0000040545-15-000129.txt : 20151217 0000040545-15-000129.hdr.sgml : 20151217 20151217161318 ACCESSION NUMBER: 0000040545-15-000129 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20151117 ITEM INFORMATION: Other Events FILED AS OF DATE: 20151217 DATE AS OF CHANGE: 20151217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CO CENTRAL INDEX KEY: 0000040545 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 140689340 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00035 FILM NUMBER: 151293789 BUSINESS ADDRESS: STREET 1: 3135 EASTON TURNPIKE STREET 2: W3F CITY: FAIRFIELD STATE: CT ZIP: 06828 BUSINESS PHONE: 203-373-2211 MAIL ADDRESS: STREET 1: 3135 EASTON TURNPIKE STREET 2: W3F CITY: FAIRFIELD STATE: CT ZIP: 06828 8-K 1 ge8k121715.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) November 17, 2015
 
 
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.)
   
 
   
3135 Easton Turnpike, Fairfield, Connecticut
     
06828-0001
(Address of principal executive offices)
     
(Zip Code)
   
 
   
Registrant's telephone number, including area code   (203) 373-2211
 
     
(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 8.01 Other Events.

As reported by General Electric Company (the "Company" or "GE") on November 17, 2015, GE completed the split-off of Synchrony Financial ("Synchrony") which was reported in General Electric Capital Corporation's ("GECC's") Consumer business. As previously disclosed in a Form 8-K filed on November 23, 2015, that transaction resulted in GE accepting 671,366,809 shares of its common stock in exchange for all of its Synchrony shares, as well as a pro forma gain as of September 30, 2015 of approximately $3.7 billion. Synchrony's historical results, as well as the actual gain on the transaction, will be reported as discontinued operations in the fourth quarter of 2015.

Also, as previously reported by GE on November 30, 2015, GE met the criteria to classify the rest of GECC's Consumer business as held for sale as of that date. GE will report GECC's Consumer business as discontinued operations beginning in the fourth quarter of 2015.

Unaudited pro forma financial information giving effect to both the Synchrony split-off and the classification of GECC's Consumer business (including Synchrony) as discontinued operations is filed herewith as Exhibit 99.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The following unaudited pro forma financial information of the Company is filed as Exhibit 99 to this Report on Form 8-K and is incorporated herein by reference:

Unaudited Pro Forma Condensed Consolidated Statement of Financial Position at September 30, 2015.
Unaudited Pro Forma Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2015 and 2014 and each of the years ended December 31, 2014, 2013 and 2012.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.


(d) Exhibits.  See Exhibits Index.
2


Forward-Looking Statements

This document contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, 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," or "target."

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our announced plan to reduce the size of our financial services businesses, including expected cash and non-cash charges associated with this plan; expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings.

For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals associated with our announced plan to reduce the size of our financial services businesses;
our ability to complete incremental asset sales as part of that plan in a timely manner (or at all) and at the prices we have assumed;
changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental assets to be sold as part of our announced plan to reduce the size of our financial services businesses as well as other aspects of that plan;
the impact of conditions in the financial and credit markets on the availability and cost of GE Capital Global Holdings, LLC's ("New GECC") funding, and New GECC's exposure to counterparties;
the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults;
pending and future mortgage loan repurchase claims and other litigation claims in connection with WMC, which may affect our estimates of liability, including possible loss estimates;
our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so;
the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels;
New GECC's ability to pay dividends to GE at the planned level, which may be affected by New GECC's cash flows and earnings, financial services regulation and oversight, and other factors;
our ability to convert pre-order commitments/wins into orders;
the price we realize on orders since commitments/wins are stated at list prices;
customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve;
the effectiveness of our risk management framework;
the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation and litigation;
our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions;
our success in completing, including obtaining regulatory approvals for, announced transactions, such as the Appliances disposition and our announced plan and transactions to reduce the size of our financial services businesses;
our success in integrating acquired businesses and operating joint ventures;
our ability to realize anticipated earnings and savings from announced transactions, acquired businesses and joint ventures;
the impact of potential information technology or data security breaches; and
the other factors that are described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014.


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.


