, we continue to size the business for a 25-30 GW market, although acknowledge that the size any given year can vary. We remain focused on our underwriting discipline and risk management to ensure we are securing deals that meet our financial hurdles and we have a high confidence to deliver for our customers.
8 2020 3Q FORM 10-Q
MD&ASEGMENT OPERATIONS
Global electricity demand increased during the first quarter of 2021, driving increases in GE gas turbine utilization and long-term service agreement billings. Looking ahead, we anticipate the power market to continue to be impacted by overcapacity in the industry, increasedcontinued price pressure from competition on servicing the installed base, and the uncertain timing of deal closures due to financing and the complexities of working in emerging markets.markets, as well as the ongoing impacts of COVID-19. Market factors related to the energy transition such as increasing energy efficiency andgreater renewable energy penetration and the adoption of climate change-related policies continue to impact long-term demand. As such, we announced this quarter that wedemand, to differing degrees across markets globally. We believe gas will be exitingplay a critical role in the energy transition and our view of the market has not materially changed. Our businesses are executing on their turnarounds, including the planned exit of new build coal, power market, while continuing to service our customers' installed base.and we are encouraged by the growth in Gas Power Services.

We continue to invest in new product development, such as our HA-Turbines, and upgrades as these are critical to our customers and the long-term strategy of the business.HA-Turbines. Our fundamentals remain strong with approximately $79$78 billion in backlog and a gas turbine installed base greater than 7,000 units, including approximately 1,800 units under long-term service agreements.
Three months ended September 30Nine months ended September 30
OrdersSalesOrdersSales
(In units)20202019202020192020201920202019
GE Gas Turbines17 17 11 12 32 52 43 32 
Heavy-Duty Gas Turbines(a)15 15 9 9 23 42 29 20 
HA-Turbines(b)3 5 3 5 5 15 12 6 
Aeroderivatives(a)2 2 2 3 9 10 14 12 
GE Gas Turbine Gigawatts(c)3.4 3.1 6.0 9.8 
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines.
(c) Gigawatts reported associated with financial orders in the periods presented.
(Dollars in millions)September 30, 2020December 31, 2019September 30, 2019
Equipment$16,734 $17,661 $18,980 
Services62,562 67,640 67,806 
Total backlog$79,295 $85,302 $86,787 
Three months ended September 30Nine months ended September 30
2020201920202019
Equipment$814 $1,252 $2,658 $4,328 
Services2,574 2,612 7,712 8,113 
Total orders$3,388 $3,864 $10,370 $12,442 
Gas Power$2,940 $2,732 $8,876 $9,242 
Power Portfolio1,085 1,194 3,330 3,982 
Total segment revenues$4,025 $3,926 $12,206 $13,224 
Equipment$1,595 $1,434 $4,589 $4,473 
Services2,430 2,492 7,617 8,751 
Total segment revenues$4,025 $3,926 $12,206 $13,224 
Segment profit (loss)$150 $(144)$(19)$84 
Segment profit margin3.7 %(3.7)%(0.2)%0.6 %
Three months ended March 31
OrdersSales
(In units)2021202020212020
GE Gas Turbines18 9 11 7 
Heavy-Duty Gas Turbines(a)10 6 11 5 
HA-Turbines(b)2 2 5 4 
Aeroderivatives(a)8 3 — 2 
GE Gas Turbine Gigawatts(c)1.7 2.2 
(a) Heavy-Duty Gas Turbines and Aeroderivatives are subsets of GE Gas Turbines.
(b) HA-Turbines are a subset of Heavy-Duty Gas Turbines.
(c) Gigawatts reported associated with orders in the periods presented.

2021 1Q FORM 10-Q 7

March 31, 2021December 31, 2020March 31, 2020
Equipment$16,563 $17,127 $18,187 
Services61,468 62,448 66,921 
Total backlog$78,032 $79,575 $85,108 

Three months ended March 31
20212020
Equipment$837 $1,498 
Services2,796 2,612 
Total orders$3,633 $4,111 
Gas Power$2,829 $2,859 
Power Portfolio1,091 1,165 
Total segment revenues$3,921 $4,025 
Equipment$1,241 $1,506 
Services2,679 2,518 
Total segment revenues$3,921 $4,025 
Segment profit (loss)$(87)$(131)
Segment profit margin(2.2)%(3.3)%
For the three months ended September 30, 2020,March 31, 2021, segment orders were down $0.5 billion (12%), segment revenues were updown $0.1 billion (3%) and segment profit was up $0.3 billion.34%.
Backlog as of March 31, 2021 decreased $1.5 billion (2%) and $7.1 billion (8%) from December 31, 2020 and March 31, 2020, respectively, primarily driven by sales outpacing new orders.
Orders decreased $0.4$0.5 billion (12%) organically, primarily due to decreases in Gas Power Heavy-Duty Gas Turbinedriven by the nonrecurrence of a large turnkey order and Steam Power equipment and services orders.
Revenues increased $0.1decreased $0.2 billion (3%(4%) organically*, primarily due to increasesdecreased Steam Power equipment and services revenues and decreases in Gas Power equipment revenues, related to higher extended scope shipments in the quarter, partially offset by decreasesan increase in Gas Power services primarily related to decreases in upgrades. Steam equipment revenues also decreased primarily driven by project timing.revenues.
Profit increased $0.3 billion35% organically* due to higher Gas Power equipment revenues, better equipment project execution in Gas Power equipment contracts, and improved cost productivity across Gas Power and Power Portfolio driven by continued efforts to right size the business.

For the nine months ended September 30, 2020, segment orders were down $2.1 billion (17%), segment revenues were down $1.0 billion (8%) and segment profit was down $0.1 billion.
Backlog as of September 30, 2020 decreased $6.0 billion (7%) and $7.5 billion (9%) from December 31, 2019 and September 30, 2019, respectively, primarily driven by sales outpacing new orders.
Orders decreased $1.9 billion (16%) organically, primarily due to decreases in Gas Power Heavy-Duty Gas Turbine unit and services orders and Steam equipment orders.


*Non-GAAP Financial Measure
2020 3Q FORM 10-Q 9
MD&ASEGMENT OPERATIONS
Revenues decreased $0.8 billion (6%) organically*, primarily due to decreasesgrowth in Gas Power services revenues primarily related to decreases in transactional part sales and upgrades, partially offset by increases in Gas Power equipment revenues related to 9 more Heavy-Duty gas turbine unit shipments. Steam equipment and service revenues also decreased.
Profit decreased $0.1 billion organically* due to lower revenues, a charge of approximately $0.1 billion related to an under-performing JV in China at Gas Power and a quality reserve at Power Portfolio on the legacy product line that we have since exited in Power Conversion, partially offset by better equipment project execution in Gas Power equipment contractsmargins and continued efforts to right sizestreamline the business across Gas Power and Power Portfolio.Portfolio, partially offset by unfavorable legacy project arbitration resolutions and Steam project execution.

RENEWABLE ENERGY. During the third quarterRenewable Energy includes a portfolio of 2020, our manufacturing locations and long-term project sites returned to pre-COVID-19 capacity levels and operations, respectively. While we do not believe the long-term outlook for renewable energy products and services has materially changed, we are monitoring the impact of the pandemic on the renewable energy industry, including electricity consumption forecasts and customer capital expenditure levels, supply chain, availability of financing and our ability to execute on equipment and long-term projects, including the impact of possible customer related delays. In response to volume declines in certain of our businesses we implemented additional cost reduction measures, restructuring and cash preservation actions.comprising

Our businesses comprise Onshore Wind (including(with our separate LM Wind)Wind blades business), Grid Solutions equipment and services, Hydro, Offshore Wind and Hybrid Solutions. These businesses are uniquely positioned to lead the energy transition with products and integrated solutions by growing new renewable energy generation, lowering the cost of electricity and modernizing the grid.

We continue to observe growthstrong demand across the global onshore wind market together with a positive impact on deliveries and installations in the U.S. from the Production Tax Credit (PTC) cycle and customer preference shifting to larger, more efficient units to drive down costs and compete with other power generation options. Despite the competitive nature of the market, onshore wind order pricing has stabilized globally. In response to the risk of COVID-19 impacting the timing of project completion, the phase-down of U.S. PTCs was extended by an additional year allowing installations in 2021 and 2022 to qualify for a 100% and 80% PTC, respectively. Under the current legislation, the PTC phase-down concludes in 2024. We expect high levels of production to continue for 2020 and 2021 deliveries at Onshore Wind and are closely monitoring our execution during this period.

The grid market remains challenging as we continue to experience pricing pressure in the High Voltage Direct Current (HVDC) and High Voltage (HV) product lines. While we have experienced order declines in both these product lines, we announced in the third quarter of 2020, that Grid has been awarded HVDC scope for a 1.4GW offshore wind project in the United Kingdom. Both the Grid and Hydro businesses are executing their turnaround plans.plans and we are expecting improved operating results in 2021.

New product introductions remain important to our onshore and offshore customers who are demonstrating the willingness to adopt the new technology of larger turbines that decrease the levelized cost of energy. We continue to focus on developing larger, more efficient turbines like the Haliade-X (Offshore Wind) and the 5MW Cypress (Onshore Wind), for which we have observed significant market interest,demand for our Onshore 5-6 MW Cypress units and cost reduction initiatives over these productsOffshore Haliade-X 12-13 MW units and our broader portfolio. We are preparing for large scale production of Haliade-X and expect itin response to receive certification in the fourth quarter of 2020. During the third quarter of 2020, we completed delivery of the first Cypress units and have reported more than 700 of these units in backlog.this market demand.
Three months ended September 30Nine months ended September 30
OrdersSalesOrdersSales
(In units)20202019202020192020201920202019
OnshoreWind Turbines953 1,104 1,170 1,128 2,336 3,058 2,731 2,285 
Wind Turbine Megawatts3,251 3,413 3,366 3,148 7,751 8,747 7,770 6,392 
Repower units75 318 300 266 199 912 876 643 
Three months ended March 31
OrdersSales
Onshore and Offshore (In units)
2021202020212020
Wind Turbines728 738 778 731 
Wind Turbine Gigawatts2.2 2.3 2.4 2.1 
Repower units121 6 — 219 
(Dollars in millions)September 30, 2020December 31, 2019September 30, 2019
Equipment$15,734 $16,297 $16,423 
Services10,767 11,233 10,940 
Total backlog$26,501 $27,530 $27,363 

Three months ended September 30Nine months ended September 30
2020201920202019
Equipment$3,488 $4,271 $8,631 $10,125 
Services493 745 1,404 2,079 
Total orders$3,981 $5,016 $10,036 $12,204 
Onshore Wind$3,303 $3,193 $7,914 $7,084 
Grid Solutions equipment and services936 991 2,587 2,843 
Hydro, Offshore Wind and other287 241 722 663 
Total segment revenues$4,525 $4,425 $11,224 $10,590 
Equipment$3,771 $3,609 $9,068 $8,457 
Services754 816 2,155 2,133 
Total segment revenues$4,525 $4,425 $11,224 $10,590 
Segment profit (loss)$5 $(98)$(493)$(469)
Segment profit margin0.1 %(2.2)%(4.4)%(4.4)%
March 31, 2021December 31, 2020March 31, 2020
Equipment$16,987 $17,470 $15,799 
Services12,461 12,531 10,712 
Total backlog$29,448 $30,001 $26,511 


*Non-GAAP Financial Measure
10 2020 3Q2021 1Q FORM 10-Q8

MD&ASEGMENT OPERATIONS
Three months ended March 31
20212020
Equipment$2,954 $2,669 
Services561 399 
Total orders$3,515 $3,068 
Onshore Wind$2,118 $2,124 
Grid Solutions equipment and services795 839 
Hydro165 179 
Offshore Wind and Hybrid Solutions169 51 
Total segment revenues$3,248 $3,194 
Equipment$2,844 $2,576 
Services404 618 
Total segment revenues$3,248 $3,194 
Segment profit (loss)$(234)$(327)
Segment profit margin(7.2)%(10.2)%
For the three months ended September 30, 2020,March 31, 2021, segment orders were down $1.0up $0.4 billion (21%(15%), segment revenues were up $0.1 billion (2%) and segment profit was up $0.1 billion.
Orders decreased $0.9 billion (18%) organically. Onshore Wind decreased driven by the phase down of the U.S. PTC cycle and lower repower orders. Offshore Wind decreased primarily from the nonrecurrence of the Offshore EDF project.
Revenues increased $0.2 billion (4%) organically*, with higher revenue from 42 more wind turbine shipments, or 7% more megawatts shipped, and 34 more repower units than in the prior year at Onshore Wind. Revenue decreased at Hydro, primarily related to lower volume.
Profit increased $0.1 billion organically*, primarily due to improved pricing and cost deflation at Onshore Wind and lower cost across the segment, partially offset by the impact of higher volume of lower margin products at Onshore Wind.

For the nine months ended September 30, 2020, segment orders were down $2.2 billion (18%), segment revenues were up $0.6 billion (6%) and segment profit was lower (5%(28%).
Backlog as of September 30, 2020March 31, 2021 decreased $1.0$0.6 billion (4%) and $0.9 billion (3%(2%) from December 31, 2019 and September 30, 2019, respectively. This decrease is2020 primarily attributabledriven by the effects of foreign currency fluctuations, partially offset by new orders outpacing sales. Backlog increased $2.9 billion (11%) from March 31, 2020 primarily from Offshore Wind due to our first Haliade-X order for the phase down of the U.S. PTC cycle resultingDogger Bank Wind Farm, new Cypress platform orders in deliveries at Onshore Wind and an increase in North AmericaHydro. These increases were partially offset by sales exceeding new orders and lower orders at Grid, primarily as a result of increased commercial selectivity in certain product lines. These decreases were partially offset by higher backlog in other Onshore regions driven primarily by orders for the new Cypress platform, and Hydro, primarily in the U.S.
Orders decreased $1.9increased $0.4 billion (16%(13%) organically, primarily due to lowerthe Grid high voltage direct current (HVDC) project for the Sofia Offshore Wind Farm and higher services orders at Onshore Wind.
Revenues were flat organically*, as higher revenue at Offshore Wind associated with the EDF’s 6MW PBG project in Saint-Nazaire, France and 30 more Onshore Wind turbine sales on a unit basis and 11% more on a megawatt basis, were offset by lower repower unit orders associated with the U.S. PTC cycle compared to the prior year, the nonrecurrence of the Offshore EDF project in the prior year,deliveries at Onshore Wind and lower ordersrevenue at Grid.
RevenuesProfit increased $0.9$0.1 billion (9%(31%) organically*, primarily from improvement in Onshore Wind with 446 more wind turbine shipments on a unit basis, than in the prior year, partially offset by lower Grid revenues, primarily due to COVID-19.
Profit decreased $0.1 billion (11%) organically*, as the impact of higher sales volume at Onshore Wind andproduct cost, the favorable impact of cost reduction measures, wasprimarily at Grid and Hydro, and improved project execution, partially offset by the nonrecurrence of a $0.1 billion non-cash gain from the termination of two Offshorelower margins on new product introductions at Onshore Wind contracts in the first quarter of 2019.and higher restructuring costs.

AVIATION. The global COVID-19 pandemic continues to have a material adverse effect on the global airline industry. A key underlying driver of Aviation’s commercial engine and services businesses is global commercial air traffic, which in turn is driven by economic activity and consumer and business propensity to travel. Since the beginning of the pandemic in the first quarter of 2020, we have seen varied levels of recovery in global markets. Government travel restrictions, public health advisories, individuals' propensity to travel and continued cases of the virus have all impacted the level of air travel. Aviation regularly tracks global departures, which as of March 31, 2021, were approximately 40% below first quarter 2020. Global departures improved in March 2021 compared to the first two months of the year, but levels of recovery varied across global regions. Aviation is closely monitoring government actions and economic and industry forecasts. Due to the global airline industry contraction, Aviation’s airline and airframe customers are taking measures to address reduced demand, which, in turn, continue to materially impact Aviation’s business operations and financial performance. As a result, our long-term service agreement billings decreased approximately 50% from the prior year. Aviation is closely monitoring government actions and economic and industry forecasts, although such forecasts continue to evolve and reflect the uncertainty about the severity and duration of the decline in commercial air traffic. Aviation regularly tracks global departures, which as of September 30, 2020, were approximately 40% below the pre-COVID-19 baseline and have remained relatively flat in October. More broadly, we are in frequent dialogue with our airline and airframe customers about the outlook for commercial air travel, new aircraft production, fleet retirements, and after-market services.services, including shop visit and spare part demand. Given the current trend,trends, we expect domestic travel routes primarily served by narrowbody aircraft to recover before long-haul, international travel routes which are primarily served by widebody aircraft. However,Consistent with industry projections, Aviation continues to estimate the duration of the market recovery to be prolonged over multiple years dependent on various factors, including travelers' safety concerns, containmentcontaining the spread of COVID-19, medical treatment progress,the virus, effective inoculation programs and economic conditions.government collaboration to encourage travel, particularly around reducing quarantine requirements.

Aviation has and is continuing to taketaken several business actions to respond to the current adverse environment, including a permanent reduction of approximately 25% of its total global employee workforce. These actions are estimated to result in more than $1 billion in cost savings and more than $2 billion in cash preservation actions in 2020. Through the third quarter of 2020, theworkforce since year-end 2019. The business has completed around 70% of these actions, including workforce reductions of approximately 20%, and realized close to $1 billion in cost savings, and is actively monitoring the pace of demand recovery to ensure the business is appropriately sized for the future. In addition, we continue to partner with our airline and leasing customers and are working closelyaligned with our airframe partners to alignon production rates for 20202021 and beyond.

Aviation’s operational and financial performance is impacted by demand for commercial air traffic, shop visit demand, fleet retirements, and demand for new aircraft. We monitor and forecast each of these factors as part of Aviation’s long-term planning process, which may result in additional business restructuring actions. Given the uncertainty related to the severity and length of the global COVID-19 pandemic and the impact on these factors across the aviation sector, Aviation could be required to record charges, impairments, or other adverse financial impacts in future periods if actual results differ significantly from Aviation's current estimates.

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




*Non-GAAP Financial Measure
2020 3Q FORM 10-Q 11
MD&ASEGMENT OPERATIONS
Total engineering, comprised bothof company, customer and customer funded spending,partner-funded and nonrecurring engineering costs, decreased compared to prior year in line with the changes in the commercial environment. ForDuring the nine months ended September 30, 2020,first quarter of 2021, company-funded research and development spend decreased compared to 2019,the prior year. Customer and we expect the reduction to continue in line with the actions outlined above. However, customer-fundedpartner-funded engineering efforts, primarily in our Military business, increaseddecreased compared to the prior year. On September 28, 2020,year due to the timing of planned program expenditures. Aviation announced it received certification from the U.S. Federal Aviation Administration (FAA) for the GE9X engine, the world’s largestcontinues to be committed to investment in developing and most powerful commercial aircraft engine.maturing technology that enables a more sustainable future of flight.
*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 9

Aviation is taking actions to protect its ability to serve its customers now and as the global airline industry recovers. While its near-term focus remains on navigating the COVID-19 pandemic, Aviation’s deep history of innovation and technology leadership, commercial engine installed base of approximately 38,00037,700 units, with approximately 12,500 units under long-term service agreements, and military engine installed base of approximately 27,00026,500 units with approximately 12,000 units under long-term service agreements, and $262 billion backlog represents strong long-term fundamentals. Aviation is taking actions to protect and strengthen its business and seeks to emerge from this crisis stronger and drive long-term cash and profitable growth over time.
Three months ended September 30Nine months ended September 30
OrdersSalesOrdersSales
(In units, except where noted)20202019202020192020201920202019
Commercial Engines88 297 329 714 291 1,995 1,121 2,188 
LEAP Engines(a)16 49 172 455 46 1,378 622 1,316 
Military Engines116 154 107 186 851 233 457 490 
Spare Parts Rate(b)$14.4 $30.0 $18.1 $29.0 
(a) LEAP engines are subsets of commercial engines.
(b) Commercial externally shipped spare parts and spare parts used in time and material shop visits in millions of dollars per day.

(Dollars in millions)September 30, 2020December 31, 2019September 30, 2019
Equipment$34,778 $39,131 $38,212 
Services227,013 234,114 214,686 
Total backlog$261,791 $273,245 $252,898 
Three months ended March 31
OrdersSales
(In units, except where noted)2021202020212020
Commercial Engines(a)298 168 359 530 
LEAP Engines(b)141 6 188 272 
Military Engines181 272 96 146 
Spare Parts Rate(c)$13.2 $26.9 
(a) Commercial Engines now includes Business and General 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.
Three months ended September 30Nine months ended September 30
2020201920202019
Equipment$1,137 $2,971 $5,408 $9,687 
Services2,935 5,825 9,851 16,388 
Total orders$4,072 $8,796 $15,259 $26,074 
Commercial Engines & Services$2,696 $5,997 $9,705 $17,796 
Military1,137 1,061 3,258 3,073 
Systems & Other1,087 1,050 3,233 3,071 
Total segment revenues$4,919 $8,109 $16,196 $23,940 
Equipment$1,933 $3,149 $6,234 $9,295 
Services2,987 4,960 9,961 14,645 
Total segment revenues$4,919 $8,109 $16,196 $23,940 
Segment profit$356 $1,718 $681 $4,764 
Segment profit margin7.2 %21.2 %4.2 %19.9 %

March 31, 2021December 31, 2020March 31, 2020
Equipment$34,333 $34,486 $39,154 
Services225,032 225,927 234,078 
Total backlog$259,365 $260,412 $273,232 
Three months ended March 31
20212020
Equipment$2,004 $2,228 
Services3,488 5,221 
Total orders$5,491 $7,448 
Commercial Engines & Services$3,354 $5,113 
Military956 960 
Systems & Other682 820 
Total segment revenues$4,992 $6,892 
Equipment$1,847 $2,364 
Services3,145 4,529 
Total segment revenues$4,992 $6,892 
Segment profit$641 $1,003 
Segment profit margin12.8 %14.6 %
For the three months ended September 30, 2020,March 31, 2021, segment orders were down $4.7$2.0 billion (54%(26%), segment revenues were down $3.2$1.9 billion (39%(28%) and segment profit was down $1.4$0.4 billion (79%).
Orders decreased $4.7 billion (53%) organically, primarily driven by declines of approximately 60% in both commercial equipment and service orders as airline customers have slowed or deferred new engine orders, as well as delayed maintenance and repair operations while existing fleets have been grounded.
Revenues decreased $3.1 billion (39%) organically*. Equipment revenues decreased primarily due to 385 fewer commercial install and spare engine unit shipments, including 283 fewer LEAP units versus the prior year, in part due to the 737 MAX grounding and production slowdown. Commercial Services revenues decreased primarily due to lower commercial spare part shipments, decreased shop visits and the cumulative impact of changes in billing and cost assumptions in our long-term service agreements. Military revenues increased primarily due to higher volume of spare part shipments and increased revenues on development contracts, partially offset by fewer engine shipments due to supply chain execution issues.
Profit decreased $1.4 billion (79%) organically*, primarily due to lower volume on commercial spare part and commercial spare engine shipments, and decreased shop visits in our service agreements. During the three months ended September 30, 2020, Aviation recorded expenses of $0.1 billion due to lower production volumes given decreases in demand primarily related to commercial engines. Aviation also recorded a pre-tax impairment charge of $0.1 billion in a joint venture in the systems business as a result of changes in the commercial aviation market. In addition, Aviation recorded a $0.1 billion pre-tax charge to reflect the cumulative impacts of changes to billing and cost assumptions for certain long-term service agreements. Additional adjustments could occur in future periods and could be material for certain long-term service agreements if actual customer operating behavior differs significantly from Aviation’s current estimates.
*Non-GAAP Financial Measure
12 2020 3Q FORM 10-Q
MD&ASEGMENT OPERATIONS
For the nine months ended September 30, 2020, segment orders were down $10.8 billion (41%), segment revenues were down $7.7 billion (32%) and segment profit was down $4.1 billion (86%(36%).
Backlog as of September 30, 2020March 31, 2021 decreased $11.5$1.0 billion (4%) from December 31, 2019,2020, primarily due to approximately 400 LEAP-1B unit order cancellations. Backlog decreased $13.9 billion (5%) from March 31, 2020, primarily due to a reduction in our Commercial Services backlog and cancellations of commercial equipment orders, which included approximately 1,100 LEAP 1-B1,900 LEAP-1B unit order cancellations and 22 GE9x unit order cancellations, as well as sales outpacing new orders.cancellations. The reduction to Commercial Services backlog reflects estimates of lower engine utilization, the partial cancellation of long-term service agreements related to the equipment unit order cancellations, estimates of lower engine utilization, and anticipated customer fleet restructuring and contract modifications. In addition to cancellations removed from backlog during 2020, there were several public customer announcements that indicate an intent to cancel, however, customer purchase orders with Aviation or the airframer have not been canceled as of September 30, 2020. Based on information currently available, the value of the announced but not canceled orders is less than $2 billion of total backlog. Backlog adjustments could be necessary in future periods for additional cancellations of new commercial engine orders, fleet retirements, or changes to customer aircraft utilization and operating behavior. Backlog increased $8.9 billion (4%) from September 30, 2019, primarily due to an increase in long-term service agreements and transactional services commitments, offset by decreases in commercial equipment orders.
Orders decreased $10.5$1.9 billion (41%(26%) organically, primarily driven by lower commercial equipment and service orders as airline customers have slowed or deferred new engine orders, as well as delayed maintenance and repair operations while existing fleets have lower utilization or been grounded. Military orders increased 23%decreased 8% compared to the prior year primarily driven by equipment and new developmentlower spare parts orders.
Revenues decreased $7.5$1.9 billion (32%(27%) organically*. Equipment revenues decreased, primarily due to 1,067171 fewer commercial install and spare engine unit shipments, including 69484 fewer LEAP units and 202 fewer CFM56 units versus the prior year, in part due to the 737 MAX grounding and production slowdown.year. Commercial Services revenues decreased, primarily due to lower commercial spare part shipments and decreased shop visits and the cumulative impact of changes in billing and cost assumptions in our long-term service agreements.visits. Military revenues increased primarily due to higher volume of spare part shipments and increased revenues on development contracts, partially offset bywere flat with 50 fewer engine shipments due to supply chain execution issues in the third quarter.challenges, offset by favorable product mix.
Profit decreased $4.1$0.4 billion (86%(37%) organically*, primarily due to lower volume on commercial spare part and commercial spare engine shipments, and decreased shop visits in our service agreements. During the nine months ended September 30, 2020, Aviation recorded expenses of $0.3 billion due to lower production volumes and initiated restructuring actions givenThese decreases in demand primarilyprofit were partially offset by operational cost reduction from the cost savings actions taken in 2020 and the first quarter of 2021, along with charges related to commercial engines. Aviation also recorded pre-tax charges totaling $0.3 billion due to expected future losses related primarily to customer
credit risk given the current environment. In addition, Aviation recorded net unfavorable changes of $0.9 billion toand declines in the estimated profitability in its long-term service agreements. This decrease includes a $0.5 billion pre-tax charge to reflect the cumulative impacts of changes to billing and cost assumptions for certain long-term service agreements reflecting lower engine utilization, anticipated customer fleet restructuring and contract modifications. Additional adjustments could occur in future periods and could be material for certain long-term service agreements if actual customer operating behavior differs significantly from Aviation's current estimates.

HEALTHCARE. During the first half of 2020, there was an increase in demand for certain of our products that are highly correlated to the response to the COVID-19 pandemic, including ventilators, monitoring solutions, x-ray, anesthesia and point-of-care ultrasound product lines. However, we also saw reduction in demand and delays in procurement in other products and services that were not critical to the response efforts or where procedures could be postponed (magnetic resonance, contrast agents and nuclear tracers). We have experienced some moderation in COVID-19 related demandrepeating in the third quarter and have experienced some recovery in hospital spending on non-COVID-19 related products. The pandemic is still driving uncertainty in our markets globally, as well as additional supply chain and logistics costs, and we expect this to continue. We expect capital expenditures, particularly in private markets, to remain under pressure from financial constraints as they recover from procedure delays and revenue declines related to COVID-19. In response to expected near term volatility and cost pressures, we have initiated additional cost reduction, restructuring and cash preservation actions.

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

The Healthcare Systems (HCS) equipment market over the long term continues to expand at low single-digit rates or better, while demand continues for services on new equipment as well as on our existing installed base. However, there is short-term variation driven by market-specific political, environmental and economic cycles. There has been some moderation in tariffs in both U.S. and China, however, this is subject to changes in U.S.-China trade relations. Long-term growth in emerging markets is driven by trends of expanding demand and access to healthcare. Developed markets are expected to remain steady in the near term driven by macro trends in the healthcare industry.

The Pharmaceutical Diagnostics (PDx) business is positioned in the contrast agent and nuclear tracer markets. This market is expected to grow over the long-term, driven by continued diagnostic imaging procedure growth and increasing contrast and tracer-enhanced biomarkers of these same procedures, as these products help to increase the precision of the diagnostic information provided to clinicians. After we experienced reduced demand in the first half of 2020, we saw increases in the third quarter for PDx products as procedure volume increased.current year.




*Non-GAAP Financial Measure
2020 3Q2021 1Q FORM 10-Q 1310

MD&AHEALTHCARE. We continue to see an overall recovery in hospital spend and increases in procedure volume; the expectation is that this will continue in line with the worldwide COVID-19 vaccine rollout. PDx demand has largely recovered to pre-COVID levels in line with increases in procedure volume. However, in some markets we expect capital expenditures to remain under pressure from revenue declines related to COVID-19 impacts. The pandemic is still driving additional supply chain and logistics costs, and we expect this to continue. In response to continuing near-term volatility and cost pressures, we have continued to execute on structural cost reductions and cash optimization actions, in order to prioritize spend on growth and research and development.

SEGMENT OPERATIONS
We continue focusing on creating new products and digital solutions as well as expanding uses of existing offerings that are tailored to the different needs of our global customers. GE Healthcare recently introduced the Vivid™ Ultra Edition, which bringslatest member of the efficiency capabilitiesVenue™ point of artificial intelligence (AI) to its entire Vivid cardiovascularcare ultrasound portfolio.family. We also partneredintroduced Vscan Air, a cutting edge wireless pocket-sized ultrasound that provides crystal clear image quality, whole-body scanning capabilities, and intuitive software. We received 510(k) clearance for OEC 3D surgical c-arm. OEC 3D sets the standard of interoperative imaging with Lunitprecise 3D volumetric images for spine and orthopedic procedures combined with 2D imaging for greater everyday efficiency. We remain committed to launch the Thoracic Care Suite on x-ray with Lunit INSIGHT CXR, which leverages AIinnovate and invest to help alleviate clinical strain on radiologists by automatically analyzing images.create more integrated, efficient, and personalized precision healthcare.
March 31, 2021December 31, 2020March 31, 2020
Equipment$5,564 $5,538 $5,957 
Services11,479 11,562 11,433 
Total backlog$17,044 $17,100 $17,389 

(Dollars in millions)September 30, 2020December 31, 2019September 30, 2019
Equipment$5,476 $6,978 $6,674 
Services11,546 11,480 11,422 
Total backlog(a)$17,022 $18,458 $18,096 
Three months ended September 30Nine months ended September 30
2020201920202019
Equipment$2,139 $3,078 $7,893 $9,179 
Services1,986 2,063 5,769 6,097 
Total orders(a)$4,125 $5,141 $13,662 $15,276 
Healthcare Systems$4,085 $3,642 $11,056 $10,664 
Pharmaceutical Diagnostics480 495 1,300 1,497 
BioPharma— 786 830 2,378 
Total segment revenues$4,565 $4,923 $13,185 $14,540 
Equipment$2,538 $2,828 $7,287 $8,320 
Services2,027 2,095 5,899 6,220 
Total segment revenues$4,565 $4,923 $13,185 $14,540 
Segment profit$765 $974 $2,212 $2,714 
Segment profit margin16.8 %19.8 %16.8 %18.7 %
(a) Backlog as of September 30, 2020 excluded the BioPharma business due to its disposition in the first quarter of 2020. Backlog as of both December 31, 2019 and September 30, 2019 included $1.2 billion related to BioPharma. Orders included $0.8 billion related to BioPharma for the three months ended September 30, 2019, and included $1.1 billion and $2.6 billion related to BioPharma for the nine months ended September 30, 2020 and 2019, respectively.

Three months ended March 31
20212020
Equipment$2,445 $3,305 
Services2,027 1,987 
Total orders(a)$4,472 $5,292 
Healthcare Systems (HCS)$3,825 $3,448 
Pharmaceutical Diagnostics (PDx)482 450 
BioPharma— 830 
Total segment revenues$4,308 $4,727 
Equipment$2,227 $2,699 
Services2,081 2,029 
Total segment revenues$4,308 $4,727 
Segment profit$698 $867 
Segment profit margin16.2 %18.3 %
(a) Orders for the three months ended March 31, 2020 included $1,136 million related to BioPharma.
For the three months ended September 30, 2020,March 31, 2021, segment orders were down $1.0$0.8 billion (20%(15%), segment revenues were down $0.4 billion (7%(9%) and segment profit was down $0.2 billion (21%).
Orders were down $0.2 billion (4%) organically, driven by decreases in HCS (5%) mainly due to lower equipment demand and in PDx (2%). The difference between reported and organic orders decreases was primarily driven by the BioPharma disposition.
Revenues increased $0.4 billion (10%) organically*, primarily driven by $0.3 billion from the U.S. Department of Health and Human Services (HHS) to deliver ventilators in partnership with Ford and increased volume from COVID-19 related products, partially offset by a decrease in PDx.
Profit was up $0.2 billion (30%) organically*, primarily due to cost reductions and increases in HCS volume.

For the nine months ended September 30, 2020, segment orders were down $1.6 billion (11%), segment revenues were down $1.4 billion (9%) and segment profit was down $0.5 billion (18%(19%).
Backlog as of September 30, 2020March 31, 2021 decreased $1.4$0.1 billion (8%) from December 31, 20192020 and decreased $1.1$0.3 billion (6%(2%) from September 30, 2019March 31, 2020 primarily due to the BioPharma disposition. Excluding Biopharma, backlog increased $0.1 billion from September 30, 2019.conversion to revenue of shorter cycle time LCS products, offset by increases in orders of longer cycle time imaging products.
Orders increased $0.2 billion (2%(5%) organically, due to increases in demand for COVID-19 related products, includingImaging and Ultrasound in HCS, and a $0.3 billion order from the HHSreturn to deliver 50,000 ventilatorspre-pandemic volume in partnership with Ford,PDx, partially offset by PDx. Excluding BioPharma,lower Life Care Solutions (LCS) orders were flat organically.in HCS as pandemic-related demand softened.
Revenues increased $0.4$0.3 billion (3%(7%) organically*, driven by increased demand in Imaging, Ultrasound and Life Care Solutions for HCS products, used directly in responseand a return to COVID-19, partially offset by reducedpre-pandemic volume in PDx from a decrease in non-essential routine procedures. Excluding BioPharma, revenues increased $0.3 billion (2%) organically*.PDx.
Profit increased $0.2 billion (12%(30%) organically*, primarily due to cost reductions and increased demand for HCS products, used directly in response to COVID-19, partially offset by decreasesand increases in PDx volume. Excluding BioPharma, profits increased $0.2 billion (10%) organically*.

CAPITAL. We continueIn the first quarter of 2021, we announced an agreement to evaluate strategic optionscombine GECAS with AerCap, for which the Company expects to accelerate the further reductionreceive $23.9 billion in cash, subject to contractual closing adjustments, approximately $6.6 billion in shares representing a 46% stake in the sizecombined company, and $1 billion in AerCap notes and/or cash upon closing. The Company expects to transfer GECAS’ net assets, including its engine leasing and Milestone helicopter leasing businesses, as well as GECAS’ more than 400 employees and its current purchase obligations, to AerCap. In addition, upon the closing of the transaction, the remainder of GE Capital some of which could result in material financial charges depending on the timing, negotiated terms and conditions of any ultimate arrangements.will be reported within Corporate.

AtIn connection with the signing of the transaction agreement, GE Capital the primary effectrecorded a non-cash after-tax charge of the COVID-19 pandemic pertains to its GECAS business. The pandemic has led to worldwide reduction of flight schedules and it is difficult to predict its longer-term impact. Additionally, the related market volatility resulted$2.8 billion in higher credit spreads on the investment securities held by our run-off insurance business, which resulted in marks and impairments takendiscontinued operations in the first quarter of 2021, and the results of GECAS are now presented in discontinued operations.

In the first quarter of 2021, we announced our intention to discontinue the majority of our factoring programs, which recoveredwas effective April 1, 2021.

GE Capital made capital contributions to its insurance subsidiaries of $2.0 billion in the second and thirdfirst quarters of 2020.both 2021 and 2020, and expects to provide further capital contributions of approximately $5.5 billion through 2024.

*Non-GAAP Financial Measure
14 2020 3Q2021 1Q FORM 10-Q11
MD&ASEGMENT OPERATIONS
As of September 30, 2020, GECAS owned 952 fixed-wing aircraft, of which 29 with a book value of $0.6 billion were available to lease to customers (aircraft on the ground). We test recoverability of each fixed-wing aircraft in our operating lease portfolio at least annually. Additionally, we perform quarterly evaluations in circumstances such as when assets are re-leased or current lease terms have changed.

Given the environment, we accelerated our review in the second quarter to focus on leases with higher risk of repossession based on our assessment of customer credit risk default and any unplaced leased assets rolling-off over the next 12 months, which represented approximately 20% of our fixed-wing aircraft operating lease portfolio. In addition, we performed our detailed annual portfolio review in the third quarter of 2020, which incorporated third party appraisal data, updates to all cash flow assumptions as well as evolving market and customer dynamics that we are monitoring. These analyses resulted in pre-tax impairments of $0.2 billion and $0.5 billion during the three and nine months ended September 30, 2020, respectively, primarily on our fixed-wing aircraft operating lease portfolio. Pre-tax impairments were insignificant and $0.1 billion for the three and nine months ended September 30, 2019, respectively. The increase in pre-tax impairments was driven by declining cash flow projections of the future collectability of rents on aircraft and engines currently under contract related to market impacts resulting from the pandemic. Continued deterioration in cash flow projections, including current rents, downtime, release rates and residual assumptions could result in future impairments in the operating lease portfolio.

Based on the resulting pressure on its airline customers, GECAS continues to see deferral requests, which are primarily short term in nature. As a result of these requests, we have executed agreements with customers to reschedule certain lease payments. As of September 30, 2020, we have a contractually deferred balance of $408 million, we have invoiced $139 million under these agreements and collected $119 million. We expect to continue to receive requests for rent deferrals and/or lease restructures from our global airline customers as a result of COVID-19 and related market impacts. An extended disruption of regional or international travel could result in an increase in these types of requests in future periods, which could result in an increase to the trade receivable balance. As GECAS evaluates future lease restructures, there is a risk of lease modifications that could have a material adverse effect on GECAS operations, financial position and cash flows.

