113 Highlight All Clear Highlights
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29 Profitability 1 Contract
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DOCUMENT: ge8k1q17.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 21, 2017
 
 
General Electric Company
 
 
(Exact name of registrant as specified in its charter)
 
 
New York
 
001-00035
 
14-0689340
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
   
 
   
41 Farnsworth Street, Boston, MA
     
02210
(Address of principal executive offices)
     
(Zip Code)
   
 
   
Registrant's telephone number, including area code   (617) 443-3000
 
     
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


Item 2.02 Results of Operations and Financial Condition.
On April 21, 2017, General Electric Company (the "Company") released its first-quarter 2017 financial results on its investor relations website at www.ge.com/investor. A copy of these is attached as Exhibit 99 and incorporated by reference herein.

The information provided pursuant to this Item 2.02, including Exhibit 99, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is being furnished as part of this report:

Exhibit Description

99 First-quarter 2017 financial results released on General Electric Company's website on April 21, 2017.


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 hereunto duly authorized.

   
General Electric Company
 
   
(Registrant)
 
   
 
 
 
 
Date: April 21, 2017
 
/s/ Jan R. Hauser
 
   
Jan R. Hauser
Vice President and Controller
 

 
DOCUMENT: ge8k1q17ex99.htm
 
Exhibit 99


 

 
 


GENERAL ELECTRIC COMPANY
CONDENSED STATEMENT OF EARNINGS (LOSS) (UNAUDITED)
 
 
Consolidated
   
GE(a)
Financial Services (GE Capital)
Three months ended March 31
2017
2016
 
V%
   
2017
2016
 
V%
2017
2016
 
V%
                                         
Revenues and other income
                                       
Sales of goods and services
$
25,228
$
25,314
 
-%
   
$
25,392
$
25,407
 
-%
$
29
$
25
 
16%
Other income
 
168
 
9
         
137
 
92
     
-
 
-
   
GE Capital earnings (loss) from continuing operations
-
 
-
         
(47)
 
(892)
     
-
 
-
   
GE Capital revenues from services
 
2,264
 
2,522
         
-
 
-
     
2,652
 
2,860
   
   Total revenues and other income
 
27,660
 
27,845
 
(1)%
     
25,481
 
24,607
 
4%
 
2,681
 
2,885
 
(7)%
                                         
Costs and expenses
                                       
Cost of sales
 
20,359
 
20,362
         
19,974
 
19,891
     
585
 
589
   
Selling, general and administrative expenses
 
4,506
 
4,608
         
4,020
 
3,982
     
574
 
874
   
Interest and other financial charges
 
1,139
 
1,736
         
564
 
440
     
812
 
1,430
   
Investment contracts, insurance losses and
                                       
   insurance annuity benefits
 
634
 
642
         
-
 
-
     
636
 
671
   
Other costs and expenses
 
190
 
259
         
-
 
-
     
214
 
268
   
   Total costs and expenses
 
26,829
 
27,606
 
(3)%
     
24,558
 
24,313
 
1%
 
2,820
 
3,833
 
(26)%
Earnings (loss) from continuing operations
                                       
    before income taxes
 
832
 
238
 
F
     
923
 
294
 
F
 
(139)
 
(948)
 
85%
Benefit (provision) for income taxes
 
(16)
 
177
         
(143)
 
(164)
     
128
 
341
   
Earnings (loss) from continuing operations
 
816
 
415
 
97%
     
780
 
130
 
F
 
(11)
 
(608)
 
98%
Earnings (loss) from discontinued
                                       
    operations, net of taxes
 
(239)
 
(308)
         
(239)
 
(309)
     
(242)
 
(308)
   
Net earnings (loss)
 
577
 
107
 
F
     
541
 
(178)
 
F
 
(253)
 
(916)
 
72%
Less net earnings (loss) attributable to
                                       
    noncontrolling interests
 
(76)
 
(121)
         
(78)
 
(117)
     
2
 
(4)
   
Net earnings (loss) attributable to the Company
 
653
 
228
 
F
     
619
 
(61)
 