3

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: December 17, 2015
 
/s/ Jan R. Hauser
 
   
Jan R. Hauser
Vice President and Controller
 


4

EXHIBIT INDEX



Exhibit Number
Description
99
General Electric Company Unaudited Pro Forma Condensed
Consolidated Financial Statements
 

5

 
 
EX-99 2 ge8k121715ex99.htm
EXHIBIT 99
GENERAL ELECTRIC COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As previously reported by General Electric Company (the "Company" or "GE") on November 17, 2015, GE completed the split-off of Synchrony Financial ("Synchrony") through which the Company accepted 671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833 shares of Synchrony stock that it owned (the "Exchange"). As a result, Synchrony's historical results, which had been reported in General Electric Capital Corporation's ("GECC's") Consumer business, will be reported in GE's consolidated financial statements as discontinued operations and in subsequent periods GE's consolidated financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Synchrony.

Also, as previously reported by GE on November 30, 2015, the rest of GECC's Consumer business met the criteria to be classified as held for sale.  The Consumer business, including the results of Synchrony, will be reported as discontinued operations beginning in the fourth quarter of 2015.

The following unaudited pro forma condensed consolidated statement of financial position of GE as of September 30, 2015, is presented as if the Exchange and the classification of the Consumer business (including Synchrony) as discontinued operations, as described in the notes to these unaudited pro forma condensed consolidated financial statements, had occurred at September 30, 2015. The unaudited pro forma condensed consolidated statements of earnings for the nine months ended September 30, 2015 and 2014, and each of the years ended December 31, 2014, 2013 and 2012, reflect the classification of Consumer as discontinued operations and the Synchrony split-off as if such events had occurred on January 1, 2012. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of GE for each period presented and in the opinion of GE management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made.

These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had the Exchange and classification of the Consumer business as discontinued operations been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read together with the following:

GE's audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2014, and Management's Discussion and Analysis included in GE's Annual Report on Form 10-K for the year ended December 31, 2014 as updated by GE's Current Report on Form 8-K filed August 7, 2015.
GE's unaudited consolidated financial statements and the notes thereto as of and for the nine months ended September 30, 2015, and Management's Discussion and Analysis included in GE's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
GE's Current Report on Form 8-K filed November 23, 2015.
GE's Current Report on Form 8-K filed November 30, 2015.

6

                       
General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Financial Position
At September 30, 2015
                       
                       
   
General
                 
   
Electric
         
Adjustments
     
   
Company
   
Consumer
   
and Effects of the
     
(In millions, except share amounts)
 
Historical
   
Adjustment
   
the Exchange
   
Pro Forma
Assets
                     
Cash and equivalents
$
99,086
 
$
(15,219)
 
$
-
 
$
83,867
Investment securities
 
36,933
   
(4,462)
   
-
   
32,471
Current receivables
 
22,332
   
-
   
-
   
22,332
Inventories
 
19,285
   
-
   
-
   
19,285
Financing receivables – net
 
72,353
   
(60,149)
   
-
   
12,204
Other GECC receivables
 
6,280
   
(405)
   
-
   
5,875
Property, plant and equipment – net
 
50,704
   
(265)
   
-
   
50,439
Goodwill
 
61,660
   
(9,088)
   
-
   
52,572
Other intangible assets – net
 
13,618
   
(684)
   
-
   
12,934
All other assets
 
45,793
   
(2,977)
   
-
   
42,816
Financing receivables held for sale
 
22,832
   
(22,713)
   
-
   
119
Deferred income taxes
 
176
   
918
   
(82)
   
1,012
Assets of businesses held for sale
 
8,309
   
(4,917)
   
-
   
3,392
Assets of discontinued operations
 
121,949
   
121,533
   
(86,969)
   
156,513
Total assets
$
581,310
 
$
1,572
 
$
(87,051)
 
$
495,831
                       
Liabilities and equity
                     
Short-term borrowings
$
46,495
 
$
(189)
 
$
-
 
$
46,306
Accounts payable, principally trade accounts
 
11,762
   
(400)
   