In October 2020, Pacific Investment Management Company (PIMCO), one of the world’s premier fixed income investment managers, and GECAS reached a preliminary agreement to develop an aviation leasing venture to support up to $3 billion in aircraft asset financings. The transaction is subject to definitive agreement, customary closing conditions and receipt of required regulatory approvals.

We annually perform premium deficiency testing in the aggregate across our run-off insurance portfolio in the third quarter. As a result of the testing, we identified no premium deficiency. See the Other Items section and Note 12 to the consolidated financial statements for further information.

GE Capital expects to receive approximately $2 billion of additional capital contributions from GE in the fourth quarter of 2020. See the Capital Resources and Liquidity section for further information.
(Dollars in millions)September 30, 2020December 31, 2019
GECAS$35,846 $37,979 
March 31, 2021December 31, 2020
Energy Financial Services (EFS)Energy Financial Services (EFS)1,6211,823Energy Financial Services (EFS)$2,359 $2,385 
Working Capital Solutions (WCS)(a)Working Capital Solutions (WCS)(a)6,7859,014Working Capital Solutions (WCS)(a)4,5675,884
InsuranceInsurance50,00746,266Insurance50,35350,824
Other continuing operations(b)(a)Other continuing operations(b)(a)18,668 22,463 Other continuing operations(b)(a)14,429 18,577 
Total segment assets$112,927 $117,546 
Total segment assets - continuing operationsTotal segment assets - continuing operations$71,709 $77,670 
GE Capital debt to equity ratio4.1:13.9:1
(a) In the first quarter of 2020, the remaining Industrial Finance assets of $0.3 billion were transferred to Other continuing operations.
(b) Included cash, cash equivalents and restricted cash of $13.9 billion$9,332 million as of September 30, 2020March 31, 2021 and $17.6 billion$13,245 million as of December 31, 2019.2020.
2020 3Q FORM 10-Q 15
MD&ASEGMENT OPERATIONS
Three months ended September 30Nine months ended September 30Three months ended March 31
(In millions)2020201920202019
GECAS$923 $1,211 $2,994 $3,678 
20212020
EFSEFS15 (44)77 100 EFS$(3)$64 
WCSWCS57 195 270 683 WCS55 131 
InsuranceInsurance764 718 2,167 2,160 Insurance775 616 
Other continuing operationsOther continuing operations(78)17 (59)24 Other continuing operations51 25 
Total segment revenuesTotal segment revenues$1,681 $2,097 $5,449 $6,645 Total segment revenues$878 $837 
GECAS$(38)$263 $(906)$815 
EFSEFS18 (7)13 110 EFS$(5)$53 
WCSWCS15 55 51 203 WCS2 24 
InsuranceInsurance57 (678)78 (677)Insurance116 (93)
Other continuing operations(a)Other continuing operations(a)(104)(277)(794)(1,050)Other continuing operations(a)(285)(171)
Total segment profit (loss)Total segment profit (loss)$(52)$(645)$(1,558)$(599)Total segment profit (loss)$(172)$(187)
(a) Other continuing operations primarily comprised excess interest costs from debt previously allocated to assets that have been sold, as part of the GE Capital Exit Plan, preferred stock dividend costs and interest costs not allocated to GE Capital segments,businesses, and preferred stock dividend costs prior to January 2021, at which are driven bytime these became a GE Capital’s interest allocation process.Industrial obligation (see Note 17 for further information). Interest costs are allocated to GE Capital segmentsbusinesses based on the tenor of their assets using the market rate at the time of origination, which differs from the asset profile when the debt was originated. As a result, actual interest expense is higher than interest expense allocated to the remaining GE Capital segments. Substantially all preferred stock dividend costs will become a GE obligation in January 2021. See Note 15 for further information. In addition, webusinesses. We anticipate unallocated interest costs to gradually decline as debt matures and/or is refinanced.

For the three months ended September 30, 2020,March 31, 2021, segment revenues decreased $0.4 billion (20%)increased 5% and segment losses were down $0.6 billion.decreased 8%.
GE Capital revenues decreased $0.4 billion (20%)increased 5%, primarily as a result of volume declines,lower marks and impairments primarily at GECAS related to lower interest income attributable to the sale of PK Air Finance and lower rental revenue, and lower gains. Capital losses decreased $0.6 billion, primarily due to the nonrecurrence of a $1.0 billion pre-tax charge identified through the completion of our 2019 annual insurance premium deficiency review, higher tax benefits and lower excess interest costs,in Insurance, partially offset by lower revenue at WCS due to lower volume declines,and lower gains and higher mark-to-market effectsproject revenues at EFS. GE Capital segment losses decreased 8% as lower claims, improved investment performance and lower marks and impairments including on the GECAS fixed-wing aircraft portfolio as a result of COVID-19 and related market impacts. Gains were insignificant and $0.2 billion in the third quarters of 2020 and 2019, respectively, which primarily related to sales of GECAS aircraft and engines resulting in gains that were insignificant and $0.1 billion in the third quarters of 2020 and 2019, respectively.

For the nine months ended September 30, 2020, segment revenues decreased $1.2 billion (18%) and segment losses were up $1.0 billion.
Capital revenues decreased $1.2 billion (18%), as a result of volume declines, primarily at GECAS related to lower interest income attributable to the sale of PK Air Finance and lower rental revenue, lower gains and higher mark-to-market effects and impairments as a result of COVID-19 and related market impacts. Capital losses increased $1.0 billion, primarily due to an impairment of goodwill, volume declines, higher mark-to-market effects and other impairments, including on the GECAS fixed-wing aircraft portfolio as a result of COVID-19 and related market impacts, lower gains, debt tender costs and the nonrecurrence of a 2019 tax reform enactment adjustment. These increased lossesInsurance were partially offset by lower gains and project revenues at EFS and the nonrecurrence of a $1.0 billion pre-tax charge identified through the completion of our 2019 annual insurance premium deficiency review, higher tax benefits including the tax benefit related to the BioPharma sale and lower excess interest cost. Gains were $0.3 billion and $0.5 billion in the nine months ended September 30, 2020 and 2019, respectively, which primarily related to salesfirst quarter of GECAS aircraft and engines resulting in gains of $0.2 billion and $0.3 billion in the nine months ended September 30, 2020 and 2019, respectively, and the nonrecurrence of a sale of an equity method investment resulting in a gain of $0.1 billion in 2019 at EFS.2020.

16 2020 3Q FORM 10-Q
MD&ACORPORATE ITEMS AND ELIMINATIONS
CORPORATE ITEMS AND ELIMINATIONS. IncludesCorporate items and eliminations included the results of our Lighting segment for the three and nine months of 2019, the nine months ofended March 31, 2020, as well as includes the results ofand our GE Digital business for all periods presented.
Three months ended September 30Nine months ended September 30
(In millions)2020201920202019
Revenues
Corporate revenues$251 $395 $1,039 $1,395 
Eliminations and other(550)(515)(1,608)(1,356)
Total Corporate Items and Eliminations$(299)$(120)$(570)$39 
Operating profit (cost)
Gains (losses) on disposals and held for sale businesses$119 $(97)$12,632 $153 
Restructuring and other charges(326)(322)(967)(924)
Steam asset impairments(a) (Notes 7 and 8)(363)— (363)— 
Unrealized gains (losses)(760)(86)(4,728)(125)
Goodwill impairments(b) (Note 8)— (740)(728)(1,484)
Adjusted total corporate operating costs (Non-GAAP)(275)(303)(806)(1,117)
Total Corporate Items and Eliminations (GAAP)$(1,606)$(1,548)$5,040 $(3,497)
Less: gains (losses) and restructuring & other(1,331)(1,245)5,845 (2,380)
Adjusted total corporate operating costs (Non-GAAP)$(275)$(303)$(806)$(1,117)
Functions & operations$(201)$(225)$(630)$(913)
Environmental, health and safety (EHS) and other items(21)(20)8 (117)
Eliminations(54)(58)(184)(86)
Adjusted total corporate operating costs (Non-GAAP)$(275)$(303)$(806)$(1,117)
(a) Included non-cash pre-tax impairment charges of $429 million, net of $65 million attributable to noncontrolling interests for the Steam business within our Power segment for the three and nine months ended September 30, 2020.
(b) Included non-cash pre-tax impairment charge of $877 million, net of $149 million attributable to noncontrolling interests for the Additive reporting unit within our Aviation segment for the nine months ended September 30, 2020.

Three months ended March 31
20212020
Revenues
Corporate revenues$227 $377 
Eliminations and other(455)(562)
Total Corporate Items and Eliminations$(228)$(185)
Operating profit (cost)
Gains (losses) on disposals and held for sale businesses$(159)$12,439 
Restructuring and other charges(106)(143)
Unrealized gains (losses)509 (5,794)
Adjusted total corporate operating costs (Non-GAAP)(192)(379)
Total Corporate Items and Eliminations (GAAP)$52 $6,123 
Less: gains (losses) and restructuring & other244 6,502 
Adjusted total corporate operating costs (Non-GAAP)$(192)$(379)
Functions & operations$(159)$(272)
Environmental, health and safety (EHS) and other items(55)(10)
Eliminations23 (98)
Adjusted total corporate operating costs (Non-GAAP)$(192)$(379)
Adjusted total corporate operating costs* excludes gains (losses) on disposals and held for sale businesses, significant, higher-cost
restructuring and other charges including goodwillprograms and unrealized gains (losses). We believe that adjusting corporate costs*costs to exclude the effects of items that are not closely associated with ongoing corporate operations provides management and investors with a meaningful measure that increases the period-to-period comparability of our ongoing corporate costs.
*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 12

Unrealized gains (losses) are primarily related to our mark-to-market impact on our Baker Hughes shares for the three and nine months ended September 30, 2020, on our Ventures portfolio for the nine months ended September 30, 2020, and on our mark-to-market impact on our Baker Hughes shares for the three and nine months ended September 30, 2019.

For the three months ended September 30, 2020March 31, 2021, revenues decreased by $0.2 billionremained relatively flat year over year primarily as a result of a $0.1 billion decrease in revenuerevenues due to the sale of our Lighting business in June 2020. Overall, Corporate costs increased2020, offset by $0.1 billion versus prior year.of lower inter-segment eliminations. Corporate costs decreased due to the nonrecurrence of a $0.7 billion net goodwill impairment charge related to our Renewable Energy segment in 2019 and $0.2 billion of higher gains, primarily due to our Wabtec investment in the third quarter of 2019. Restructuring and other charges were flat year over year, with lower restructuring charges at Corporate, partially offset by higher restructuring at Aviation and legal reserves associated with the SEC investigation (see Note 19 for further information). These decreases were offset by $0.7 billion of higher net unrealized losses, primarily related to a $0.7 billion mark-to-market loss on our Baker Hughes shares in the third quarter of 2020, as compared to a $0.1 billion mark-to-market loss on our Baker Hughes shares in the third quarter of 2019. Corporate recognized $0.4 billion of non-cash impairment charges related to property, plant and equipment and intangible assets at our Steam business within our Power segment during the third quarter of 2020.

Adjusted corporate costs were down $28 million (9%) due to improvements in our functional costs and operations as GE Digital continues to optimize its cost structure, while EHS and other costs and eliminations remained relatively flat.

For the nine months ended September 30, 2020, revenuesoperating profit decreased by $0.6 billion, primarily as a result of a $0.3 billion decrease in revenue due to the sale of our Current and Lighting businesses in April 2019 and June 2020 respectively and $0.3 billion of higher intersegment eliminations. Corporate costs decreased by $8.5$6.1 billion due to $12.5$12.6 billion of higherlower net gains, primarily driven by $12.3 billion of gains from the sale of our BioPharma business induring the first quarterthree months of 2020. Corporate costs also decreased by $0.8 billion due2020, as compared to $1.5$0.2 billion of goodwill impairment chargesrealized losses primarily related to our Renewable Energy segmentBaker Hughes shares during the ninefirst three months ended September 30, 2019 as compared to $0.7 billion of net goodwill impairment charges related to our Aviation segment during the second quarter of 2020. Restructuring and other charges were flat year over year, with lower restructuring and other charges at Corporate, partially offset by higher restructuring at Aviation and legal reserves associated with the SEC investigation.2021. These decreases were partially offset by $4.6a $6.3 billion of higherchange in net unrealized gains and losses primarily related to a $4.6 billion mark-to-market impactactivity on our Baker Hughes sharesshares. Overall, restructuring and a $0.1 billion impairment on our Ventures portfolio in the first nine months of 2020, as compared to a $0.1 billion mark-to-market impact on our Baker Hughes shares in the first nine months of 2019. Corporate recognized $0.4 billion of non-cash impairmentother charges related to property, plant and equipment and intangible assets at our Steam business within our Power segment during the third quarter of 2020.remained relatively flat year over year.
*Non-GAAP Financial Measure
2020 3Q FORM 10-Q 17
MD&ACORPORATE ITEMS AND ELIMINATIONS
Adjusted total corporate operating costs* decreased by $0.3$0.2 billion in the first quarter of 2021 primarily due to $0.2as the result of $0.1 billion of cost reductions inprimarily within our Digital business, $0.1 billion of lower costs associated with existing EHS matters and $0.1 billion of lower Corporate costs as a result of restructuring and cost reduction actions. These decreases were partially offsetfunctions. Costs also decreased by $0.1 billion due to lower intercompany profit eliminations as the result of higherlower intercompany activity from our Aviation segment to our GECAS business, lower intercompany elimination activity primarily from project financing investments associated with wind energy projects in our Renewable Energy segment higherand lower GE industrial inter-segment eliminations, partially offset by lower spare engine sales from our Aviation segment to GECAS business.eliminations. Overall, costs associated with EHS matters remained relatively flat year over year.

Although there were no significant impacts in the third quarter related to COVID-19, potential future impacts at Corporate may include, but are not limited to, the increase in our long-term liabilities, primarily for pension and certain environmental obligations, or decrease in asset returns subject to interest rate changes, additional asset impairments driven by overall market conditions, and lower revenue in our Digital operations. See the Critical Accounting Estimates section for further information on pension assumptions.

OTHER CONSOLIDATED INFORMATION
RESTRUCTURING.Restructuring actions are an essential component ofto our cost improvement efforts.efforts for both existing operations and those acquired. Restructuring and other charges relate primarily to workforce reductions, facility exit costs associated with the consolidation of sales, service and manufacturing facilities, the integration of acquisitions, and certain other asset write-downs such as those associated with product line exits. We willalso recognize an obligation for severance benefits that vest or accumulate with service. We continue to closely monitor the economic environment including the impacts of COVID-19, and expect to undertake further restructuring actions to more closely align our cost structure with earnings and cost reduction goals. This table is inclusive of all restructuring charges in our segments.
Three months ended September 30Nine months ended September 30Three months ended March 31
(In millions)2020201920202019
20212020
Workforce reductionsWorkforce reductions$122 $88 $609 $477 Workforce reductions$211 $154 
Plant closures & associated costs and other asset write-downsPlant closures & associated costs and other asset write-downs93 194 201 326 Plant closures & associated costs and other asset write-downs26 29 
Acquisition/disposition net chargesAcquisition/disposition net charges12 40 57 130 Acquisition/disposition net charges5 27 
Other100 — 100 (9)
Total restructuring and other chargesTotal restructuring and other charges$326 $322 $967 $924 Total restructuring and other charges$242 $210 
Cost of product/servicesCost of product/services$111 $69 $368 $243 Cost of product/services$101 $116 
Selling, general and administrative expensesSelling, general and administrative expenses215 253 599 682 Selling, general and administrative expenses148 94 
Other incomeOther income(7)— 
Total restructuring and other chargesTotal restructuring and other charges$326 $322 $967 $924 Total restructuring and other charges$242 $210 
PowerPower$30 $23 $147 $158 Power$49 $33 
Renewable EnergyRenewable Energy58 60 141 133 Renewable Energy76 26 
AviationAviation58 2 300 2 Aviation62 68 
HealthcareHealthcare25 45 97 143 Healthcare39 30 
CorporateCorporate155 192 283 489 Corporate11 50 
Total GE Industrial restructuring and other chargesTotal GE Industrial restructuring and other charges$236 $207 
CapitalCapital5 3 
Total restructuring and other chargesTotal restructuring and other charges$326 $322 $967 $924 Total restructuring and other charges$242 $210 
Restructuring and other charges cash expendituresRestructuring and other charges cash expenditures$223 $210 

Cash expenditures forLiabilities associated with restructuring and other chargesactivities were approximately $0.3$1.3 billion, including actuarial determined post-employment severance benefits of $0.7 billion as of both March 31, 2021 and $0.2 billion for the three months ended September 30, 2020 and 2019, respectively. Cash expenditures for restructuring and other charges were approximately $0.8 billion and $0.9 billion for the nine months ended September 30, 2020 and 2019, respectively.December 31, 2020.

COSTS AND GAINS NOT INCLUDED IN SEGMENT RESULTS. As discussed in the Segment Operations section, certain amounts are not included in industrial segment results because they are excluded from measurement of their operating performance for internal and external purposes. These costs relate primarily to restructuring, impairments and acquisition and disposition activities.
Three months ended September 30Nine months ended September 30
CostsGains (Losses)CostsGains (Losses)
(In millions)20202019202020192020201920202019
Power$393 $25 $2 $(2)$488 $154 $49 $(3)
Renewable Energy58 799 — — 141 1,616 — — 
Aviation58 2 1 15 1,013 2 14 (2)
Healthcare25 45 21 2 87 143 12,350 (1)
Total segments$533 $871 $24 $15 $1,728 $1,915 $12,413 $(7)
Corporate Items & Eliminations154 191 (665)(198)281 484 (4,510)35 
Total Industrial$687 $1,062 $(641)$(183)$2,009 $2,399 $7,904 $28 









*Non-GAAP Financial Measure
18 2020 3Q FORM 10-Q
MD&AOTHER CONSOLIDATED INFORMATION
OTHER CONSOLIDATED INFORMATION
INTEREST AND OTHER FINANCIAL CHARGESINTEREST AND OTHER FINANCIAL CHARGESThree months ended September 30Nine months ended September 30INTEREST AND OTHER FINANCIAL CHARGESThree months ended March 31
(In millions)2020201920202019
GE$313 $791 $1,079 $1,693 
20212020
GE IndustrialGE Industrial$268 $370 
GE CapitalGE Capital486 590 1,647 1,913 GE Capital291 271 

The decrease in GE Industrial interest and other financial charges for the three months ended September 30, 2020March 31, 2021 was primarily due to lower interest expense on debt driven by a lower debt balancesintercompany loan balance and the nonrecurrence of a $0.3 billion loss related to debt repurchases in the third quarter of 2019, as well as lower financing costs on sales of receivables. The decrease in GE interest and other financial charges for the nine months ended September 30, 2020, was primarily due to lower interest expense on debt driven by lower debt balances and the nonrecurrence of a $0.3 billion loss related to debt repurchases in the third quarter of 2019, as well as lower financing costs on sales of receivables, partially offset by the nonrecurrence of the June 2019 reversal of accrued interest on tax liabilities due to the completion of the 2012-2013 IRS audit. The primary components of GE interest and other financial charges are interest on short- and long-term borrowings and financing costs on sales of receivables. Total GE Industrial interest and other financial charges of $0.2 billion and $0.6$0.2 billion was recorded at Corporate and $0.1 billion and $0.2$0.1 billion was recorded by Industrial segments for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively, and $0.7 billion and $1.1 billion was recorded at Corporate and $0.3 billion and $0.6 billion was recorded by Industrial segments for the nine months ended September 30, 2020 and 2019, respectively.

The decreaseincrease in GE Capital interest and other financial charges for the three months ended September 30, 2020March 31, 2021 was primarily due to lowerhigher average borrowings balances due to maturities and debt purchases as well as lower averagemarket interest rates partially offset byand higher interest on assumed debt as a result of the repayments of intercompany loans by GE Industrial (effectively transferring that interest cost back to GE Capital). The decrease in GE Capital interest and other financial charges for the nine months ended September 30, 2020 was primarily due to, partially offset by lower average borrowings balances due to maturities and debt purchases as well as lower average interest rates due to changes in market rates, partially offset by the loss resulting from the completion of tender offers to purchase debt, as well as higher interest on assumed debt as described above.purchases.


*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 13

CONSOLIDATED INCOME TAXES.
For the three months ended September 30, 2020March 31, 2021, the consolidated income tax rate was 30.2%59.7% compared to (3.3)%0.9% for the three months ended September 30, 2019. The negative rate for 2019 reflects a tax expense on a pre-tax loss.March 31, 2020.

The consolidated provision (benefit) for income taxes was $(0.5)$0.1 billion for both the three months ended September 30, 2020March 31, 2021 and an insignificant amount2020. The provision increased slightly as there was a tax expense associated with the unrealized gain on our remaining interest in Baker Hughes in the three months ended September 30, 2019. Income tax was a benefitfirst quarter of 2021 compared to a provision primarily due to favorable effects of global activities including a $0.1 billion favorable impact on the carrying value of deferred tax assets due to a change in tax rate in the United Kingdom ($0.3) billion, the tax benefit associated with the mark-to-marketunrealized loss recorded in the thirdfirst quarter onof 2020. This was largely offset by the remaining interest in Baker Hughes ($0.1) billion and a higher benefit to adjust the year-to-date tax rate to be in-line with the projected full-year rate ($0.1) billion.

The consolidated tax provision (benefit) includes $(0.1) billion and $0.2 billion for GE (excluding GE Capital) for the three months ended September 30, 2020 and 2019, respectively.

For the nine months ended September 30, 2020, the consolidated income tax rate was (25.7)% compared to 0.2% for the nine months ended September 30, 2019. The negative rate for 2020 reflects a tax benefit on pre-tax income.

The consolidated provision (benefit) for income taxes was $(0.6) billion for the nine months ended September 30, 2020 and an insignificant amount for the nine months ended September 30, 2019. The increase in tax benefit was primarily due to the decrease in pre-tax income excluding the gain from the salenonrecurrence of our BioPharma business and non-deductible goodwill impairment charges ($1.9 billion) partially offset by the tax expense associated with the disposition of the BioPharma business excludingin the amount recognized on preparatory steps in 2019 ($1.1 billion).first quarter of 2020.

The consolidated tax provision (benefit) includes an insignificant amount$0.1 billion and $0.3$0.2 billion for GE (excluding GE Capital)Industrial for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively.

DISCONTINUED OPERATIONS. Discontinued operations primarily includePrimarily comprise our Baker Hughes and Transportation segments, and certain businesses inGECAS business, our GE Capital segment (our mortgage portfolio in Poland, and other trailing assets and liabilities associated with the saledispositions of ourcertain GE Capital businesses).and GE Industrial businesses. See Notes 2 and 1921 for further financial information regarding our businesses in discontinued operations.

The mortgage portfolio in Poland (Bank BPH) comprises floating rate residential mortgages, 87% of which are indexed to or denominated in foreign currencies (primarily Swiss francs). At September 30, 2020, the total portfolio had a carrying value of $2.5 billion with a 1.53% 90-day delinquency rate and an average loan to value ratio of approximately 67.0%. The portfolio is recorded at the lower of cost or fair value, less cost to sell, which reflects market yields as well as our best estimate of the effects of ongoing litigation in Poland related to foreign currency-denominated mortgages. Future changes in the economic impact of COVID-19, market yields or changes in estimated legal liabilities could result in further losses related to these loans in future reporting periods.

2020 3Q FORM 10-Q 19
MD&ACAPITAL RESOURCES AND LIQUIDITY
CAPITAL RESOURCES AND LIQUIDITY
FINANCIAL POLICY. POLICY. We intend to maintain a disciplined financial policy, including maintaining a high cash balance. We are targeting a sustainable long-term credit rating in the Single-A range, achieving a GE Industrial net debt*-to-EBITDA ratio of less than 2.5x over the next few years and a dividend in line with our peers over time, as well as a less than 4-to-1 debt-to-equity ratio for GE Capital.time. In addition to net debt*-to-EBITDA, we also evaluate other leverage measures, including gross debt-to-EBITDA, and we will ultimately size our deleveraging actions across a range of measures to ensure we are operating the Company based on a strong balance sheet. We intend to continue to decrease our GE Industrial leverage over time as we navigate this period of uncertainty, although we now expectuncertainty.

Following the closing of the GECAS transaction, the Company intends to achieve our targetsuse the transaction proceeds and its existing cash sources to significantly reduce debt, and will continue to target achieving a less than 2.5x net debt-to-EBITDA ratio over time.the next few years.

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 obligations under both normal and stressed conditions. We intend to maintain a high level of cash and maximize flexibility as we navigate the current environment. At both GE Industrial and GE Capital, we manage our liquidity to provide access to sufficient funding to meet our business needs and financial obligations, as well as capital allocation and growth objectives, throughout business cycles.

GE Industrial has continued to enhance its cash management operations, targeting increased linear cash flow, lower factoring, and reducing restricted cash. As a result, GE Industrial's go-forward cash needs are expected to be below $13 billion. We intend to continue holding elevated cash levels through this period of uncertainty.

At GE Capital, we continue to hold cash levels to cover at least 12 months of long-term debt maturities.

We believe that our consolidated liquidity and availability under our revolving credit facilities will be sufficient to meet our liquidity needs.needs.

CONSOLIDATED LIQUIDITY. Following is a summary of cash, cash equivalents and restricted cash at September 30, 2020.March 31, 2021.
(In millions)September 30, 2020September 30, 2020
GE$24,337 U.S.$21,211 
GE Capital14,825 Non-U.S.17,951 
Consolidated$39,162 Consolidated$39,162 

March 31, 2021March 31, 2021
GE Industrial$22,361 U.S.$18,115 
GE Capital9,422 Non-U.S.13,668 
Consolidated$31,783 Consolidated$31,783 
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.

GE INDUSTRIAL LIQUIDITY. GE'sGE Industrial's primary sources of liquidity consist of cash and cash equivalents, free cash flows from our operating businesses, monetization of receivables, proceeds from dispositions, and short-term borrowing facilities, including revolving credit facilities. Cash generation can be subject to variability based on many factors, including seasonality, receipt of down payments on large equipment orders, timing of billings on long-term contracts, market conditions and our ability to execute dispositions. Additionally, as previously reported,in connection with the program we launched a program in the third quarter of 2020 to fully monetize our Baker Hughes position over approximately three years. Consistent with the program’s design,years, we received initial proceeds of approximately $0.4$0.7 billion in October 2020.See Note 21 for further information.the first quarter of 2021 and expect to receive approximately $1.0 billion in the second quarter of 2021.

GE Industrial cash, cash equivalents and restricted cash totaled $24.3$22.4 billion at September 30, 2020,March 31, 2021, including $2.3$2.1 billion of cash held in countries with currency control restrictions and $0.8$0.4 billion of restricted use cash. Cash held in countries with currency controls represents amounts held in countries whichthat may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. Restricted use cash represents amounts that are not available to fund operations, and primarily comprised collateral for receivables sold and funds restricted in connection with certain ongoing litigation matters.

GE plans to provide a capital contribution to GE Capital in the fourth quarter of 2020 of approximately $2.0 billion, in line with*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 14

In the first quarter 2020 insurance statutory funding. Capitalof 2021, we announced our intention to discontinue the majority of our factoring programs, which was effective April 1, 2021. The estimated adverse impact to GE Industrial CFOA is expected to be approximately $3.5 to $4 billion primarily in the second quarter of 2021, which will be excluded from GE Industrial free cash flows*.

During 2021, GE Capital’s liquidity and capital needs will be evaluated based on the anticipated timing of the closing of the GECAS transaction, as well as GE Capital’s overall performance, to determine if additional capital contributions to GE Capital are determined by considering various metrics, including our internal economic capital framework. In 2021,necessary.

Additionally, we do not anticipate any further funding requirements for the GE expects to provide an additional contribution to GE Capital to meetPension Plan in the 2021 insurance statutory funding requirement of approximately $2.0 billion. Further capital contributions will depend on GE Capital’s performance, including GECAS operations andforeseeable future, potentially until the Insurance statutory asset adequacy testing results, in lightend of the uncertain environment.decade. This is due to our $2.5 billion prefunding in 2020 and portfolio performance, as well as the recently enacted American Rescue Plan Act.

GE CAPITAL LIQUIDITY. GE Capital’s primary sources of liquidity consist of cash and cash equivalents, cash generated from asset sales (including the expected proceeds from the GECAS transaction) and cash flows from our businesses, as well as GE Industrial repayments of intercompany loans and capital contributions from GE.GE Industrial. We expect to maintain a sufficient liquidity position to fund our insurance obligations, debt maturities and debt maturities.other obligations. See the Segment Operations - Capital section for further information regarding allocation of GE Capital interest expense to the GE Capital businesses.

GE Capital cash, cash equivalents and restricted cash totaled $14.8$9.4 billion at September 30, 2020, including $0.9March 31, 2021, excluding $1.7 billion of cash in Insurance, which was subject to regulatory restrictions, primarily in insurance entities.classified as All other assets on the GE Capital Statement of Financial Position.

GE Capital provided capital contributions to its insurance subsidiaries of $2.0 billion, $2.0 billion, $1.9 billion and $3.5 billion in the first quarters of 2021, 2020, 2019 and 2018, respectively, and expects to provide further capital contributions of approximately $7$5.5 billion through 2024. These contributions are subject to ongoing monitoring by Kansas Insurance Department (KID), and the total amount to be contributed could increase or decrease, or the timing could be accelerated, based upon the results of reserve adequacy testing or a decision by KID to modify the schedule of contributions set forth in January 2018. We will continueGE is required to monitor the interest rate environment, including the impact of reinvestment rates and our investment portfolio performance, and other factors in determining the related effect on our expected future capital contributions. See the Critical Accounting Estimates section for discussion of the sensitivity of interest rate changes to our insurance liabilities. GE maintainsmaintain specified capital levels at these insurance subsidiaries under capital maintenance agreements. Going forward, we anticipate funding any capital needs for insuranceInsurance through a combination of GE Capital liquidity, GE Capital asset sales, GE Capital future earnings and capital contributions from GE.GE Industrial.
*Non-GAAP Financial Measure
20
 2020 3Q FORM 10-Q
MD&ACAPITAL RESOURCES AND LIQUIDITY
BORROWINGS. Consolidated total borrowings were $79.5$71.4 billion and $90.9$74.9 billion at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, a decrease of $11.4$3.5 billion ($11.73.9 billion excluding intercompany eliminations). See the following table for a summary of GE Industrial and GE Capital borrowings.
GE (In millions)
September 30, 2020December 31, 2019
GE Capital (In millions)
September 30, 2020December 31, 2019
Commercial paper$— $3,008 Senior and subordinated notes$34,391 $36,501 
GE senior notes18,820 15,488 Senior and subordinated notes assumed by GE24,134 31,368 
Intercompany loans from
GE Capital		4,726 12,226 Intercompany loans to GE(4,726)(12,226)
Other GE borrowings1,305 2,195 Other GE Capital borrowings1,589 3,358 
Total GETotal GE Capital
adjusted borrowings(a)$24,851 $32,917 adjusted borrowings(a)(b)$55,387 $59,001 
GE IndustrialMarch 31, 2021December 31, 2020GE CapitalMarch 31, 2021December 31, 2020
GE Industrial senior notes$18,753 $18,994 Senior and subordinated notes$29,144 $30,987 
Senior and subordinated notes assumed by GE Industrial21,538 22,390 
Intercompany loans from
GE Capital		3,177 3,177 Intercompany loans to
GE Industrial		(3,177)(3,177)
Other GE Industrial borrowings956 1,352 Other GE Capital
borrowings		1,244 1,779 
Total GE IndustrialTotal GE Capital
adjusted borrowings(a)$22,886 $23,523 adjusted borrowings(a)(b)$48,749 $51,979 
(a) Consolidated total borrowings of $79.5 billion$71,358 million and $90.9 billion$74,902 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, are
net of intercompany eliminations of $0.8 billion$277 million and $1.0 billion,$600 million, respectively, of other GE Industrial borrowings from GE Capital, primarily
related to timing of cash settlements associated with GE Industrial receivables monetization programs.
(b) Included $6.2 billion$3,826 million and $4.2 billion$5,687 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, of fair value adjustments for debt
in fair value hedge relationships. See Note 19 for further information.

The reduction in GE Industrial adjusted borrowings at September 30, 2020March 31, 2021 compared to December 31, 2019,2020 was driven primarily by $7.5 billion of repayments of intercompany loans from GE Capital, debt repurchases of $4.2 billion, lower commercial paper of $3.0 billion (including a reduction of $0.5 billion in the third quarter of 2020), and net repayments and maturities of other debt of $1.2 billion, partially offset by issuances of new long-term debt of $7.5$0.4 billion and $0.4$0.2 billion related to changes in foreign exchange rates.

GE Industrial net debt* was $32.3 billion and $32.3 billion at March 31, 2021 and December 31, 2020, respectively, as debt reductions of $0.6 billion were offset by a decrease in the net cash deduction of $0.6 billion due to a lower cash balance.

The reduction in GE Capital adjusted borrowings at September 30, 2020March 31, 2021 compared to December 31, 2019,2020 was driven primarily by debt
repurchases of $9.8 billion,long-term debt maturities of $7.7$0.9 billion, (including $2.3 billion in the third quarter of 2020) and lower nonrecoursenon-recourse borrowings of $1.2$0.3 billion, partially offset by repaymentslower short-term borrowings of intercompany loans from GE of $7.5 billion (which has the effect of increasing GE Capital borrowings), issuances of new long-term debt of $6.0$0.2 billion, and $2.0$1.9 billion of fair value adjustments for debt in fair value hedge relationships.

GE Industrial net debt* was $34.6 billion and $47.9 billion at September 30, 2020 and December 31, 2019, respectively. The reduction was driven primarily by $7.5 billion of repayments of intercompany loans from GE Capital, an increase in the net cash deduction of $5.0 billion due to a higher cash balance, the repurchase of $4.2 billion of debt, a reduction in commercial paper of $3.0 billion and net repayments and maturities of other debt of $1.2 billion, partially offset by new issuances of new long-term debt of $7.5 billion and $0.4 billion related to changes in foreign exchange rates.
2021 1Q FORM 10-Q 15

The following table provides a reconciliation of total short- and long-term borrowings as reported on the respective GE Industrial and GE Capital Statements of Financial Position to borrowings adjusted for assumed debt and intercompany loans:
September 30, 2020 (In millions)
GEGE CapitalConsolidated
March 31, 2021March 31, 2021GE IndustrialGE CapitalConsolidated
Total short- and long-term borrowingsTotal short- and long-term borrowings$44,258 $35,980 $79,463 Total short- and long-term borrowings$41,247 $30,388 $71,358 
Debt assumed by GE from GE Capital(a)(24,134)24,134 — 
Debt assumed by GE Industrial from GE Capital(a)Debt assumed by GE Industrial from GE Capital(a)(21,538)21,538 — 
Intercompany loans with right of offset(a)Intercompany loans with right of offset(a)4,726 (4,726)— Intercompany loans with right of offset(a)3,177 (3,177)— 
Total intercompany payable (receivable) between GE and GE Capital(19,407)19,407 — 
Total intercompany payable (receivable) between GE Industrial and GE CapitalTotal intercompany payable (receivable) between GE Industrial and GE Capital(18,361)18,361 — 
Total borrowings adjusted for assumed debt and intercompany loansTotal borrowings adjusted for assumed debt and intercompany loans$24,851 $55,387 $79,463 Total borrowings adjusted for assumed debt and intercompany loans$22,886 $48,749 $71,358 
(a) See the Capital Resources and Liquidity section of our Annual Report on Form 10-K for the year ended December 31, 20192020 for further details on the assumed debt and intercompany loans with right of offset.

The intercompany loans from GE Capital to GE Industrial bear the right of offset against amounts owed by GE Capital to GE Industrial under the assumed debt agreement and can be prepaid by GE Industrial at any time, in whole or in part, without premium or penalty. These loans are priced at market terms and have a collective weighted average interest rate of 3.4%3.7% and term of approximately 12.415.2 years at September 30, 2020.March 31, 2021.

GE Industrial has in place committed revolving credit lines. The following table providesfacilities totaling $20.2 billion at March 31, 2021, comprised of a summary$15.0 billion unused back-up revolving syndicated credit facility and a total of committed and available$5.2 billion of bilateral revolving credit lines.facilities.
GE COMMITTED AND AVAILABLE REVOLVING CREDIT FACILITIES (In millions)
September 30, 2020December 31, 2019
Unused back-up revolving syndicated credit facility$15,000 $20,000 
Unused revolving syndicated credit facility— 14,772 
Bilateral revolving credit facilities5,213 7,225 
Total committed revolving credit facilities$20,213 $41,997 
Less offset provisions— 6,700 
Total net available revolving credit facilities$20,213 $35,297 
*Non-GAAP Financial Measure
2020 3Q FORM 10-Q
21
MD&ACAPITAL RESOURCES AND LIQUIDITY
Under the terms of an agreement between GE Capital and GE Industrial, GE Capital has the right to compel GE Industrial to borrow under the $15.0 billion unused back-up revolving syndicated credit facility. Under this agreement, GE Industrial would transfer the proceeds to GE Capital as intercompany loans, which would be subject to the same terms and conditions as those between GE Industrial and the lending banks. GE Capital has not exercised this right.

The following table provides a summary of the activity in the primary external sources of short-term borrowings for GE in the third quarters of 2020 and 2019. GE uses its bilateral revolving credit facilities from time to time to meet its short-term liquidity needs.
(In millions)GE Commercial PaperBilateral Revolving Credit FacilitiesTotal
2020Average borrowings during the third quarter$463 $508 $971 
Maximum borrowings outstanding during the third quarter508 1,094 1,601 
Ending balance at September 30— — — 
2019Average borrowings during the third quarter$2,952 $1,314 $4,266 
Maximum borrowings outstanding during the third quarter3,112 1,900 4,924 
Ending balance at September 302,985 — 2,985 

In the third quarter of 2020, we reduced our ending commercial paper balance to zero. Total average and maximum borrowings in the table above are calculated based on the daily outstanding balance of the sum of commercial paper and revolving credit facilities.

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 separate ratings on GE Industrial and GE Capital short- and long-term debt. The credit ratings of GE Industrial and GE Capital as of the date of this filing are set forth in the table below.
Moody'sS&PFitch
GE IndustrialOutlookNegativeCreditWatch NegativeStable
Short termP-2A-2F3
Long termBaa1BBB+BBB
GE CapitalOutlookNegativeCreditWatch NegativeStable
Short termP-2A-2F3
Long termBaa1BBB+BBB
On March 10, 2021, Moody’s and Fitch affirmed their respective credit ratings, and S&P announced that they have placed us on CreditWatch with negative implications and currently expect to lower our credit ratings by one notch upon the closing of the GECAS transaction.

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. 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, 2019.2020.

The following table provides a summarySubstantially all of the estimated potential liquidity impact in the event of further downgrades with regards to the most significant contractual credit ratings conditions of the Company based on their proximity to our current ratings.
(In millions)Triggers BelowAt September 30, 2020
Derivatives
TerminationsBBB/Baa2$(277)
Cash margin postingBBB/Baa2(217)
Receivables Sales Programs
Loss of cash comminglingA-3/P-3$(129)
Alternative funding sourcesA-2/P-2(306)
Surety bond cash collateral postingBBB-/Baa3$(843)
The timing within the quarter of the potential liquidity impact of these areas may differ, as described in the following sections, which provide additional details regarding the significant credit rating conditions of the Company.