F
 
(256)
 
(912)
 
72%
Preferred stock dividends
 
(34)
 
(289)
         
-
 
-
     
(34)
 
(289)
   
Net earnings (loss) attributable to
                                       
   GE common shareowners
$
619
$
(61)
 
F
   
$
619
$
(61)
 
F
$
(290)
$
(1,201)
 
76%
Amounts attributable to GE common
                                       
   shareowners:
                                       
   Earnings (loss) from continuing operations
$
816
$
415
 
97%
   
$
780
$
130
 
F
$
(11)
$
(608)
 
98%
   Less net earnings (loss) attributable
                                       
     to noncontrolling interests, continuing operations
 
(76)
 
(122)
         
(78)
 
(117)
     
2
 
(4)
   
   Earnings (loss) from continuing operations
                                       
     attributable to the Company
 
892
 
537
 
66%
     
858
 
248
 
F
 
(13)
 
(603)
 
98%
   Preferred stock dividends
 
(34)
 
(289)
         
-
 
-
     
(34)
 
(289)
   
   Earnings (loss) from continuing operations
                                       
      attributable to GE common shareowners
 
858
 
248
 
F
     
858
 
248
 
F
 
(47)
 
(892)
 
95%
   Earnings (loss) from discontinued
                                       
      operations, net of taxes
 
(239)
 
(308)
         
(239)
 
(309)
     
(242)
 
(308)
   
   Less net earnings (loss) attributable to
                                       
      noncontrolling interests, discontinued operations
 
-
 
-
         
-
 
-
     
-
 
-
   
Net earnings (loss) attributable to GE
                                       
   common shareowners
$
619
$
(61)
 
F
   
$
619
$
(61)
 
F
$
(290)
$
(1,201)
 
76%
                                         
Per-share amounts - earnings (loss) from
                                       
   continuing operations
                                       
Diluted earnings (loss) per share
$
0.10
$
0.03
 
F
                           
Basic earnings (loss) per share
$
0.10
$
0.03
 
F
                           
Per-share amounts - net earnings (loss)
                                       
Diluted earnings (loss) per share
$
0.07
$
(0.01)
 
F
                           
Basic earnings (loss) per share
$
0.07
$
(0.01)
 
F
                           
Total average equivalent shares
                                       
Diluted
 
8,811
 
9,383
 
(6)%
                           
Basic
 
8,714
 
9,288
 
(6)%
                           
Dividends declared per common share
$
0.24
$
0.23
 
4%
                           

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


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

"GE Capital" means GE Capital Global Holdings, LLC (GECGH) and its predecessor General Electric Capital Corporation (GECC) and all of their affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GE Capital)." Transactions between GE and GE Capital have been eliminated from the "Consolidated" column. See Note 1 to the 2016 consolidated financial statements at www.ge.com/ar2016 for further information about consolidation matters.

GENERAL ELECTRIC COMPANY
             
SUMMARY OF OPERATING SEGMENTS (UNAUDITED)
   
               
 
Three months ended March 31
(Dollars in millions)
2017
 
2016
 
V%
               
Revenues(a)
             
   Power
$
6,089
 
$
5,204
 
 17 %
   Renewable Energy
 
2,044
   
1,669
 
 22 %
   Oil & Gas
 
3,001
   
3,314
 
 (9)%
   Aviation
 
6,804
   
6,262
 
 9 %
   Healthcare
 
4,291
   
4,183
 
 3 %
   Transportation
 
1,039
   
981
 
 6 %
   Energy Connections & Lighting(b)
 
2,747
   
4,256
 
 (35)%
        Total industrial segment revenues
 
26,016
   
25,869
 
 1 %
   Capital
 
2,681
   
2,885
 
 (7)%
        Total segment revenues
 
28,697
   
28,754
 
 - %
   Corporate items and eliminations(a)
 
(1,037)
   
(909)
   
Consolidated revenues and other income
             
  from continuing operations
$
27,660
 
$
27,845
 
 (1)%
               
Segment profit (loss)(a)
             