-
   
11,362
Progress collections and price adjustments accrued
 
11,247
   
-
   
-
   
11,247
Dividends payable
 
2,324
   
-
   
-
   
2,324
Other GE current liabilities
 
12,624
   
-
   
102
   
12,726
Non-recourse borrowings of consolidated securitization entities
 
16,225
   
(13,640)
   
-
   
2,585
Bank deposits
 
48,656
   
(48,656)
   
-
   
-
Long-term borrowings
 
180,011
   
(10,872)
   
-
   
169,139
Investment contracts, insurance liabilities and insurance annuity benefits
 
26,135
   
(28)
   
-
   
26,107
All other liabilities
 
60,685
   
(2,527)
   
(217)
   
57,941
Liabilities of businesses held for sale
 
1,384
   
(260)
   
-
   
1,124
Liabilities of discontinued operations
 
43,768
   
78,144
   
(67,590)
   
54,322
Total liabilities
 
461,317
   
1,572
   
(67,705)
   
395,184
                       
Common stock (10,109,239,000 and 9,437,872,191 shares outstanding
for GE Historical and Pro forma, respectively)
 
 
702
   
-
   
-
   
702
Accumulated other comprehensive income (loss) – net attributable to GE
                   
-
   Investment securities
 
561
   
-
   
1
   
562
   Currency translation adjustments
 
(5,281)
   
-
   
22
   
(5,259)
   Cash flow hedges
 
(174)
   
-
   
-
   
(174)
   Benefit plans
 
(12,089)
   
-
   
136
   
(11,953)
Other capital
 
32,760
   
-
   
-
   
32,760
Retained earnings
 
135,932
   
-
   
3,668
   
139,600
Less common stock held in treasury
 
(41,207)
   
-
   
(20,383)
   
(61,590)
Total GE shareowners' equity
 
111,204
   
-
   
(16,556)
   
94,648
Noncontrolling interests
 
8,788
   
-
   
(2,790)
   
5,998
Total equity
 
119,993
   
-
   
(19,346)
   
100,647
Total liabilities and equity
$
581,310
 
$
1,572
 
$
(87,051)
 
$
495,831
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


7

General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
For the nine months ended September 30, 2015
                       
                       
   
General
                 
   
Electric
                 
   
Company
   
Consumer
   
Effects of the
     
(In millions; per-share amounts in dollars)
 
Historical
   
Adjustment
   
Exchange
   
Pro Forma
                       
Revenues and other income
                     
Sales of goods
$
53,003
 
$
-
 
$
-
 
$
53,003
Sales of services
 
22,263
   
-
   
-
   
22,263
Other income
 
1,092
   
-
   
-
   
1,092
GECC revenues from services
 
16,373
   
(9,237)
         
7,136
Total revenues and other income
 
92,731
   
(9,237)
   
-
   
83,494
                       
Costs and expenses
                     
Costs of goods sold
 
42,748
   
-
   
-
   
42,748
Cost of services sold
 
14,690
   
-
   
-
   
14,690
Interest and other financial charges
 
3,976
   
(1,748)
   
-
   
2,228
Investment contracts, insurance losses and insurance annuity benefits
 
1,952
   
(10)
   
-
   
1,942
Provision for losses on financing receivables
 
4,636
   
(4,596)
   
-
   
40
Other costs and expenses
 
19,125
   
(3,562)
   
-
   
15,563
Total costs and expenses
 
87,127
   
(9,915)
   
-
   
77,212
                       
Earnings (loss) from continuing operations
                     
     before income taxes
 
5,604
   
679
   
-
   
6,282
Benefit (provision) for income taxes
 
(7,466)
   
238
   
-
   
(7,227)
                       
Earnings (loss) from continuing operations
 
(1,862)
   
917
         
(945)
Less net earnings (loss) attributable to noncontrolling interests
 
229
   
(270)
   
-
   
(41)
Earnings (loss) from continuing operations attributable
                     
   to GE common shareowners
$
(2,091)
 
$
1,187
 
$
-
 
$
(904)
                       
Per share amounts
                     
   Earnings (loss) from continuing operations
                     
      Diluted earnings (loss) per share
$
(0.21)
             