DEBT CONDITIONS. Substantially allCompany's debt agreements in place at September 30, 2020March 31, 2021 do not contain material credit rating covenants. GE’s 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 GE satisfied at September 30, 2020.March 31, 2021.

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.

22 2020 3Q FORM 10-Q
Triggers BelowAt March 31, 2021
BBB+/A-2/P-2$277 
MD&ABBB/A-3/P-3CAPITAL RESOURCES AND LIQUIDITY621 
BBB-1,429 
BB+ and below468 
DERIVATIVE CONDITIONS. Swap, forward and option contracts are executed under standard master agreements that typically contain mutual downgrade provisions that provide the ability of the counterparty to require termination if the credit ratings of the applicable GE entity were to fall below specified ratings levels agreed upon with the counterparty, primarily BBB/Baa2. Our master agreements also typically contain provisions that provide termination rights upon the occurrence of certain other events, such as a bankruptcy or events of default by one of the parties. If an agreement was terminated under any of these circumstances, the termination amount payable would be determined on a net basis and could also take into account any collateral posted. The net amount of our derivative liability subject to such termination provisions, after consideration of collateral posted by us and outstanding interest payments was $0.3 billion at September 30, 2020. This excludes exposure related to embedded derivatives, which are not subject to these provisions.

In addition, certain of our derivatives, primarily interest rate swaps, are subject to additional cash margin posting requirements if our credit ratings were to fall below BBB/Baa2. The amount of additional margin will vary based on, among other factors, market movements and changes in our positions. At September 30, 2020, the amount of additional margin that we could be required to post if we fell below these ratings levels was approximately $0.2 billion.
2021 1Q FORM 10-Q 16

See Note 17 for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.

OTHER CONDITIONS. Where we provide servicing for third-party investors under one of our receivable sales programs, GE is contractually permitted to commingle cash collected from customers on financing receivables sold to third-party investors with our own cash prior to payment to third-party investors, provided our short-term credit rating does not fall below A-3/P-3 (this program does not contain any FitchOur most significant contractual ratings requirements). In the event any of our ratings were to fall below such levels, we may be required to segregate certain of these cash collections owed to third-party investors into restricted bank accounts and would lose the short-term liquidity benefit of commingling with respect to such collections. The financial impact to our intra-quarter liquidity would vary based on collections activity for a given quarter and may result in increased utilization of our revolving credit facilities. The loss of cash commingling would have resulted in an estimated maximum reduction of approximately $0.1 billion to GE intra-quarter liquidity during the third quarter of 2020.

We have relied, and may continue to rely, on securitization programs to provide alternative funding for sales of GE receivables to third-party investors. In the event our short-term credit ratings were to fall below certain levels, we would not be permitted to commingle certain cash receivedrequirements are related to sales of receivables at the end of the quarter. The Fitch downgrade in the second quarter of 2020 resulted in GE classifying $0.3 billion as restricted cash at September 30, 2020. The amount of cash that GE Capital would have been required to classify as restricted cash if our credit ratings had fallen below A-2/P-2 was approximately $0.3 billion at September 30, 2020.

In conjunction with ordinary course commercial transactionsactivities, our receivables sales programs, and certain regulatory requirements,our derivatives portfolio. The timing within the Company may periodically enter into agreements that require us to post surety bonds to counterparties. In the first quarter of 2020, we entered into amendmentsthe potential liquidity impact of these areas may differ, as can the remedies to our agreements with certainresolving any potential breaches of our surety bond providers that may require us to post cash collateral in the event our creditrequired ratings were to fall below BBB-/Baa3. At September 30, 2020, the maximum amount of cash collateral we could be required to post if we fell below these levels was approximately $0.8 billion.levels.

FOREIGN EXCHANGE. 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 British pound sterling the Brazilian real and the Chinese renminbi,Indian rupee, among others. The effects of foreign currency fluctuations on earnings, excluding the earnings impact of the underlying hedged item, was less than $0.1 billion for both the three and nine months ended September 30, 2020,March 31, 2021 and less than $0.1 billion for the three and nine months ended September 30, 2019.2020. This analysis excludes any offsetting effect from the forecasted future transactions that are economically hedged.

See Note 1719 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 – NINETHREE MONTHS ENDED SEPTEMBER 30, 2020MARCH 31, 2021 VERSUS 2019.2020. We manage the cash flow performance of our industrial and financial services businesses separately, in order to enable us and our investors to evaluate the cash from operating activities of our industrial businesses separately from the cash flows of our financial services business.

See the Intercompany Transactions between GE Industrial and GE Capital are reported in the respective columns of our statement of cash flows, but are eliminated in deriving our consolidated statement of cash flows. See the GE Industrial working capital transactions section and Notes 4 and 2022 for further information regarding certain transactions affecting our consolidated Statement of Cash Flows.

GE INDUSTRIAL CASH FLOWS FROM CONTINUING OPERATIONS. The most significant source of cash in GE Industrial CFOA is from 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, contribute to post retirement plans and pay others for a wide range of material, services and taxes.


2020 3Q FORM 10-Q 23
MD&ACAPITAL RESOURCES AND LIQUIDITY
GE Industrial cash used for operating activities was $3.2$0.5 billion in 2020, an increase2021, a decrease of $3.3$1.2 billion compared with 2019,2020, primarily due to: a general decrease in net income (after adjusting for the gain on the sale of BioPharma and non-cash losses related to our interest in Baker Hughes), primarily due to COVID-19 impacts in our Aviation segment; an increase in cash used for working capital of $0.6$1.6 billion; andpartially offset by an increase in cash paidused for income taxes of $0.5 billion; partially offset by changes in contract and other deferred assets of $0.9 billion, primarily due to a net unfavorable change in estimated profitability of $0.9 billion at Aviation (See Note 10); and an increase in cash from All other operating activities of $0.8$0.2 billion (primarilyprimarily due to an increase in equipment project cost accruals of $0.3 billion and an increase in deferred income of $0.3 billion). Increasesincreases in Aviation-related customer allowance accruals (which is a component of All other operating activities)$0.4 billion in 2020 and the settlement of $0.8 billion remained relatively flat compared with 2019.

We utilized the provisionan Alstom legacy legal matter of the Coronavirus, Aid, Relief and Economic Security Act (CARES Act) which allows employers to defer the payment of Social Security taxes and, as a result, we deferred $0.2 billion asin 2021, partially offset by lower net cash used for employee benefit liabilities of September 30, 2020.$0.3 billion. There was an insignificant decrease in Aviation-related customer allowance accruals in 2021.

The increasedecrease in cash used for working capital was due to: an increasea decrease in cash used for accounts payable and equipment project accruals of $3.5$1.0 billion, which was primarily as a result of lower volume in 2020 and disbursements related to purchases of materials in prior periods; a decrease in cash used for inventories, including deferred inventory, of $0.4 billion, which was primarily driven by lower material purchases, partially offset by lower liquidations; an increase in cash from current receivables of $0.2 billion, which was primarily driven by lower volume; and higherlower net liquidations of progress collections and current deferred income of $1.2$0.2 billion, which included a partial offset due to early payments received at our Aviation Military equipment business of $0.7$0.3 billion in 2020 as part of the U.S. Department of Defense's efforts to support vendors in its supply chain during the pandemic.from a foreign government. These increases in cash used for working capitaldecreases were partially offset by changes in current contract assets of $0.2 billion, primarily due to a decreasenet unfavorable change in cash used for current receivables of $2.3 billion, which was primarily driven by lower volume; and a decreaseestimated profitability at Aviation in cash used for inventories of $1.7 billion, which was primarily driven by lower material purchases, partially offset by lower liquidations.2020.

GE Industrial cash from investing activities was $19.3$0.5 billion in 2020, an increase2021, a decrease of $12.4$19.5 billion compared with 2019,2020, primarily due to: netthe nonrecurrence of proceeds from the sale of our BioPharma business of $20.3 billion; the nonrecurrence of a capital contribution from GE to GE Capital of $1.5 billion in 2019; partially offset by the nonrecurrences of proceeds from the spin-off of our Transportation business of $6.2 million (including the sale of our retained ownership interests in Wabtec) and the salesales of a portion of our stakeretained ownership interest in Baker Hughes of $3.0$0.7 billion. Cash used for additions to property, plant and equipment and internal-use software, which is a componentare components of GE Industrial free cash flows*, was $1.4$0.4 billion in 2020,2021, down $0.4$0.2 billion compared with 2019.2020.

GE Industrial cash used for financing activities was $9.4$0.8 billion in 2020, an increase2021, a decrease of $2.4$1.2 billion compared with 2019, primarily due to: higher repayments of intercompany loans from GE Capital to GE of $7.0 billion; a reduction in commercial paper of $3.0 billion; lower repurchases of long-term debt of $0.6 billion; partially offset by new principal issuances of long-term debt of $7.5 billion in the second quarter of 2020.

GE CASH FLOWS FROM DISCONTINUED OPERATIONS. GE cash used for investing activities in 2019 was2020, primarily due to the deconsolidationnon-recurrence of Baker Hughes cash as a resultrepayments of the reductioncommercial paper of $1.1 billion in our ownership interest in the segment in the third quarter of 2019. GE cash used for financing activities in 2019 primarily reflects payments of Baker Hughes dividends to noncontrolling interests.2020.

GE CAPITAL CASH FLOWS FROM CONTINUING OPERATIONS. GE Capital cash fromused for operating activities was $2.4$2.5 billion in 2020,2021, an increase of $1.1$3.0 billion compared with 2019,2020, primarily due to: a net increase in cash collateral received (standardpaid, which is a standard market practice to minimize derivative counterparty exposures)exposures, and settlements paid on derivative contracts (components of $0.7All other operating activities) of $1.7 billion in 2021, compared with collateral and a general increasesettlements received on derivative contracts of $1.4 billion in cash generated from earnings (loss) from continuing operations; partially offset by an increase in trade receivables due to short-term extensions of payment terms to customers of $0.3 billion driven primarily by COVID-19 and other market related effects.2020.

GE Capital cash from investing activities was $7.5$1.2 billion in 2020,2021, an increase of $4.8$0.5 billion compared with 2019,2020, primarily due to: the repayment of GE Capital intercompany loans by GE of $7.0 billion and an increase in cash received related tohigher net settlements between our continuing operations (primarily our Corporate function) and businesses in discontinued operations (primarily WMC) of $1.9 billion; partially offset by lower collections of financing receivables of $2.7$1.1 billion partially offset by a decrease in cash related to our current receivables and supply chain finance programs with GE Industrial of GECAS sales deposits of $0.8 billion primarily driven by COVID-19 and other market related effects and lower net sales of equity investments $0.5$0.6 billion.

GE Capital cash used for financing activities was $13.9$1.4 billion in 2020, an increase2021, a decrease of $6.6$5.1 billion compared with 2019,2020, primarily due to: higherlower net repayments of borrowings of $5.8$4.8 billion and the nonrecurrence of a capital contribution from GE to GE Capital in 2019 of $1.5 billion; partially offset by lower cash settlements on derivatives hedging foreign currency debt of $0.9$0.3 billion.

GE CAPITAL CASH FLOWS FROM DISCONTINUED OPERATIONS. GE Capital cash from operating activities relates primarily to cash generated from earnings (loss) from discontinued operations in our GECAS business. GE Capital cash from investing activities increased by $0.2 billion primarily due to higher net collections of financing receivables of $0.3 billion.
*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 17

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

Supply Chain Finance Programs. GE Industrial facilitates voluntary supply chain finance programs with third parties, which provide participating GE Industrial suppliers the opportunity to sell their GE Industrial receivables to third parties at the sole discretion of both the suppliers and the third parties.

At September 30, 2020March 31, 2021 and December 31, 2019,2020, included in GE'sGE Industrial's accounts payable was $2.5$3.0 billion and $2.4$2.9 billion, respectively, of supplier invoices that are subject to the third-party programs. Total GE Industrial supplier invoices paid through these third-party programs were $3.8$1.6 billion and $0.9$1.1 billion for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively.

Previously, GE Capital operated a supply chain finance program for suppliers to GE's Industrial businesses. The remaining GE Industrial liability associated with the funded participation in the GE Capital program is presented as accounts payable and amounted to $0.3 billion and $2.1 billionwas insignificant at September 30, 2020 and DecemberMarch 31, 2019, respectively.2021.
*Non-GAAP Financial Measure
24
 2020 3Q FORM 10-Q
MD&ACAPITAL RESOURCES AND LIQUIDITY
INTERCOMPANY TRANSACTIONS BETWEEN GE INDUSTRIAL AND GE CAPITAL. Transactions between related companies are made on arm's lengtharms-length terms and are reported in the GE Industrial and GE Capital columns of our financial statements, which we believe provide useful supplemental information to our consolidated financial statements. See Note 2022 for further information.

GE Capital Finance Transactions. During the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, GE Capital acquired from third parties eightthree aircraft with a list price totaling $0.8$0.2 billion and 39five aircraft with a list price totaling $5.0$0.6 billion, respectively, that will be leased to others and are powered by engines manufactured by GE Aviation and affiliates. GE Capital also made no payments to GE Aviation and affiliates related to spare engines and engine parts of $0.2during the three months ended March 31, 2021 and $0.1 billion and $0.3 billion,during the three months ended March 31, 2020, which included $0.1 billion and $0.3 billion to CFM International during the nine months ended September 30, 2020 and 2019, respectively.International. Additionally, GE Capital had $2.1$2.0 billion and $2.0$2.1 billion of net book value of engines, originally manufactured by GE Aviation and affiliates and subsequently leased back to GE Aviation and affiliates at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. There were two spare engine sales from our Aviation segment to our GECAS business in the three months ended September 30, 2020.

Also, during the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, GE Industrial recognized equipment revenues of $1.9$0.4 billion and $1.0$0.5 billion, respectively, from customers within our Power and Renewable Energy segments in which GE Capital is an investee or is committed to be an investee in the underlying projects. At March 31, 2021, GE Capital had funded related investments of $0.1 billion.

For certain of these investments, in order to meet its underwriting criteria, GE Capital may obtain a direct guarantee from GE Industrial related to the performance of the third party. GE Industrial guarantees include direct performance or payment guarantees, return on investment guarantees and asset value guarantees. As of September 30, 2020,March 31, 2021, GE Industrial had outstanding guarantees to GE Capital on $0.9$0.8 billion of funded exposure and $0.5 billion ofan insignificant amount on unfunded commitments, which included guarantees issued by industrial businesses. The recorded contingent liability for these guarantees was insignificant as of September 30, 2020March 31, 2021 and is based on individual transaction level defaults, losses and/or returns.

CRITICAL ACCOUNTING ESTIMATES. 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, 2019, and Other Items within MD&A2020 for a further discussion of our accounting policies and critical accounting estimates. COVID-19 related market events may have an effect on our Insurance business and pension assumptions.

PENSION ASSUMPTIONS. As discussed in Critical Accounting Estimates in our Annual Report on Form 10-K for the year ended December 31, 2019, our defined benefit pension plans are accounted for on an actuarial basis and measured annually. During the first nine months of 2020, financial markets and interest rates have experienced volatility, which could result in a change in the discount rate used to measure our pension benefit obligation or our pension assets may realize less than our expected long-term rate of return, either of which could result in a material change in the funded status of our pension plans when we measure them at December 31, 2020. Our discount rate is determined using the weighted average of market-observed yields for high-quality fixed income securities with maturities that correspond to the payments of benefits and while benchmark interest rates in the U.S. have been lowered credit spreads on high-quality fixed incomes securities have widened.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, changes in key assumptions for our principal pension plans would have the following effects.
•Discount rate - A 25 basis point decrease in the discount rate would increase pension cost in the following year by about $0.2 billion and would increase the pension benefit obligation by about $2.3 billion.
•Expected return on assets - A 50 basis point decrease in the expected return on assets would increase pension cost in the following year by about $0.3 billion.

OTHER ITEMS
INSURANCE. At September 30, 2020, our insurance liabilities and annuity benefits of $41.5 billion were primarily supported by investment securities of $41.2 billion and commercial mortgage loans of $1.9 billion, net of their allowance for losses, respectively. The insurance liabilities and annuity benefits primarily comprise a liability for future policy benefits for those insurance contract claims not yet incurred and claim reserves for claims that have been incurred or are estimated to have been incurred but not yet reported.

For additional information, see Note 12 to the consolidated financial statements and Other Items - Insurance in our Annual Report on Form 10-K for the year ended December 31, 2019.

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

Future policy benefit reserves. Future policy benefit reserves represent the present value of future policy benefits less the present value of future gross premiums based on actuarial assumptions including, but not limited to, morbidity (i.e., frequency and severity of claim, including claim termination rates and benefit utilization rates); morbidity improvement (i.e., assumed rate of improvement in morbidity in the future); mortality (i.e., life expectancy or longevity); mortality improvement (i.e., assumed rate that mortality is expected to reduce over time); policyholder persistency or lapses (i.e., the length of time a policy will remain in force); anticipated premium increases or benefit reductions associated with future in-force rate actions, including actions that are: (a) approved and not yet implemented, (b) filed but not yet approved, and (c) estimated on future filings through 2028, on long-term care insurance policies; and interest rates. Assumptions are locked-in throughout the remaining life of a contract unless a premium deficiency develops.
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MD&AOTHER ITEMS
Claim reserves. Claim reserves are established when a claim is incurred and represents our best estimate of the present value of the ultimate obligations for future claim payments and claim adjustment expenses. Key inputs include actual known facts about the claim, such as the benefits available and cause of disability of the claimant, as well as assumptions derived from our actual historical experience and expected future changes in experience factors. Claim reserves are evaluated periodically for potential changes in loss estimates with the support of qualified actuaries, and any changes are recorded in earnings in the period in which they are determined.

Reinsurance recoverables. We cede insurance risk to third-party reinsurers for a portion of our insurance contracts, primarily on long-term care insurance policies, and record receivables for estimated recoveries as we are not relieved from our primary obligation to policyholders or cedents. These receivables are estimated in a manner consistent with the future policy benefit reserves and claim reserves. Reserves ceded to reinsurers, net of allowance, were $2.5 billion and $2.4 billion at September 30, 2020 and December 31, 2019, respectively, and are included in the caption Other GE Capital receivables in our consolidated Statement of Financial Position.

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

The primary assumptions used in the premium deficiency tests include:

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

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

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

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


26 2020 3Q FORM 10-Q
MD&AOTHER ITEMS
Future long-term care premium rate increases. As a reinsurer, we rely upon the primary insurers that issued the underlying policies to file proposed premium rate increases on those policies with the relevant state insurance regulators. While we have no direct ability to seek or to institute such premium rate increases, we often collaborate with the primary insurers in accordance with reinsurance contractual terms to file proposed premium rate increases. We consider recent experience of rate increase filings made by our ceding companies along with state insurance regulatory processes and precedents in establishing our current expectations. Higher future premium rate increases lower the present value of future policy benefit reserves and lower future premium rate increases increase the present value of future policy benefit reserves.

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

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

2020 Premium Deficiency Testing. We completed our annual premium deficiency testing in the aggregate across our run-off insurance portfolio in the third quarter of 2020. These procedures included updating experience studies since our last test completed in the third quarter of 2019, independent actuarial analysis and review of industry benchmarks. As we experienced a premium deficiency in 2019, our 2020 premium deficiency testing started with a zero margin and, accordingly, any net adverse development would result in a future premium deficiency. Using our most recent future policy benefit reserve assumptions, including changes to our assumptions related to morbidity, future premium rate increases and discount rate, the 2020 premium deficiency testing results indicated there was a positive margin of less than 2% of the recorded future policy benefit reserves, excluding Other adjustments, at September 30, 2020. As a result, the assumptions updated in connection with the premium deficiency recognized in 2019 remain locked-in and will remain so unless another premium deficiency occurs in the future.

The increase in the premium deficiency testing margin from our 2019 testing was primarily attributable to modestly favorable emerging morbidity experience in our long-term care insurance portfolio, primarily at the older attained ages, in the period since the 2017 reconstruction of our future claim cost projections ($0.4 billion) and higher projected future premium rate increase approvals ($0.2 billion), partially offset by a decline in the overall discount rate to a weighted average rate of 5.70% compared to 5.74% in 2019 ($0.2 billion). This decline in the discount rate from 2019 to 2020 reflects a lower expected reinvestment rate, due to lower benchmark interest rates in the U.S, increasing to a lower expected long-term average investment yield over a longer period and slightly lower actual yields on our investment security portfolio, partially offset by increased allocations to higher yielding asset classes introduced with our 2018 strategic initiatives, which included a modest decline in expected yield compared to 2019 assumptions.

As noted above, while our observed long-term care insurance claim experience has shown some emerging modest favorable experience in the period since the 2017 reconstruction of our future claim cost projections, it remains largely in-line with those reconstructed projections. Based on the application of professional actuarial judgment to the factors discussed above, we have made no substantial change to our assumptions concerning morbidity improvement, mortality, mortality improvement, or terminations in 2020.
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.

Since our premium deficiency testing performed in 2019, we have implemented approximately $0.3 billion of previously approved rate increase actions and expect higher projected future premium rate increase approvals of approximately $0.2 billion. Our 2020 premium deficiency test includes approximately $1.9 billion of anticipated future premium increases or benefit reductions associated with future in-force rate actions. This represents a decrease of $0.1 billion from our 2019 premium deficiency test to account for actions that are: (a) approved and not yet implemented, (b) filed but not yet approved, and (c) estimated on future filings through 2028 and includes the effects of the lower discount rate mentioned above and longer anticipated timing to achieve certain premium rate approvals.

As a result of exposure period cut-off dates to permit experience to develop and lags in ceding company data reporting from our ceding companies, the impact of COVID-19 is not reflected in the experience studies data used in our 2020 premium deficiency testing. However, we assessed certain scenarios to understand potential impacts associated with COVID-19 and, due to the insignificance and short-term nature of such uncertain future impacts, including the natural offsets from mortality in the aggregate across our run-off insurance products, concluded adjustments to our primary assumptions used in the premium deficiency testing were not warranted.

When results of the premium deficiency testing indicate overall reserves are sufficient, we are also required to assess whether additional future policy benefit reserves are required to be accrued over time in the future. Such an accrual would be required if profits are projected in earlier future periods followed by losses projected in later future years (i.e., profits followed by losses). When this pattern of profits followed by losses is projected, we would be required to accrue a liability in the expected profitable years by the amount necessary to offset projected losses in later future years. We noted our projections as of third quarter 2020 indicate the present value of projected earnings in each future year to be positive, and therefore, no further adjustments to our future policy benefit reserves were required at this time.
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MD&AOTHER ITEMS
GAAP Reserve Sensitivities. The results of our premium deficiency testing are sensitive to the assumptions described above. Considering the results of the 2020 premium deficiency test which resulted in a small margin, any future net adverse changes in our assumptions may reduce the margin or result in a premium deficiency requiring an increase to future policy benefit reserves. For example, adverse changes in key assumptions related to our future policy benefits reserves, holding all other assumptions constant, would have the following effects on the projected present value of future cash flows as presented in the table below. Any future net favorable changes to these assumptions could result in a lower projected present value of future cash flows and additional margin in our premium deficiency test and higher income over the remaining duration of the portfolio, including higher investment income. The assumptions within our future policy benefit reserves are subject to significant uncertainties, including those inherent in the complex nature of our reinsurance treaties. Many of our assumptions are interdependent and require evaluation individually and in the aggregate across all insurance products. Small changes in the amounts used in the sensitivities or the use of different factors could result in materially different outcomes from those reflected below.
2019 assumption2020 assumptionHypothetical change in 2020 assumption
Estimated increase to projected present value of future cash flows
(In millions, pre-tax)
Long-term care insurance morbidity improvement1.25% per year over 12 to 20 years1.25% per year over 12 to 20 years25 basis point reduction
No morbidity improvement		$600
$3,400
Long-term care insurance morbidityBased on company experienceBased on company experience5% increase in dollar amount of paid claims$1,000
Long-term care insurance mortality improvement0.5% per year for 10 years with annual improvement graded to 0% over next 10 years0.5% per year for 10 years with annual improvement graded to 0% over next 10 years1.0% per year for 10 years with annual improvement graded to 0% over next 10 years$400
Total terminations:
Long-term care insurance mortalityBased on company experienceBased on company experienceAny change in termination assumptions that reduce total terminations by 10%$1,100
Long-term care insurance lapse rateVaries by block, attained age and benefit period; average 0.5 - 1.15%Varies by block, attained age and benefit period; average 0.5 - 1.15%
Long-term care insurance benefit exhaustionBased on company experienceBased on company experience
Long-term care insurance future premium rate increasesVaries by block based on filing experienceVaries by block based on filing experience25% adverse change in premium rate increase success rate$500
Discount rate:
Overall discount rate5.74%5.70%25 basis point reduction$900
Reinvestment rate3.05%; grading to a long-term average investment yield of 5.9%2.70%; grading to a long-term average investment yield of 5.8%25 basis point reduction; grading to a long-term average investment yield of 5.8%Less than $100
Structured settlement annuity mortalityBased on company experienceBased on company experience5% decrease in mortality$100
Life insurance mortalityBased on company experienceBased on company experience5% increase in mortality$300

Statutory Considerations. Our run-off insurance subsidiaries are required to prepare statutory financial statements in accordance with statutory accounting practices. Statutory accounting practices, not GAAP, determine the required statutory capital levels of our insurance legal entities. We annually perform statutory asset adequacy testing and expect our December 31, 2020 testing process to be completed in the first quarter of 2021, the results of which may affect the amount or timing of capital contributions from GE Capital to the insurance legal entities. See Other Items - New Accounting Standards and Note 12 to the consolidated financial statements and Other Items within MD&A in our Annual Report on Form 10-K for the year ended December 31, 2019 for further information.


28 2020 3Q FORM 10-Q
MD&AOTHER ITEMS
NEW ACCOUNTING STANDARDS. The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements tonew guidance on accounting for long-duration insurance contracts that is effective January 1, 2023. Early adoption is permitted, and if elected, the Accounting for Long-Duration Contracts with an effective date for periods beginning after December 31, 2021, with an election to adopt early. On September 30, 2020, the FASB directed the staff to draft a final ASU to defer the effective date for all insurance entities by one year and to allow the early application transition date tocan be either the beginning of the prior period or the earliest prior period presented. We are evaluating the effect of the standardnew guidance on our consolidated financial statements and anticipate that its adoption will significantly change the accounting for measurements of our long-duration insurance liabilities. The ASUnew guidance requires cash flow assumptions used in the measurement of various insurance liabilities to be reviewed at least annually and updated if actual experience or other evidence indicates previous assumptions need to be revised with any required changes recorded in earnings. Under the current accounting guidance, the discount rate is based on expected investment yields, while under the ASUnew guidance the discount rate will be equivalent to the upper-medium grade (i.e., single A) fixed-income instrument yield reflecting the duration characteristics of the liability and is required to be updated in each reporting period with changes recorded in other comprehensive income. In measuring the insurance liabilities under the new standard,guidance, contracts shall not be grouped together from different issue years. These changes result in the elimination of premium deficiency testing and shadow adjustments. While we continue to evaluate the effect of the standardnew guidance on our ongoing financial reporting, we anticipate that theits adoption of the ASU will materially affect our financial statements. As the ASUnew guidance is only applicable to the measurements of our long-duration insurance liabilities under GAAP, it will not affect the accounting for our insurance reserves or the levels of capital and surplus under statutory accounting practices.

2021 1Q FORM 10-Q 18

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

In addition, management recognizes that certain non-GAAP terms may be interpreted differently by other companies under different circumstances. In various sections of this report we have made reference to the following non-GAAP financial measures in describing our (1) revenues, specifically GE Industrial organic revenues by segment; BioPharma organic revenues, GE Industrial organic revenues, and GE Industrial equipment and services organic revenues, (2) profit, specifically GE Industrial organic profit and profit margin by segment; BioPharma organic profit and profit margin, Adjusted GE Industrial profit and profit margin (excluding certain items); Adjusted GE Industrial organic profit and profit margin; Adjusted earnings (loss); and Adjusted earnings (loss) per share (EPS), (3) cash flows, specifically GE Industrial free cash flows (FCF), and (4) debt balances, specifically GE Industrial net debt.

The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures follow.
GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP)
(Dollars in millions)RevenuesSegment profit (loss)Profit margin
Three months ended September 3020202019V%20202019V%20202019V pts
Power (GAAP)$4,025 $3,926 3 %$150 $(144)F3.7 %(3.7)%7.4pts
Less: acquisitions— — — — 
Less: business dispositions— 25 — 4 
Less: foreign currency effect— — (5)— 
Power organic (Non-GAAP)$4,026 $3,901 3 %$155 $(147)F3.8 %(3.8)%7.6pts
Renewable Energy (GAAP)$4,525 $4,425 2 %$5 $(98)F0.1 %(2.2)%2.3pts
Less: acquisitions— — — — 
Less: business dispositions— 37 — (7)
Less: foreign currency effect(32)— (2)— 
Renewable Energy organic (Non-GAAP)$4,558 $4,388 4 %$7 $(91)F0.2 %(2.1)%2.3pts
Aviation (GAAP)$4,919 $8,109 (39)%$356 $1,718 (79)%7.2 %21.2 %(14.0)pts
Less: acquisitions— — — — 
Less: business dispositions— 73 — 1 
Less: foreign currency effect6 — (5)— 
Aviation organic (Non-GAAP)$4,913 $8,036 (39)%$361 $1,717 (79)%7.3 %21.4 %(14.1)pts
Healthcare (GAAP)$4,565 $4,923 (7)%$765 $974 (21)%16.8 %19.8 %(3.0)pts
Less: acquisitions14 — (6)— 
Less: business dispositions21 825 (2)373 
Less: foreign currency effect10 — (8)— 
Healthcare organic (Non-GAAP)$4,519 $4,098 10 %$781 $601 30 %17.3 %14.7 %2.6pts
Less: BioPharma organic (Non-GAAP)$— $— $— $— 
Healthcare excluding BioPharma organic (Non-GAAP)$4,519 $4,098 10 %$781 $601 30 %17.3 %14.7 %2.6pts
2020 3Q FORM 10-Q 29
MD&ANON-GAAP FINANCIAL MEASURES
RevenuesSegment profit (loss)Profit margin
Nine months ended September 3020202019V%20202019V%20202019V pts
Power (GAAP)$12,206 $13,224 (8)%$(19)$84 U(0.2)%0.6 %(0.8)pts
Less: acquisitions19 19 (3)(2)
Less: business dispositions15 81 2 4 
Less: foreign currency effect(111)— 16 — 
Power organic (Non-GAAP)$12,283 $13,124 (6)%$(34)$83 U(0.3)%0.6 %(0.9)pts
Renewable Energy (GAAP)$11,224 $10,590 6 %$(493)$(469)(5)%(4.4)%(4.4)%—pts
Less: acquisitions— — — — 
Less: business dispositions8 60 — (7)
Less: foreign currency effect(230)— 21 — 
Renewable Energy organic (Non-GAAP)$11,445 $10,530 9 %$(513)$(462)(11)%(4.5)%(4.4)%(0.1)pts
Aviation (GAAP)$16,196 $23,940 (32)%$681 $4,764 (86)%4.2 %19.9 %(15.7)pts
Less: acquisitions— — — — 
Less: business dispositions13 299 (2)16 
Less: foreign currency effect(1)— 2 — 
Aviation organic (Non-GAAP)$16,184 $23,640 (32)%$681 $4,748 (86)%4.2 %20.1 %(15.9)pts
Healthcare (GAAP)$13,185 $14,540 (9)%$2,212 $2,714 (18)%16.8 %18.7 %(1.9)pts
Less: acquisitions36 21 (17)(4)
Less: business dispositions21 1,656 (2)702 
Less: foreign currency effect(114)— (28)— 
Healthcare organic (Non-GAAP)$13,243 $12,863 3 %$2,259 $2,015 12 %17.1 %15.7 %1.4pts
Less: BioPharma organic (Non-GAAP)$839 $762 $379 $311 
Healthcare excluding BioPharma organic (Non-GAAP)$12,404 $12,102 2 %$1,879 $1,705 10 %15.1 %14.1 %1.0pts
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends. We also believe presenting organic revenues* and organic profit* separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial companies.
BIOPHARMA ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN (NON-GAAP)
Three months ended September 30RevenuesSegment profit (loss)Profit margin
(Dollars in millions)20202019V%20202019V%20202019V pts
BioPharma (GAAP)$— $786 U$— $380 U— %48.3 %(48.3)pts
Less: acquisitions— — — — 
Less: business dispositions— 786 — 380 
Less: foreign currency effect— — — — 
BioPharma organic (Non-GAAP)$— $— — %$— $— — %— %— %— pts
Nine months ended September 3020202019V%20202019V%20202019V pts
BioPharma (GAAP)$830 $2,378 (65)%$382 $1,063 (64)%46.0 %44.7 %1.3 pts
Less: acquisitions— — — — 
Less: business dispositions— 1,616 — 752 
Less: foreign currency effect(9)— 2 — 
BioPharma organic (Non-GAAP)$839 $762 10 %$379 $311 22 %45.2 %40.8 %4.4 pts










*Non-GAAP Financial Measure
30 2020 3Q FORM 10-Q
MD&ANON-GAAP FINANCIAL MEASURES
GE INDUSTRIAL ORGANIC REVENUES (NON-GAAP)Three months ended September 30Nine months ended September 30
(Dollars in millions)20202019V%20202019V%
GE Industrial revenues (GAAP)$17,918 $21,519 (16.7)%$52,828 $63,259 (16)%
Less: acquisitions35 6 103 45 
Less: business dispositions(a)21 1,104 58 2,403 
Less: foreign currency effect(b)(15)— (461)— 
GE Industrial organic revenues (Non-GAAP)$17,877 $20,410 (12.4)%$53,129 $60,811 (12.6)%
Less: BioPharma organic revenue (Non-GAAP)— — 839 762 
GE Industrial organic revenues excluding BioPharma organic revenues (Non-GAAP)$17,877 $20,410 (12.4)%$52,290 $60,049 (12.9)%
(a) Dispositions impact in 2019 primarily related to our BioPharma business, with revenues of $1,616 million, Middle River and Hamble site dispositions, with revenues of $125 million and $148 million, respectively, and Current and Lighting within our Corporate segment, with revenues of $155 million and $144 million, respectively.
(b) Foreign currency impact in 2020 is primarily driven by U.S. Dollar appreciation against Euro, Brazilian Real and Chinese Yen.
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.

GE INDUSTRIAL EQUIPMENT AND SERVICESThree months ended September 30Nine months ended September 30
ORGANIC REVENUES (NON-GAAP) (Dollars in millions)
20202019V%20202019V%
GE Industrial equipment revenues (GAAP)$9,625 $10,996 (12)%$26,928 $30,873 (13)%
Less: acquisitions— — 13 14 
Less: business dispositions— 968 19 2,112 
Less: foreign currency effect9 — (299)— 
GE Industrial equipment organic revenues (Non-GAAP)$9,616 $10,027 (4)%$27,194 $28,747 (5)%
GE Industrial services revenues (GAAP)$8,293 $10,524 (21)%$25,901 $32,386 (20)%
Less: acquisitions35 6 89 31 
Less: business dispositions21 136 39 291 
Less: foreign currency effect(24)— (162)— 
GE Industrial services organic revenues (Non-GAAP)$8,261 $10,383 (20)%$25,934 $32,064 (19)%
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.
2020 3Q FORM 10-Q 31
MD&ANON-GAAP FINANCIAL MEASURES
ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGINThree months ended September 30Nine months ended September 30
(EXCLUDING CERTAIN ITEMS) (NON-GAAP) (Dollars in millions)
2020201920202019
GE total revenues (GAAP)$17,918 $21,519 $52,828 $63,259 
Costs
GE total costs and expenses (GAAP)$18,705 $22,128 $56,943 $64,201 
Less: GE interest and other financial charges313 791 1,079 1,693 
Less: non-operating benefit costs603 562 1,815 1,684 
Less: restructuring & other(a)326 322 967 933 
Less: Steam asset impairments(a)363 — 363 — 
Less: goodwill impairments(a)— 740 728 1,484 
Add: noncontrolling interests(51)(5)(161)17 
Adjusted GE Industrial costs (Non-GAAP)$17,049 $19,708 $51,829 $58,423 
Other Income
GE other income (GAAP)$(509)$153 $8,481 $1,177 
Less: unrealized gains (losses)(a)(760)(86)(4,728)(125)
Less: restructuring & other— — — 9 
Less: gains (losses) and impairments for disposed or held for sale businesses(a)119 (97)12,632 153 
Adjusted GE other income (Non-GAAP)$132 $336 $577 $1,140 
GE Industrial profit (GAAP)$(1,296)$(456)$4,366 $236 
GE Industrial profit margin (GAAP)(7.2)%(2.1)%8.3 %0.4 %
Adjusted GE Industrial profit (Non-GAAP)$1,001 $2,147 $1,576 $5,976 
Adjusted GE Industrial profit margin (Non-GAAP)5.6 %10.0 %3.0 %9.4 %
(a) See the Corporate Items and Eliminations section for further information.
We believe these measures are meaningful because they increase the comparability of period-to-period results.