   Power
$
797
 
$
573
 
 39 %
   Renewable Energy
 
107
   
83
 
 29 %
   Oil & Gas
 
207
   
308
 
 (33)%
   Aviation
 
1,684
   
1,524
 
 10 %
   Healthcare
 
643
   
631
 
 2 %
   Transportation
 
156
   
164
 
 (5)%
   Energy Connections & Lighting(b)
 
28
   
31
 
 (10)%
        Total industrial segment profit
 
3,622
   
3,314
 
 9 %
   Capital
 
(47)
   
(892)
 
 95 %
   Total segment profit (loss)
 
3,575
   
2,422
 
 48 %
Corporate items and eliminations(a)
 
(2,009)
   
(1,571)
   
GE interest and other financial charges
 
(564)
   
(440)
   
GE provision for income taxes
 
(143)
   
(164)
   
Earnings (loss) from continuing operations
             
   attributable to GE common shareowners
 
858
   
248
 
F
Earnings (loss) from discontinued operations,
             
   net of taxes
 
(239)
   
(308)
 
 22 %
Less net earnings attributable to
             
   noncontrolling interests, discontinued operations
 
-
   
-
 
 - %
Earnings (loss) from discontinued operations,
             
   net of tax and noncontrolling interest
 
(239)
   
(309)
 
 23 %
Consolidated net earnings (loss)
             
   attributable to GE common shareowners
$
619
 
$
(61)
 
F
               
(a)
Segment revenues include revenues and other income related to the segment. Segment profit excludes results reported as discontinued operations and material accounting changes, the portion of earnings or loss attributable to noncontrolling interests of consolidated subsidiaries, and as such only includes the portion of earnings or loss attributable to our share of the consolidated earnings or loss of consolidated subsidiaries. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment's management is measured – excluded in determining segment profit, which we sometimes refer to as "operating profit," for Power, Renewable Energy, Oil & Gas, Aviation, Healthcare, Transportation and Energy Connections & Lighting; included in determining segment profit, which we sometimes refer to as "net earnings," for Capital. Certain corporate costs, such as shared services, employee benefits and information technology are allocated to our segments based on usage. A portion of the remaining corporate costs are allocated based on each segment's relative net cost of operations. Total industrial segment revenues and profit include the sum of our seven industrial reporting segments without giving effect to the elimination of transactions among such segments. Total segment revenues and profit include the sum of our seven industrial segments and one financial services segment, without giving effect to the elimination of transactions among such segments.  We believe that this provides investors with a view as to the results of all of our segments, without inter-segment eliminations and corporate items.
(b)
Beginning in the third quarter of 2016, the former Energy Connections and Appliances & Lighting segments are presented as one reporting segment called Energy Connections & Lighting. This segment includes the historical results of the Appliances business prior to its sale in June 2016.

Amounts may not add due to rounding


GENERAL ELECTRIC COMPANY
                                   
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
 
                                     
 
Consolidated
   
GE(a)
 
Financial Services (GE Capital)
 