$
(0.10)
      Basic earnings (loss) per share
$
(0.21)
             
$
(0.10)
                       
Average equivalent shares
                     
   Diluted
 
10,085
         
(671)
   
9,414
   Basic
 
10,085
         
(671)
   
9,414
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


8

General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
For the nine months ended September 30, 2014
                       
                       
   
General
                 
   
Electric
                 
   
Company
   
Consumer
   
Effects of the
     
(In millions; per-share amounts in dollars)
 
Historical
   
Adjustment
   
Exchange
   
Pro Forma
                       
Revenues and other income
                     
Sales of goods
$
53,894
 
$
-
 
$
-
 
$
53,894
Sales of services
 
21,945
   
-
   
-
   
21,945
Other income
 
792
   
-
   
-
   
792
GECC revenues from services
 
17,964
   
(10,822)
   
-
   
7,142
Total revenues and other income
 
94,595
   
(10,822)
   
-
   
83,773
                       
Costs and expenses
                     
Costs of goods sold
 
43,600
   
-
   
-
   
43,600
Cost of services sold
 
14,668
   
-
   
-
   
14,668
Interest and other financial charges
 
3,975
   
(1,898)
   
-
   
2,077
Investment contracts, insurance losses and insurance annuity benefits
 
1,940
   
(13)
   
-
   
1,927
Provision for losses on financing receivables
 
2,693
   
(2,663)
   
-
   
29
Other costs and expenses
 
18,744
   
(3,659)
   
-
   
15,087
Total costs and expenses
 
85,620
   
(8,233)
   
-
   
77,388
                       
Earnings (loss) from continuing operations
                     
     before income taxes
 
8,975
   
(2,588)
   
-
   
6,385
Benefit (provision) for income taxes
 
(1,034)
   
449
   
-
   
(585)
                       
Earnings (loss) from continuing operations
 
7,941
   
(2,139)
   
-
   
5,800
Less net earnings (loss) attributable to noncontrolling interests
 
(75)
   
(71)
   
-
   
(146)
Earnings (loss) from continuing operations attributable
                     
   to GE common shareowners
$
8,016
 
$
(2,068)
 
$
-
 
$
5,946
                       
Per share amounts
                     
   Earnings (loss) from continuing operations
                     
      Diluted earnings (loss) per share
$
0.79
             
$
0.63
      Basic earnings (loss) per share
$
0.80
             
$
0.63
                       
Average equivalent shares
                     
   Diluted
 
10,121
         
(671)
   
9,450
   Basic
 
10,042
         
(671)
   
9,371
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


9

General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
For the year ended December 31, 2014
                       
                       
   
General
                 
   
Electric
                 
   
Company
   
Consumer
   
Effects of the
     
(In millions; per-share amounts in dollars)
 
Historical
   
Adjustment
   
Exchange
   
Pro Forma
                       
Revenues and other income
                     
Sales of goods
$
76,569
 
$
-
 
$
-
 
$
76,568
Sales of services
 
30,190
   
-
   
-
   
30,190
Other income
 
778
   
-
   
-
   
778
GECC revenues from services
 
24,671
   
(15,023)
   
-
   
9,648
Total revenues and other income
 
132,208
   
(15,023)
   
-
   
117,184
                       
Costs and expenses
                     
Costs of goods sold
 
61,257
   
-
   
-
   
61,257
Cost of services sold
 
20,054
   
-
   
-
   
20,053
Interest and other financial charges
 
5,334
   
(2,611)
   
-
   
2,723
Investment contracts, insurance losses and insurance annuity benefits
 
2,548
   
(18)
   
-
   
2,530
Provision for losses on financing receivables
 
3,623
   
(3,544)
   
-
   
80
Other costs and expenses
 
25,238
   
(4,959)
   
-
   
20,278
Total costs and expenses
 
118,054
   
(11,132)
   
-
   
106,921
                       
Earnings (loss) from continuing operations
                     
     before income taxes
 
14,154
   
(3,891)
   
-
   
10,263
Benefit (provision) for income taxes
 
(1,508)
   
736
   
-
   
(773)
                       
Earnings (loss) from continuing operations
 
12,646
   
(3,155)
   