ADJUSTED GE INDUSTRIAL ORGANIC PROFITThree months ended September 30Nine months ended September 30
 (NON-GAAP) (Dollars in millions)
20202019V%20202019V%
Adjusted GE Industrial profit (Non-GAAP)$1,001 $2,147 (53)%$1,576 $5,976 (74)%
Less: acquisitions— — (8)(6)
Less: business dispositions(2)360 (3)695 
Less: foreign currency effect(15)— 15 — 
Adjusted GE Industrial organic profit (Non-GAAP)$1,018 $1,787 (43)%$1,572 $5,286 (70)%
Adjusted GE Industrial profit margin (Non-GAAP)5.6 %10.0 %(4.4)pts3.0 %9.4 %(6.4)pts
Adjusted GE Industrial organic profit margin (Non-GAAP)5.7 %8.8 %(3.1)pts3.0 %8.7 %(5.7)pts
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.
32 2020 3Q FORM 10-Q
MD&ANON-GAAP FINANCIAL MEASURES
ADJUSTED EARNINGS (LOSS) (NON-GAAP)Three months ended September 30Nine months ended September 30
(Dollars in millions)20202019V%20202019V%
Consolidated earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)(a)$(1,155)$(1,325)13 %$2,984 $(707)F
Add: Accretion of redeemable noncontrolling interests (RNCI)(6)— (141)— 
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)(52)(645)(1,558)(599)
GE Industrial earnings (loss) (Non-GAAP)$(1,109)$(680)(63)%$4,401 $(108)F
Non-operating benefits costs (pre-tax) (GAAP)(603)(562)(1,815)(1,684)
Tax effect on non-operating benefit costs127 118 381 354 
Less: non-operating benefit costs (net of tax)(476)(444)(1,434)(1,331)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)(b)119 (97)12,632 153 
Tax effect on gains (losses) and impairments for disposed or held for sale businesses(35)(34)(1,270)3 
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)84 (130)11,362 156 
Restructuring & other (pre-tax)(b)(326)(322)(967)(924)
Tax effect on restructuring & other47 68 181 222 
Less: restructuring & other (net of tax)(279)(254)(786)(702)
Steam asset impairments (pre-tax)(b)(363)— (363)— 
Tax effect on Steam asset impairments37 — 37 — 
Less: Steam asset impairments (net of tax)(326)— (326)— 
Goodwill impairments (pre-tax)(b)— (740)(728)(1,484)
Tax effect on goodwill impairments— — (23)(55)
Less: goodwill impairments (net of tax)— (740)(751)(1,539)
Unrealized gains (losses) (pre-tax)(b)(760)(86)(4,728)(125)
Tax on unrealized gains (losses)132 18 951 26 
Less: unrealized gains (losses) (net of tax)(628)(68)(3,777)(98)
Debt extinguishment costs (pre-tax)— (255)(63)(255)
Tax effect on debt extinguishment costs— 53 (13)53 
Less: debt extinguishment costs (net of tax)— (201)(50)(201)
BioPharma deal expense (pre-tax)— — — — 
Tax on BioPharma deal expense— — — (14)
Less: BioPharma deal expense (net of tax)— — — (14)
Accretion of RNCI (pre-tax)(6)— (141)— 
Tax effect on accretion of RNCI— — — — 
Less: Accretion of RNCI (net of tax)(6)— (141)— 
Less: GE Industrial U.S. tax reform enactment adjustment(51)— (51)(101)
Adjusted GE Industrial earnings (loss) (Non-GAAP)$574 $1,158 (50)%$355 $3,722 (90)%
GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)$(52)$(645)92 %$(1,558)$(599)U
Insurance premium deficiency test charge (pre-tax)— (972)— (972)
Tax effect on insurance premium deficiency test charge— 204 — 204 
Less: Insurance premium deficiency test charge (net of tax)— (768)— (768)
Goodwill impairments (pre-tax)— — (839)— 
Tax effect on goodwill impairments— — 3 — 
Less: goodwill impairments (net of tax)— — (836)— 
Debt extinguishment costs (pre-tax)— — (143)— 
Tax effect on debt extinguishment costs— — 24 — 
Less: debt extinguishment costs (net of tax)— — (119)— 
Less: GE Capital U.S. tax reform enactment adjustment2 — 2 99 
Less: GE Capital tax benefit related to BioPharma sale8 — 96 — 
Adjusted GE Capital earnings (loss) (Non-GAAP)$(61)$123 U$(701)$70 U
Adjusted GE Industrial earnings (loss) (Non-GAAP)$574 $1,158 (50)%$355 $3,722 (90)%
Add: Adjusted GE Capital earnings (loss) (Non-GAAP)(61)123 U(701)70 U
Adjusted earnings (loss) (Non-GAAP)$513 $1,282 (60)%$(346)$3,792 U
(a) Earnings for per-share calculation includes allocation of participating securities pursuant to the two-class method. See Note 16 for further information.
(b) See the Corporate Items and Eliminations section for further information.
2020 3Q FORM 10-Q 33
MD&ANON-GAAP FINANCIAL MEASURES
ADJUSTED EARNINGS (LOSS) PER SHARE (EPS)Three months ended September 30Nine months ended September 30
(NON-GAAP)20202019V%20202019V%
Consolidated EPS from continuing operations attributable to GE common shareholders (GAAP)$(0.13)$(0.15)13 %$0.34 $(0.08)F
Add: Accretion of redeemable noncontrolling interests (RNCI)— — (0.02)— 
Less: GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP)(0.01)(0.07)(0.18)(0.07)
GE Industrial EPS (Non-GAAP)$(0.13)$(0.08)(63)%$0.50 $(0.01)F
Non-operating benefits costs (pre-tax) (GAAP)(0.07)(0.06)(0.21)(0.19)
Tax effect on non-operating benefit costs0.01 0.01 0.04 0.04 
Less: non-operating benefit costs (net of tax)(0.05)(0.05)(0.16)(0.15)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)0.01 (0.01)1.44 0.02 
Tax effect on gains (losses) and impairments for disposed or held for sale businesses— — (0.15)— 
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)0.01 (0.01)1.30 0.02 
Restructuring & other (pre-tax)(0.04)(0.04)(0.11)(0.11)
Tax effect on restructuring & other0.01 0.01 0.02 0.03 
Less: restructuring & other (net of tax)(0.03)(0.03)(0.09)(0.08)
Steam asset impairments (pre-tax)(0.04)— (0.04)— 
Tax effect on Steam asset impairments— — — — 
Less: Steam asset impairments (net of tax)(0.04)— (0.04)— 
Goodwill impairments (pre-tax)— (0.08)(0.08)(0.17)
Tax effect on goodwill impairments— — — (0.01)
Less: goodwill impairments (net of tax)— (0.08)(0.09)(0.18)
Unrealized gains (losses) (pre-tax)(0.09)(0.01)(0.54)(0.01)
Tax on unrealized gains (losses)0.02 — 0.11 — 
Less: unrealized gains (losses) (net of tax)(0.07)(0.01)(0.43)(0.01)
Debt extinguishment costs (pre-tax)— (0.03)(0.01)(0.03)
Tax effect on debt extinguishment costs— 0.01 — 0.01 
Less: debt extinguishment costs (net of tax)— (0.02)(0.01)(0.02)
BioPharma deal expense (pre-tax)— — — — 
Tax on BioPharma deal expense— — — — 
Less: BioPharma deal expense (net of tax)— — — — 
Accretion of RNCI (pre-tax)— — (0.02)— 
Tax effect on accretion of RNCI— — — — 
Less: Accretion of RNCI (net of tax)— — (0.02)— 
Less: GE Industrial U.S. tax reform enactment adjustment(0.01)— (0.01)(0.01)
Adjusted GE Industrial EPS (Non-GAAP)$0.07 $0.13 (46)%$0.04 $0.43 (91)%
GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP)$(0.01)$(0.07)86 %$(0.18)$(0.07)U
Insurance premium deficiency test charge (pre-tax)— (0.11)— (0.11)
Tax effect on insurance premium deficiency test charge— 0.02 — 0.02 
Less: Insurance premium deficiency test charge (net of tax)— (0.09)— (0.09)
Goodwill impairments (pre-tax)— — (0.10)— 
Tax effect on goodwill impairments— — — — 
Less: goodwill impairments (net of tax)— — (0.10)— 
Debt extinguishment costs (pre-tax)— — (0.02)— 
Tax effect on debt extinguishment costs— — — — 
Less: debt extinguishment costs (net of tax)— — (0.01)— 
Less: GE Capital U.S. tax reform enactment adjustment— — — 0.01 
Less: GE Capital tax benefit related to BioPharma sale— — 0.01 — 
Adjusted GE Capital EPS (Non-GAAP)$(0.01)$0.01 U$(0.08)$0.01 U
Adjusted GE Industrial EPS (Non-GAAP)$0.07 $0.13 (46)%$0.04 $0.43 (91)%
Add: Adjusted GE Capital EPS (Non-GAAP)(0.01)0.01 U(0.08)0.01 U
Adjusted EPS (Non-GAAP)$0.06 $0.15 (60)%$(0.04)$0.43 U
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
34 2020 3Q FORM 10-Q
MD&ANON-GAAP FINANCIAL MEASURES
GE INDUSTRIAL ORGANIC REVENUES, PROFIT (LOSS) AND PROFIT MARGIN BY SEGMENT (NON-GAAP)
RevenuesSegment profit (loss)Profit margin
Three months ended March 3120212020V%20212020V%20212020V pts
Power (GAAP)$3,921 $4,025 (3)%$(87)$(131)34 %(2.2)%(3.3)%1.1pts
Less: acquisitions— — — — 
Less: business dispositions— 15 — 2 
Less: foreign currency effect63 — (1)— 
Power organic (Non-GAAP)$3,858 $4,009 (4)%$(86)$(133)35 %(2.2)%(3.3)%1.1pts
Renewable Energy (GAAP)$3,248 $3,194 2 %$(234)$(327)28 %(7.2)%(10.2)%3.0pts
Less: acquisitions— — — — 
Less: business dispositions— 24 — (4)
Less: foreign currency effect90 — (10)— 
Renewable Energy organic (Non-GAAP)$3,157 $3,169 — %$(224)$(323)31 %(7.1)%(10.2)%3.1pts
Aviation (GAAP)$4,992 $6,892 (28)%$641 $1,003 (36)%12.8 %14.6 %(1.8)pts
Less: acquisitions— — — — 
Less: business dispositions— 25 — (17)
Less: foreign currency effect10 — — — 
Aviation organic (Non-GAAP)$4,982 $6,868 (27)%$641 $1,020 (37)%12.9 %14.9 %(2.0)pts
Healthcare (GAAP)$4,308 $4,727 (9)%$698 $867 (19)%16.2 %18.3 %(2.1)pts
Less: acquisitions18 (21)8 (6)
Less: business dispositions— 865 — 380 
Less: foreign currency effect120 — 48 — 
Healthcare organic (Non-GAAP)$4,170 $3,884 7 %$643 $493 30 %15.4 %12.7 %2.7pts
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends. We also believe presenting organic revenues* and organic profit* separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial companies.
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 2020. We believe presenting Adjusted Industrial earnings* and Adjusted Industrial EPS* separately for our financial services businesses also provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.
GE INDUSTRIAL ORGANIC REVENUES (NON-GAAP)Three months ended March 31
20212020V%
GE Industrial revenues (GAAP)$16,329 $18,844 (13)%
Less: acquisitions18 (21)
Less: business dispositions(a)— 1,095 
Less: foreign currency effect(b)288 — 
GE Industrial organic revenues (Non-GAAP)$16,023 $17,770 (10)%
(a) Dispositions impact in 2020 primarily related to our BioPharma business, with revenues of $830 million.
(b) Foreign currency impact in 2021 was primarily driven by U.S. Dollar appreciation against euro, Brazilian real, and Chinese renminbi.
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.

GE INDUSTRIAL FREE CASH FLOWS (FCF) (NON-GAAP)Nine months ended September 30
(In millions)20202019
GE CFOA (GAAP)$(3,175)$77 
Add: gross additions to property, plant and equipment(1,302)(1,596)
Add: gross additions to internal-use software(121)(203)
Less: taxes related to business sales(837)(160)
GE Industrial free cash flows (Non-GAAP)$(3,761)$(1,562)
We believe investors may find it useful to compare GE's Industrial free cash flows* performance without the effects of cash used for taxes related to business sales. We believe this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows.

*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 19

GE INDUSTRIAL EQUIPMENT AND SERVICESThree months ended March 31
ORGANIC REVENUES (NON-GAAP)20212020V%
GE Industrial equipment revenues (GAAP)$7,971 $9,097 (12)%
Less: acquisitions— — 
Less: business dispositions— 948 
Less: foreign currency effect189 — 
GE Industrial equipment organic revenues (Non-GAAP)$7,782 $8,149 (5)%
GE Industrial services revenues (GAAP)$8,358 $9,748 (14)%
Less: acquisitions18 (21)
Less: business dispositions— 147 
Less: foreign currency effect99 — 
GE Industrial services organic revenues (Non-GAAP)$8,241 $9,622 (14)%
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.

GE INDUSTRIAL NET DEBT (NON-GAAP) (In millions)
September 30, 2020December 31, 2019
Total GE short- and long-term borrowings (GAAP)$44,258 $52,059 
Less: GE Capital short- and long-term debt assumed by GE24,134 31,368 
Add: intercompany loans from GE Capital4,726 12,226 
Total adjusted GE borrowings$24,851 $32,917 
Total pension and principal retiree benefit plan liabilities (pre-tax)(a)27,773 27,773 
Less: taxes at 21%5,832 5,832 
Total pension and principal retiree benefit plan liabilities (net of tax)$21,941 $21,941 
GE operating lease liabilities3,117 3,369 
GE preferred stock5,871 5,738 
Less: 50% of GE preferred stock2,936 2,869 
50% of preferred stock$2,936 $2,869 
Deduction for total GE cash, cash equivalents and restricted cash(24,337)(17,613)
Less: 25% of GE cash, cash equivalents and restricted cash(6,084)(4,403)
Deduction for 75% of GE cash, cash equivalents and restricted cash$(18,252)$(13,210)
Total GE Industrial net debt (Non-GAAP)$34,592 $47,886 
(a) Represents the total net deficit status of principal pension plans, other pension plans and retiree benefit plans at December 31, 2019. The funded status of our benefit plans is updated annually in the fourth quarter.
In this document we use GE Industrial net debt*, which is calculated based on rating agency methodologies. We are including the calculation of GE industrial net debt* to provide investors more clarity regarding how the credit rating agencies measure GE Industrial leverage.
ADJUSTED GE INDUSTRIAL PROFIT AND PROFIT MARGINThree months ended March 31
(EXCLUDING CERTAIN ITEMS) (NON-GAAP)20212020V%
GE Industrial total revenues (GAAP)$16,329 $18,844 (13)%
Costs
GE Industrial total costs and expenses (GAAP)$16,574 $19,133 (13)%
Less: GE Industrial interest and other financial charges268 370 
Less: non-operating benefit costs433 616 
Less: restructuring & other(a)113 143 
Add: noncontrolling interests7 36 
Adjusted GE Industrial costs (Non-GAAP)$15,767 $18,040 (13)%
Other Income
GE Industrial other income (GAAP)$623 $6,874 (91)%
Less: unrealized gains (losses)(a)509 (5,794)
Less: restructuring & other7 — 
Less: gains (losses) and impairments for disposed or held for sale businesses(a)(159)12,439 
Adjusted GE Industrial other income (Non-GAAP)$266 $228 17 %
GE Industrial profit (GAAP)$378 $6,585 (94)%
GE Industrial profit margin (GAAP)2.3 %34.9 %(32.6)pts
Adjusted GE Industrial profit (Non-GAAP)$828 $1,032 (20)%
Adjusted GE Industrial profit margin (Non-GAAP)5.1 %5.5 %(0.4)pts
(a) See the Corporate Items and Eliminations section for further information.
We believe that adjusting industrial 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), unrealized 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 GE INDUSTRIAL ORGANIC PROFITThree months ended March 31
 (NON-GAAP)20212020V%
Adjusted GE Industrial profit (Non-GAAP)$828 $1,032 (20)%
Less: acquisitions8 9 
Less: business dispositions— 366 
Less: foreign currency effect43 — 
Adjusted GE Industrial organic profit (Non-GAAP)$777 $657 18 %
Adjusted GE Industrial profit margin (Non-GAAP)5.1 %5.5 %(0.4)pts
Adjusted GE Industrial organic profit margin (Non-GAAP)4.8 %3.7 %1.1pts
We believe these measures provide management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency, as these activities can obscure underlying trends.

2021 1Q FORM 10-Q 20

ADJUSTED EARNINGS (LOSS) (NON-GAAP)Three months ended March 31
20212020V%
Consolidated earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)(a)$18 $6,158 (100)%
Add: Accretion of redeemable noncontrolling interests (RNCI)2 — 
Less: GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)(172)(187)
GE Industrial earnings (loss) (Non-GAAP)$192 $6,345 (97)%
Non-operating benefits costs (pre-tax) (GAAP)(433)(616)
Tax effect on non-operating benefit costs91 129 
Less: non-operating benefit costs (net of tax)(342)(487)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)(b)(159)12,439 
Tax effect on gains (losses) and impairments for disposed or held for sale businesses33 (1,265)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)(126)11,174 
Restructuring & other (pre-tax)(b)(106)(143)
Tax effect on restructuring & other22 30 
Less: restructuring & other (net of tax)(84)(114)
Unrealized gains (losses) (pre-tax)(b)509 (5,794)
Tax on unrealized gains (losses)(152)1,096 
Less: unrealized gains (losses) (net of tax)357 (4,697)
Accretion of RNCI (pre-tax)2 — 
Tax effect on accretion of RNCI— — 
Less: Accretion of RNCI (net of tax)2 — 
Adjusted GE Industrial earnings (loss) (Non-GAAP)$384 $469 (18)%
GE Capital earnings (loss) from continuing operations attributable to GE common shareholders (GAAP)$(172)$(187)8 %
Less: GE Capital tax benefit related to BioPharma sale— 88 
Less: GE Capital tax loss related to GECAS sale(44)— 
Adjusted GE Capital earnings (loss) (Non-GAAP)$(129)$(275)53 %
Adjusted GE Industrial earnings (loss) (Non-GAAP)$384 $469 (18)%
Add: Adjusted GE Capital earnings (loss) (Non-GAAP)(129)(275)53 %
Adjusted earnings (loss) (Non-GAAP)$256 $194 32 %
(a) See Note 18 for further information.
(b) See the Corporate Items and Eliminations section for further information.
2021 1Q FORM 10-Q 21

ADJUSTED EARNINGS (LOSS) PER SHARE (EPS)Three months ended March 31
(NON-GAAP)20212020V%
Consolidated EPS from continuing operations attributable to GE common shareholders (GAAP)$— $0.70 U
Add: Accretion of redeemable noncontrolling interests (RNCI)— — 
Less: GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP)(0.02)(0.02)
GE Industrial EPS (Non-GAAP)$0.02 $0.73 (97)%
Non-operating benefits costs (pre-tax) (GAAP)(0.05)(0.07)
Tax effect on non-operating benefit costs0.01 0.01 
Less: non-operating benefit costs (net of tax)(0.04)(0.06)
Gains (losses) and impairments for disposed or held for sale businesses (pre-tax)(0.02)1.42 
Tax effect on gains (losses) and impairments for disposed or held for sale businesses— (0.14)
Less: gains (losses) and impairments for disposed or held for sale businesses (net of tax)(0.01)1.28 
Restructuring & other (pre-tax)(0.01)(0.02)
Tax effect on restructuring & other— — 
Less: restructuring & other (net of tax)(0.01)(0.01)
Unrealized gains (losses) (pre-tax)0.06 (0.66)
Tax on unrealized gains (losses)(0.02)0.13 
Less: unrealized gains (losses) (net of tax)0.04 (0.54)
Accretion of RNCI (pre-tax)— — 
Tax effect on accretion of RNCI— — 
Less: Accretion of RNCI (net of tax)— — 
Less: GE Industrial U.S. tax reform enactment adjustment— — 
Adjusted GE Industrial EPS (Non-GAAP)$0.04 $0.05 (20)%
GE Capital EPS from continuing operations attributable to GE common shareholders (GAAP)$(0.02)$(0.02)— %
Less: GE Capital tax benefit related to BioPharma sale— 0.01 
Less: GE Capital tax loss related to GECAS sale— — 
Adjusted GE Capital EPS (Non-GAAP)$(0.01)$(0.03)67 %
Adjusted GE Industrial EPS (Non-GAAP)$0.04 $0.05 (20)%
Add: Adjusted GE Capital EPS (Non-GAAP)(0.01)(0.03)67 %
Adjusted EPS (Non-GAAP)$0.03 $0.02 50 %
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
The service cost of our pension and other benefit plans are included in adjusted earnings (loss)*, 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 (losses), unrealized 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. 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.

GE INDUSTRIAL FREE CASH FLOWS (FCF) (NON-GAAP)Three months ended March 31
20212020
GE Industrial CFOA (GAAP)$(491)$(1,662)
Add: gross additions to property, plant and equipment(332)(504)
Add: gross additions to internal-use software(23)(58)
Less: taxes related to business sales— (17)
GE Industrial free cash flows (Non-GAAP)$(845)$(2,207)
We believe investors may find it useful to compare GE's Industrial free cash flows* performance without the effects of cash used for taxes related to business sales. We believe this measure will better allow management and investors to evaluate the capacity of our industrial operations to generate free cash flows.







*Non-GAAP Financial Measure
2021 1Q FORM 10-Q 22

GE INDUSTRIAL NET DEBT (NON-GAAP)March 31, 2021December 31, 2020
Total GE Industrial short- and long-term borrowings (GAAP)$41,247 $42,736 
Less: GE Capital short- and long-term debt assumed by GE Industrial21,538 22,390 
Add: intercompany loans from GE Capital3,177 3,177 
Total adjusted GE Industrial borrowings$22,886 $23,523 
Pension and principal retiree benefit plan liabilities (pre-tax)(a)25,492 25,492 
Less: taxes at 21%5,353 5,353 
Pension and principal retiree benefit plan liabilities (net of tax)$20,139 $20,139 
GE Industrial operating lease liabilities3,083 3,133 
GE Industrial preferred stock5,930 5,918 
Less: 50% of GE Industrial preferred stock2,965 2,959 
50% of preferred stock$2,965 $2,959 
Deduction for total GE Industrial cash, cash equivalents and restricted cash(22,361)(23,209)
Less: 25% of GE Industrial cash, cash equivalents and restricted cash(5,590)(5,802)
Deduction for 75% of GE Industrial cash, cash equivalents and restricted cash$(16,771)$(17,407)
Total GE Industrial net debt (Non-GAAP)$32,302 $32,347 
(a) Represents the sum of the net deficit of principal pension, other pension, and principal retiree benefit plans at December 31, 2020. The funded status of our benefit plans is updated annually in the fourth quarter.
In this document we use GE Industrial net debt*, which is calculated based on rating agency methodologies. We are including the calculation of GE Industrial net debt* to provide investors more clarity regarding how the credit rating agencies measure GE Industrial leverage.

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, 2020,March 31, 2021, and (ii) no change in internal control over financial reporting occurred during the quarter ended September 30, 2020,March 31, 2021, that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting.

OTHER FINANCIAL DATA. GE did not repurchase any equity securities during the three months ended September 30, 2020.March 31, 2021.


RISK FACTORS. The risk factor set forth below updates the corresponding risk factor in our Annual Report on Form 10-K for the year ended December 31, 2020. In addition to the risk factor below, you should carefully consider the risk factors discussed in our most recent Form 10-K report, which could have a material adverse effect on our business, reputation, financial position, results of operations, cash flows and stock price, and they could cause our future results to be materially different than we presently anticipate.
Business portfolio - Our success depends on achieving our strategic and financial objectives, including through dispositions, acquisitions, integrations and joint ventures. Over the past several years we have been pursuing a variety of dispositions, including the ongoing monetization of our remaining equity ownership position in Baker Hughes, and in March 2021 we announced a new plan to combine our GECAS business with AerCap. The proceeds from dispositions have been an important source of cash flow for the Company as part of our strategic and financial planning. When we seek to sell certain businesses, equity interests or assets, we may encounter difficulties in finding buyers or in market conditions that could delay or prevent the accomplishment of our objectives, and declines in the values of equity interests (such as our remaining interest in Baker Hughes, or the equity ownership position that we will hold in AerCap after completing our announced plan to combine GECAS with AerCap) or other assets that we sell can diminish the cash proceeds that we realize. We may dispose of businesses or assets at a price or on terms that are less favorable than we had anticipated, or with purchase price adjustments or the exclusion of assets or liabilities that must be divested, managed or run off separately. We can also be subject to limitations in the form of regulatory or governmental approvals that may prevent certain prospective counterparties from completing transactions with us or delay us from executing transactions on our preferred timeline, or arising from our debt or other contractual obligations that limit our ability to complete certain transactions. For example, the planned transaction to combine GECAS with AerCap is subject to closing conditions, including regulatory approvals in multiple jurisdictions, and accordingly there are risks that one or more closing conditions may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction, may require conditions, limitations or restrictions in connection with such approvals or that the required approval by the shareholders of AerCap may not be obtained. Moreover, dispositions have the effect of reducing the Company’s cash flow and earnings capacity, resulting in a less diversified portfolio of businesses and increasing our dependency on remaining businesses for our financial results from ongoing operations. Dispositions or other business separations also often involve continued financial involvement in the divested business, such as through continuing equity ownership, retained assets or liabilities, transition services agreements, commercial agreements, guarantees, indemnities or other current or contingent financial obligations or liabilities. Under these arrangements, performance by the divested businesses or other conditions outside our control could materially affect our future financial results. With respect to acquisitions, joint ventures and business integrations, we may not achieve expected returns and other benefits on a timely basis or at all as a result of changes in strategy or separation/integration challenges related to personnel, IT systems or other factors. Executing on all types of portfolio transactions can divert senior management time and resources from other pursuits. In addition, in connection with acquisitions over time, we have recorded significant goodwill and other intangible assets on our balance sheet, and if we are not able to realize the value of these assets, we may be required to incur charges relating to the impairment of these assets. We also participate in a number of joint ventures with other companies or government enterprises in various markets around the world, including joint ventures where we have a lesser degree of control over the business operations, which may expose us to additional operational, financial, reputational, legal or compliance risks.






*Non-GAAP Financial Measure
2020 3Q2021 1Q FORM 10-Q 3523

FINANCIAL STATEMENTS
STATEMENT OF EARNINGS (LOSS)STATEMENT OF EARNINGS (LOSS)Three months ended September 30STATEMENT OF EARNINGS (LOSS)Three months ended March 31
(UNAUDITED)(UNAUDITED)Consolidated(UNAUDITED)Consolidated
(In millions; per-share amounts in dollars)(In millions; per-share amounts in dollars)20202019(In millions; per-share amounts in dollars)20212020
Sales of goodsSales of goods$12,318 $14,869 Sales of goods$10,349 $12,339 
Sales of servicesSales of services5,558 6,635 Sales of services5,967 6,452 
GE Capital revenues from servicesGE Capital revenues from services1,541 1,856 GE Capital revenues from services803 699 
Total revenues (Note 9)Total revenues (Note 9)19,417 23,360 Total revenues (Note 9)17,118 19,490 
Cost of goods soldCost of goods sold10,833 12,503 Cost of goods sold8,679 9,930 
Cost of services soldCost of services sold4,442 4,825 Cost of services sold3,859 4,497 
Selling, general and administrative expensesSelling, general and administrative expenses3,227 3,293 Selling, general and administrative expenses2,891 3,061 
Research and developmentResearch and development561 723 
Interest and other financial chargesInterest and other financial charges745 1,279 Interest and other financial charges500 561 
Insurance losses and annuity benefitsInsurance losses and annuity benefits624 1,463 Insurance losses and annuity benefits555 636 
Goodwill impairments (Note 8)0 740 
Non-operating benefit costsNon-operating benefit costs605 565 Non-operating benefit costs430 618 
Other costs and expensesOther costs and expenses84 99 Other costs and expenses32 25 
Total costs and expensesTotal costs and expenses20,561 24,767 Total costs and expenses17,506 20,051 
Other income (Note 22)(517)158 
GE Capital earnings (loss) from continuing operations0 0 
Other income (Note 23)Other income (Note 23)626 6,869 
Earnings (loss) from continuing operations before income taxesEarnings (loss) from continuing operations before income taxes(1,660)(1,249)Earnings (loss) from continuing operations before income taxes238 6,308 
Benefit (provision) for income taxesBenefit (provision) for income taxes501 (41)Benefit (provision) for income taxes(142)(54)
Earnings (loss) from continuing operationsEarnings (loss) from continuing operations(1,160)(1,290)Earnings (loss) from continuing operations97 6,254 
Earnings (loss) from discontinued operations, net of taxes (Note 2)Earnings (loss) from discontinued operations, net of taxes (Note 2)(35)(8,093)Earnings (loss) from discontinued operations, net of taxes (Note 2)(2,894)(21)
Net earnings (loss)Net earnings (loss)(1,195)(9,383)Net earnings (loss)(2,798)6,233 
Less net earnings (loss) attributable to noncontrolling interestsLess net earnings (loss) attributable to noncontrolling interests(51)40 Less net earnings (loss) attributable to noncontrolling interests5 34 
Net earnings (loss) attributable to the CompanyNet earnings (loss) attributable to the Company(1,144)(9,423)Net earnings (loss) attributable to the Company(2,802)6,199 
Preferred stock dividendsPreferred stock dividends(46)(42)Preferred stock dividends(72)(43)
Net earnings (loss) attributable to GE common shareholdersNet earnings (loss) attributable to GE common shareholders$(1,190)$(9,465)Net earnings (loss) attributable to GE common shareholders$(2,874)$6,156 
Amounts attributable to GE common shareholdersAmounts attributable to GE common shareholdersAmounts attributable to GE common shareholders
Earnings (loss) from continuing operationsEarnings (loss) from continuing operations$(1,160)$(1,290)Earnings (loss) from continuing operations$97 $6,254 
Less net earnings (loss) attributable to noncontrolling interests,Less net earnings (loss) attributable to noncontrolling interests,Less net earnings (loss) attributable to noncontrolling interests,
continuing operations continuing operations(51)(7) continuing operations5 36 
Earnings (loss) from continuing operations attributable to the CompanyEarnings (loss) from continuing operations attributable to the Company(1,109)(1,283)Earnings (loss) from continuing operations attributable to the Company92 6,218 
Preferred stock dividendsPreferred stock dividends(46)(42)Preferred stock dividends(72)(43)
Earnings (loss) from continuing operations attributableEarnings (loss) from continuing operations attributableEarnings (loss) from continuing operations attributable
to GE common shareholders to GE common shareholders(1,155)(1,325) to GE common shareholders20 6,175 
Earnings (loss) from discontinued operations, net of taxesEarnings (loss) from discontinued operations, net of taxes(35)(8,093)Earnings (loss) from discontinued operations, net of taxes(2,894)(21)
Less net earnings (loss) attributable toLess net earnings (loss) attributable toLess net earnings (loss) attributable to
noncontrolling interests, discontinued operations noncontrolling interests, discontinued operations— 46  noncontrolling interests, discontinued operations0 (2)
Net earnings (loss) attributable to GE common shareholdersNet earnings (loss) attributable to GE common shareholders$(1,190)$(9,465)Net earnings (loss) attributable to GE common shareholders$(2,874)$6,156 
Earnings (loss) per share from continuing operations (Note 16)
Earnings (loss) per share from continuing operations (Note 18)Earnings (loss) per share from continuing operations (Note 18)
Diluted earnings (loss) per shareDiluted earnings (loss) per share$(0.13)$(0.15)Diluted earnings (loss) per share$0 $0.70 
Basic earnings (loss) per shareBasic earnings (loss) per share$(0.13)$(0.15)Basic earnings (loss) per share$0 $0.70 
Net earnings (loss) per share (Note 16)
Net earnings (loss) per share (Note 18)Net earnings (loss) per share (Note 18)
Diluted earnings (loss) per shareDiluted earnings (loss) per share$(0.14)$(1.08)Diluted earnings (loss) per share$(0.33)$0.70 
Basic earnings (loss) per shareBasic earnings (loss) per share$(0.14)$(1.08)Basic earnings (loss) per share$(0.33)$0.70 
Dividends declared per common share$0.01 $0.01 







36 2020 3Q2021 1Q FORM 10-Q24

FINANCIAL STATEMENTS
STATEMENT OF EARNINGS (LOSS) (CONTINUED)Three months ended September 30
(UNAUDITED)GE(a)GE Capital
(In millions; per-share amounts in dollars)2020201920202019
Sales of goods$12,314 $14,879 $12 $22 
Sales of services5,604 6,640 0 0 
GE Capital revenues from services0 0 1,669 2,075 
Total revenues17,918 21,519 1,681 2,097 
Cost of goods sold10,831 12,519 11 17 
Cost of services sold3,853 4,341 635 510 
Selling, general and administrative expenses3,106 3,172 178 199 
Interest and other financial charges313 791 486 590 
Insurance losses and annuity benefits0 0 635 1,469 
Goodwill impairments (Note 8)0 740 0 0 
Non-operating benefit costs603 562 2 3 
Other costs and expenses0 4 98 103 
Total costs and expenses18,705 22,128 2,045 2,890 
Other income (Note 22)(509)153 0 0 
GE Capital earnings (loss) from continuing operations(52)(645)0 0 
Earnings (loss) from continuing operations before income taxes(1,348)(1,101)(364)(793)
Benefit (provision) for income taxes143 (229)357 188 
Earnings (loss) from continuing operations(1,205)(1,330)(6)(604)
Earnings (loss) from discontinued operations, net of taxes (Note 2)(35)(8,093)(26)(18)
Net earnings (loss)(1,241)(9,423)(32)(623)
Less net earnings (loss) attributable to noncontrolling interests(51)41 0 (2)
Net earnings (loss) attributable to the Company(1,190)(9,465)(32)(621)
Preferred stock dividends0 0 (46)(42)
Net earnings (loss) attributable to GE common shareholders$(1,190)$(9,465)$(78)$(663)
Amounts attributable to GE common shareholders:
   Earnings (loss) from continuing operations$(1,205)$(1,330)$(6)$(604)
   Less net earnings (loss) attributable to noncontrolling interests,
      continuing operations(51)(5)0 (2)
   Earnings (loss) from continuing operations attributable to the Company(1,155)(1,325)(6)(603)
   Preferred stock dividends0 0 (46)(42)
   Earnings (loss) from continuing operations attributable
      to GE common shareholders(1,155)(1,325)(52)(645)
   Earnings (loss) from discontinued operations, net of taxes(35)(8,093)(26)(18)
   Less net earnings (loss) attributable to
      noncontrolling interests, discontinued operations0 46 0 0 
Net earnings (loss) attributable to GE common shareholders$(1,190)$(9,465)$(78)$(663)
(a) Represents the adding together of all GE Industrial affiliates and GE Capital continuing operations on a one-line basis. See Note 1.
STATEMENT OF EARNINGS (LOSS) (CONTINUED)Three months ended March 31
(UNAUDITED)GE IndustrialGE Capital
(In millions)2021202020212020
Sales of goods$10,349 $12,359 $0 $0 
Sales of services5,980 6,486 0 0 
GE Capital revenues from services0 0 878 837 
Total revenues16,329 18,844 878 837 
Cost of goods sold8,679 9,949 0 0 
Cost of services sold3,867 4,526 5 5 
Selling, general and administrative expenses2,766 2,949 116 149 
Research and development561 723 0 0 
Interest and other financial charges268 370 291 271 
Insurance losses and annuity benefits0 0 567 653 
Non-operating benefit costs433 616 (3)2 
Other costs and expenses0 0 42 33 
Total costs and expenses16,574 19,133 1,018 1,113 
Other income (Note 23)623 6,874 0 0 
Earnings (loss) from continuing operations before income taxes378 6,585 (140)(277)
Benefit (provision) for income taxes(148)(187)6 133 
Earnings (loss) from continuing operations230 6,398 (134)(144)
Earnings (loss) from discontinued operations, net of taxes (Note 2)0 (14)(2,894)(7)
Net earnings (loss)230 6,384 (3,028)(151)
Less net earnings (loss) attributable to noncontrolling interests7 34 (2)0 
Net earnings (loss) attributable to the Company223 6,350 (3,025)(151)
Preferred stock dividends(31)0 (41)(43)
Net earnings (loss) attributable to GE common shareholders$192 $6,350 $(3,066)$(194)
Amounts attributable to GE common shareholders:
   Earnings (loss) from continuing operations$230 $6,398 $(134)$(144)
   Less net earnings (loss) attributable to noncontrolling interests,
      continuing operations7 36 (2)0 
   Earnings (loss) from continuing operations attributable to the Company223 6,362 (131)(144)
   Preferred stock dividends(31)0 (41)(43)
   Earnings (loss) from continuing operations attributable
      to GE common shareholders192 6,362 (172)(187)
   Earnings (loss) from discontinued operations, net of taxes0 (14)(2,894)(7)
   Less net earnings (loss) attributable to
      noncontrolling interests, discontinued operations0 (2)0 0 
Net earnings (loss) attributable to GE common shareholders$192 $6,350 $(3,066)$(194)


2020 3Q2021 1Q FORM 10-Q 3725

FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION (UNAUDITED)Consolidated
(In millions, except share amounts)March 31, 2021December 31, 2020
Cash, cash equivalents and restricted cash(a)$31,783 $36,530 
Investment securities (Note 3)6,741 7,319 
Current receivables (Note 4)15,381 16,691 
Financing receivables – net (Note 5)306 326 
Inventories, including deferred inventory costs (Note 6)16,530 15,890 
Other GE Capital receivables1,339 1,549 
Receivable from GE Capital0 0 
Current contract assets (Note 10)5,821 5,764 
All other current assets (Note 11)1,376 1,109 
Assets of discontinued operations (Note 2)33,922 0 
  Current assets113,198 85,180 
Investment securities (Note 3)40,786 42,549 
Financing receivables – net (Note 5)0 0 
Other GE Capital receivables4,634 4,661 
Property, plant and equipment – net (Note 7)16,296 16,699 
Receivable from GE Capital0 0 
Goodwill (Note 8)25,320 25,524 
Other intangible assets – net (Note 8)9,395 9,671 
Contract and other deferred assets (Note 10)5,985 5,888 
All other assets (Note 11)12,308 11,038 
Deferred income taxes (Note 16)14,232 14,253 
Assets of discontinued operations (Note 2)3,009 40,749 
Total assets$245,164 $256,211 
Short-term borrowings (Note 12)$4,468 $4,713 
Short-term borrowings assumed by GE (Note 12)0 0 
Accounts payable and equipment project accruals16,090 16,458 
Progress collections and deferred income (Note 10)17,993 18,371 
All other current liabilities (Note 15)14,139 15,071 
Liabilities of discontinued operations (Note 2)4,991 0 
  Current liabilities57,681 54,613 
Deferred income (Note 10)1,748 1,801 
Long-term borrowings (Note 12)66,890 70,189 
Long-term borrowings assumed by GE (Note 12)0 0 
Insurance liabilities and annuity benefits (Note 13)39,562 42,191 
Non-current compensation and benefits29,104 29,677 
All other liabilities (Note 15)14,821 15,484 
Liabilities of discontinued operations (Note 2)204 5,182 
Total liabilities210,011 219,138 
Preferred stock (5,939,875 shares outstanding at both March 31, 2021
and December 31, 2020)		6 6 
Common stock (8,778,641,000 and 8,765,493,000 shares outstanding
at March 31, 2021 and December 31, 2020, respectively)		702 702 
Accumulated other comprehensive income (loss) – net attributable to GE(8,893)(9,749)
Other capital34,042 34,307 
Retained earnings89,276 92,247 
Less common stock held in treasury(81,548)(81,961)
Total GE shareholders’ equity33,585 35,552 
Noncontrolling interests1,568 1,522 
Total equity35,153 37,073 
Total liabilities and equity$245,164 $256,211 
STATEMENT OF EARNINGS (LOSS)Nine months ended September 30
(UNAUDITED)Consolidated
(In millions; per-share amounts in dollars)20202019
Sales of goods$35,414 $42,220 
Sales of services17,336 20,912 
GE Capital revenues from services4,940 5,845 
Total revenues (Note 9)57,690 68,976 
Cost of goods sold31,679 35,123 
Cost of services sold14,375 15,825 
Selling, general and administrative expenses9,371 10,120 
Interest and other financial charges2,536 3,272 
Insurance losses and annuity benefits1,824 2,712 
Goodwill impairments (Note 8)1,717 1,484 
Non-operating benefit costs1,821 1,694 
Other costs and expenses322 337 
Total costs and expenses63,645 70,568 
Other income (Note 22)8,430 1,170 
GE Capital earnings (loss) from continuing operations0 0 
Earnings (loss) from continuing operations before income taxes2,476 (422)
Benefit (provision) for income taxes637 1 
Earnings (loss) from continuing operations3,113 (421)
Earnings (loss) from discontinued operations, net of taxes (Note 2)(206)(5,212)
Net earnings (loss)2,907 (5,634)
Less net earnings (loss) attributable to noncontrolling interests(161)73 
Net earnings (loss) attributable to the Company3,068 (5,707)
Preferred stock dividends(280)(270)
Net earnings (loss) attributable to GE common shareholders$2,787 $(5,977)
Amounts attributable to GE common shareholders
   Earnings (loss) from continuing operations$3,113 $(421)
   Less net earnings (loss) attributable to noncontrolling interests,
     continuing operations(159)16 
   Earnings (loss) from continuing operations attributable to the Company3,271 (437)
   Preferred stock dividends(280)(270)
   Earnings (loss) from continuing operations attributable
     to GE common shareholders2,991 (707)
   Earnings (loss) from discontinued operations, net of taxes(206)(5,212)
   Less net earnings (loss) attributable to noncontrolling interests,
     discontinued operations(2)58 
Net earnings (loss) attributable to GE common shareholders$2,787 $(5,977)
   Earnings (loss) per share from continuing operations (Note 16)
      Diluted earnings (loss) per share$0.32 $(0.08)
      Basic earnings (loss) per share$0.32 $(0.08)
   Net earnings (loss) per share (Note 16)
      Diluted earnings (loss) per share$0.30 $(0.69)
      Basic earnings (loss) per share$0.30 $(0.69)
Dividends declared per common share$0.03 $0.03 
(a) Excluded $1,707 million and $455 million at March 31, 2021 and December 31, 2020, respectively, in Insurance, which is subject to regulatory restrictions. This balance is included in All other assets. See Note 11 for further information.