March 31,
 
December 31,
   
March 31,
 
December 31,
 
March 31,
 
December 31,
(Dollars in billions)
2017
 
2016
   
2017
 
2016
 
2017
 
2016
                         
Assets
                                   
Cash and marketable securities(b)
$
83.5
 
$
92.4
   
$
8.1
 
$
10.7
 
$
75.4
 
$
81.8
Receivables
 
21.7
   
24.1
     
12.6
   
12.7
   
-
   
-
Inventories
 
22.7
   
22.4
     
22.6
   
22.3
   
0.1
   
0.1
GE Capital financing receivables - net
 
12.2
   
12.2
     
-
   
-
   
23.9
   
26.0
Property, plant & equipment - net
 
49.0
   
50.5
     
19.0
   
19.1
   
31.0
   
32.2
Receivable from GE Capital (debt assumption)
 
-
   
-
     
50.3
   
58.8
   
-
   
-
Investment in GE Capital
 
-
   
-
     
22.8
   
24.7
   
-
   
-
Goodwill & intangible assets
 
86.8
   
86.9
     
84.2
   
84.2
   
2.7
   
2.7
Contract assets
 
27.4
   
25.2
     
27.4
   
25.2
   
-
   
-
Other assets
 
34.4
   
35.0
     
18.5
   
18.7
   
24.6
   
25.4
Assets of businesses held for sale
 
4.1
   
1.7
     
3.8
   
1.6
   
-
   
-
Assets of discontinued operations
 
9.8
   
14.8
     
-
   
-
   
9.8
   
14.8
Total assets
$
351.6
 
$
365.2
   
$
269.2
 
$
277.9
 
$
167.3
 
$
183.0
                                     
Liabilities and equity
                                   
Borrowings(c)
$
128.7
 
$
136.2
   
$
74.0
 
$
79.3
 
$
106.1
 
$
117.3
Investment contracts, insurance liabilities and
                                   
   insurance annuity benefits
 
26.3
   
26.1
     
-
   
-
   
26.9
   
26.5
Non-current compensation and benefits
 
43.0
   
43.8
     
42.1
   
42.8
   
1.0
   
1.0
Other liabilities
 
71.5
   
73.8
     
73.1
   
74.9
   
8.5
   
9.0
Liabilities of businesses held for sale
 
1.1
   
0.7
     
1.1
   
0.7
   
-
   
-
Liabilities of discontinued operations
 
1.7
   
4.2
     
-
   
-
   
1.7
   
4.1
Redeemable noncontrolling interest
 
3.1
   
3.0
     
3.1
   
3.0
   
-
   
-
GE shareowners' equity
 
74.5
   
75.8
     
74.5
   
75.8
   
22.8
   
24.7
Noncontrolling interests
 
1.6
   
1.7
     
1.4
   
1.4
   
0.3
   
0.3
Total liabilities and equity
$
351.6
 
$
365.2
   
$
269.2
 
$
277.9
 
$
167.3
 
$
183.0
                                     
(a)
Represents the adding together of all affiliated companies except GE Capital, which is presented on a one-line basis.
(b)
At March 31, 2017, GE Capital maintained liquidity sources of $43.4 billion that consisted of cash and equivalents of $33.7 billion, high-quality investments of $8.9 billion and cash and equivalents of $0.8 billion classified as assets of discontinued operations.  Additionally, at March 31, 2017, GE has $20 billion of committed unused credit lines. Credit lines maintained at GE Company since December 2015, but can be drawn and lent to GE Capital upon request.
(c)
GE Capital borrowings includes commercial paper of $5 billion for both periods ended March 31, 2017, and December 31, 2016.

Amounts may not add due to rounding


"GE Capital" means GE Capital Global Holdings, LLC (GECGH) and its predecessor General Electric Capital Corporation (GECC) and all of their affiliates and associated companies. Separate information is shown for "GE" and "Financial Services (GE Capital)." Transactions between GE and GE Capital have been eliminated from the "Consolidated" column. See Note 1 to the 2016 consolidated financial statements at www.ge.com/ar2016 for further information about consolidation matters.


GENERAL ELECTRIC COMPANY
Financial Measures That Supplement GAAP


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

Industrial operating and GE Capital earnings (loss) from continuing operations and EPS
Industrial operating + Verticals earnings and EPS (and excluding gains and restructuring)
Industrial operating profit and operating profit margin (excluding certain items)
Industrial segment organic revenues
Industrial segment organic operating profit
Industrial cash flows from operating activities (Industrial CFOA)
2017 operating framework including 2017 Industrial operating + Verticals EPS target

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

INDUSTRIAL OPERATING AND GE CAPITAL EARNINGS (LOSS) FROM CONTINUING OPERATIONS AND EPS
               
   
Three months ended March 31
(Dollars in millions; except per share amounts)
 
2017
   
2016
 
V%
               
Consolidated earnings from continuing operations attributable to GE common shareowners (GAAP)
$
858
 
$
248
 
F
      Non-operating pension costs
 
578
   
512
   
      Tax effect on non-operating pension costs(a)
 