-
   
9,490
Less net earnings (loss) attributable to noncontrolling interests
 
112
   
(157)
   
-
   
(45)
Earnings (loss) from continuing operations attributable
                     
   to GE common shareowners
$
12,534
 
$
(2,998)
 
$
-
 
$
9,535
                       
Per share amounts
                     
   Earnings (loss) from continuing operations
                     
      Diluted earnings (loss) per share
$
1.24
             
$
1.01
      Basic earnings (loss) per share
$
1.25
             
$
1.02
                       
Average equivalent shares
                     
   Diluted
 
10,123
         
(671)
   
9,452
   Basic
 
10,045
         
(671)
   
9,374
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


10

General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
For the year ended December 31, 2013
                       
                       
   
General
                 
   
Electric
                 
   
Company
   
Consumer
   
Effects of the
     
(In millions; per-share amounts in dollars)
 
Historical
   
Adjustment
   
Exchange
   
Pro Forma
                       
Revenues and other income
                     
Sales of goods
$
71,873
 
$
-
 
$
-
 
$
71,873
Sales of services
 
28,669
   
-
   
-
   
28,669
Other income
 
3,108
   
-
   
-
   
3,107
GECC revenues from services
 
25,336
   
(15,741)
   
-
   
9,595
Total revenues and other income
 
128,986
   
(15,741)
   
-
   
113,245
                       
Costs and expenses
                     
Costs of goods sold
 
57,867
   
-
   
-
   
57,867
Cost of services sold
 
19,274
   
-
   
-
   
19,274
Interest and other financial charges
 
5,539
   
(2,669)
   
-
   
2,870
Investment contracts, insurance losses and insurance annuity benefits
 
2,676
   
(15)
   
-
   
2,661
Provision for losses on financing receivables
 
4,053
   
(4,048)
   
-
   
5
Other costs and expenses
 
26,154
   
(4,686)
   
-
   
21,468
Total costs and expenses
 
115,563
   
(11,418)
   
-
   
104,145
                       
Earnings (loss) from continuing operations
                     
     before income taxes
 
13,423
   
(4,324)
   
-
   
9,100
Benefit (provision) for income taxes
 
(1,212)
   
(7)
   
-
   
(1,219)
                       
Earnings (loss) from continuing operations
 
12,211
   
(4,330)
   
-
   
7,881
Less net earnings (loss) attributable to noncontrolling interests
 
298
   
(36)
   
-
   
262
Earnings (loss) from continuing operations attributable
                     
   to GE common shareowners
$
11,913
 
$
(4,294)
 
$
-
 
$
7,618
                       
Per share amounts
                     
   Earnings (loss) from continuing operations
                     
      Diluted earnings (loss) per share
$
1.16
             
$
0.79
      Basic earnings (loss) per share
$
1.16
             
$
0.80
                       
Average equivalent shares
                     
   Diluted
 
10,289
         
(671)
   
9,618
   Basic
 
10,222
         
(671)
   
9,551
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


11

General Electric Company
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
For the year ended December 31, 2012
                       
                       
   
General
                 
   
Electric
                 
   
Company
   
Consumer
   
Effects of the
     
(In millions; per-share amounts in dollars)
 
Historical
   
Adjustment
   
Exchange
   
Pro Forma
                       
Revenues and other income
                     
Sales of goods
$
72,990
 
$
-
 
$
-
 
$
72,990
Sales of services
 
27,158
   
-
   
-
   
27,158
Other income
 
2,563
   
-
   
-
   
2,563
GECC revenues from services
 
25,180
   
(15,303)
   
-
   
9,877
Total revenues and other income
 
127,891
   
(15,303)
   
-
   
112,588
                       
Costs and expenses
                     
Costs of goods sold
 
56,785
   
-
   
-
   
56,784
Cost of services sold
 
17,525
   
-
   
-
   
17,525
Interest and other financial charges
 
6,442
   
(3,294)
   
-
   
3,149
Investment contracts, insurance losses and insurance annuity benefits
 
2,857
   
(10)
   
-
   
2,847
Provision for losses on financing receivables
 
3,224
   
(3,218)
   