38 2020 3Q2021 1Q FORM 10-Q26

FINANCIAL STATEMENTS
STATEMENT OF EARNINGS (LOSS) (CONTINUED)Nine months ended September 30
(UNAUDITED)GE(a)GE Capital
(In millions; per-share amounts in dollars)2020201920202019
Sales of goods$35,401 $42,312 $49 $56 
Sales of services17,427 20,948 0 0 
GE Capital revenues from services0 0 5,400 6,589 
Total revenues52,828 63,259 5,449 6,645 
Cost of goods sold31,677 35,233 38 44 
Cost of services sold12,461 14,372 2,005 1,508 
Selling, general and administrative expenses9,034 9,734 543 677 
Interest and other financial charges1,079 1,693 1,647 1,913 
Insurance losses and annuity benefits0 0 1,866 2,771 
Goodwill impairments (Note 8)877 1,484 839 0 
Non-operating benefit costs1,815 1,684 7 10 
Other costs and expenses0 0 395 380 
Total costs and expenses56,943 64,201 7,340 7,303 
Other income (Note 22)8,481 1,177 0 0 
GE Capital earnings (loss) from continuing operations(1,558)(599)0 0 
Earnings (loss) from continuing operations before income taxes2,808 (363)(1,890)(658)
Benefit (provision) for income taxes22 (327)614 327 
Earnings (loss) from continuing operations2,830 (690)(1,276)(331)
Earnings (loss) from discontinued operations, net of taxes (Note 2)(206)(5,212)(173)255 
Net earnings (loss)2,624 (5,902)(1,449)(76)
Less net earnings (loss) attributable to noncontrolling interests(163)75 2 (2)
Net earnings (loss) attributable to the Company2,787 (5,977)(1,451)(74)
Preferred stock dividends0 0 (280)(270)
Net earnings (loss) attributable to GE common shareholders$2,787 $(5,977)$(1,731)$(344)
Amounts attributable to GE common shareholders:
   Earnings (loss) from continuing operations$2,830 $(690)$(1,276)$(331)
   Less net earnings (loss) attributable to noncontrolling interests,
     continuing operations(161)17 2 (2)
Earnings (loss) from continuing operations attributable to the Company2,991 (707)(1,278)(329)
   Preferred stock dividends0 0 (280)(270)
   Earnings (loss) from continuing operations attributable
     to GE common shareholders2,991 (707)(1,558)(599)
   Earnings (loss) from discontinued operations, net of taxes(206)(5,212)(173)255 
   Less net earnings (loss) attributable to noncontrolling interests,
     discontinued operations(2)58 0 0 
Net earnings (loss) attributable to GE common shareholders$2,787 $(5,977)$(1,731)$(344)
(a) Represents the adding together of all GE Industrial affiliates and GE Capital continuing operations on a one-line basis. See Note 1.
STATEMENT OF FINANCIAL POSITION (CONTINUED)GE IndustrialGE Capital
(UNAUDITED) (In millions, except share amounts)
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Cash, cash equivalents and restricted cash$22,361 $23,209 $9,422 $13,322 
Investment securities (Note 3)6,741 7,319 0 0 
Current receivables (Note 4)12,418 13,442 0 0 
Financing receivables – net (Note 5)0 0 3,738 4,172 
Inventories, including deferred inventory costs (Note 6)16,530 15,890 0 0 
Other GE Capital receivables0 0 2,260 3,280 
Receivable from GE Capital1,784 2,432 0 0 
Current contract assets (Note 10)5,821 5,764 0 0 
All other current assets (Note 11)1,062 835 518 543 
Assets of discontinued operations (Note 2)0 0 33,922 0 
  Current assets66,716 68,892 49,860 21,317 
Investment securities (Note 3)32 36 40,756 42,515 
Financing receivables – net (Note 5)0 0 0 0 
Other GE Capital receivables0 0 5,077 5,076 
Property, plant and equipment – net (Note 7)16,039 16,433 261 271 
Receivable from GE Capital16,577 16,780 0 0 
Goodwill (Note 8)25,320 25,524 0 0 
Other intangible assets – net (Note 8)9,358 9,632 37 39 
Contract and other deferred assets (Note 10)5,985 5,921 0 0 
All other assets (Note 11)7,952 7,948 4,617 3,354 
Deferred income taxes (Note 16)9,209 9,154 5,023 5,099 
Assets of discontinued operations (Note 2)132 144 2,876 40,587 
Total assets$157,321 $160,462 $108,507 $118,257 
Short-term borrowings (Note 12)$535 $918 $2,426 $1,963 
Short-term borrowings assumed by GE (Note 12)1,784 2,432 1,784 2,432 
Accounts payable and equipment project accruals15,839 16,380 841 918 
Progress collections and deferred income (Note 10)17,993 18,371 0 0 
All other current liabilities (Note 15)13,508 14,131 1,507 2,288 
Liabilities of discontinued operations (Note 2)0 0 4,991 0 
  Current liabilities49,659 52,232 11,549 7,602 
Deferred income (Note 10)1,748 1,801 0 0 
Long-term borrowings (Note 12)19,174 19,428 27,962 30,803 
Long-term borrowings assumed by GE (Note 12)19,754 19,957 16,577 16,780 
Insurance liabilities and annuity benefits (Note 13)0 0 40,004 42,565 
Non-current compensation and benefits28,769 29,291 327 379 
All other liabilities (Note 15)14,586 15,072 363 539 
Liabilities of discontinued operations (Note 2)125 139 79 5,058 
Total liabilities133,815 137,921 96,861 103,726 
Preferred stock (5,939,875 shares outstanding at both
     March 31, 2021 and December 31, 2020)
6 6 0 6 
Common stock (8,778,641,000 and 8,765,493,000 shares outstanding at
     March 31, 2021 and December 31, 2020, respectively)
702 702 5 0 
Accumulated other comprehensive income (loss) – net attributable to GE(8,108)(8,945)(786)(804)
Other capital16,055 16,466 17,982 17,835 
Retained earnings95,006 94,910 (5,730)(2,663)
Less common stock held in treasury(81,548)(81,961)0 0 
Total GE shareholders’ equity22,113 21,179 11,472 14,373 
Noncontrolling interests1,393 1,363 175 159 
Total equity23,506 22,542 11,646 14,531 
Total liabilities and equity$157,321 $160,462 $108,507 $118,257 


2020 3Q2021 1Q FORM 10-Q 3927

FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWSThree months ended March 31
(UNAUDITED)Consolidated
(In millions)20212020
Net earnings (loss)$(2,798)$6,233 
(Earnings) loss from discontinued operations2,894 21 
Adjustments to reconcile net earnings (loss)
   to cash provided from operating activities
Depreciation and amortization of property, plant and equipment (Note 7)452 461 
Amortization of intangible assets (Note 8)301 318 
(Gains) losses on purchases and sales of business interests (Note 23)(3)(12,372)
(Gains) losses on equity securities (Note 23)(296)5,873 
Principal pension plans cost (Note 14)658 877 
Principal pension plans employer contributions(74)(70)
Other postretirement benefit plans (net)(289)(254)
Provision (benefit) for income taxes142 54 
Cash recovered (paid) during the year for income taxes(322)(310)
Changes in operating working capital:
Decrease (increase) in current receivables946 (503)
Decrease (increase) in inventories, including deferred inventory costs(722)(1,077)
Decrease (increase) in current contract assets(35)145 
Increase (decrease) in accounts payable and equipment project accruals(349)(617)
Increase (decrease) in progress collections and current deferred income(425)(590)
All other operating activities(2,719)892 
Cash from (used for) operating activities – continuing operations(2,640)(919)
Cash from (used for) operating activities – discontinued operations680 686 
Cash from (used for) operating activities(1,959)(233)
Additions to property, plant and equipment(332)(504)
Dispositions of property, plant and equipment34 28 
Additions to internal-use software(24)(60)
Net decrease (increase) in financing receivables21 (103)
Proceeds from principal business dispositions1 20,505 
Net cash from (payments for) principal businesses purchased0 (6)
Sales of retained ownership interests735 0 
Net (purchases) dispositions of GE Capital investment securities(709)(1,289)
All other investing activities1,121 1,455 
Cash from (used for) investing activities – continuing operations847 20,025 
Cash from (used for) investing activities – discontinued operations(646)(920)
Cash from (used for) investing activities202 19,105 
Net increase (decrease) in borrowings (maturities of 90 days or less)(319)(1,905)
Newly issued debt (maturities longer than 90 days)314 125 
Repayments and other debt reductions (maturities longer than 90 days)(1,513)(5,867)
Dividends paid to shareholders(148)(89)
All other financing activities57 (226)
Cash from (used for) financing activities – continuing operations(1,608)(7,962)
Cash from (used for) financing activities – discontinued operations3 43 
Cash from (used for) financing activities(1,605)(7,919)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash(131)(256)
Increase (decrease) in cash, cash equivalents and restricted cash(3,494)10,697 
Cash, cash equivalents and restricted cash at beginning of year37,608 37,077 
Cash, cash equivalents and restricted cash at March 3134,115 47,774 
Less cash, cash equivalents and restricted cash of discontinued operations at March 31625 584 
Cash, cash equivalents and restricted cash of continuing operations at March 31$33,490 $47,190 
STATEMENT OF FINANCIAL POSITION (UNAUDITED)Consolidated
(In millions, except share amounts)September 30, 2020December 31, 2019
Cash, cash equivalents and restricted cash$39,162 $36,394 
Investment securities (Note 3)46,881 48,521 
Current receivables (Note 4)17,302 16,769 
Financing receivables – net (Note 5)3,021 3,134 
Inventories (Note 6)14,925 14,104 
Other GE Capital receivables7,389 7,144 
Property, plant and equipment – net (Note 7)44,830 46,186 
Receivable from GE Capital0 0 
Investment in GE Capital0 0 
Goodwill (Note 8)25,278 26,734 
Other intangible assets – net (Note 8)9,909 10,653 
Contract and other deferred assets (Note 10)15,571 16,801 
All other assets15,094 16,461 
Deferred income taxes (Note 14)11,367 9,889 
Assets of businesses held for sale (Note 2)0 9,149 
Assets of discontinued operations (Note 2)3,587 4,109 
Total assets$254,315 $266,048 
Short-term borrowings (Note 11)$5,977 $22,072 
Short-term borrowings assumed by GE (Note 11)0 0 
Accounts payable, principally trade accounts13,941 15,926 
Progress collections and deferred income (Note 10)19,523 20,508 
Other GE current liabilities16,243 15,753 
Non-recourse borrowings of consolidated securitization entities (Note 11)452 1,655 
Long-term borrowings (Note 11)73,034 67,155 
Long-term borrowings assumed by GE (Note 11)0 0 
Insurance liabilities and annuity benefits (Note 12)41,452 39,826 
Non-current compensation and benefits30,809 31,687 
All other liabilities17,802 19,745 
Liabilities of businesses held for sale (Note 2)0 1,658 
Liabilities of discontinued operations (Note 2)288 203 
Total liabilities219,522 236,187 
Preferred stock (5,939,875 shares outstanding at both September 30, 2020
and December 31, 2019)		6 6 
Common stock (8,759,873,000 and 8,738,434,000 shares outstanding
at September 30, 2020 and December 31, 2019, respectively)		702 702 
Accumulated other comprehensive income (loss) – net attributable to GE(9,498)(11,732)
Other capital34,279 34,405 
Retained earnings89,905 87,732 
Less common stock held in treasury(82,125)(82,797)
Total GE shareholders’ equity33,269 28,316 
Noncontrolling interests1,524 1,545 
Total equity34,793 29,861 
Total liabilities and equity$254,315 $266,048 
2021 1Q FORM 10-Q 28

STATEMENT OF CASH FLOWS (CONTINUED)Three months ended March 31
(UNAUDITED)GE IndustrialGE Capital
(In millions)2021202020212020
Net earnings (loss)$230 $6,384 $(3,028)$(151)
(Earnings) loss from discontinued operations0 14 2,894 7 
Adjustments to reconcile net earnings (loss)
   to cash provided from operating activities
Depreciation and amortization of property, plant and equipment (Note 7)446 453 6 7 
Amortization of intangible assets (Note 8)297 315 3 3 
(Gains) losses on purchases and sales of business interests (Note 23)(3)(12,372)0 0 
(Gains) losses on equity securities (Note 23)(293)5,789 (4)85 
Principal pension plans cost (Note 14)658 877 0 0 
Principal pension plans employer contributions(74)(70)0 0 
Other postretirement benefit plans (net)(275)(247)(14)(8)
Provision (benefit) for income taxes148 187 (6)(133)
Cash recovered (paid) during the year for income taxes(336)(278)14 (32)
Changes in operating working capital:
Decrease (increase) in current receivables691 487 0 0 
Decrease (increase) in inventories, including deferred inventory costs(681)(1,065)0 0 
Decrease (increase) in current contract assets(35)145 0 0 
Increase (decrease) in accounts payable and equipment project accruals(449)(1,475)14 (18)
Increase (decrease) in progress collections and current deferred income(425)(590)0 0 
All other operating activities(390)(215)(2,359)763 
Cash from (used for) operating activities – continuing operations(491)(1,662)(2,479)524 
Cash from (used for) operating activities – discontinued operations0 29 681 658 
Cash from (used for) operating activities(491)(1,633)(1,798)1,181 
Additions to property, plant and equipment(332)(504)0 0 
Dispositions of property, plant and equipment34 29 0 0 
Additions to internal-use software(23)(58)(1)(1)
Net decrease (increase) in financing receivables0 0 575 (559)
Proceeds from principal business dispositions1 20,505 0 0 
Net cash from (payments for) principal businesses purchased0 (6)0 0 
Sales of retained ownership interests735 0 0 0 
Net (purchases) dispositions of GE Capital investment securities0 0 (709)(1,289)
All other investing activities133 81 1,334 2,579 
Cash from (used for) investing activities – continuing operations548 20,046 1,199 730 
Cash from (used for) investing activities – discontinued operations0 (33)(646)(887)
Cash from (used for) investing activities549 20,013 553 (157)
Net increase (decrease) in borrowings (maturities of 90 days or less)(655)(1,881)(223)(514)
Newly issued debt (maturities longer than 90 days)0 1 315 124 
Repayments and other debt reductions (maturities longer than 90 days)(20)(64)(1,493)(5,804)
Dividends paid to shareholders(118)(89)(41)(42)
All other financing activities(27)(12)84 (214)
Cash from (used for) financing activities – continuing operations(820)(2,045)(1,358)(6,450)
Cash from (used for) financing activities – discontinued operations0 0 3 43 
Cash from (used for) financing activities(820)(2,045)(1,355)(6,406)
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash(85)(143)(46)(113)
Increase (decrease) in cash, cash equivalents and restricted cash(848)16,193 (2,646)(5,495)
Cash, cash equivalents and restricted cash at beginning of year23,209 17,617 14,400 19,460 
Cash, cash equivalents and restricted cash at March 3122,361 33,810 11,754 13,964 
Less cash, cash equivalents and restricted cash of discontinued operations at March 310 0 625 584 
Cash, cash equivalents and restricted cash of continuing operations at March 31$22,361 $33,810 $11,129 $13,380 
2021 1Q FORM 10-Q 29

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)Three months ended March 31
(In millions, net of tax)20212020
Net earnings (loss)$(2,798)$6,233 
Less net earnings (loss) attributable to noncontrolling interests5 34 
Net earnings (loss) attributable to the Company$(2,802)$6,199 
Investment securities$(18)$(41)
Currency translation adjustments110 135 
Cash flow hedges62 (211)
Benefit plans705 1,035 
Other comprehensive income (loss)859 918 
Less: other comprehensive income (loss) attributable to noncontrolling interests3 5 
Other comprehensive income (loss) attributable to the Company$856 $913 
Comprehensive income (loss)$(1,939)$7,152 
Less: comprehensive income (loss) attributable to noncontrolling interests8 39 
Comprehensive income (loss) attributable to the Company$(1,947)$7,113 

40 2020 3Q FORM 10-Q
FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION (CONTINUED)GE(a)GE Capital
(UNAUDITED) (In millions, except share amounts)
September 30, 2020December 31, 2019September 30, 2020December 31, 2019
Cash, cash equivalents and restricted cash$24,337 $17,613 $14,825 $18,781 
Investment securities (Note 3)5,176 10,008 41,705 38,514 
Current receivables (Note 4)13,151 13,883 0 0 
Financing receivables - net (Note 5)0 0 7,425 6,979 
Inventories (Note 6)14,925 14,104 0 0 
Other GE Capital receivables0 0 9,609 11,767 
Property, plant and equipment – net (Note 7)16,363 17,447 29,567 29,886 
Receivable from GE Capital19,407 19,142 0 0 
Investment in GE Capital13,547 15,299 0 0 
Goodwill (Note 8)25,278 25,895 0 839 
Other intangible assets – net (Note 8)9,759 10,461 149 192 
Contract and other deferred assets (Note 10)15,604 16,833 0 0 
All other assets8,398 8,399 7,612 8,648 
Deferred income taxes (Note 14)9,332 8,189 2,035 1,700 
Assets of businesses held for sale (Note 2)0 8,626 0 241 
Assets of discontinued operations (Note 2)153 202 3,434 3,907 
Total assets$175,430 $186,100 $116,362 $121,454 
Short-term borrowings (Note 11)$1,012 $5,606 $3,417 $12,030 
Short-term borrowings assumed by GE (Note 11)2,323 5,473 1,881 2,104 
Accounts payable, principally trade accounts13,984 17,702 887 886 
Progress collections and deferred income (Note 10)19,683 20,694 0 0 
Other GE current liabilities16,931 16,833 0 0 
Non-recourse borrowings of consolidated securitization entities (Note 11)0 0 452 1,655 
Long-term borrowings (Note 11)19,113 15,085 32,111 26,175 
Long-term borrowings assumed by GE (Note 11)21,811 25,895 17,526 17,038 
Insurance liabilities and annuity benefits (Note 12)0 0 41,876 40,232 
Non-current compensation and benefits30,384 31,208 418 472 
All other liabilities15,396 16,156 3,961 5,278 
Liabilities of businesses held for sale (Note 2)0 1,620 0 52 
Liabilities of discontinued operations (Note 2)159 106 129 97 
Total liabilities140,795 156,379 102,658 106,016 
Preferred stock (5,939,875 shares outstanding at both
     September 30, 2020 and December 31, 2019)
6 6 6 6 
Common stock (8,759,873,000 and 8,738,434,000 shares outstanding at
     September 30, 2020 and December 31, 2019, respectively)
702 702 0 0 
Accumulated other comprehensive income (loss) - net attributable to GE(9,498)(11,732)(870)(852)
Other capital34,279 34,405 17,006 17,001 
Retained earnings89,905 87,732 (2,595)(857)
Less common stock held in treasury(82,125)(82,797)0 0 
Total GE shareholders’ equity33,269 28,316 13,547 15,299 
Noncontrolling interests1,366 1,406 157 139 
Total equity34,635 29,721 13,704 15,438 
Total liabilities and equity$175,430 $186,100 $116,362 $121,454 
(a) Represents the adding together of all GE Industrial affiliates and GE Capital continuing operations on a one-line basis. See Note 1.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)Three months ended March 31
(In millions)20212020
Preferred stock issued$6 $6 
Common stock issued$702 $702 
Beginning balance(9,749)(11,732)
Investment securities(18)(41)
Currency translation adjustments108 133 
Cash flow hedges62 (211)
Benefit plans704 1,032 
Accumulated other comprehensive income (loss) ending balance$(8,893)$(10,819)
Beginning balance34,307 34,405 
Gains (losses) on treasury stock dispositions(384)(249)
Stock-based compensation106 105 
Other changes14 35 
Other capital ending balance$34,042 $34,296 
Beginning balance92,247 87,732 
Net earnings (loss) attributable to the Company(2,802)6,199 
Dividends and other transactions with shareholders(168)(142)
Changes in accounting (Note 1)0 (175)
Retained earnings ending balance$89,276 $93,615 
Beginning balance(81,961)(82,797)
Purchases(38)(14)
Dispositions450 295 
Common stock held in treasury ending balance$(81,548)$(82,516)
GE shareholders' equity balance33,585 35,284 
Noncontrolling interests balance (Note 17)1,568 1,575 
Total equity balance at March 31$35,153 $36,859 


2020 3Q FORM 10-Q 41
FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWSNine months ended September 30
(UNAUDITED)Consolidated
(In millions)20202019
Net earnings (loss)$2,907 $(5,634)
(Earnings) loss from discontinued operations206 5,212 
Adjustments to reconcile net earnings (loss)
   to cash provided from operating activities
Depreciation and amortization of property, plant and equipment (Note 7)3,655 2,969 
Amortization of intangible assets (Note 8)1,076 1,220 
Goodwill impairments (Note 8)1,717 1,484 
(Earnings) loss from continuing operations retained by GE Capital0 0 
(Gains) losses on purchases and sales of business interests (Note 22)(12,503)(260)
(Gains) losses on equity securities (Note 22)4,800 230 
Principal pension plans cost (Note 13)2,681 2,509 
Principal pension plans employer contributions(226)(202)
Other postretirement benefit plans (net)(712)(809)
Provision (benefit) for income taxes(637)(1)
Cash recovered (paid) during the year for income taxes(1,138)(1,427)
Decrease (increase) in contract and other deferred assets563 (321)
Decrease (increase) in GE current receivables(1,665)(1,857)
Decrease (increase) in inventories(258)(2,113)
Increase (decrease) in accounts payable(1,501)1,259 
Increase (decrease) in GE progress collections(1,397)(216)
All other operating activities2,320 1,376 
Cash from (used for) operating activities – continuing operations(112)3,423 
Cash from (used for) operating activities – discontinued operations75 (1,390)
Cash from (used for) operating activities(37)2,033 
Additions to property, plant and equipment(2,241)(4,175)
Dispositions of property, plant and equipment1,280 2,796 
Additions to internal-use software(125)(208)
Net decrease (increase) in financing receivables(37)523 
Proceeds from sale of discontinued operations0 5,864 
Proceeds from principal business dispositions20,610 1,124 
Net cash from (payments for) principal businesses purchased(10)0 
Capital contribution from GE to GE Capital0 0 
Sales of retained ownership interests in Wabtec0 3,383 
All other investing activities(1,582)(2,218)
Cash from (used for) investing activities – continuing operations17,895 7,087 
Cash from (used for) investing activities – discontinued operations(216)(2,037)
Cash from (used for) investing activities17,679 5,050 
Net increase (decrease) in borrowings (maturities of 90 days or less)(4,198)(185)
Newly issued debt (maturities longer than 90 days)14,452 1,449 
Repayments and other debt reductions (maturities longer than 90 days)(24,671)(13,476)
Capital contribution from GE to GE Capital0 0 
Dividends paid to shareholders(412)(411)
All other financing activities(208)(1,097)
Cash from (used for) financing activities – continuing operations(15,038)(13,721)
Cash from (used for) financing activities – discontinued operations1 (368)
Cash from (used for) financing activities(15,038)(14,089)
Effect of currency exchange rate changes on cash, cash equivalents and
restricted cash
(11)(131)
Increase (decrease) in cash, cash equivalents and restricted cash2,593 (7,136)
Cash, cash equivalents and restricted cash at beginning of year37,077 35,548 
Cash, cash equivalents and restricted cash at September 3039,670 28,412 
Less cash, cash equivalents and restricted cash of discontinued operations
   at September 30
508 602 
Cash, cash equivalents and restricted cash of continuing operations
   at September 30
$39,162 $27,810 
42 2020 3Q FORM 10-Q
FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS (CONTINUED)Nine months ended September 30
(UNAUDITED)GE(a)GE Capital
(In millions)2020201920202019
Net earnings (loss)$2,624 $(5,902)$(1,449)$(76)
(Earnings) loss from discontinued operations206 5,212 173 (255)
Adjustments to reconcile net earnings (loss)
   to cash provided from operating activities
Depreciation and amortization of property, plant and equipment (Note 7)1,664 1,453 2,010 1,513 
Amortization of intangible assets (Note 8)1,028 1,176 48 44 
Goodwill impairments (Note 8)877 1,484 839 0 
(Earnings) loss from continuing operations retained by GE Capital1,558 599 0 0 
(Gains) losses on purchases and sales of business interests (Note 22)(12,445)(260)(58)0 
(Gains) losses on equity securities (Note 22)4,761 232 40 (2)
Principal pension plans cost (Note 13)2,681 2,509 0 0 
Principal pension plans employer contributions(226)(202)0 0 
Other postretirement benefit plans (net)(675)(798)(37)(11)
Provision (benefit) for income taxes(22)327 (614)(327)
Cash recovered (paid) during the year for income taxes(1,805)(1,346)667 (81)
Decrease (increase) in contract and other deferred assets563 (321)0 0 
Decrease (increase) in GE current receivables(118)(2,370)0 0 
Decrease (increase) in inventories(211)(1,950)0 0 
Increase (decrease) in accounts payable(3,305)164 (32)(3)
Increase (decrease) in GE progress collections(1,424)(254)0 0 
All other operating activities1,092 322 766 433 
Cash from (used for) operating activities – continuing operations(3,175)77 2,353 1,235 
Cash from (used for) operating activities – discontinued operations34 (17)41 (1,700)
Cash from (used for) operating activities(3,141)60 2,394 (465)
Additions to property, plant and equipment(1,302)(1,596)(992)(2,795)
Dispositions of property, plant and equipment134 273 1,153 2,544 
Additions to internal-use software(121)(203)(5)(5)
Net decrease (increase) in financing receivables0 0 (297)2,399 
Proceeds from sale of discontinued operations0 5,864 0 0 
Proceeds from principal business dispositions20,408 1,083 34 380 
Net cash from (payments for) principal businesses purchased(10)(380)0 0 
Capital contribution from GE to GE Capital0 (1,500)0 0 
Sales of retained ownership interests in Wabtec0 3,383 0 0 
All other investing activities210 21 7,608 211 
Cash from (used for) investing activities – continuing operations19,318 6,946 7,501 2,734 
Cash from (used for) investing activities – discontinued operations(39)(3,480)(177)1,770 
Cash from (used for) investing activities19,279 3,466 7,324 4,504 
Net increase (decrease) in borrowings (maturities of 90 days or less)(4,323)(1,005)(460)(539)
Newly issued debt (maturities longer than 90 days)7,432 5 7,020 1,445 
Repayments and other debt reductions (maturities longer than 90 days)(12,129)(5,342)(20,043)(8,613)
Capital contribution from GE to GE Capital0 0 0 1,500 
Dividends paid to shareholders(265)(262)(276)(266)
All other financing activities(84)(317)(125)(805)
Cash from (used for) financing activities – continuing operations(9,369)(6,923)(13,883)(7,279)
Cash from (used for) financing activities – discontinued operations1 (368)0 (1)
Cash from (used for) financing activities(9,369)(7,290)(13,883)(7,279)
Effect of currency exchange rate changes on cash, cash equivalents and
restricted cash
(50)(103)38 (28)
Increase (decrease) in cash, cash equivalents and restricted cash6,719 (3,867)(4,126)(3,269)
Cash, cash equivalents and restricted cash at beginning of year17,617 20,528 19,460 15,020 
Cash, cash equivalents and restricted cash at September 3024,337 16,660 15,333 11,751 
Less cash, cash equivalents and restricted cash of discontinued operations
   at September 30
0 4 508 598 
Cash, cash equivalents and restricted cash of continuing operations
   at September 30
$24,337 $16,656 $14,825 $11,154 
(a) Represents the adding together of all GE Industrial affiliates and the impact of GE Capital dividends on a one-line basis. See Note 1.
2020 3Q FORM 10-Q 43
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)Three months ended September 30Nine months ended September 30
(In millions, net of tax)2020201920202019
Net earnings (loss)$(1,195)$(9,383)$2,907 $(5,634)
Less net earnings (loss) attributable to noncontrolling interests(51)40 (161)73 
Net earnings (loss) attributable to the Company$(1,144)$(9,423)$3,068 $(5,707)
Investment securities$9 $18 $(5)$116 
Currency translation adjustments55 762 133 1,044 
Cash flow hedges24 (2)(134)10 
Benefit plans609 655 2,248 1,838 
Other comprehensive income (loss)695 1,433 2,241 3,010 
Less: other comprehensive income (loss) attributable to noncontrolling interests0 (58)7 (43)
Other comprehensive income (loss) attributable to the Company$695 $1,491 $2,234 $3,053 
Comprehensive income (loss)$(499)$(7,950)$5,147 $(2,624)
Less: comprehensive income (loss) attributable to noncontrolling interests(50)(19)(154)30 
Comprehensive income (loss) attributable to the Company$(449)$(7,931)$5,302 $(2,654)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)Three months ended September 30Nine months ended September 30
(In millions)2020201920202019
Preferred stock issued$6 $6 $6 $6 
Common stock issued$702 $702 $702 $702 
Beginning balance(10,194)(12,852)(11,732)(14,414)
Investment securities9 18 (5)116 
Currency translation adjustments55 824 129 1,084 
Cash flow hedges24 (2)(134)11 
Benefit plans609 650 2,245 1,842 
Accumulated other comprehensive income (loss) ending balance$(9,498)$(11,361)$(9,498)$(11,361)
Beginning balance34,292 34,324 34,405 35,504 
Gains (losses) on treasury stock dispositions(162)(160)(574)(817)
Stock-based compensation104 118 319 382 
Other changes46 33 129 (753)
Other capital ending balance$34,279 $34,315 $34,279 $34,315 
Beginning balance91,188 96,773 87,732 93,109 
Net earnings (loss) attributable to the Company(1,144)(9,423)3,068 (5,707)
Dividends and other transactions with shareholders(139)(138)(720)(557)
Changes in accounting (Note 1)0 0 (175)368 
Retained earnings ending balance$89,905 $87,213 $89,905 $87,213 
Beginning balance(82,320)(83,137)(82,797)(83,925)
Purchases(3)(8)(25)(53)
Dispositions198 204 697 1,038 
Common stock held in treasury ending balance$(82,125)$(82,940)$(82,125)$(82,940)
GE shareholders' equity balance33,269 27,935 33,269 27,935 
Noncontrolling interests balance (Note 15)1,524 1,219 1,524 1,219 
Total equity balance at September 30(a)$34,793 $29,153 $34,793 $29,153 
(a)Total equity balance increased by $5,639 in the last twelve months from September 30, 2019, primarily due to after-tax gain of $11,214 million due to the sale of our BioPharma business within our Healthcare segment, partially offset by after-tax change in unrealized loss on our remaining interest in Baker Hughes $(3,679) million in the nine months ended September 30, 2020. See Notes 2 and 21 for further information.



44 2020 3Q2021 1Q FORM 10-Q30

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. We present our financial statements in a three-column format, which allows investors to see our GE industrial operations separately from our financial services operations. We believe that this provides useful supplemental information to our consolidated financial statements. To the extent that we have transactions between GE Industrial and GE Capital, these transactions are made on arm's lengtharms-length terms, are reported in the respective columns of our financial statements and are eliminated in consolidation. See Note 2022 for further information.

Our consolidated 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 and financial position. In particular, a number of estimates have been and will continue to be affected by the ongoing Coronavirus Disease 2019 (COVID-19) pandemic. The severity, magnitude and duration, as well as the economic consequences, of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. As a result, our accounting estimates and assumptions may change over time in response to COVID-19. Such changes could result in future impairments of goodwill, intangibles, long-lived assets and investment securities, revisions to estimated profitability on long-term product service agreements, incremental credit losses on receivables and debt securities, a decrease in the carrying amount of our tax assets, or an increase 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-period amounts to conform to the current-period’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 the 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.

The accompanying consolidated financial statements and notes are unaudited. The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. These consolidated financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.

Our significant accounting policies are described in Note 1 of our aforementioned Annual Report. We include herein certain updates to those policies.

Allowance for credit losses. When we record customer receivables, contract assets and financing receivables arising from revenue transactions, as well as commercial mortgage loans and reinsurance recoverables in GE Capital’s run-off insurance operations, financial guarantees and certain commitments, we record an allowance for credit losses for the current expected credit losses (CECL) inherent in the asset over its expected life. The allowance for credit losses is a valuation account deducted from the amortized cost basis of the assets to present their net carrying value at the amount expected to be collected. Each period the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets. We evaluate debt securities with unrealized losses to determine whether any of the losses arise from concerns about the issuer’s credit or the underlying collateral and record an allowance for credit losses, if required.

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

ACCOUNTING CHANGES. On January 1, 2020,2021, we adopted ASU No. 2016-13, Financial Instruments - Credit Losses (ASU 2016-13). 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU 2016-13 requires usremoves certain exceptions from the guidance in ASC 740 related to prospectively record an allowanceintra-period tax allocations, interim calculations and the recognition of deferred tax liabilities for credit lossesoutside basis differences and clarifies and simplifies several other aspects of accounting for income taxes. Different transition methods apply to the current expected credit losses inherent invarious income tax simplifications. For the asset over its expected life, replacingchanges requiring a retrospective or modified retrospective transition, the incurred loss model that recognized losses only when they became probable and estimable. We recordedadoption of the new standard did not have a $221 million increase inmaterial impact to our allowance for credit losses and a $175 million decrease to retained earnings, net of tax, reflecting the cumulative effect on retained earnings.financial statements.

In March 2020, the SEC issued a final rule amending disclosure requirements for guarantors and issuers of registered guaranteed securities under SEC Regulation S-X, Rule 3-10. The final rule is effective for filings on or after January 4, 2021, however early application is permitted. As a result of the simplification provided by this rule, beginning with our quarterly report on Form 10-Q for the period ended June 30, 2020, we have elected to early adopt the disclosure requirements.

2020 3Q FORM 10-Q 45
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
ASSETS AND LIABILITIES OF BUSINESSES HELD FOR SALE.OPERATIONS. On March 31, 2020, we completed the sale of our BioPharma business within our Healthcare segment for total consideration of $21,112 million (after certain working capital adjustments). The consideration consisted of $20,695 million in cash and $417 million of pension liabilities that were assumed by Danaher. In addition, we incurred $185 million of cash payments directly associated with the transaction. As a result,In the first quarter of 2020, we recognized a pre-tax gain of $12,362$12,292 million ($11,21411,145 million after-tax) in our consolidated Statement of Earnings (Loss).

In the first half of 2020, we sold all our remaining businesses classified as held for sale, including the remaining Lighting business within our Corporate segment and the remaining PK AirFinance business within our Capital segment.

DISCONTINUED OPERATIONS. Discontinued operations primarily include our Baker Hughes and Transportation segments, and certain businesses inPrimarily comprise our GE Capital segment (ourAviation Services (GECAS) business, our mortgage portfolio in Poland, and other trailing assets and liabilities associated with the saledispositions of ourcertain GE Capital businesses).and GE Industrial businesses. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented.

In September 2019,GECAS. On March 9, 2021 we reducedentered into an agreement with AerCap Holdings N.V. (AerCap) to combine our GECAS business with AerCap. GE will receive total consideration consisting of $23,905 million cash subject to contractual closing adjustments, 111.5 million shares of AerCap common stock (approximately 46% ownership interestinterest) valued at $6,550 million based on the AerCap’s closing share price of $58.74 on March 31, 2021 and $1,000 million paid in Baker Hughes from 50.2% to 36.8%.AerCap notes and/or cash upon closing at AerCap's option. As a result, we deconsolidated our Baker Hughes segment andhave reclassified itsGECAS' results to discontinued operations for all periods presented and recognized a non-cash after-tax loss of $8,715$2,755 million ($8,238 million after-tax).in discontinued operations in the first quarter of 2021. Given the economics of GECAS accrue to AerCap in conjunction with the transaction, the net impact of GECAS (loss on sale and operations) could change materially, mainly due to fluctuations in AerCap's closing share price. Completion of the transaction remains subject to AerCap shareholder approval, regulatory approvals and other customary closing conditions.

2021 1Q FORM 10-Q 31

After completion of the transaction, we will elect to prospectively measure our investment in AerCap at fair value and expect to have continuing involvement with AerCap, primarily through our ownership interest and ongoing sales or leases of products and services.

Bank BPH. The mortgage portfolio in Poland (Bank BPH) comprises floating rate residential mortgages, 86% of which are indexed to or denominated in foreign currencies (primarily Swiss francs). At March 31, 2021, the total portfolio had a carrying value of $1,986 million with a 1.67% 90-day delinquency rate and an average loan to value ratio of approximately 61.6%. 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. Earnings from discontinued operations for the three months ended March 31, 2021 included $282 million non-cash pre-tax charges, reflecting estimates with respect to ongoing litigation as well as market yields. Future changes in the estimated legal liabilities or market yields could result in further losses related to these loans in future reporting periods. See Note 21 for further information.

Baker Hughes (BKR).We have continuing involvement with Baker Hughes (BKR)BKR primarily through our remaining interest, ongoing purchases and sales of products and services, transition services that we provide to BKR, as well as an aeroderivative joint venture (JV) we formed with BKR in the fourth quarter of 2019.