(202)
   
(179)
   
Adjustment: non-operating pension costs (net of tax)
 
376
   
333
   
Operating earnings (Non-GAAP)
$
1,234
 
$
581
 
F
               
Adjustment: GE Capital (loss) from continuing operations attributable to GE common shareowners
 
(47)
   
(892)
   
Industrial operating earnings (Non-GAAP)
$
1,281
 
$
1,473
 
(13)%
   
             
Earnings (loss) per share (EPS) - diluted(b)
             
Consolidated EPS from continuing operations attributable to GE common shareowners (GAAP)
$
0.10
 
$
0.03
 
F
Adjustment: non-operating pension costs (net of tax)
 
0.04
   
0.04
   
Operating EPS (Non-GAAP)
 
0.14
   
0.06
 
F
               
Adjustment: GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)
 
(0.01)
   
(0.10)
 
90%
Industrial operating EPS (Non-GAAP)
$
0.14
 
$
0.16
 
(13)%
               
(a)
The tax effect on non-operating pension costs was calculated using a 35% U.S. federal statutory tax rate, based on its applicability to such cost.
(b)
Earnings (loss) per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.

Operating earnings (loss) excludes non-service related pension costs of our principal pension plans comprising interest cost, expected return on plan assets and amortization of actuarial gains/losses. The service cost, prior service cost and any curtailment gain or loss components of our principal pension plans are included in operating earnings. We believe that these components of pension cost better reflect the ongoing service-related costs of providing pension benefits to our employees. As such, we believe that our measure of operating earnings (loss) provides management and investors with a useful measure of the operational results of our business. Other components of GAAP pension cost are mainly driven by capital allocation decisions and market performance, and we manage these separately from the operational performance of our businesses. Neither GAAP nor operating pension costs are necessarily indicative of the current or future cash flow requirements related to our pension plans. We believe that this measure, considered along with the corresponding GAAP measure, provides management and investors with additional information for comparison of our operating results to the operating results of other companies. We also believe that presenting operating earnings separately for our industrial businesses provides management and investors with useful information about the relative size of our industrial and financial services businesses in relation to the total company.



INDUSTRIAL OPERATING + VERTICALS EARNINGS AND EPS (AND EXCLUDING GAINS AND RESTRUCTURING)
               
   
Three months ended March 31
(Dollars in millions; except per share amounts)
 
2017
   
2016
 
V%
               
GE Capital earnings (loss) from continuing operations attributable to GE common shareowners (GAAP)
$
(47)
 
$
(892)
 
95%
Adjustment: GE Capital other continuing earnings (loss) (Other Capital)
 
(582)
   
(1,389)
   
Verticals earnings(a)
$
535
 
$
496
 
8%
Industrial operating earnings (Non-GAAP)
 
1,281
 
 
1,473
 
(13)%
Industrial operating earnings + Verticals earnings (Non-GAAP)
$
1,816
 
$
1,970
 
(8)%
   Adjustment: Gains (net of tax)
 
1
   
38
   
   Adjustment: Restructuring (net of tax)
 
(714)
   
(483)
   
Industrial operating earnings + Verticals earnings, excluding gains & restructuring (Non-GAAP)
$
2,529
   
2,415
 
5%
               
Earnings (loss) per share (EPS) - diluted(b)
             
GE Capital EPS from continuing operations attributable to GE common shareowners (GAAP)
 
(0.01)
   
(0.10)
 
90%
Adjustment: GE Capital other continuing EPS (Other Capital EPS)
 
(0.07)
   
(0.15)
 
53%
Verticals EPS
$
0.06
 
$
0.05
 
20%
Industrial operating EPS (Non-GAAP)
 
0.14
   
0.16
   
Industrial operating + Verticals EPS (Non-GAAP)
$
0.21
 
$
0.21
 
-%
   Adjustment: Gains (net of tax) per share
 
-
   
-
   
   Adjustment: Restructuring (net of tax) per share
 
(0.08)
   
(0.05)
   
Industrial operating earnings + Verticals earnings EPS, excluding gains & restructuring per share (Non-GAAP)
$
0.29
 
$
0.26
 
12%
               
(a)
Verticals include businesses expected to be retained (GECAS, Energy Financial Services, Industrial Finance, and run-off Insurance), including allocated corporate after tax costs of $25 million in both the three months ended March 31, 2017 and 2016.
(b)
Earnings-per-share amounts are computed independently. As a result, the sum of per-share amounts may not equal the total.
 