-
   
5
Other costs and expenses
 
26,497
   
(4,420)
   
-
   
22,077
Total costs and expenses
 
113,330
   
(10,942)
   
-
   
102,387
                       
Earnings (loss) from continuing operations
                     
     before income taxes
 
14,561
   
(4,361)
   
-
   
10,201
Benefit (provision) for income taxes
 
(2,526)
   
1,141
   
-
   
(1,385)
                       
Earnings (loss) from continuing operations
 
12,035
   
(3,218)
   
-
   
8,816
Less net earnings (loss) attributable to noncontrolling interests
 
223
   
(53)
   
-
   
170
Earnings (loss) from continuing operations attributable
                     
   to GE common shareowners
$
11,812
 
$
(3,165)
 
$
-
 
$
8,646
                       
Per share amounts
                     
   Earnings (loss) from continuing operations
                     
      Diluted earnings (loss) per share
$
1.12
             
$
0.87
      Basic earnings (loss) per share
$
1.12
             
$
0.88
                       
Average equivalent shares
                     
   Diluted
 
10,564
         
(671)
   
9,893
   Basic
 
10,523
         
(671)
   
9,852
                       

Amounts may not add due to rounding.
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.


12

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1) EXCHANGE AND SPLIT-OFF OF SYNCHRONY
As previously reported by GE on November 17, 2015, GE completed the previously announced split-off of Synchrony through which GE accepted 671,366,809 shares of GE common stock from its shareholders in exchange for 705,270,833 shares of Synchrony stock representing all the Synchrony stock that it owned.
These unaudited pro forma condensed consolidated financial statements reflect an exchange ratio of 1.0505 shares of Synchrony common stock for each share of GE common stock, which represents the ratio that was in effect following the official close of trading on the New York Stock Exchange ("NYSE") on November 12, 2015, and is calculated as the average GE price of $30.3454 per share divided by 93% of the average Synchrony price of $31.0620 per share, reflecting a discount of 7%. The average prices reflect the simple arithmetic average of the daily volume-weighted average prices of shares of GE common stock and Synchrony common stock on the NYSE during the three consecutive trading days ending on and including November 12, 2015. These unaudited pro forma condensed consolidated financial statements reflect the acceptance of 671,366,809 shares of GE common stock in exchange for the 705,270,833 shares of Synchrony common stock.



   
Shares of Synchrony common stock exchanged
 
705,270,833
Exchange ratio
 
1.0505
Total shares of GE common stock accepted
 
671,366,809
     

The 671,366,809 shares of GE common stock acquired in the Exchange have been reflected as treasury stock on the unaudited pro forma condensed consolidated statement of financial position. This transaction results in a pro forma one-time net gain to GE estimated as of September 30, 2015 to be approximately $3,668 million calculated as follows:

(In millions)
 
     
Fair value of GE common stock tendered (671,366,809 shares acquired at the GE closing price of
$
20,383
     $30.36 per share as of November 16, 2015)
   
GECC's carrying value in Synchrony at September 30, 2015
 
(16,589)
Accumulated other comprehensive loss
 
(24)
Estimated transaction costs
 
(102)
Pro forma net gain as of September 30, 2015
$
3,668
     

The pro forma net gain, which would be reflected in discontinued operations in GE's consolidated statement of earnings, has not been reflected in the unaudited pro forma condensed consolidated statements of earnings and has been reflected as an adjustment to retained earnings on the unaudited pro forma condensed consolidated statement of financial position.
The amount of the actual gain to be reported in the fourth quarter of 2015 will differ from the pro forma net gain set forth above based on factors including GE's carrying value of Synchrony at the time the Exchange was consummated (which carrying value increased as GE recognized its share of Synchrony's earnings through the closing of the Exchange).

2) CONSUMER DISCONTINUED OPERATIONS

As previously reported by GE on November 30, 2015, GE met the criteria to classify the rest of GECC's Consumer business as held for sale as of that date. The Consumer business will be reported as discontinued operations beginning in the fourth quarter of 2015.  These unaudited pro forma condensed consolidated financial statements present the Consumer business (including Synchrony) as discontinued operations for all periods presented.
13