The JV is jointly controlled by GE and BKR and is consolidated by GE due to the significance of our investment in BKR. Our Aviation segment sells products and services to

For the JV. In turn, the JV sells products and services primarily to BKR and our Power segment. Transactions between the JV and GE businesses are eliminated in consolidation. In the first ninethree months of 2020,ended March 31, 2021, we had sales of $432 million to BKR for products and services from the JV, and we collected cash of $389 million. If our investment in BKR is reduced to below 20%, we would no longer have significant influence in BKR and, as a result, we would not consolidate the JV. A potential deconsolidation of the JV is not expected to have a material impact on GE Industrial free cash flows.

In addition, in the first nine months of 2020, we had sales of $536$166 million and purchases of $167$61 million with BKR for products and services outside of the JV. We collected net cash of $593$131 million from BKR related to sales, purchases and transition services.

In the first quarter of 2021, we had sales of $119 million to BKR for products and services from the JV, and we collected cash of $161 million. When our investment in BKR is reduced to below 20%, we will deconsolidate the JV. A deconsolidation of the JV is not expected to have a material impact on GE Industrial Cash from operating activities (CFOA).

In addition, we received $147$28 million of repayments on the promissory note receivable from BKR and dividends of $204$56 million on our investment.

In February 2019, we completed the spin-off and subsequent merger of our Transportation business with Wabtec. As a result, we recorded a gain of $3,471 million ($2,508 million after-tax) in discontinued operations.
RESULTS OF DISCONTINUED OPERATIONS
(In millions)
Baker HughesTransportation GE CapitalTotal
Three months ended September 3020202019202020192020201920202019
Operations
Sales of goods and services$0 $4,478 $0 $0 $0 $0 $0 $4,478 
GE Capital revenues from services0 0 0 0 43 16 43 16 
Cost of goods and services sold0 (3,686)0 0 0 0 0 (3,686)
Other income, costs and expenses4 (618)2 (16)(63)(53)(57)(686)
Earnings (loss) of discontinued operations before
  income taxes
4 175 2 (16)(20)(37)(14)121 
Benefit (provision) for income taxes(5)(50)0 6 (8)29 (12)(14)
Earnings (loss) of discontinued operations,
  net of taxes(a)
$0 $125 $2 $(9)$(28)$(8)$(26)$107 
Disposal
Gain (loss) on disposal before income taxes0 (8,667)(12)0 3 (10)(8)(8,677)
Benefit (provision) for income taxes0 477 0 0 (1)0 (1)477 
Gain (loss) on disposal, net of taxes$0 $(8,190)$(12)$0 $2 $(10)$(9)$(8,201)
Earnings (loss) from discontinued operations,
  net of taxes
$0 $(8,066)$(10)$(9)$(26)$(18)$(35)$(8,093)
46 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RESULTS OF DISCONTINUED OPERATIONSRESULTS OF DISCONTINUED OPERATIONSThree months ended March 31
Baker HughesTransportation GE CapitalTotal20212020
Nine months ended September 3020202019202020192020201920202019
OperationsOperationsOperations
Sales of goods and services$0 $16,047 $0 $549 $0 $0 $0 $16,596 
GE Capital revenues from servicesGE Capital revenues from services0 0 0 0 38 7 38 7 GE Capital revenues from services$633 $1,010 
Cost of goods and services soldCost of goods and services sold0 (13,317)0 (478)0 0 0 (13,795)Cost of goods and services sold(368)(547)
Other income, costs and expensesOther income, costs and expenses1 (2,386)(1)(22)(209)(142)(209)(2,550)Other income, costs and expenses(386)(462)
Earnings (loss) of discontinued operations before
income taxes
Earnings (loss) of discontinued operations before
income taxes
1 345 (1)49 (171)(136)(171)258 Earnings (loss) of discontinued operations before income taxes(121)2 
Benefit (provision) for income taxesBenefit (provision) for income taxes(15)(165)7 (13)(4)356 (12)178 Benefit (provision) for income taxes(29)(19)
Earnings (loss) of discontinued operations,
net of taxes(a)
$(14)$179 $6 $36 $(175)$220 $(184)$436 
Earnings (loss) of discontinued operations, net of taxes(a)(b)Earnings (loss) of discontinued operations, net of taxes(a)(b)$(149)$(17)
DisposalDisposalDisposal
Gain (loss) on disposal before income taxesGain (loss) on disposal before income taxes(13)(8,667)(12)3,471 3 36 (22)(5,160)Gain (loss) on disposal before income taxes(2,702)(4)
Benefit (provision) for income taxesBenefit (provision) for income taxes0 477 0 (963)(1)(2)(1)(488)Benefit (provision) for income taxes(43)0 
Gain (loss) on disposal, net of taxesGain (loss) on disposal, net of taxes$(13)$(8,190)$(12)$2,508 $2 $35 $(23)$(5,648)Gain (loss) on disposal, net of taxes$(2,745)$(4)
Earnings (loss) from discontinued operations,
net of taxes
Earnings (loss) from discontinued operations,
net of taxes
$(27)$(8,011)$(6)$2,544 $(173)$255 $(206)$(5,212)Earnings (loss) from discontinued operations, net of taxes$(2,894)$(21)
(a) Earnings (loss) of discontinued operations attributable to the Company after income taxes was $(26)$(149) million and $61$(15) million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively. Earnings (loss) of discontinued operations attributable to the Company after income taxes was $(181)
(b) Included $177 million and $378$155 million from GECAS operations, including $(359) million and $(545) million of depreciation and amortization, for the ninethree months ended September 30,March 31, 2021 and 2020, respectively. Depreciation and 2019, respectively.amortization ceased on March 10, 2021.
ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS (In millions)
September 30, 2020December 31, 2019
Cash, cash equivalents and restricted cash$508 $638 
Investment securities0 202 
Current receivables61 81 
Financing receivables held for sale (Polish mortgage portfolio)2,469 2,485 
 Property, plant, and equipment107 123 
Deferred income taxes226 264 
All other assets217 317 
Assets of discontinued operations(a)$3,587 $4,109 
Accounts payable & Progress collections and deferred income$15 $40 
All other liabilities(b)273 163 
Liabilities of discontinued operations(a)$288 $203 
2021 1Q FORM 10-Q 32

ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONSMarch 31, 2021December 31, 2020
Cash, cash equivalents and restricted cash$142 $0 
Financing receivables - net2,095 0 
Other GE Capital receivables2,122 0 
 Property, plant, and equipment - net28,143 0 
Valuation allowance on disposal group classified as discontinued operations(2,536)0 
All other current assets3,957 0 
Total current assets of discontinued operations33,922 0 
Cash, cash equivalents and restricted cash483 623 
Financing receivables - net0 2,710 
Other GE Capital receivables49 1,844 
Financing receivables held for sale (Polish mortgage portfolio)1,986 2,461 
 Property, plant, and equipment - net102 28,429 
All other assets389 4,683 
Assets of discontinued operations(a)$36,931 $40,749 
Deferred income taxes$2,268 $0 
Accounts payable and all other liabilities2,723 0 
Total current liabilities of discontinued operations4,991 0 
Deferred income taxes0 2,172 
Accounts payable and all other liabilities(b)204 3,010 
Liabilities of discontinued operations(a)$5,195 $5,182 
(a)Assets and liabilities of discontinued operations included $3,434 Included $33,922 million and $129$37,199 million related to GE Capitalof assets and $4,991 million and $4,997 million of liabilities for GECAS as of September 30,March 31, 2021 and December 31, 2020, respectively.
(b) Included within All other liabilities of discontinued operations at September 30, 2020March 31, 2021 and December 31, 20192020 are intercompany tax receivables in the amount of $734$657 million and $839$704 million, respectively, primarily related to thepreviously disposed financial services businesses, that were part of the GE Capital Exit Plan, which are eliminated upon consolidation.

NOTE 3. INVESTMENT SECURITIES. All of our debt securities are classified as available-for-sale and substantially all are investment-grade debt securities supporting obligations to annuitants and policyholders in our run-off insurance operations. Changes inWe have adopted the fair value option for our investment in BKR (comprising 311.4 million shares with approximately 30% ownership and a promissory note receivable as of our debt securities areMarch 31, 2021), which is recorded in Other comprehensive income.as Equity securities with readily determinable fair valuesvalues. We classify investment securities as current or non-current based on our intent regarding the usage of proceeds from those investments. Investment securities held within insurance entities are included within this caption and changes in their fair value are recorded in earnings.classified as non-current as they support the long-duration insurance liabilities.
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
(In millions)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 (Baker Hughes)Equity (Baker Hughes)$6,741 $— $— $6,741 $7,319 $— $— $7,319 
Current investment securitiesCurrent investment securities$6,741 $— $— $6,741 $7,319 $— $— $7,319 
DebtDebtDebt
U.S. corporateU.S. corporate$23,649 $6,090 $(83)$29,656 $23,037 $4,636 $(11)$27,661 U.S. corporate$24,159 $4,616 $(79)$28,695 $23,604 $6,651 $(26)$30,230 
Non-U.S. corporateNon-U.S. corporate2,290 364 (2)2,652 2,161 260 (1)2,420 Non-U.S. corporate2,456 273 (5)2,724 2,283 458 (1)2,740 
State and municipalState and municipal3,322 878 (18)4,182 3,086 598 (15)3,669 State and municipal3,409 648 (19)4,038 3,387 878 (9)4,256 
Mortgage and asset-backedMortgage and asset-backed3,561 147 (100)3,609 3,117 116 (4)3,229 Mortgage and asset-backed3,725 153 (63)3,815 3,652 171 (71)3,752 
Government and agenciesGovernment and agencies1,266 198 0 1,464 1,391 126 0 1,516 Government and agencies1,166 112 (3)1,275 1,169 184 0 1,353 
Equity5,318 — — 5,318 10,025 — — 10,025 
Other equityOther equity239 — — 239 218 — — 218 
Non-current investment securitiesNon-current investment securities$35,152 $5,801 $(168)$40,786 $34,313 $8,342 $(106)$42,549 
TotalTotal$39,406 $7,677 $(202)$46,881 $42,816 $5,736 $(31)$48,521 Total$41,893 $5,801 $(168)$47,527 $41,632 $8,342 $(106)$49,868 

2020 3Q FORM 10-Q 47
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost of debt securities as of September 30, 2020,March 31, 2021 excludes accrued interest of $442$438 million, which is reported in current Other GE Capital receivables.

The estimated fair valuesvalue of investment securities at September 30, 2020March 31, 2021 decreased since December 31, 2019,2020, primarily due to higher market yields and the sale of BKR shares, partially offset by new investments in our Insurance business and the mark-to-market effectseffect on our remaining interest in BKR, partially offset by a decrease in market yields and new investments in our insurance business. TheBKR. 

2021 1Q FORM 10-Q 33

Total estimated fair value of the remaining BKR interestdebt securities in an unrealized loss position were $3,732 million and promissory note receivable was $5,102$1,765 million, at September 30, 2020.

Grossof which $644 million and $165 million had gross unrealized losses of $(169)$(56) million and $(33) million are associated with debt securities with a fair value of $2,413$(20) million and $153 million that havehad been in a loss position for less than 12 months and 12 months or more respectively, at September 30, 2020.March 31, 2021 and December 31, 2020, respectively. Gross unrealized losses of $(11)$(168) million and $(20) million are associated with debt securities with a fair value of $724 million and $274 million that have been in a loss position for less than 12 months and 12 months or more, respectively, at DecemberMarch 31, 2019.

As of September 30, 2020, gross unrealized losses of $(202) million2021 included $(83)$(79) million related to U.S. corporate securities primarily in the energy industry, and $(87)$(57) million related to commercial mortgage-backed securities (CMBS). SubstantiallyPrimarily all of our CMBS in an unrealized loss position have received investment-grade credit ratings from the major rating agencies and are collateralized by pools of commercial mortgage loans on real estate.

Net unrealized gains (losses) for equity securities with readily determinable fair values, which are recorded in Other income within continuing operations, were $(776)$238 million and $(89)$(5,772) million for the three months ended March 31, 2021 and $(4,619) million and $(131) million for the nine months ended September 30, 2020, and 2019, respectively.

Proceeds from debt and equity securities sales, early redemptions by issuers and principal payments on the BKR promissory note totaled $833$1,333 million and $2,318$1,250 million for the three months ended March 31, 2021 and $3,538 million and $6,652 million for the nine months ended September 30, 2020, and 2019, respectively. Gross realized gains on investment securities were $17$30 million and $10$46 million and gross realized losses and impairments were $(60) million and $(17) million for the three months ended March 31, 2021 and $145 million and $86 million for the nine months ended September 30, 2020, and 2019, respectively. Gross realized losses and impairments were $(10) million and $(75) million for the three months ended and $(95) million and $(181) million for the nine months ended September 30, 2020 and 2019, respectively.

Contractual maturities of investments inour debt securities (excluding mortgage and asset-backed securities) as of September 30, 2020at March 31, 2021 are due as follows:
(In millions)Amortized
cost		Estimated
fair value
Amortized
cost		Estimated
fair value
Within one yearWithin one year$673 $684 Within one year$613 $622 
After one year through five yearsAfter one year through five years2,568 2,799 After one year through five years3,111 3,396 
After five years through ten yearsAfter five years through ten years6,516 7,732 After five years through ten years6,579 7,626 
After ten yearsAfter ten years20,771 26,739 After ten years20,886 25,088 
We expect actual maturities to differ from contractual maturities because issuersborrowers have the right to call or prepay certain obligations.

Substantially all our equity securities are classified within Level 1 and substantially all our debt securities are classified within Level 2, as their valuation is determined based on significant observable inputs. Investments with a fair value of $5,548$5,641 million and $5,210$5,866 million are classified within Level 3, as significant inputs to the valuation model are unobservable at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. During the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, there were no significant transfers into or out of Level 3.

In addition to the equity securities described above, we hold $258$291 million and $517$274 million of equity securities without readily determinable fair valuevalues at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, that are classified within non-current All other assets in our consolidated Statement of Financial Position. Fair value adjustments, including impairments, recorded in earnings were bothan insignificant amountsamount and $(93) million for the three months ended March 31, 2021 and $(163) million and $25 million for the nine months ended September 30, 2020, and 2019, respectively.

48 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. CURRENT AND LONG-TERM RECEIVABLES
CURRENT RECEIVABLESCURRENT RECEIVABLESConsolidatedGECURRENT RECEIVABLESConsolidatedGE Industrial
(In millions)September 30, 2020December 31, 2019September 30, 2020December 31, 2019
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Customer receivables(a)Customer receivables(a)$13,862 $12,594 $9,500 $9,507 Customer receivables(a)$12,441 $13,459 $9,307 $9,841 
Sundry receivables(c)(b)Sundry receivables(c)(b)4,652 5,049 4,861 5,247 Sundry receivables(c)(b)4,106 4,395 4,274 4,763 
Allowance for credit losses(d)(c)Allowance for credit losses(d)(c)(1,212)(874)(1,210)(872)Allowance for credit losses(d)(c)(1,165)(1,164)(1,163)(1,161)
Total current receivablesTotal current receivables$17,302 $16,769 $13,151 $13,883 Total current receivables$15,381 $16,691 $12,418 $13,442 
(a) Includes Aviation receivables from CFM International (CFM) due to 737 MAX temporary fleet grounding of $801 million and $1,397 million as of September 30, 2020 and December 31, 2019, respectively. During 2020, CFM and Boeing reached an agreement to secure payment terms for engines delivered in 2019 and 2020, net of progress collections. Based on the agreement, the receivable is expected to be collected from Boeing through the first quarter of 2021.
(b) Includes supplier advances, revenue sharing programs receivables in our Aviation business, other non-income based tax receivables, primarily value-added tax related to our operations in various countries outside of the U.S., receivables from disposed businesses, including receivables for transactional services agreements and certain intercompany balances that eliminate upon consolidation. Revenue sharing program receivables in Aviation 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.
(c)(b) Consolidated current receivables includeincluded a deferred purchase price receivable, which represents our retained risk with respect to current customer receivables sold to third parties through one of the receivable facilities. The balance of the deferred purchase price held by GE Capital as of September 30, 2020March 31, 2021 and December 31, 20192020 was $480$461 million and $421$413 million, respectively.
(d)(c) GE Industrial allowance for credit losses primarily increased due to net new provisions of $313$39 million offset by write-offs and foreign currency impact.


2021 1Q FORM 10-Q 34

Sales of GE Industrial current customer receivables. When GE Industrial sells customer receivables to GE Capital or third parties, it accelerates the receipt of cash that would otherwise have been collected from customers. In any given period, the amount of cash received from sales of customer receivables compared to the cash GE Industrial would have otherwise collected had those customer receivables not been sold represents the cash generated or used in the period relating to this activity. GE Industrial sales of customer receivables to GE Capital or third parties are made on arm's lengtharms-length terms and any discount related to time value of money is recognized by GE Industrial when the customer receivables are sold. In our Statement of Cash Flows, receivables purchased and retained by GE Capital are reflected as cash from operating activities at GE Industrial, primarily as cash used for investing activities at GE Capital and are eliminated in consolidation. Collections on receivables purchased by GE Capital are reflected primarily as cash from investing activities at GE Capital and are reclassified to cash from operating activities in consolidation. As of September 30,March 31, 2021 and 2020, and 2019, GE Industrial sold approximately 45%38% and 54%49%, respectively, of its gross customer receivables to GE Capital or third parties. Effective April 1, 2021, the Company discontinued the majority of its factoring programs. Activity related to customer receivables sold by GE Industrial is as follows:
2020201920212020
(In millions)GE CapitalThird PartiesGE CapitalThird Parties
GE CapitalThird PartiesGE CapitalThird Parties
Balance at January 1Balance at January 1$3,087 $6,757 $4,386 $7,880 Balance at January 1$3,618 $2,992 $3,087 $6,757 
GE sales to GE Capital24,630 — 30,243 — 
GE sales to third parties— 1,063 — 4,206 
GE Industrial sales to GE CapitalGE Industrial sales to GE Capital7,044 — 9,225 — 
GE Industrial sales to third partiesGE Industrial sales to third parties— 124 — 307 
GE Capital sales to third partiesGE Capital sales to third parties(13,757)13,757 (20,505)20,505 GE Capital sales to third parties(3,826)3,826 (5,253)5,253 
Collections and otherCollections and other(9,805)(18,119)(10,606)(26,209)Collections and other(3,765)(4,360)(3,224)(7,797)
Reclassification from long-term customer receivablesReclassification from long-term customer receivables207 0 265 0 Reclassification from long-term customer receivables63 0 123 0 
Balance at September 30$4,362 (a)$3,458 $3,782 (a)$6,382 
Balance at March 31Balance at March 31$3,134 (a)$2,582 (b)$3,958 (a)$4,519 
(a) At September 30,March 31, 2021 and 2020, and 2019, $640$526 million and $707$557 million, respectively, of the current receivables purchased and retained by GE Capital had been sold by GE Industrial to GE Capital with recourse (i.e., GE Industrial retains all or some risk of default). The effect on GE cash flows from operating activities (CFOA)Industrial CFOA of claims by GE Capital on receivables sold with recourse was insignificant for the ninethree months ended September 30, 2020March 31, 2021 and 2019.2020.
(b) Included $1,863 million in our active unconsolidated receivables facility at March 31, 2021, under which we currently expect to continue sales of GE Industrial receivables in the future.

LONG-TERM RECEIVABLESLONG-TERM RECEIVABLESConsolidatedGELONG-TERM RECEIVABLESConsolidatedGE Industrial
(In millions)September 30, 2020December 31, 2019September 30, 2020December 31, 2019
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Long-term customer receivables(a)Long-term customer receivables(a)$673 $906 $483 $506 Long-term customer receivables(a)$638 $585 $601 $474 
Long-term sundry receivables(b)Long-term sundry receivables(b)1,525 1,504 1,726 1,834 Long-term sundry receivables(b)1,656 1,748 1,928 2,097 
Allowance for credit lossesAllowance for credit losses(140)(128)(140)(128)Allowance for credit losses(136)(142)(136)(142)
Total long-term receivablesTotal long-term receivables$2,058 $2,282 $2,069 $2,212 Total long-term receivables$2,158 $2,191 $2,392 $2,430 
(a) As of September 30, 2020March 31, 2021 and December 31, 2019,2020, GE Capital held $190$37 million and $400$111 million, respectively, of GE Industrial long-term customer receivables, substantially all of which $173 million and $312 million had been purchasedare with recourse (i.e., GE Industrial retains all or some risk of default). GE sold an insignificant amount of long-term customer receivables during the nine months ended September 30, 2020 and 2019.
(b) Includes supplier advances, revenue sharing programs receivables, other non-income based tax receivables and certain intercompany balances that eliminate upon consolidation.

2020 3Q FORM 10-Q 49
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNCONSOLIDATED RECEIVABLES FACILITIES. GE Capital has 21 active revolving receivables facilities,facility, under which customer receivables purchased from GE Industrial are sold to third parties. In the firstthis facility, which has a program size of $2,500$2,000 million as of March 31, 2021, upon the sale of receivables, we receive proceeds of cash and deferred purchase price and the Company’s remaining risk with respect to the sold receivables is limited to the balance of the deferred purchase price. In the second facility, which has a program size of $800 million, upon the sale of receivables, we receive proceeds of cash only and therefore the Company has no remaining risk with respect to the sold receivables. The program sizes of the first facility and the second facility at December 31, 2019 were $3,100 million and $1,200 million, respectively.

Activity related to theseour unconsolidated receivables facilities is included in the GE Capital sales to third parties line in the sales of GE Industrial current customer receivables table above and is as follows:
Nine months ended September 30 (In millions)
20202019
Three months ended March 31Three months ended March 3120212020
Customer receivables sold to receivables facilitiesCustomer receivables sold to receivables facilities$10,570 $16,062 Customer receivables sold to receivables facilities$2,605 $4,307 
Total cash purchase price for customer receivablesTotal cash purchase price for customer receivables10,060 15,702 Total cash purchase price for customer receivables2,479 4,120 
Cash collections re-invested to purchase customer receivablesCash collections re-invested to purchase customer receivables8,865 13,287 Cash collections re-invested to purchase customer receivables2,274 3,723 
Non-cash increases to deferred purchase priceNon-cash increases to deferred purchase price$446 $170 Non-cash increases to deferred purchase price$116 $160 
Cash payments received on deferred purchase priceCash payments received on deferred purchase price388 270 Cash payments received on deferred purchase price68 78 

CONSOLIDATED SECURITIZATION ENTITIES. GE Capital consolidates 3 variable interest entities (VIEs) that purchased customer receivables and long-term customer receivables from GE.GE Industrial. At September 30, 2020March 31, 2021 and December 31, 2019,2020, these VIEs held current customer receivables of $1,646$1,133 million and $2,080$1,489 million and long-term customer receivables of $190$29 million and $375$93 million, respectively. At September 30, 2020March 31, 2021 and December 31, 2019,2020, the outstanding non-recourse debt under their respective debt facilities was $452$624 million and $1,655$892 million, respectively. 

2021 1Q FORM 10-Q 35

NOTE 5. FINANCING RECEIVABLES AND ALLOWANCES
ConsolidatedGE Capital
(In millions)September 30, 2020December 31, 2019September 30, 2020December 31, 2019
Loans, net of deferred income$1,192 $1,098 $5,572 $4,927 
Investment in financing leases, net of deferred income1,914 2,070 1,914 2,070 
3,106 3,168 7,486 6,996 
Allowance for losses(85)(33)(61)(17)
Financing receivables – net$3,021 $3,134 $7,425 $6,979 
ConsolidatedGE Capital
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Loans, net of deferred income$337 $359 $3,749 $4,182 
Allowance for losses(31)(32)(11)(10)
Current financing receivables - net$306 $326 $3,738 $4,172 

Consolidated finance lease income was $33 million and $43 million in the three months ended September 30, 2020 and 2019, respectively, and $111 million and $135 million in the nine months ended September 30, 2020 and 2019, respectively.

We manage our GE Capital financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At September 30,March 31, 2021 and December 31, 2020, 5.2%, 4.0% and 4.6% of financing receivables were over 30 days past due overwere 3.7% and 2.8% and 90 days past due were 1.6% and on nonaccrual, respectively, with the vast majority of nonaccrual financing receivables secured by collateral. At December 31, 2019, 4.2%1.7%, 2.9% and 6.1% of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.

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

NOTE 6. INVENTORIES, INCLUDING DEFERRED INVENTORY COSTS
(In millions)September 30, 2020December 31, 2019
March 31, 2021December 31, 2020
Raw materials and work in processRaw materials and work in process$8,819 $8,771 Raw materials and work in process$8,013 $7,937 
Finished goodsFinished goods6,106 5,333 Finished goods6,057 5,654 
Total inventories$14,925 $14,104 
Deferred inventory costs(a)Deferred inventory costs(a)2,460 2,299 
Inventories, including deferred inventory costsInventories, including deferred inventory costs$16,530 $15,890 
(a) Represents cost deferral for shipped goods (such as components for wind turbine assemblies within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.

NOTE 7. PROPERTY, PLANT AND EQUIPMENT
(In millions)September 30, 2020December 31, 2019
March 31, 2021December 31, 2020
Original costOriginal cost$76,885 $75,187 Original cost$31,893 $32,098 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization(34,675)(31,897)Less accumulated depreciation and amortization(18,405)(18,251)
Right-of-use operating lease assetsRight-of-use operating lease assets2,808 2,852 
Property, plant and equipment – netProperty, plant and equipment – net$42,211 $43,290 Property, plant and equipment – net$16,296 $16,699 


50 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated depreciation and amortization on property, plant and equipment was $1,374$452 million and $1,004$461 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively, and $3,655 million and $2,969 million in the nine months ended September 30, 2020 and 2019, respectively.

In the third quarter of 2020, we recognized a non-cash pre-tax impairment charge of $316 million related to property, plant and equipment at our Steam business within our Power segment due to our recent announcement to exit the new build coal power market. We determined the fair value of these assets using an income approach. This charge was recorded by Corporate in Selling, general, and administrative expenses in our consolidated Statement of Earnings (Loss).

During the three and nine months ended September 30, 2020, our GE Capital Aviation Services (GECAS) business recognized pre-tax impairments of $160 million and $497 million, respectively, primarily on its fixed-wing aircraft operating lease portfolio. Pre-tax impairments were $28 million and $57 million for the three and nine months ended September 30, 2019, respectively. We determined the fair values of these assets using primarily the income approach. These charges are included in costs of services sold within the Statement of Earnings (Loss) and within our Capital segment.

Income on our operating lease portfolio, primarily from our GECAS business, was $844 million and $935 million for the three months ended September 30, 2020 and 2019, respectively, and comprised fixed lease income of $713 million and $757 million and variable lease income of $131 million and $179 million, respectively. Income on our operating lease portfolio was $2,515 million and $2,885 million for the nine months ended September 30, 2020 and 2019, respectively, and comprised fixed lease income of $2,132 million and $2,296 million and variable lease income of $384 million and $589 million, respectively.

Operating Lease Assets and Liabilities. Our consolidated Right of use operating lease (ROU) assets, included within property, plant and equipment in our Statement of Financial Position were $2,619 million and $2,896 million, as of September 30, 2020 and December 31, 2019, respectively. Our consolidated operating lease liabilities, included in All other liabilities in our Statement of Financial Position, were $2,943$3,143 million and $3,162$3,195 million, as of September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, which included GE Industrial operating lease liabilities of $3,117$3,083 million and $3,369$3,133 million, respectively. Expense on our operating lease portfolio, primarily from our long-term fixed leases, was $281 million and $294 million for the three months ended March 31, 2021 and 2020, respectively.
OPERATING LEASE EXPENSEThree months ended September 30Nine months ended September 30
(In millions)2020201920202019
Long-term (fixed)$170 $180 $529 $625 
Long-term (variable)47 40 92 111 
Short-term39 60 162 150 
Total operating lease expense$256 $281 $784 $887 

NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL (In millions)
January 1, 2020ImpairmentsCurrency exchange
and other		Balance at September 30, 2020
GOODWILLGOODWILLJanuary 1, 2021Currency exchange
and other		Balance at
March 31, 2021
PowerPower$145 $0 $0 $145 Power$146 $0 $145 
Renewable EnergyRenewable Energy3,290 0 48 3,338 Renewable Energy3,401 (88)3,313 
AviationAviation9,859 (877)191 9,172 Aviation9,247 (103)9,144 
HealthcareHealthcare11,728 0 20 11,748 Healthcare11,855 (15)11,840 
Capital839 (839)0 0 
CorporateCorporate873 0 1 874 Corporate876 1 877 
TotalTotal$26,734 $(1,717)$260 $25,278 Total$25,524 $(204)$25,320 

We test goodwill for impairment annually in the fourth quarter. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence, including (i) the results of our impairment testing from the most recent testing date, (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts or decreases in market multiples, (and the magnitude thereof), if any, and (iii) declines in market capitalization below book value (andcapitalization. In the magnitude and durationfirst quarter of those declines), if any. Due to the impact of recent events, including challenges from declines in current market conditions,2021, we performeddid not identify any reporting units that required an interim impairment test at our Additive reporting unit within our Aviation segment and GECAS reporting unit within our Capital segment in the second quarter of 2020, both of which incorporated a combination of income and market valuation approaches. The results of the analysis indicated that carrying values of both reporting units were in excess of their respective fair values. Therefore,test. However, we recorded non-cash impairment losses of $877 million and $839 million for the Additive and GECAS reporting units, respectively, in the caption Goodwill impairments in our consolidated Statement of Earnings (Loss). All of the goodwill in Additive was the result of the Arcam AB and Concept Laser GmBH acquisitions in 2016. Of the $839 million of goodwill for GECAS, $729 million arose from the acquisition of Milestone Aviation, our helicopter leasing business, in 2015. After the impairment charges, there is $236 million goodwill remaining in our Additive reporting unit and 0 goodwill remaining in our GECAS reporting unit. In the third quarter, we performed an additional review of our Additive reporting unit and concluded an additional impairment test was not required.


2020 3Q FORM 10-Q 51
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Also in the third quarter, we performed an analysis of the impact of recent events, including business and industry specific considerations, on the fair value of our Grid Solutions software reporting unit in our Digital business within Corporate, and concluded an interim impairment test was not required. While the goodwill of this reporting unit is not currently impaired there can be no assurances that goodwill will not be impaired in future periods. We will continue to monitor the operating results and cash flow forecasts and challenges from declinesof our Additive reporting unit in current market conditions,our Aviation segment as well as impactsthe fair value of COVID-19 for this reporting unit as its fair value iswas not significantly in excess of its carrying value. At September 30, 2020, goodwill inMarch 31, 2021, our Grid Solutions softwareAdditive reporting unit was $874had goodwill of $236 million.

OTHER INTANGIBLE ASSETS - NET (In millions)
September 30, 2020December 31, 2019
Intangible assets subject to amortization$9,909 $10,653 
2021 1Q FORM 10-Q 36

All other intangible assets of $9,395 million and $9,671 million at March 31, 2021 and December 31, 2020, respectively, are subject to amortization. Intangible assets decreased in the thirdfirst quarter of 2020,2021, primarily as a result of amortization. Consolidated amortization expense was $428$301 million and $496$318 million in the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively, and $1,076 million and $1,220 million in the nine months ended September 30, 2020 and 2019, respectively. Included within consolidated amortization expense for the three and nine months ended September 30, 2020 and 2019, were non-cash pre-tax impairment charges of $113 million and $103 million, respectively.

In the third quarter of 2020, we recognized a non-cash pre-tax impairment charge of $113 million related to intangible assets at our Steam business within our Power segment due to our recent announcement to exit the new build coal power market. We determined 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).

NOTE 9. REVENUES. The equipment and services revenues classification in the table below is consistent with our segment MD&A presentation.presentation.
EQUIPMENT & SERVICES REVENUES
Three months ended September 3020202019
(In millions)EquipmentServicesTotalEquipmentServicesTotal
Power$1,595 $2,430 $4,025 $1,434 $2,492 $3,926 
Renewable Energy3,771 754 4,525 3,609 816 4,425 
Aviation1,933 2,987 4,919 3,149 4,960 8,109 
Healthcare2,538 2,027 4,565 2,828 2,095 4,923 
Corporate items and industrial eliminations(212)95 (117)(24)161 137 
Total GE Industrial revenues$9,625 $8,293 $17,918 $10,996 $10,524 $21,519 
Nine months ended September 3020202019
(In millions)EquipmentServicesTotalEquipmentServicesTotal
Power$4,589 $7,617 $12,206 $4,473 $8,751 $13,224 
Renewable Energy9,068 2,155 11,224 8,457 2,133 10,590 
Aviation6,234 9,961 16,196 9,295 14,645 23,940 
Healthcare7,287 5,899 13,185 8,320 6,220 14,540 
Corporate items and industrial eliminations(251)268 17 328 638 967 
Total GE Industrial revenues$26,928 $25,901 $52,828 $30,873 $32,386 $63,259 
52 2020 3Q FORM 10-Q
EQUIPMENT & SERVICES REVENUES
Three months ended March 3120212020
EquipmentServicesTotalEquipmentServicesTotal
Power$1,241 $2,679 $3,921 $1,506 $2,518 $4,025 
Renewable Energy2,844 404 3,248 2,576 618 3,194 
Aviation1,847 3,145 4,992 2,364 4,529 6,892 
Healthcare2,227 2,081 4,308 2,699 2,029 4,727 
Corporate items and industrial eliminations(188)49 (139)(48)54 6 
Total GE Industrial revenues$7,971 $8,358 $16,329 $9,097 $9,748 $18,844 
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REVENUESREVENUESThree months ended September 30Nine months ended September 30REVENUESThree months ended March 31
(In millions)2020201920202019
20212020
Gas PowerGas Power$2,940 $2,732 $8,876 $9,242 Gas Power$2,829 $2,859 
Power PortfolioPower Portfolio1,085 1,194 3,330 3,982 Power Portfolio1,091 1,165 
PowerPower$4,025 $3,926 $12,206 $13,224 Power$3,921 $4,025 
Onshore WindOnshore Wind$3,303 $3,193 $7,914 $7,084 Onshore Wind$2,118 $2,124 
Grid Solutions equipment and servicesGrid Solutions equipment and services936 991 2,587 2,843 Grid Solutions equipment and services795 839 
Hydro, Offshore Wind and other287 241 722 663 
HydroHydro165 179 
Offshore Wind and Hybrid SolutionsOffshore Wind and Hybrid Solutions169 51 
Renewable EnergyRenewable Energy$4,525 $4,425 $11,224 $10,590 Renewable Energy$3,248 $3,194 
Commercial Engines & ServicesCommercial Engines & Services$2,696 $5,997 $9,705 $17,796 Commercial Engines & Services$3,354 $5,113 
MilitaryMilitary1,137 1,061 3,258 3,073 Military956 960 
Systems & OtherSystems & Other1,087 1,050 3,233 3,071 Systems & Other682 820 
AviationAviation$4,919 $8,109 $16,196 $23,940 Aviation$4,992 $6,892 
Healthcare SystemsHealthcare Systems$4,085 $3,642 $11,056 $10,664 Healthcare Systems$3,825 $3,448 
Pharmaceutical DiagnosticsPharmaceutical Diagnostics480 495 1,300 1,497 Pharmaceutical Diagnostics482 450 
BioPharmaBioPharma0 786 830 2,378 BioPharma0 830 
HealthcareHealthcare$4,565 $4,923 $13,185 $14,540 Healthcare$4,308 $4,727 
Corporate items and industrial eliminationsCorporate items and industrial eliminations(117)137 17 967 Corporate items and industrial eliminations(139)6 
Total GE Industrial revenuesTotal GE Industrial revenues$17,918 $21,519 $52,828 $63,259 Total GE Industrial revenues$16,329 $18,844 
CapitalCapital1,681 2,097 5,449 6,645 Capital878 837 
GE Capital-GE eliminations$(181)$(256)$(587)$(928)
GE Capital-GE Industrial eliminationsGE Capital-GE Industrial eliminations$(89)$(191)
Consolidated revenuesConsolidated revenues$19,417 $23,360 $57,690 $68,976 Consolidated revenues$17,118 $19,490 

REMAINING PERFORMANCE OBLIGATION. As of September 30, 2020,March 31, 2021, the aggregate amount of the contracted revenues allocated to our unsatisfied (or partially unsatisfied) performance obligations was $226,666$226,962 million. We expect to recognize revenue as we satisfy our remaining performance obligations as follows: (1) equipment-related remaining performance obligation of $44,634$40,951 million, of which 59%62%, 83%82% and 100%97% is expected to be satisfied within 1, 2 and 5 years, respectively; and (2) services-related remaining performance obligation of $182,032$186,012 million, of which 11%15%, 42%47%, 66%67% and 81%83% is expected to be recognized within 1, 5, 10 and 15 years, respectively, and the remaining thereafter. Contract modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related remaining performance obligations.