As described above, Verticals represents the GE Capital businesses that we expect to retain. We believe that presenting Industrial operating + Verticals earnings-per-share amounts provides management and investors with a useful measure to evaluate the performance of the businesses we expect to retain after the disposition of most of our financial services business.

We have also presented our Industrial operating + Verticals earnings and EPS excluding gains and restructuring and other charges. We believe that Industrial operating + Verticals earnings and EPS adjusted for these items are meaningful measures because they increase the comparability of period-to-period results.


INDUSTRIAL OPERATING PROFIT AND OPERATING PROFIT MARGIN (EXCLUDING CERTAIN ITEMS)
           
 
Three months ended March 31
(Dollars in millions)
 
2017
   
2016
           
Revenues
         
   GE total revenues and other income
$
25,481
 
$
24,607
      Less: GE Capital earnings (loss) from continuing operations
 
(47)
   
(892)
   GE revenues and other income excluding GE Capital earnings (loss) (Industrial revenues) (GAAP)
$
25,528
 
$
25,499
           
      Less: gains on disposals
 
2
   
59
   Adjusted Industrial revenues (Non-GAAP)
$
25,526
 
$
25,440
           
Costs
         
   GE total costs and expenses
$
24,558
 
$
24,313
      Less: GE interest and other financial charges
 
564
   
440
   Industrial costs excluding interest and other financial charges (GAAP)
$
23,994
 
$
23,873
           
      Less: non-operating pension costs
 
578
   
512
      Less: restructuring and other charges
 
1,020
   
686
      Less: noncontrolling interests
 
78
   
117
   Adjusted Industrial costs (Non-GAAP)
$
22,318
 
$
22,558
           
Industrial profit (GAAP)
$
1,534
 
$
1,626
Industrial margins (GAAP)
 
6.0%
   
6.4%
           
Industrial operating profit (Non-GAAP)
$
3,208
 
$
2,883
Industrial operating profit margins (Non-GAAP)
 
12.6%
   
11.3%
           
We have presented our Industrial operating profit and operating profit margin excluding gains, non-operating pension costs, restructuring and other charges, and noncontrolling interests. We believe that Industrial operating profit and operating profit margin adjusted for these items are meaningful measures because they increase the comparability of period-to-period results.

INDUSTRIAL SEGMENT ORGANIC REVENUES
               
 
Three months ended March 31
(Dollars in millions)
 
2017
   
2016
 
V%
               
Industrial segment revenues (GAAP)
$
26,016
 
$
25,869
 
1%
Adjustments:
             
   Acquisitions
 
132
   
1
   
   Business dispositions
 
10
   
1,556
   
   Currency exchange rates
 
(108)
   
-
   
Industrial segment organic revenues (Non-GAAP)
$
25,981
 
$
24,312
 
7%
               
Organic revenue growth measures revenue growth excluding the effects of acquisitions, business dispositions and currency exchange rates. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that presenting organic revenue growth separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "organic revenue growth" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.