2021 1Q FORM 10-Q 37

NOTE 10. CONTRACT AND OTHER DEFERRED ASSETS & PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract and other deferred assets decreased $1,230increased $153 million in the ninethree months ended September 30, 2020.March 31, 2021 primarily due to the timing of revenue recognition ahead of billing milestones on our long-term equipment contracts. Our long-term service agreements decreased primarily due to billings of $6,373$2,232 million, offset by revenues recognized of $2,118 million, a net favorable change in estimated profitability of $31 million at Aviation and a net unfavorable change in estimated profitability of $940$8 million at Aviation and $122 million at Power, offset by revenues recognized of $6,563 million. The decrease in long-term service agreements at Aviation included a $536 million pre-tax charge to reflect the cumulative impacts of changes to billing and cost assumptions for certain long-term service agreements, reflecting lower engine utilization, anticipated customer fleet restructuring and contract modifications. Additional adjustments could occur in future periods and could be material for certain long-term service agreements if actual customer operating behavior differs significantly from Aviation's current estimates.Power.
September 30, 2020 (In millions)
PowerAviationRenewable EnergyHealthcareOtherTotal
March 31, 2021March 31, 2021PowerAviationRenewable EnergyHealthcareOtherTotal
Revenues in excess of billingsRevenues in excess of billings$5,282 $4,147 $0 $0 $0 $9,429 Revenues in excess of billings$5,223 $2,911 $0 $0 $0 $8,134 
Billings in excess of revenuesBillings in excess of revenues(1,566)(3,754)0 0 0 (5,320)Billings in excess of revenues(1,541)(5,347)0 0 0 (6,888)
Long-term service agreements(a)Long-term service agreements(a)3,716 394 0 0 0 4,110 Long-term service agreements(a)$3,682 $(2,436)$0 $0 $0 $1,246 
Short-term and other service agreementsShort-term and other service agreements138 300 94 182 30 744 Short-term and other service agreements139 342 109 164 16 769 
Equipment contract revenues(b)Equipment contract revenues(b)2,667 77 1,164 308 181 4,397 Equipment contract revenues(b)2,024 36 1,239 289 217 3,805 
Total contract assets6,521 770 1,259 490 211 9,251 
Current contract assetsCurrent contract assets$5,845 $(2,058)$1,348 $454 $232 $5,821 
Deferred inventory costs898 496 1,001 353 0 2,748 
Nonrecurring engineering costsNonrecurring engineering costs22 2,384 39 33 0 2,478 Nonrecurring engineering costs13 2,436 33 29 0 2,511 
Customer advances and other(c)0 1,127 0 0 (32)1,094 
Contract and other deferred assets$7,441 $4,776 $2,299 $876 $179 $15,571 
Customer advances and otherCustomer advances and other783 2,570 0 122 0 3,474 
Non-current contract and other deferred assetsNon-current contract and other deferred assets$796 $5,005 $33 $151 $0 $5,985 
Total contract and other deferred assetsTotal contract and other deferred assets$6,641 $2,948 $1,381 $604 $233 $11,806 
2020 3Q FORM 10-Q 53
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019 (In millions)
PowerAviationRenewable EnergyHealthcareOtherTotal
Revenues in excess of billings$5,342 $4,996 $0 $0 $0 $10,338 
Billings in excess of revenues(1,561)(3,719)0 0 0 (5,280)
Long-term service agreements(a)3,781 1,278 0 0 0 5,058 
Short-term and other service agreements190 316 43 169 0 717 
Equipment contract revenues(b)2,508 82 1,217 324 106 4,236 
Total contract assets6,478 1,675 1,260 492 106 10,011 
Deferred inventory costs943 287 1,677 359 0 3,267 
Nonrecurring engineering costs44 2,257 47 35 8 2,391 
Customer advances and other(c)0 1,165 0 0 (32)1,133 
Contract and other deferred assets$7,465 $5,384 $2,985 $886 $82 $16,801 
(a)Included amounts due from customers at Aviation for the sales of engines, spare parts and services, which we will collect through higher usage-based fees from servicing equipment under long-term service agreements, totaling $1,858 million and $1,712 million as of September 30, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $294 million and $308 million as of September 30, 2020 and December 31, 2019, respectively. 
(b)Included are amounts due from customers at Power for the sale of services upgrades, which we collect through incremental fixed or usage-based fees from servicing the equipment under long-term service agreements, totaling $850 million and $909 million as of September 30, 2020 and December 31, 2019, respectively. 
(c)Included advances to and amounts due from customers at Aviation for the sale of engines, spare parts and services, which we will collect through incremental fees for goods and services to be delivered in future periods, totaling $947 million and $986 million as of September 30, 2020 and December 31, 2019, respectively. The corresponding discount is recorded within liabilities as Deferred income and amounted to $264 million and $256 million as of September 30, 2020 and December 31, 2019, respectively.
December 31, 2020
Revenues in excess of billings$5,282 $3,072 $0 $0 $0 $8,354 
Billings in excess of revenues(1,640)(5,375)0 0 0 (7,015)
Long-term service agreements$3,642 $(2,304)$0 $0 $0 $1,338 
Short-term and other service agreements129 282 106 173 29 719 
Equipment contract revenues2,015 59 1,127 306 201 3,707 
Current contract assets$5,786 $(1,963)$1,233 $479 $229 $5,764 
Nonrecurring engineering costs16 2,409 34 31 0 2,490 
Customer advances and other822 2,481 0 128 (32)3,398 
Non-current contract and other deferred assets$838 $4,889 $34 $159 $(32)$5,888 
Total contract and other deferred assets$6,623 $2,927 $1,268 $638 $197 $11,653 

Progress collections and deferred income decreased $1,012$431 million primarily due to the timing of revenue recognition in excess of new collections received, primarily at Renewable EnergyAviation and Power. These decreases were partially offset by early payments received at our Aviation Military equipment business of $708 million in the second quarter 2020 as part of the U.S. Department of Defense's efforts to support vendors in its supply chain during the pandemic.

Revenues recognized for contracts included in a liability position at the beginning of the year were $10,383$5,909 million and $9,565$4,137 million for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively.respectively.
September 30, 2020 (In millions)
PowerAviationRenewable EnergyHealthcareOtherTotal
Progress collections on equipment contracts$5,142 $157 $1,255 $0 $0 $6,554 
Other progress collections426 5,069 3,141 370 154 9,160 
Total progress collections5,568 5,226 4,396 370 154 15,714 
Deferred income(a)128 1,565 378 1,780 118 3,969 
GE Progress collections and deferred income$5,696 $6,791 $4,773 $2,150 $272 $19,683 
March 31, 2021PowerAviationRenewable EnergyHealthcareOtherTotal
Progress collections on equipment contracts$4,829 $197 $1,388 $0 $0 $6,414 
Other progress collections371 4,483 4,343 416 121 9,735 
Current deferred income16 122 219 1,392 95 1,844 
Progress collections and deferred income$5,217 $4,802 $5,949 $1,808 $217 $17,993 
Non-current deferred income118 855 211 555 9 1,748 
Total Progress collections and deferred income$5,335 $5,657 $6,160 $2,363 $226 $19,741 
December 31, 2019 (In millions)
Progress collections on equipment contracts$5,857 $115 $1,268 $0 $0 $7,240 
Other progress collections413 4,748 4,193 305 189 9,849 
Total progress collections6,270 4,863 5,461 305 189 17,089 
Deferred income(a)49 1,528 284 1,647 98 3,606 
GE Progress collections and deferred income$6,319 $6,391 $5,745 $1,952 $287 $20,694 
(a)Included in this balance are finance discounts associated with customer advances at Aviation of $558 million and $564 million as of September 30, 2020 and December 31, 2019, respectively.
December 31, 2020
Progress collections on equipment contracts$4,918 $214 $1,229 $0 $0 $6,362 
Other progress collections458 4,623 4,604 414 152 10,252 
Current deferred income17 132 194 1,309 105 1,757 
Progress collections and deferred income$5,393 $4,969 $6,028 $1,724 $257 $18,371 
Non-current deferred income116 898 214 564 10 1,801 
Total Progress collections and deferred income$5,509 $5,867 $6,241 $2,288 $267 $20,172 

NOTE 11. ALL OTHER ASSETS.All other current assets and All other assets primarily includes equity method and other investments, long-term customer and sundry receivables (see Note 4), cash and cash equivalents in our run-off insurance operations and prepaid taxes and other deferred charges. Consolidated All other non-current assets increased $1,270 million in the three months ended March 31, 2021, primarily due to an increase in Insurance cash and cash equivalents of $1,252 million.
54 2020 3Q2021 1Q FORM 10-Q38

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11.12. BORROWINGS
(In millions)September 30, 2020December 31, 2019
Commercial paper$— $3,008 
Current portion of long-term borrowings37 766 
Current portion of long-term borrowings assumed by GE2,323 5,473 
Other975 1,832 
Total GE short-term borrowings$3,335 $11,079 
March 31, 2021December 31, 2020
Current portion of long-term borrowingsCurrent portion of long-term borrowings$3,070 $11,226 Current portion of long-term borrowings$47 $36 
Intercompany payable to GE1,881 2,104 
Current portion of long-term borrowings assumed by GE IndustrialCurrent portion of long-term borrowings assumed by GE Industrial1,784 2,432 
OtherOther488 882 
Total GE Industrial short-term borrowingsTotal GE Industrial short-term borrowings$2,318 $3,350 
Current portion of long-term borrowingsCurrent portion of long-term borrowings$1,743 $788 
Intercompany payable to GE IndustrialIntercompany payable to GE Industrial1,784 2,432 
Non-recourse borrowings of consolidated securitization entitiesNon-recourse borrowings of consolidated securitization entities624 892 
OtherOther347 804 Other59 283 
Total GE Capital short-term borrowingsTotal GE Capital short-term borrowings$5,298 $14,134 Total GE Capital short-term borrowings$4,210 $4,395 
EliminationsEliminations(2,656)(3,140)Eliminations(2,061)(3,033)
Total short-term borrowingsTotal short-term borrowings$5,977 $22,072 Total short-term borrowings$4,468 $4,713 
Senior notesSenior notes$18,820 $14,762 Senior notes$18,753 $18,994 
Senior notes assumed by GE20,074 23,024 
Subordinated notes assumed by GE1,737 2,871 
Senior notes assumed by GE IndustrialSenior notes assumed by GE Industrial17,981 18,178 
Subordinated notes assumed by GE IndustrialSubordinated notes assumed by GE Industrial1,774 1,779 
OtherOther294 324 Other422 435 
Total GE long-term borrowings$40,923 $40,980 
Total GE Industrial long-term borrowingsTotal GE Industrial long-term borrowings$38,929 $39,386 
Senior notesSenior notes$31,337 $25,371 Senior notes$27,292 $30,132 
Subordinated notesSubordinated notes186 178 Subordinated notes148 189 
Intercompany payable to GE17,526 17,038 
Intercompany payable to GE IndustrialIntercompany payable to GE Industrial16,577 16,780 
Non-recourse borrowings of consolidated securitization entitiesNon-recourse borrowings of consolidated securitization entities0 0 
OtherOther588 626 Other521 483 
Total GE Capital long-term borrowingsTotal GE Capital long-term borrowings$49,637 $43,213 Total GE Capital long-term borrowings$44,539 $47,584 
EliminationsEliminations(17,526)(17,038)Eliminations(16,577)(16,780)
Total long-term borrowingsTotal long-term borrowings$73,034 $67,155 Total long-term borrowings$66,890 $70,189 
Non-recourse borrowings of consolidated securitization entities452 1,655 
Total borrowingsTotal borrowings$79,463 $90,882 Total borrowings$71,358 $74,902 

At September 30, 2020,March 31, 2021, the outstanding GE Capital borrowings that had been assumed by GE Industrial as part of the GE Capital Exit Plan was $24,134$21,538 million ($2,3231,784 million short termshort-term and $21,811$19,754 million long term)long-term), for which GE Industrial has an offsetting Receivable from GE Capital of $19,407$18,361 million. The difference of $4,726 million ($442 million in short-term borrowings and $4,284$3,177 million in long-term borrowings)borrowings represents the amount of borrowings GE Capital had funded with available cash to GE Industrial via intercompany loans in lieu of GE Industrial issuing borrowings externally. GE repaid a total of $7.5 billion of intercompany loans from GE Capital in the second quarter of 2020.

At September 30, 2020,March 31, 2021, total GE Industrial borrowings of $24,851$22,886 million comprised GE-issuedGE Industrial-issued borrowings of $20,125$19,709 million and intercompany loans from GE Capital to GE Industrial of $4,726$3,177 million as described above.

GE Industrial has provided a full and unconditional guarantee on the payment of the principal and interest on all tradable senior and subordinated outstanding long-term debt securities issued by GE Capital. This guarantee applied to $31,719$27,332 million and $34,683$28,503 million of GE Capital debt at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.

Non-recourse borrowings of consolidated securitization entities included an insignificant amount and $1,569 million of current portion of long-term borrowings at September 30, 2020 and December 31, 2019, respectively. See Notes 4 and 18 for further information.

In the second quarter of 2020, GE issued a total of $7,500 million in aggregate principal amount of senior unsecured debt, comprising $1,000 million of 3.450% Notes due 2027, $1,250 million of 3.625% Notes due 2030, $1,500 million of 4.250% Notes due 2040, and $3,750 million of 4.350% Notes due 2050, and used these proceeds in addition to a portion of the proceeds from the BioPharma sale to repay a total of $7,500 million of intercompany loans to GE Capital and to complete a tender offer to purchase $4,237 million in aggregate principal amount of certain GE unsecured debt, comprising $2,046 million of 2.700% Notes due 2022, €934 million ($1,011 million equivalent) of 0.375% Notes due 2022, €425 million ($460 million equivalent) of 1.250% Notes due 2023, €376 million ($407 million equivalent) of floating-rate Notes due 2020, and $312 million of 3.375% Notes due 2024. The total cash consideration paid for these purchases was $4,282 million and the total carrying amount of the purchased notes was $4,228 million, resulting in a loss of $63 million (including $9 million of fees and other costs associated with the tender) which was recorded in Interest and other financial charges in the GE Statement of Earnings (Loss). In addition to the purchase price, GE paid any accrued and unpaid interest on the purchased notes through the date of purchase.


2020 3Q FORM 10-Q 55
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the second quarter of 2020, GE Capital issued a total of $6,000 million in aggregate principal amount of senior unsecured debt with maturities ranging from 2025 to 2032, and used these proceeds in addition to the proceeds received from repayments of intercompany loans from GE to complete tender offers to purchase a total of $9,787 million in aggregate principal amount of certain senior unsecured debt. The total cash consideration paid for these purchases was $9,950 million and the total carrying amount of the purchased notes was $9,827 million, resulting in a total loss of $143 million (including $20 million of fees and other costs associated with the tender) which was recorded in Interest and other financial charges in the GE Capital Statement of Earnings (Loss). In addition to the purchase price, GE Capital paid any accrued and unpaid interest on the purchased notes through the date of purchase.

See Note 1719 for further information about borrowings and associated interest rate swaps.

NOTE 12.13. INSURANCE LIABILITIES AND ANNUITY BENEFITS. Insurance liabilities and annuity benefits comprise mainlysubstantially all obligations to annuitants and insureds in our run-off insurance activities.operations. Our insurance operations generated revenues of $775 million and $616 million and profit (loss) of $116 million and $(93) million for the three months ended March 31, 2021 and 2020, respectively. These operations were supported by assets of $50,353 million and $50,824 million at March 31, 2021 and December 31, 2020, respectively. A summary of our insurance contracts is presented below:
September 30, 2020 (In millions)
Long-term care insurance contractsStructured settlement annuities & life insurance contractsOther
contracts		Other adjustments(a)Total
March 31, 2021March 31, 2021Long-term careStructured settlement annuities & lifeOther contractsOther adjustments(a)Total
Future policy benefit reservesFuture policy benefit reserves$16,866 $9,294 $178 $7,404 $33,742 Future policy benefit reserves$16,997 $9,105 $183 $5,580 $31,864 
Claim reservesClaim reserves4,364 270 1,079 — 5,713 Claim reserves4,397 306 1,062 — 5,765 
Investment contractsInvestment contracts0 1,060 1,034 — 2,094 Investment contracts0 1,018 1,003 — 2,021 
Unearned premiums and otherUnearned premiums and other20 189 118 — 327 Unearned premiums and other16 191 147 — 353 
21,250 10,813 2,409 7,404 41,876 21,409 10,620 2,395 5,580 40,004 
EliminationsEliminations— — (424)— (424)Eliminations— — (442)— (442)
TotalTotal$21,250 $10,813 $1,985 $7,404 $41,452 Total$21,409 $10,620 $1,953 $5,580 $39,562 
December 31, 2019 (In millions)
Future policy benefit reserves$16,755 $9,511 $183 $5,655 $32,104 
Claim reserves4,238 252 1,125 — 5,615 
Investment contracts0 1,136 1,055 — 2,191 
Unearned premiums and other30 196 96 — 322 
21,023 11,095 2,459 5,655 40,232 
Eliminations— — (406)— (406)
Total$21,023 $11,095 $2,053 $5,655 $39,826 
2021 1Q FORM 10-Q 39

December 31, 2020Long-term careStructured settlement annuities & lifeOther contractsOther adjustments(a)Total
Future policy benefit reserves$16,934 $9,207 $181 $8,160 $34,482 
Claim reserves4,393 275 1,068 — 5,736 
Investment contracts0 1,034 1,016 — 2,049 
Unearned premiums and other19 189 89 — 298 
21,346 10,705 2,354 8,160 42,565 
Eliminations— — (374)— (374)
Total$21,346 $10,705 $1,980 $8,160 $42,191 
(a) To the extent that unrealized gains on specific investment securities supporting our insurance contracts would result in a premium deficiency should those gains be realized, an increase in future policy benefit reserves is recorded, with an after-tax reduction of net unrealized gains recognized through Accumulated other comprehensive income (loss) (AOCI) in our consolidated Statement of Earnings (Loss).

The increasedecrease in insurance liabilities and annuity benefitsOther adjustments of $1,626$2,580 million from December 31, 2019 to September 30, 2020 is primarily due to an adjustmenta result of $1,749 million resulting from an increasethe decline in unrealized gains on investment securities that would result in a premium deficiency should those gains be realized.securities.

Claim reserves included incurred claims of $1,390$454 million and $1,410$507 million, of which insignificant amounts related to the recognition of adjustments to prior year claim reserves arising from our periodic reserve evaluation for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively. Paid claims were $1,328$424 million and $1,237$405 million in the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively.

Reinsurance recoverables, are recorded when we cede insurance risk to third parties but are not relieved from our primary obligation to policyholders and cedents. These amounts, net of allowances of $1,485$1,540 million and $1,355$1,510 million, are included in non-current Other GE Capital receivables in our consolidated Statement of Financial Position, and amounted to $2,486$2,592 million and $2,416$2,552 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.

2020 Premium Deficiency Testing. We completed The vast majority of our annual premium deficiency testing in the aggregate across our run-off insurance portfolio in the third quarter of 2020. These procedures included updating experience studies since our last test completed in the third quarter of 2019, independent actuarial analysis and review of industry benchmarks. As we experienced a premium deficiency in 2019, our 2020 premium deficiency testing started with a zero margin and, accordingly, anyremaining net adverse development would resultreinsurance recoverables are secured by assets held in a future premium deficiency. Using our most recent future policy benefit reserve assumptions, including changes to our assumptions related to morbidity, future premium rate increases and discount rate, the 2020 premium deficiency testing results indicated there was a positive margin of less than 2% of the recorded future policy benefit reserves, excluding Other adjustments, at September 30, 2020. As a result, the assumptions updated in connection with the premium deficiency recognized in 2019 remain locked-in and will remain so unless another premium deficiency occurs in the future.


56 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The increase in the premium deficiency testing margin from our 2019 testing was primarily attributable to modestly favorable emerging morbidity experience in our long-term care insurance portfolio, primarily at the older attained ages, in the period since the 2017 reconstruction of our future claim cost projections ($412 million) and higher projected future premium rate increase approvals ($199 million), partially offset by a decline in the overall discount rate to a weighted average rate of 5.70% compared to 5.74% in 2019 ($218 million). This decline in the discount rate from 2019 to 2020 reflects a lower expected reinvestment rate, due to lower benchmark interest rates in the U.S, increasing to a lower expected long-term average investment yield over a longer period and slightly lower actual yields on our investment security portfolio, partially offset by increased allocations to higher yielding asset classes introduced with our 2018 strategic initiatives,trust for which included a modest decline in expected yield compared to 2019 assumptions.

When results of the premium deficiency testing indicate overall reserves are sufficient, we are also required to assess whether additional future policy benefit reserves are required to be accrued over time in the future. Such an accrual would be required if profits are projected in earlier future periods followed by losses projected in later future years (i.e., profits followed by losses). When this pattern of profits followed by losses is projected, we would be required to accrue a liability in the expected profitable years by the amount necessary to offset projected losses in later future years. We noted our projections as of third quarter 2020 indicate the present value of projected earnings in each future year to be positive, and therefore, no further adjustments to our future policy benefit reserves were required at this time.beneficiary.

NOTE 13.14. POSTRETIREMENT BENEFIT PLANS. We sponsor a number of pension and retiree health and life insurance benefit plans that we present in 3 categories, principal pension plans, other pension plans and principal retiree benefit plans. Principal pension plans representPlease refer to Note 13 to the GE Pension Plan andconsolidated financial statements of our Annual Report on Form 10-K for the GE Supplementary Pension Plan. Other pension plans include U.S. and non-U.S. pension plans with pension assets or obligations greater than $50 million. Principal retireeyear ended December 31, 2020 for a discussion of our postretirement benefit plans provide health and life insurance benefits to certain eligible participants and these participants share in the cost of the healthcare benefits. Smaller pension plans with pension assets or obligations less than $50 million and other retiree benefit plans are not presented.plans.

EFFECT ON OPERATIONS OF BENEFIT PLANS.The components of benefit plans costscost other than the service cost are included in the caption Non-operating benefit costs in our consolidated Statement of Earnings (Loss).
PRINCIPAL PENSION PLANSPRINCIPAL PENSION PLANSThree months ended September 30Nine months ended September 30PRINCIPAL PENSION PLANSThree months ended March 31
(In millions)2020201920202019
20212020
Service cost for benefits earnedService cost for benefits earned$156 $154 $501 $472 Service cost for benefits earned$64 $153 
Prior service cost amortizationPrior service cost amortization36 34 110 101 Prior service cost amortization7 37 
Expected return on plan assetsExpected return on plan assets(747)(863)(2,243)(2,588)Expected return on plan assets(763)(748)
Interest cost on benefit obligationsInterest cost on benefit obligations588 724 1,764 2,173 Interest cost on benefit obligations486 587 
Net actuarial loss amortizationNet actuarial loss amortization850 767 2,549 2,300 Net actuarial loss amortization864 848 
Curtailment/settlement loss (gain)0 0 0 51 
Benefit plans costBenefit plans cost$883 $816 $2,681 $2,509 Benefit plans cost$658 $877 

Principal retiree benefit plans income was $31$40 million and $31$32 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, and $85 million and $122 million for the nine months ended September 30, 2020 and 2019, respectively, which includes a curtailment gain of $33 million in 2019 resulting from the Transportation transaction.respectively. Other pension plans was $24 million income and $7 million cost were immaterial for the three months ended September 30,March 31, 2021 and 2020, and 2019, and for the nine months ended September 30, 2020 and 2019.respectively.

We also have a defined contribution plan for eligible U.S. employees that provides discretionaryemployer contributions. Defined contribution plan costs were $71$108 million and $83$95 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, and $253 million and $274 million for the nine months ended September 30, 2020 and 2019, respectively.

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, employee compensation and benefits, income taxes payable and uncertain tax positions, operating lease liabilities (see Note 7), environmental, health and safety remediations and product warranties (see Note 21). GE Industrial All other liabilities decreased $486 million in the three months ended March 31, 2021, primarily due to a decrease in Alstom legacy legal matters of $199 million (see Note 21) and a decrease in interest accruals on assumed debt of $132 million.

NOTE 16. INCOME TAXES. Our consolidated effective income tax rate was (25.7)%59.7% and 0.2%0.9% during the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, respectively. The negative rate for 2021 is higher than the U.S. statutory rate primarily due to the cost of global activities, including the base erosion and global intangible minimum tax provisions and from tax expense associated with the unrealized gain in 2020 reflects aour remaining interest in Baker Hughes. This was partially offset by an adjustment to decrease the 2021 three-month tax benefit on pre-tax income.rate to be in line with the lower expected full-year rate and by U.S. business credits. The tax benefitrate for 2020 is lower than the U.S. statutory rate primarily due to the lower tax rate on the sale of our BioPharma business and U.S. business credits.business. The low tax rate on the BioPharma sale reflectswas low because the gain outside the U.S. was taxed at lower than 21% and because we recorded $633 million of the tax associated with preparatory steps for the transaction in the fourth quarter of 2019. This was partially offset by the largely non-deductible goodwill impairment charges associated with our Additive business within our Aviation segment and our GECAS business within our Capital segment. The rate for 2019 benefited from favorable audit resolutions and U.S. business credits, partially offset by the cost of global activities, including the base erosion and global intangible low tax income provisions and from largely non-deductible goodwill impairment charges associated with our Hydro and Grid Solutions equipment and services business within our Renewable Energy segment.
2021 1Q FORM 10-Q 40

The Internal Revenue Service (IRS) is currently auditing our consolidated U.S. income tax returns for 2014-2015 and 2016-2018. It is possible the 2014-2015 audit will be completed in the next 12 months. The United Kingdom tax authoritiesauthority (the UK Government) disallowed interest deductions claimed by GE Capital for the years 2004-2015 that could result in a potential impact of approximately $1$1.1 billion, which includes a possible assessment of tax and reduction of deferred tax assets, not including interest and penalties. We are contesting the disallowance. The UK Government is seeking to set aside a 2005 tax settlement agreement, alleging that GE misstated or omitted relevant facts. In October 2019, the UK Government asserted three new claims of fraudulent misrepresentation, one of which the Business and Property Court allowed in a July 2020 decision to go forward. In April 2021, the UK Court of Appeal reversed, holding that the equitable portion of that claim was time barred. The UK Government has petitioned the UK Supreme Court to hear an appeal, and the case remains scheduled for trial this fall in the Business and Property Court and may (depending on the outcome of the trial) be subject to further proceedings in the UK tax tribunal. We comply with all applicable tax laws and judicial doctrines of the United Kingdom and believe that the entire benefit is more likely than not to be sustained on its technical merits.
2020 3Q FORM 10-Q 57
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15.17. SHAREHOLDERS’ EQUITY
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Three months ended September 30Nine months ended September 30ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Three months ended March 31
(In millions)2020201920202019
20212020
Beginning balanceBeginning balance$47 $59 $61 $(39)Beginning balance$60 $61 
AOCI before reclasses – net of taxes of $0, $15, $7 and $30(a)3 30 44 151 
Reclasses from AOCI – net of taxes of $2, $(3), $(12) and $(9)5 (12)(50)(35)
AOCI before reclasses – net of taxes of $(7) and $0(a)AOCI before reclasses – net of taxes of $(7) and $0(a)(29)6 
Reclasses from AOCI – net of taxes of $4 and $(12)Reclasses from AOCI – net of taxes of $4 and $(12)11 (47)
AOCIAOCI9 18 (5)116 AOCI(18)(41)
Less AOCI attributable to noncontrolling interestsLess AOCI attributable to noncontrolling interests0 0 0 0 Less AOCI attributable to noncontrolling interests0 0 
Investment securities AOCI ending balanceInvestment securities AOCI ending balance$55 $77 $55 $77 Investment securities AOCI ending balance$42 $20 
Beginning balanceBeginning balance$(4,743)$(5,874)$(4,818)$(6,134)Beginning balance$(4,386)$(4,818)
AOCI before reclasses – net of taxes of $(59), $(12), $(39) and $2755 (189)(558)(191)
Reclasses from AOCI – net of taxes of $0, $(5), $0 and $(9)(b)0 951 691 1,234 
AOCI before reclasses – net of taxes of $(57) and $(5)AOCI before reclasses – net of taxes of $(57) and $(5)110 (554)
Reclasses from AOCI – net of taxes of $0 and $0(b)Reclasses from AOCI – net of taxes of $0 and $0(b)0 690 
AOCIAOCI55 762 133 1,043 AOCI110 135 
Less AOCI attributable to noncontrolling interestsLess AOCI attributable to noncontrolling interests0 (63)3 (41)Less AOCI attributable to noncontrolling interests2 2 
Currency translation adjustments AOCI ending balanceCurrency translation adjustments AOCI ending balance$(4,689)$(5,050)$(4,689)$(5,050)Currency translation adjustments AOCI ending balance$(4,278)$(4,685)
Beginning balanceBeginning balance$(109)$26 $49 $13 Beginning balance$(28)$49 
AOCI before reclasses – net of taxes of $62, $(4), $(7) and $(1)62 (30)(160)(43)
Reclasses from AOCI – net of taxes of $(13), $6, $(5) and $7(b)(38)28 26 56 
AOCI before reclasses – net of taxes of $4 and $(45)AOCI before reclasses – net of taxes of $4 and $(45)39 (262)
Reclasses from AOCI – net of taxes of $10 and $8(b)Reclasses from AOCI – net of taxes of $10 and $8(b)23 51 
AOCIAOCI24 (2)(134)13 AOCI62 (211)
Less AOCI attributable to noncontrolling interestsLess AOCI attributable to noncontrolling interests0 1 0 2 Less AOCI attributable to noncontrolling interests0 0 
Cash flow hedges AOCI ending balanceCash flow hedges AOCI ending balance$(86)$24 $(86)$24 Cash flow hedges AOCI ending balance$34 $(163)
Beginning balanceBeginning balance$(5,387)$(7,063)$(7,024)$(8,254)Beginning balance$(5,395)$(7,024)
AOCI before reclasses – net of taxes of $(22), $1, $6 and $36(87)39 58 (72)
Reclasses from AOCI – net of taxes of $187, $170, $613 and $517(b)695 616 2,190 1,910 
AOCI before reclasses – net of taxes of $(47) and $30AOCI before reclasses – net of taxes of $(47) and $3016 219 
Reclasses from AOCI – net of taxes of $194 and $239(b)Reclasses from AOCI – net of taxes of $194 and $239(b)689 817 
AOCIAOCI609 655 2,248 1,838 AOCI705 1,035 
Less AOCI attributable to noncontrolling interestsLess AOCI attributable to noncontrolling interests0 4 3 (4)Less AOCI attributable to noncontrolling interests1 3 
Benefit plans AOCI ending balanceBenefit plans AOCI ending balance$(4,779)$(6,412)$(4,779)$(6,412)Benefit plans AOCI ending balance$(4,691)$(5,991)
AOCI at September 30$(9,498)$(11,361)$(9,498)$(11,361)
AOCI at March 31AOCI at March 31$(8,893)$(10,819)
Dividends declared per common shareDividends declared per common share$0.01 $0.01 
(a) Included adjustments of $(420)$2,038 million and $(877)$1,267 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively and $(1,382) million and $(2,888) million for the nine months ended September 30, 2020 and 2019, respectively, related to insurance liabilities and annuity benefits in our run-off insurance operations to reflect the effects that would have been recognized had the related unrealized investment security gains been realized. See Note 1213 for further information.
(b) The total reclassification from AOCI included $836 million, including currency translation of $688 million, net of taxes, for the ninethree months ended September 30,March 31, 2020, related to the sale of our BioPharma business within our Healthcare segment.

In 2016, weOn January 21, 2021, GE Capital Series D preferred stock issued $5,694 millionto GE Industrial was converted to GE Capital common stock and GE Capital and GE Industrial also agreed to retire the Series A, B and C GE Capital preferred stock. As a result of these actions, there is no remaining preferred stock between GE Industrial and GE Capital, and accordingly GE Capital will no longer pay preferred dividends to GE Industrial and all preferred stock dividend costs have become a GE Industrial obligation effective January 21, 2021. The exchange of GE Capital Series D preferred stock has no impact on the GE Series D preferred stock, which, are callable oneffective January 21, 2021. In addition2021 became callable for $5,694 million on dividend payment dates and which dividends converted from 5% fixed rate to Series D, $250 million of existing3-month LIBOR plus 3.33%, payable quarterly. Similarly, there were no changes to the GE Series A, B andor C preferred stock, are also outstanding.which become callable at various dates in 2022 and 2023. The total carrying value of GE preferred stock at September 30, 2020March 31, 2021 was $5,871$5,930 million and will increase to $5,944$5,940 million by the respective call dates through periodic accretion. See our Annual Report on Form 10-K for the year ended December 31, 20192020 for further information.

Noncontrolling interests in equity of consolidated affiliates amounted to $1,524 million and $1,545 million at September 30, 2020 and December 31, 2019, respectively.
2021 1Q FORM 10-Q 41

Redeemable noncontrolling interests, presented within All other liabilities in our consolidated Statement of Financial Position, include common shares issued by our affiliates that are redeemable at the option of the holder of those interests and amounted to $498$451 million and $439$487 million as of September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.

58 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16.18. EARNINGS PER SHARE INFORMATION
Three months ended September 3020202019
(Earnings for per-share calculation, in millions; per-share amounts in dollars)DilutedBasicDilutedBasic
Earnings from continuing operations$(1,109)$(1,109)$(1,283)$(1,283)
Preferred stock dividends(46)(46)(42)(42)
Accretion of redeemable noncontrolling interests, net of tax(a)(6)(6)0 0 
Earnings from continuing operations attributable to common shareholders(1,161)(1,161)(1,325)(1,325)
Earnings (loss) from discontinued operations(35)(35)(8,140)(8,140)
Net earnings (loss) attributable to GE common shareholders(1,196)(1,196)(9,465)(9,465)
Shares of GE common stock outstanding8,756 8,756 8,730 8,730 
Employee compensation-related shares (including stock options)0 — 0 — 
Total average equivalent shares8,756 8,756 8,730 8,730 
Earnings per share from continuing operations$(0.13)$(0.13)$(0.15)$(0.15)
Earnings (loss) per share from discontinued operations0 0 (0.93)(0.93)
Net earnings (loss) per share(0.14)(0.14)(1.08)(1.08)
Potentially dilutive securities(b)486 453 
Nine months ended September 3020202019
(Earnings for per-share calculation; in millions; per-share amounts in dollars)DilutedBasicDilutedBasic
Three months ended March 31Three months ended March 3120212020
(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)DilutedBasicDilutedBasic
Earnings from continuing operationsEarnings from continuing operations$3,264 $3,264 $(438)$(438)Earnings from continuing operations$90 $92 $6,202 $6,202 
Preferred stock dividendsPreferred stock dividends(280)(280)(270)(270)Preferred stock dividends(72)(72)(43)(43)
Accretion of redeemable noncontrolling interests, net of tax(a)Accretion of redeemable noncontrolling interests, net of tax(a)(141)(141)0 0 Accretion of redeemable noncontrolling interests, net of tax(a)2 2 0 0 
Earnings from continuing operations attributable to common shareholdersEarnings from continuing operations attributable to common shareholders2,843 2,843 (708)(708)Earnings from continuing operations attributable to common shareholders20 22 6,158 6,158 
Earnings (loss) from discontinued operationsEarnings (loss) from discontinued operations(203)(203)(5,270)(5,270)Earnings (loss) from discontinued operations(2,897)(2,894)(19)(19)
Net earnings attributable to GE common shareholders2,639 2,639 (5,977)(5,977)
Net earnings (loss) attributable to GE common shareholdersNet earnings (loss) attributable to GE common shareholders(2,874)(2,872)6,140 6,140 
Shares of GE common stock outstandingShares of GE common stock outstanding8,749 8,749 8,721 8,721 Shares of GE common stock outstanding8,772 8,772 8,742 8,742 
Employee compensation-related shares (including stock options)Employee compensation-related shares (including stock options)6 — 0 — Employee compensation-related shares (including stock options)35 — 7 — 
Total average equivalent sharesTotal average equivalent shares8,755 8,749 8,721 8,721 Total average equivalent shares8,807 8,772 8,749 8,742 
Earnings from continuing operations$0.32 $0.32 $(0.08)$(0.08)
Loss from discontinued operations(0.02)(0.02)(0.60)(0.60)
Net earnings0.30 0.30 (0.69)(0.69)
Earnings per share from continuing operationsEarnings per share from continuing operations$0 $0 $0.70 $0.70 
Earnings (loss) per share from discontinued operationsEarnings (loss) per share from discontinued operations(0.33)(0.33)0.00 0.00 
Net earnings (loss) per shareNet earnings (loss) per share(0.33)(0.33)0.70 0.70 
Potentially dilutive securities(b)Potentially dilutive securities(b)454 462 Potentially dilutive securities(b)370 422 
(a) Represents accretion adjustment of redeemable noncontrolling interests in our Additive business within our Aviation segment.
(b) Outstanding stock awards not included in the computation of diluted earnings 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 months ended September 30, 2020 and 2019,March 31, 2021, as a result of excess dividends in respect to the loss from continuing operations,current period earnings, losses were not allocated to the participating securities. For the ninethree months ended September 30,March 31, 2020, application of this treatment had an insignificant effect. For the nine months ended September 30, 2019, as a result of the loss from continuing operations, losses were not allocated to the participating securities.

NOTE 17.19. 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, 2020December 31, 2019March 31, 2021December 31, 2020
(In millions)Carrying
amount
(net)		Estimated
fair value		Carrying
amount
(net)		Estimated
fair value
Carrying
amount
(net)		Estimated
fair value		Carrying
amount
(net)		Estimated
fair value
AssetsAssetsLoans and other receivables$3,895 $4,014 $4,113 $4,208 AssetsLoans and other receivables$2,901 $3,066 $2,904 $3,125 
LiabilitiesLiabilitiesBorrowings (Note 11)79,463 83,122 90,882 97,754 LiabilitiesBorrowings (Note 12)71,358 81,967 74,902 86,001 
Investment contracts (Note 12)2,094 2,575 2,191 2,588 Investment contracts (Note 13)2,021 2,402 2,049 2,547 

The lower fair value in relation to carrying value for borrowings at September 30, 2020March 31, 2021 compared to December 31, 20192020 was driven primarilyunchanged, as an increase in market interest rates was offset by wideningnarrowing GE Industrial credit spreads partially offset byand a decline in market interest rates.fair value adjustments for debt in fair value hedge relationships. Unlike the carrying amount, estimated fair value of borrowings included $978$1,178 million and $1,106$898 million of accrued interest at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.

2020 3Q FORM 10-Q 59
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures; such items include cash and equivalents, investment securities and derivative financial instruments.

DERIVATIVES AND HEDGING. Our policy requires that derivatives are used solely for managing risks and not for speculative purposes. Total gross notional was $92,529$91,921 million ($44,01043,768 million in GE Capital and $48,519$48,153 million in GE)GE Industrial) and $98,018$95,647 million ($55,70445,445 million in GE Capital and $42,314$50,202 million in GE)GE Industrial) at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. GE Capital notional relates primarily to managing interest rate and currency risk between financial assets and liabilities, and GE Industrial notional relates primarily to managing currency risk.
FAIR VALUE OF DERIVATIVESSeptember 30, 2020December 31, 2019
(In millions)Gross NotionalAll other assetsAll other liabilitiesGross NotionalAll other assetsAll other liabilities
Interest rate contracts$20,974 $2,019 $8 $23,918 $1,636 $11 
Currency exchange contracts6,968 73 113 7,044 99 46 
Derivatives accounted for as hedges$27,942 $2,091 $121 $30,961 $1,734 $57 
Interest rate contracts$446 $6 $7 $3,185 $18 $12 
Currency exchange contracts62,340 877 1,107 62,165 697 744 
Other contracts1,801 187 30 1,706 123 40 
Derivatives not accounted for as hedges$64,586 $1,070 $1,144 $67,056 $838 $796 
Gross derivatives$92,529 $3,162 $1,265 $98,018 $2,572 $853 
Netting and credit adjustments$(740)$(745)$(546)$(546)
Cash collateral adjustments(1,934)(133)(1,286)(105)
Net derivatives recognized in statement of financial position$488 $387 $740 $202 
Net accrued interest$74 $1 $182 $1 
Securities held as collateral(2)0 (469)0 
Net amount$560 $388 $452 $203 
2021 1Q FORM 10-Q 42

FAIR VALUE OF DERIVATIVESMarch 31, 2021December 31, 2020
Gross NotionalAll other assetsAll other liabilitiesGross NotionalAll other assetsAll other liabilities
Interest rate contracts$20,395 $1,404 $16 $20,500 $1,912 $7 
Currency exchange contracts6,701 193 65 7,387 164 125 
Derivatives accounted for as hedges$27,096 $1,597 $81 $27,886 $2,076 $132 
Interest rate contracts$361 $14 $7 $346 $8 $(1)
Currency exchange contracts62,369 967 911 65,379 767 918 
Other contracts2,095 322 7 2,036 218 71 
Derivatives not accounted for as hedges$64,825 $1,302 $926 $67,761 $993 $989 
Gross derivatives$91,921 $2,899 $1,007 $95,647 $3,069 $1,121 
Netting and credit adjustments$(729)$(729)$(647)$(647)
Cash collateral adjustments(1,497)(6)(1,935)(104)
Net derivatives recognized in statement of financial position$673 $271 $487 $369 
Net accrued interest$24 $(19)$0 $0 
Securities held as collateral(174)0 (2)0 
Net amount$522 $252 $484 $369 

It is standard market practice to post or receive cash collateral with our derivative counterparties in order to minimize counterparty exposure. Included in GE Capital cash,Cash, cash equivalents and restricted cash was total net cash collateral received on derivatives of $3,603$1,542 million (comprising $4,620$2,313 million received and $1,017$771 million posted) at September 30, 2020,March 31, 2021 and $1,584$3,289 million (comprising $2,294$4,203 million received and $710$914 million posted) at December 31, 2019.2020. Of these amounts, $2,595$584 million and $902$1,968 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, were received on interest rate derivatives traded through clearing houses, which are recorded as a reduction of derivative assets and net accrued interest.

Also included in total net cash collateral received are amounts presented as cash collateral adjustments in the table above, amounts related to accrued interest on interest rate derivatives presented as well as
a reduction of Net accrued interest of $159 million and $292 million at March 31, 2021 and December 31, 2020, respectively, and excess net cash collateral posted of $792$693 million (comprising $90$31 million received and $882$723 million posted) at September 30, 2020,March 31, 2021, and $499$802 million (comprising $104$3 million received and $603$805 million posted) at December 31, 2019,2020, which are excluded from cash collateral adjustments in the table above.

Securities held as collateral excluded excess collateral received of $15 million and 0 and $27 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. In the third quarter of 2020, one of our counterparties converted its collateral from securities to cash, which is in line with our other derivative counterparties.

Fair value of derivatives in our consolidated Statement of Financial Position excludes accrued interest.

FAIR VALUE HEDGES. We use derivatives to hedge the effects of interest rate and currency exchange rate changes on our borrowings. At September 30, 2020,March 31, 2021, the cumulative amount of hedging adjustments of $6,203$3,826 million (including $2,346$2,330 million on discontinued hedging relationships) was included in the carrying amount of the hedged liability of $33,434$26,926 million. At September 30, 2019,March 31, 2020, the cumulative amount of hedging adjustments of $5,118$6,527 million (including $2,484$2,348 million on discontinued hedging relationships) was included in the carrying amount of the hedged liability of $44,558$41,735 million. The cumulative amount of hedging adjustments was primarily recorded in long-term borrowings.

CASH FLOW HEDGES. 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 gain (loss) recognized in AOCI was $121$36 million and $(21)$(313) million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively, and $(139) million and $(24) million for the nine months ended September 30, 2020 and 2019, respectively. These amounts were primarily related to currency exchange and interest rate contracts.

The total amount in AOCI related to cash flow hedges of forecasted transactions was a $48$62 million lossgain at September 30, 2020.March 31, 2021. We expect to reclassify $39$4 million of lossgain to earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. For all periods presentedthe three months ended March 31, 2021 and 2020, we recognized an immaterial amount and $18 million of loss (primarily as a result of the disposition of BioPharma), respectively, related to hedged forecasted transactions and firm commitments that did not occur by the end of the originally specified period. At September 30,March 31, 2021 and 2020, and 2019, the maximum term of derivative instruments that hedge forecasted transactions was 1514 years and 1315 years, respectively.
60
 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NET INVESTMENT HEDGES. For these hedges, the portion of the fair value changes of the derivatives or debt instruments that relates to changes in spot currency exchange rates is recorded in a separate component of AOCI. The portion of the fair value changes of the derivatives related to differences between spot and forward rates is recorded in earnings each period. The amounts recorded in AOCI affect earnings if the hedged investment is sold, substantially liquidated, or control is lost.

The total gain (loss) recognized in AOCI on hedging instruments for the three months ended September 30,March 31, 2021 and 2020 and 2019 was $(529)$272 million and $213 million, and for the nine months ended September 30, 2020 and 2019 was $(461) million and $231$158 million, respectively, predominantly from foreign currency debt. For all periods presented we recognized an immaterial amount excluded from assessment and recognized in earnings.
2021 1Q FORM 10-Q 43

The carrying value of foreign currency debt designated as net investment hedges was $8,175$8,106 million and $9,119$9,145 million at September 30,March 31, 2021 and 2020, and 2019, respectively. The totalNaN amount was reclassified from AOCI into earnings was 0 and $338 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively. The total reclassified from AOCI into earnings was 0 and $344 million for the nine months ended September 30, 2020 and 2019, respectively.

EFFECTS OF DERIVATIVES ON EARNINGS. All derivatives are marked to fair value on our balance sheet,consolidated Statement of Financial Position, whether they are designated in a hedging relationship for accounting purposes or are used as economic hedges. For derivatives not designated as hedging instruments, substantially all of the gain or loss recognized in earnings is offset by either the current period change in value of underlying exposures, which is recorded in earnings in the current period or a future period when the recording of the exposures occur.

The table below presents the effect of our derivative financial instruments in the consolidated Statement of Earnings (Loss):
Three months ended September 30, 2020Three months ended September 30, 2019
(In millions)RevenuesCost of salesInterest ExpenseSG&AOther IncomeRevenuesCost of salesInterest ExpenseSG&AOther Income
Total amounts presented in the consolidated Statement of Earnings (Loss)$19,417 $15,275 $745 $3,227 $(517)$23,360 $17,328 $1,279 $3,293 $158 
Total effect of cash flow hedges$68 $(14)$(9)$6 $0 $(24)$(1)$(8)$(2)$0 
Hedged items$311 $(1,000)
Derivatives designated as hedging instruments(330)1,011 
Total effect of fair value hedges$(19)$10 
Interest rate contracts$0 $0 $(3)$0 $0 $(7)$0 $(10)$0 $0 
Currency exchange contracts174 10 0 (130)35 (165)(8)0 60 (28)
Other0 0 0 48 50 (1)0 0 0 9 
Total effect of derivatives not designated as hedges$174 $10 $(3)$(81)$85 $(172)$(8)$(11)$60 $(18)
Nine months ended September 30, 2020Nine months ended September 30, 2019
(In millions)RevenuesCost of salesInterest ExpenseSG&AOther IncomeRevenuesCost of salesInterest ExpenseSG&AOther Income
Total amounts presented in the consolidated Statement of Earnings (Loss)$57,690 $46,054 $2,536 $9,371 $8,430 $68,976 $50,949 $3,272 $10,120 $1,170 
Total effect of cash flow hedges$62 $(52)$(31)$1 $0 $(18)$(14)$(27)$(3)$0 
Hedged items$(2,290)$(2,186)
Derivatives designated as hedging instruments2,290 2,172 
Total effect of fair value hedges$0 $(14)
Interest rate contracts$(35)$0 $(16)$0 $0 $(25)$0 $(40)$0 $0 
Currency exchange contracts(443)39 0 29 14 (208)(29)0 (2)(52)
Other0 0 0 (15)39 (1)0 123 0 10 
Total effect of derivatives not designated as hedges$(478)$39 $(16)$14 $53 $(234)$(29)$83 $(2)$(42)

Three months ended March 31, 2021Three months ended March 31, 2020
RevenuesCost of salesInterest ExpenseSG&AOther IncomeRevenuesCost of salesInterest ExpenseSG&AOther Income
Total amounts presented in the consolidated Statement of Earnings (Loss)$17,118 $12,538 $500 $2,891 $626 $19,490 $14,426 $561 $3,061 $6,869 
Total effect of cash flow hedges$(21)$(4)$(8)$0 $0 $(21)$(25)$(10)$(3)$0 
Hedged items$1,843 $(2,480)
Derivatives designated as hedging instruments(1,899)2,511 
Total effect of fair value hedges$(56)$31 
Interest rate contracts$1 $0 $(9)$0 $(1)$(26)$0 $(9)$0 $0 
Currency exchange contracts303 0 0 59 38 (521)13 0 54 11 
Other0 0 0 55 19 0 0 0 (160)(22)
Total effect of derivatives not designated as hedges$305 $0 $(9)$114 $56 $(547)$13 $(9)$(106)$(12)
The gain (loss) of amount excluded for cash flow hedges was $8$(16) million and 0$15 million for the three months ended September 30,March 31, 2021 and 2020, and 2019, respectively, and $30 million and 0 for the nine months ended September 30, 2020 and 2019, respectively. This amount is recognized primarily in Revenues in our consolidated Statement of Earnings (Loss).


2020 3Q FORM 10-Q 61
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COUNTERPARTY CREDIT RISK. We manage the risk that counterparties will default and not make payments to us according to the terms of our agreements on an individual counterparty basis. Where we have agreed to netting of derivative exposures with a counterparty, we net our exposures with that counterparty and apply the value of collateral posted to us to determine the exposure. We actively monitor these net exposures against defined limits and take appropriate actions in response, including requiring additional collateral. Our exposures to counterparties (including accrued interest), net of collateral we held, was $440$404 million and $368$392 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. Counterparties' exposures to our derivative liability (including accrued interest), net of collateral posted by us, was $332$186 million and $159$307 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.

NOTE 18.20. VARIABLE INTEREST ENTITIES. In addition to the 3 VIEs detailed in Note 4, in our consolidated Statement of Financial Position, we have assets of $2,268$1,712 million and $2,134$1,733 million and liabilities of $1,196$454 million and $1,233$657 million, inclusive of intercompany eliminations, at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, from other consolidated VIEs. These entities were created to help our customers facilitate or finance the purchase of GE goods and services. These entitiesservices and have no features that could expose us to losses that would significantly exceed the difference between the consolidated assets and liabilities. Substantially all the assets of our consolidated VIEs at September 30, 2020March 31, 2021 can only be used to settle the liabilities of those VIEs.

Our investments in unconsolidated VIEs were $2,291$3,371 million and $1,937$3,230 million at September 30, 2020,March 31, 2021 and December 31, 2019,2020, respectively. These investments are primarily owned by GE Capital businesses $421of which $1,120 million and $621$1,141 million of which were owned by Energy Financial Services,EFS, comprising equity method investments, primarily renewable energy tax equity investments, at March 31, 2021 and $1,469December 31, 2020, respectively. In addition, $2,024 million and $896$1,833 million of which were owned by our run-off insurance operations, primarily comprising investment securities at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively. The increase in investments in unconsolidated VIEs in our run-off insurance operations reflects implementation of our revised reinvestment plan, which incorporates the introduction of strategic initiatives to invest in higher-yielding asset classes. Our maximum exposure to loss in respect of unconsolidated VIEs is increased by our commitments to make additional investments in these entities described in Note 19.21.
2021 1Q FORM 10-Q 44

NOTE 19.21. COMMITMENTS, GUARANTEES, PRODUCT WARRANTIES AND OTHER LOSS CONTINGENCIES
COMMITMENTS. GE Capital had total investment commitments of $2,551 million at March 31, 2021. The commitments primarily comprise project financing investments in thermal and wind energy projects of $769 million and investments by our run-off insurance operations in investment securities and other assets of $1,782 million, and included within these commitments are obligations to make additional investments in unconsolidated VIEs of $447 million and $1,632 million, respectively. See Note 20 for further information.

As of March 31, 2021, in our Aviation segment, we have committed to provide financing assistance of $2,241 million of future customer acquisitions of aircraft equipped with our engines.

Commitments - Discontinued Operations.The GECAS business within the Capital segmentdiscontinued operations has placed multiple-year orders for various Boeing, Airbus and other aircraft manufacturers with list prices approximating $27,455$26,118 million, excluding pre-delivery payments made in advance (including 295269 new aircraft with estimated delivery dates of 5% in 2020, 25%18% in 2021, and 70%18% in 2022 and 64% in 2023 through 2026) and secondary orders with airlines for used aircraft approximating $2,301$1,146 million (including 5326 used aircraft with estimated delivery dates of 17% in 2020, 60%62% in 2021, and 23%27% in 2022 throughand 11% in 2023) at September 30, 2020.March 31, 2021. When we purchaseGECAS purchases aircraft, it is at a contractual price, which is usually less than the aircraft manufacturer’smanufacturer's list price and excludes any pre-delivery payments made in advance.price. As of September 30, 2020, we haveMarch 31, 2021, GECAS has made $3,596$2,647 million of pre-delivery payments to aircraft manufacturers.

During 2020, GECAS agreed with Boeing to restructure its 737 MAX orderbook including previously canceled positions, resulting in 77 orders now remaining.

GE Capital had total investment commitments of $2,628 million at September 30, 2020. The commitments primarily comprise project financing investments in thermal and wind energy projects of $1,190 million and investments by our run-off insurance operations in investment securities and other assets of $1,411 million, included within these commitments are obligations to make additional investments in unconsolidated VIEs of $334 million and $1,171 million, respectively. See Note 18 for further information.

As of September 30, 2020, in our Aviation segment, we have committed to provide financing assistance of $1,977 million for future customer acquisitions of aircraft equipped with our engines.

GUARANTEES. Credit Support and Indemnification Agreements - Continuing Operations. For further information on credit support and indemnification agreements for continuing operations, see our Annual Report on Form 10-K for the year ended December 31, 2019.2020.

Indemnification agreements - Discontinued Operations. At September 30, 2020,March 31, 2021, we have provided specific indemnities to buyers of GE Capital's assets that, in the aggregate, represent a maximum potential claim of $648$597 million with related reserves of $103$86 million.

PRODUCT WARRANTIES. We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information, mostly historical claims experience, claims costs may differ from amounts provided. The liability for product warranties was $2,022$1,975 million and $2,165$2,054 million at September 30, 2020March 31, 2021 and December 31, 2019,2020, respectively.


62 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LEGAL MATTERS. The following information supplements and amends the discussion of Legal Matters in Note 23 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019 and in Note 19 in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020; refer to those discussions 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 matters. InOn November 2015, we acquired the Thermal, Renewables and Grid businesses from Alstom. Prior to the acquisition, the seller was the subject of 2 significant cases involving anti-competitive activities and improper payments: (1) in January 2007, Alstom was fined €65 million by the European Commission for participating in a gas insulated switchgear cartel that operated from 1988 to 2004 (that fine was later reduced to €59 million), and (2) in December 2014, Alstom pled guilty in the United States to multiple violations of the Foreign Corrupt Practices Act and paid a criminal penalty of $772 million. As part of GE’s accounting for the acquisition, we established a reserve amounting to $858 million for legal and compliance matters related to the legacy business practices that were the subject of these and related cases in various jurisdictions, including the previously reported legal proceedings in Slovenia that are described below. The reserve balance was $863$659 million and $875$858 million at September 30, 2020March 31, 2021 and December 31, 2019, respectively.2020, respectively, with the reduction driven primarily by cash payment in connection with the Šoštanj settlement described below.

Regardless of jurisdiction, the allegations relate to claimed anti-competitive conduct or improper payments in the pre-acquisition period as the source of legal violations and/or damages. Given the significant litigation and compliance activity related to these matters and our ongoing efforts to resolve them, it is difficult to assess whether the disbursements will ultimately be consistent with the reserve established. The estimation of this reserve involved significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation and investigations of this nature, and at this time we are unable to develop a meaningful estimate of the range of reasonably possible additional losses beyond the amount of this reserve. Damages sought may include disgorgement of profits on the underlying business transactions, fines and/or penalties, interest, or other forms of resolution. Factors that can affect the ultimate amount of losses associated with these and related matters include the way cooperation is assessed and valued, prosecutorial discretion in the determination of damages, formulas for determining fines and 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.
2021 1Q FORM 10-Q 45

In connection with alleged improper payments by Alstom relating to contracts won in 2006 and 2008 for work on a state-owned power plant in Šoštanj, Slovenia, the power plant owner in January 2017 filed an arbitration claim for damages of approximately $430 million before the International Chamber of Commerce Court of Arbitration in Vienna, Austria. In February 2017, a government investigation in Slovenia of the same underlying conduct proceeded to an investigative phase overseen by a judge of the Celje District Court. In September 2020, the relevant Alstom legacy entity was served with an indictment, which we havehad anticipated as we are working with the parties to resolve these matters. In March 2021, GE reached a settlement of the arbitration claim with the power plant owner for a mix of cash and services valued by the plant owner at approximately $307 million.

Shareholder and related lawsuits. Since February 2018, as previously reported, multiple shareholder derivative lawsuits have been filed against current and former GE executive officers and members of GE'sGE’s Board of Directors and GE (as nominal defendant). In July 2020, a newNaN shareholder derivative lawsuit (thelawsuits are currently pending: the Bennett case, which was filed in Massachusetts state court; and the Cuker, Lindsey case) wasand Priest/Tola cases, which were filed in New York state court against former GE executive officerscourt. The Priest and GE (as nominal defendant).Tola cases were initially filed as separate actions but have now been consolidated into one lawsuit. The lawsuit allegesBurden case, which was filed in the U.S. District Court for the Southern District of New York, was voluntarily dismissed by the plaintiffs in February 2021. These lawsuits have alleged violations of securities laws, breaches of fiduciary duties, basedunjust enrichment, waste of corporate assets, abuse of control and gross mismanagement, although the specific matters underlying the allegations in the lawsuits have varied. The allegations in the Bennett, Lindsey and Priest/Tola cases relate to substantially the same facts as those underlying the Hachem securities class action described in our Annual Report on alleged misstatements regarding accounting practices,Form 10-K for the year ended December 31, 2020, and the plaintiff seeksallegations in the Cuker case relate to alleged corruption in China. The plaintiffs seek unspecified damages and improvements in GE’s corporate governance and internal procedures. The Bennett case has been stayed pending final resolution of another shareholder derivative lawsuit (the Gammel case) that was previously dismissed. In August 2019, the Cuker plaintiffs filed an amended complaint, and GE in September 2019 filed a motion to dismiss the amended complaint. The Lindsey case has been stayed by agreement of the parties. GE filed a motion to dismiss the Priest/Tola complaint in March 2021.

In July 2018, a putative class action (the Mahar case) was filed in New York state court naming as defendants GE, former GE executive officers, a former member of GE’s Board of Directors and KPMG. It alleged violations of Sections 11, 12 and 15 of the Securities Act of 1933 based on alleged misstatements related to insurance reserves and performance of GE’s business segments in GE Stock Direct Plan registration statements and documents incorporated therein by reference and seeks damages on behalf of shareholders who acquired GE stock between July 20, 2015 and July 19, 2018 through the GE Stock Direct Plan. In February 2019, this case was dismissed. In March 2019, plaintiffs filed an amended derivative complaint naming the same defendants. In April 2019, GE filed a motion to dismiss the amended complaint. In October 2019, the court denied GE's motion to dismiss and stayed the case pending the outcome of the Hachem case. In November 2019, the plaintiffs moved to re-argue to challenge the stay, and GE cross-moved to re-argue the denial of the motion to dismiss and filed a notice of appeal. The court denied both motions for re-argument, and in November 2020, the Appellate Division First Department affirmed the court's denial of GE's motion to dismiss. In January 2021, GE filed a motion for leave to appeal to the New York Court of Appeals, and that motion was denied in March 2021.
In October 2018, a putative class action (the Houston case) was filed in New York state court naming as defendants GE, certain GE subsidiaries and current and former GE executive officers and employees. It alleges violations of Sections 11, 12 and 15 of the Securities Act of 1933 and seeks damages on behalf of purchasers of senior notes issued in 2016 and rescission of transactions involving those notes. This case was stayed pending resolution of the motion to dismiss the Hachem case. In April 2021, the plaintiffs filed an amended complaint.

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 6 institutional investors who purchased GE common stock between August 1, 2014 and October 30, 2018 and rescission of those purchases. This case was stayed pending resolution of the motion to dismiss the Hachem case. In March 2021, the plaintiffs filed an amended complaint.

As previously reported by Baker Hughes, in March 2019, 2 derivative lawsuits were filed in the Delaware Court of Chancery naming as defendants GE, directors of Baker Hughes (including former members of GE’s Board of Directors and current and former GE executive officers) and Baker Hughes (as nominal defendant), and the court issued an order consolidating these two2 actions (the Schippnick case). The complaint as amended in May 2019 alleges, among other things, that GE and the Baker Hughes directors breached their fiduciary duties and that GE was unjustly enriched by entering into transactions and agreements related to GE's sales of approximately 12% of its ownership interest in Baker Hughes in November 2018. The complaint seeks declaratory relief, disgorgement of profits, an award of damages, pre- and post-judgment interest and attorneys’ fees and costs. In May 2019, the plaintiffs voluntarily dismissed their claims against the directors who were members of the Baker Hughes Conflicts Committee and a former Baker Hughes director. In October 2019, the Court denied the remaining defendants’ motions to dismiss, except with respect to the unjust enrichment claim against GE, which has been dismissed. In November 2019, the defendants filed their answer to the complaint, and a special litigation committee of the Baker Hughes Board of Directors moved for an order staying all proceedings in this action pending completion of the committee's investigation of the allegations and claims asserted in the complaint. In October 2020, the special litigation committee filed a report with the Court recommending that the derivative action be terminated. In January 2021, the special committee filed a motion to terminate the action.

2020 3Q2021 1Q FORM 10-Q 6346

FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEC investigationBank BPH. . As previously reported, the staffGE Capital’s subsidiary Bank BPH, along with other Polish banks, has been subject to ongoing litigation in Poland related to its portfolio of floating rate residential mortgage loans, with cases brought by individual borrowers seeking relief related to their foreign currency denominated mortgage loans in various courts throughout Poland. At March 31, 2021, approximately 86% of the U.S. SecuritiesBank BPH portfolio is indexed to or denominated in foreign currencies (primarily Swiss francs), and Exchange Commission (SEC) has notified GE that they are conductingthe total portfolio had a carrying value of $1,986 million. We continue to observe an investigation of GE’s legacy revenue recognition practices and internal controls over financial reporting related to long-term service agreements. Following GE’s investor update in January 2018 about the increase in future policy benefit reserves for GE Capital’s run-off insurance operations, the SEC staff expanded the scopenumber of its investigation to encompass the reserve increase and the process leading to the reserve increase. Following GE’s announcement in October 2018 about the expected non-cash goodwill impairment charge related to GE’s Power business, the SEC staff expanded the scope of its investigation to include that charge as well. We are providing documentslawsuits being brought against Bank BPH and other information requested by the SEC staff,banks in Poland, and we are cooperating with the ongoing investigation.expect this to continue in future reporting periods.

We reportedestimate potential losses for Bank BPH in a Form 8-K filing on October 6, 2020connection with borrower litigation cases that the SEC staff issued a “Wells notice” advising GE that the staff is considering recommending to the commissioners that the SEC bring a civil action against GE for possible violations of the securities laws. GE has been informed that the issues the SEC staff may recommend that the SEC pursue relate to the historical premium deficiency testing for GE Capital’s run-off insurance operations,are pending by recording legal reserves, as well as GE’s disclosures relatingin 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 March 31, 2021, the total amount of such run-off insurance operations. The staff has not made a preliminary decision whetherestimated losses was $465 million. We update our assumptions underlying the amount of estimated losses based primarily on the number of lawsuits filed and estimated to recommend any action with respect to the matters other than GE Capital's run-off insurance operations that are under investigation. The Wells notice is neither a formal allegation nor a finding of wrongdoing. GE disagrees with the SEC staff with respect to this recommendation and is responding through the Wells notice process.

We have recorded a reserve of $100 million as of September 30, 2020 related to the SEC investigation in its entirety, encompassing all matters that are under investigation. We are also exploring whether an appropriate settlement can be reached to fully resolve all matters that are under investigation. In the event that an appropriate settlement cannot be reached, we believe the SEC staff is likely to recommend that the commissioners authorize a civil action against GE with respect to issues involving GE Capital’s run-off insurance operations, as those issues are farthest alongfiled in the SEC staff's investigationfuture, whether liability will be established in lawsuits and have already been the subject of a Wells notice. That civil action could seek an injunction against future violations of provisionsnature of the federal securities laws,remedy ordered by courts if liability is established. The increase in the impositionamount of civil monetary penalties,estimated losses during the first quarter of 2021 was driven primarily by increases in the number of lawsuits filed and other relief withinestimated to be filed in the SEC’s authority. Infuture. We expect the event that suchtrends we have previously reported of an actionincreasing number of lawsuits being filed, 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 brought, GE believes it would have strong defenses to the proposed charges and would vigorously defend the case. The results of the SEC investigation (including the continued investigation of matters other than the run-off insurance operations if an appropriate settlement cannot be reached), the Wells notice, and any enforcement action are unknownunable at this time to develop a meaningful estimate of reasonably possible losses associated with active and it is possibleinactive Bank BPH mortgage loans beyond the amounts currently recorded. Additional factors may also affect our estimated losses over time, including: potentially significant judicial decisions scheduled to be issued in the second quarter of 2021, including a decision by the European Court of Justice (ECJ) on the case involving a Bank BPH mortgage loan that was referred to the ultimateECJ in January 2020 and one or more binding resolutions from the Polish Supreme Court; the impact of any of these or other decisions or binding resolutions on how Polish courts will interpret and apply the law in particular cases and how borrower behavior may change in response, neither or which will be known immediately upon the issuance of a decision or resolution; uncertainty related to a proposal by the Chairman of the Polish Financial Supervisory Authority in December 2020 that banks voluntarily offer borrowers an opportunity to convert their foreign currency denominated mortgage loans to Polish zlotys using an exchange rate applicable at the date of loan origination, and about the approaches that other Polish banks, regulators and other government authorities are adopting or will adopt in response to this proposal; uncertainty arising from investigations of the Polish Office of Competition and Consumer Protection (UOKiK), including a UOKiK decision in December 2020 which found that certain foreign exchange clauses that appear in certain of Bank BPH’s mortgage loan agreements are unfair contractual terms under Polish law. Future adverse developments related to any of the foregoing, or other developments such as actions by regulators or other governmental authorities could have a material adverse effect on Bank BPH and the carrying value of its mortgage loan portfolio and could result in significant losses beyond the amount of GE's liability could be higher than our current reserve.that we currently estimate.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS. As previously reported, in 2000, GE and the Environmental Protection Agency (EPA) entered into a consent decree relating to PCB cleanup of the Housatonic River in Massachusetts. Following the EPA’s release in September 2015 of an intended final remediation decision, GE and the EPA engaged in mediation and the first step of the dispute resolution process contemplated by the consent decree. In October 2016, the EPA issued its final decision pursuant to the consent decree, which GE and several other interested parties appealed to the EPA’s Environmental Appeals Board (EAB). The EAB issued its decision in January 2018, affirming parts of the EPA’s decision and granting relief to GE on certain significant elements of its challenge. The EAB remanded the decision back to the EPA to address those elements and reissue a revised final remedy, and the EPA convened a mediation process with GE and interested stakeholders. In February 2020, the EPA announced an agreement between the EPA and many of the mediation stakeholders, including GE, concerning a revised Housatonic River remedy. Based on the mediated resolution, the EPA solicited public comment on a draft permit in July 2020 and issued the final revised permit effective January 4, 2021. In March 2021, two local environmental advocacy groups filed a joint petition to the EAB challenging portions of the revised permit, and EPA and GE are defending that appeal. As of March 31, 2021, and based on its assessment of current facts and circumstances and its defenses, GE believes that it has recorded adequate reserves to cover future obligations associated with the proposed final remedy.

For further information about environmental, health and safety matters, see our Annual Report on Form 10-K for the year ended December 31, 2019.2020.

2021 1Q FORM 10-Q 47

NOTE 20.22. INTERCOMPANY TRANSACTIONS. Presented below is a walk of intercompany eliminations from the combined GE Industrial and GE Capital totals to the consolidated cash flows.flows for continuing operations.
Nine months ended September 30
(In millions)20202019
Combined GE and GE Capital cash from (used for) operating activities - continuing operations$(822)$1,311 
  GE current receivables sold to GE Capital(a)(1,361)508 
  GE long-term receivables sold to GE Capital(b)210 340 
Supply chain finance programs(c)1,853 1,062 
  Other reclassifications and eliminations8 201 
Consolidated cash from (used for) operating activities - continuing operations$(112)$3,423 
Combined GE and GE Capital cash from (used for) investing activities - continuing operations$26,819 $9,680 
  GE current receivables sold to GE Capital1,086 (1,167)
  GE long-term receivables sold to GE Capital(b)(210)(340)
Supply chain finance programs(c)(1,853)(1,062)
  GE Capital long-term loans to GE(7,500)(480)
  Capital contribution from GE to GE Capital0 1,500 
  Other reclassifications and eliminations(446)(1,043)
Consolidated cash from (used for) investing activities - continuing operations$17,895 $7,087 
Combined GE and GE Capital cash from (used for) financing activities - continuing operations$(23,252)$(14,201)
  GE current receivables sold to GE Capital276 659 
  GE Capital long-term loans to GE7,500 480 
Capital contribution from GE to GE Capital0 (1,500)
  Other reclassifications and eliminations438 842 
Consolidated cash from (used for) financing activities - continuing operations$(15,038)$(13,721)

Three months ended March 31, 2021Three months ended March 31, 2020
Cash from (used for):Operating activitiesInvesting activitiesFinancing activitiesOperating activitiesInvesting activitiesFinancing activities
Combined GE Industrial and GE Capital cash flows$(2,970)$1,747 $(2,178)$(1,138)$20,776 $(8,494)
  GE Industrial current receivables sold to GE Capital(a)211 (448)237 (997)945 52 
  GE Industrial long-term receivables sold to GE Capital67 (67)0 135 (135)0 
Supply chain finance programs120 (120)0 884 (884)0 
  Other reclassifications and eliminations(68)(265)333 197 (677)480 
Consolidated cash flows$(2,640)$847 $(1,608)$(919)$20,025 $(7,962)
(a)Included the elimination of $11,335$3,218 million and $3,972 million payments to GE Industrial for current receivables purchased and retained by GE Capital and the related reclassification to CFOA of $9,974$3,429 million and $2,975 million due to GE Capital collections and other activity in our consolidated statement of cash flows for the ninethree months ended September 30, 2020. Included the elimination of $11,038 million paymentsMarch 31, 2021 and the reclassification to CFOA of $11,546 million collections and other activity for the nine months ended September 30, 2019.2020, respectively.
(b)
Primarily included the reclassification of long-term receivables purchased and retained by GE Capital to current receivables.
(c)Represents the elimination of net payments from GE to GE Capital related to the funded participation in a supply chain finance program with GE Capital. The reduction of the GE liability associated with this program is primarily as a result of GE Capital's sale of the program platform to MUFG Union Bank, N.A. (MUFG) in 2019.
64 2020 3Q FORM 10-Q
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash payments received on the Receivable facility deferred purchase price are reflected as Cash from investing activities in the GE Capital and Consolidated columns of our consolidated Statement of Cash Flows. Sales of customer receivables from GE Industrial to GE Capital are classified as Cash from operating activities in the GE Industrial column of our Statement of Cash Flows. See Note 4 for further information.

NOTE 21. BAKER HUGHES SUMMARIZED FINANCIAL INFORMATION. We account for our remaining interest in Baker Hughes (comprising 377.4 million shares and a promissory note receivable) at fair value. At September 30, 2020, the fair value of our interest in Baker Hughes was $5,102 million. We recognized a net pre-tax unrealized loss of $748 million ($618 million after-tax) and a pre-tax unrealized loss of $4,613 million ($3,679 million after-tax) for the three and nine months ended September 30, 2020, respectively, based on a share price of $13.29. These losses were recorded net of a $45 million derivative gain associated with a forward sale of up to approximately 28 million Baker Hughes shares pursuant to our previously announced program to monetize our Baker Hughes position. In October 2020, we completed this initial forward sale and received proceeds of $417 million. We recognized a pre-tax unrealized loss of $125 million ($98 million after-tax) for the three and nine months ended September 30, 2019. See Notes 2 and 3 for further information.

Summarized financial information of Baker Hughes is as follows.
Three months ended September 30Nine months ended September 30
(In millions)20202019(a)20202019(a)
Revenues$5,049 $1,404 $15,210 $1,404 
Gross Profit757 263 2,190 263 
Net income (loss)(270)25 (16,712)25 
Net income (loss) attributable to the entity(170)12 (10,592)12 
(a) Financial information is from September 16, 2019 (date of deconsolidation) to September 30, 2019.

Baker Hughes is a SEC registrant with separate filing requirements, and its financial information can be obtained from www.sec.gov or www.bakerhughes.com.

NOTE 22.23. OTHER INCOME
Three months ended September 30Nine months ended September 30Three months ended March 31
(In millions)2020201920202019
20212020
Purchases and sales of business interests(a)Purchases and sales of business interests(a)$21 $46 $12,445 $260 Purchases and sales of business interests(a)$3 $12,372 
Licensing and royalty incomeLicensing and royalty income44 56 117 176 Licensing and royalty income48 42 
Associated companiesAssociated companies(78)42 (9)163 Associated companies16 39 
Net interest and investment income(b)(582)(29)(4,259)131 
Net interest and investment income (loss)(b)Net interest and investment income (loss)(b)439 (5,632)
Other itemsOther items86 37 187 447 Other items116 53 
GE$(509)$153 $8,481 $1,177 
GE IndustrialGE Industrial$623 $6,874 
EliminationsEliminations(8)5 (50)(7)Eliminations3 (4)
TotalTotal$(517)$158 $8,430 $1,170 Total$626 $6,869 
(a)Included a pre-tax gain of $12,362$12,292 million ($11,145 million after-tax) on the sale of BioPharma for the ninethree months ended September 30,March 31, 2020. Included a pre-tax gain of $224 million on the sale of ServiceMax for the nine months ended September 30, 2019. See Note 2 for further information.
(b)Included a net pre-tax realized and unrealized lossgain of $748$296 million ($188 million after-tax) and a pre-tax unrealized loss of $4,613$5,710 million for the three and nine months ended September 30, 2020, respectively,($4,631 million after-tax) related to our interest in Baker Hughes in 2020. Included a pre-tax unrealized loss of $125 million for the three and nine months ended September 30, 2019, related to our interest in Baker Hughes in 2019. See Notes 3March 31, 2021 and 21 for further information.2020, respectively.

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

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:
•the severity, magnitude and duration of the COVID-19 pandemic, including impacts of the pandemic, of businesses’ and governments’ responses to the pandemic and of individual factors such as aviation passenger confidence on our operations and personnel, and on commercial activity and demand across our and our customers’ businesses, and on global supply chains;
•our inability to predict the extent to which the COVID-19 pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position, the prices of our securities and the achievement of our strategic objectives;
•changes in macroeconomic and market conditions and market volatility (including developments and volatility arising from the COVID-19 pandemic), including interest rates, the value of securities and other financial assets (including our equity ownership position in Baker Hughes), oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on our financial position and businesses;
•our de-leveraging and capital allocation plans, including with respect to actions to reduce our indebtedness, the timing and amount of GE dividends, organic investments, and other priorities;
•further downgrades of our current short- and long-term credit ratings or ratings outlooks, or changes in rating application or methodology, and the related impact on our liquidity, funding profile, costs and competitive position;
•GE’s liquidity and the amount and timing of our GE Industrial cash flows and earnings, which may be impacted by customer, supplier, competitive, contractual and other dynamics and conditions;
•GE Capital's capital and liquidity needs, including in connection with GE Capital’s run-off insurance operations and discontinued operations, the amount and timing of required capital contributions to the insurance operations and any strategic actions that we may pursue; the impact of conditions in the financial and credit markets on GE Capital's ability to sell financial assets; the availability and cost of funding; and GE Capital's exposure to particular counterparties and markets, including through GECAS to the aviation sector and adverse impacts related to COVID-19;
•our success in executing and completing asset dispositions or other transactions, including our plan to exit our equity ownership position in Baker Hughes, the timing of closing for such transactions and the expected proceeds and benefits to GE;
•global economic trends, competition and geopolitical risks, including changes in the rates of investment or economic growth in key markets we serve, or an escalation of sanctions, tariffs or other trade tensions between the U.S. and China or other countries, and related impacts on our businesses' global supply chains and strategies;
•market developments or customer actions that may affect levels of demand and the financial performance of the major industries and customers we serve, such as secular, cyclical and competitive pressures in our Power business, pricing and other pressures in the renewable energy market, levels of demand for air travel and other customer dynamics such as early aircraft retirements, conditions in key geographic markets and other shifts in the competitive landscape for our products and services;
•operational execution by our businesses, including our ability to improve the operations and execution of our Power and Renewable Energy businesses, and the performance of our Aviation business;
•changes in law, regulation or policy that may affect our businesses, such as trade policy and tariffs, regulation related to climate change, and the effects of U.S. tax reform and other tax law changes;
•our decisions about investments in new products, services and platforms, and our ability to launch new products in a cost-effective manner;
•our ability to increase margins through implementation of operational changes, restructuring and other cost reduction measures;
•the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of Alstom, SEC and other investigative and legal proceedings;
•the impact of actual or potential failures of our products or third-party products with which our products are integrated, such as the fleet grounding of the Boeing 737 MAX, and the timing of its return to service and return to delivery, and related reputational effects;
•the impact of potential information technology, cybersecurity or data security breaches; and
•the other factors that are described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, 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.
66 2020 3Q FORM 10-Q
OTHER ITEMS
EXHIBITS
Exhibit 10(d)
Exhibit 11
Computation of Per Share Earnings. Data is provided in Note 1618 of this Report.
Exhibit 31(a)
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
Exhibit 31(b)
Certification Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended.
Exhibit 32
Certification Pursuant to 18 U.S.C. Section 1350.
Exhibit 101The following materials from General Electric Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020,March 31, 2021, formatted in XBRL (eXtensible Business Reporting Language); (i) Statement of Earnings (Loss) for the three and nine months ended September 30,March 31, 2021 and 2020, and 2019, (ii) Statement of Financial Position at September 30, 2020March 31, 2021 and December 31, 2019,2020, (iii) Statement of Cash Flows for the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, (iv) Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30,March 31, 2021 and 2020, and 2019, (v) Statement of Changes in Shareholders' Equity for the three and nine months ended September 30,March 31, 2021 and 2020, and 2019, and (vi) Notes to Consolidated Financial Statements.
Exhibit 104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

FORM 10-Q CROSS REFERENCE INDEX
Item NumberPage(s)
Part I – FINANCIAL INFORMATION
Item 1.Financial Statements36-6524-48
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations3-354-23
Item 3.Quantitative and Qualitative Disclosures About Market Risk22-23, 60-6216-17, 42-44
Item 4.Controls and Procedures3523
Part II – OTHER INFORMATION 
Item 1.Legal Proceedings63-6445-47
Item 1A.Risk FactorsNot applicable(a)23
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds3523
Item 3.Defaults Upon Senior SecuritiesNot applicable
Item 4.Mine Safety DisclosuresNot applicable
Item 5.Other InformationNot applicable
Item 6.Exhibits6749
Signatures6749
(a) There have been no material changes to our risk factors since June 30, 2020. For a discussion of our risk factors, refer to our Annual Report on Form 10-K for the year ended December 31, 2019, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

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.

October 28, 2020April 27, 2021/s/ Thomas S. Timko
Date
Thomas S. Timko
Vice President, Chief Accounting Officer and Controller
Principal Accounting Officer
2020 3Q2021 1Q FORM 10-Q 6749