INDUSTRIAL SEGMENT ORGANIC OPERATING PROFIT
               
 
Three months ended March 31
(Dollars in millions)
 
2017
   
2016
 
V%
               
Industrial segment profit (GAAP)
$
3,622
 
$
3,314
 
9%
Adjustments:
             
   Acquisitions
 
(10)
   
1
   
   Business dispositions
 
9
   
123
   
   Currency exchange rates
 
(39)
   
-
   
Industrial segment organic operating profit (Non-GAAP)
$
3,662
 
$
3,191
 
15%
               
Industrial segment organic operating profit growth measures Industrial segment profit excluding the effects of acquisitions, business dispositions and currency exchange rates. We believe that this measure provides management and investors with a more complete understanding of underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and currency exchange, which activities are subject to volatility and can obscure underlying trends. We also believe that presenting industrial segment organic operating profit growth separately for our industrial businesses provides management and investors with useful information about the trends of our industrial businesses and enables a more direct comparison to other non-financial businesses and companies. Management recognizes that the term "Industrial segment organic operating profit growth" may be interpreted differently by other companies and under different circumstances. Although this may have an effect on comparability of absolute percentage growth from company to company, we believe that these measures are useful in assessing trends of the respective businesses or companies and may therefore be a useful tool in assessing period-to-period performance trends.

INDUSTRIAL CASH FLOWS FROM OPERATING ACTIVITIES (INDUSTRIAL CFOA)
               
 
Three months ended March 31
(Dollars in millions)
 
2017
   
2016
 
V%
               
Cash from GE's operating activities (continuing operations), as reported (GAAP)
$
370
 
$
7,902
 
(95)%
Adjustment: dividends from GE Capital
 
2,000
   
7,500
   
Industrial CFOA (Non-GAAP)
$
(1,630)
 
$
402
 
U
               
We define "Industrial CFOA" as GE's cash from operating activities (continuing operations) less the amount of dividends received by GE from GE Capital. This reflects the effects of intercompany transactions, which include, but are not limited to, the following: GE Capital working capital solutions to optimize GE cash management; GE Capital enabled GE industrial orders; aircraft engines, power equipment and healthcare equipment manufactured by GE that are installed on GE Capital investments, including leased equipment; expenses related to parent-subsidiary pension plans; buildings and equipment leased between GE and GE Capital, including sale-leaseback transactions; information technology (IT) and other services sold to GE Capital by GE; and various investments, loans and allocations of GE corporate overhead costs.

We believe that investors may find it useful to compare GE's operating cash flows without the effect of GE Capital dividends, since these dividends are not representative of the operating cash flows of our industrial businesses and can vary from period to period based upon the results of the financial services businesses. Management recognizes that these measures may not be comparable to cash flow results of companies which contain both industrial and financial services businesses, but believes that this comparison is aided by the provision of additional information about the amounts of dividends paid by our financial services business and the separate presentation in our financial statements of the GE Capital cash flows. We believe that our measure of Industrial CFOA provides management and investors with useful measures to compare the capacity of our industrial operations to generate operating cash flow with the operating cash flow of other non-financial businesses and companies and as such provides useful measures to supplement the reported GAAP CFOA measure.



2017 OPERATING FRAMEWORK INCLUDING 2017 INDUSTRIAL OPERATING + VERTICALS EPS TARGET
 
2017 Industrial operating + Verticals EPS Target $1.60-1.70
 
Items not included in non-GAAP metric:
 
1) Non-operating pension cost, which we estimate to be approximately $(0.16) – (0.17) per share.
2) Capital Other continuing earnings (excluding Verticals), which we estimate to be approximately $(0.03) – (0.12) per share. This amount is affected by, among other things:
• The timing of when, and the amount by which, the Company pays down GE Capital's outstanding debt; and
• The timing and magnitude of the remaining costs associated with GE Capital's Exit Plan.
 

Note: The company cannot provide an equivalent GAAP EPS guidance range without unreasonable effort because of the uncertainty of the amount and timing of events affecting earnings as we execute the GE Capital Exit Plan. Although we have attempted to estimate GE Capital's Other continuing earnings for the purpose of explaining the probable significance of this component, as described under number 2, this calculation involves a number of unknown variables, resulting in a GAAP range that we believe is too large and variable to be meaningful.
It is also impractical to provide a reconciliation for our organic revenue, Industrial operating margin expansion and Free Cash Flow plus Dispositions targets as these involve a number of unknown variables including the effects of future acquisitions, dispositions, restructuring activities, property plant and equipment purchases and dispositions and currency exchange.
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