XML 20 R9.htm IDEA: XBRL DOCUMENT v3.21.2
BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
6 Months Ended
Jun. 30, 2021
Discontinued Operations and Disposal Groups [Abstract]  
BUSINESSES HELD FOR SALE AND DISCONTINUED OPERATIONS
NOTE 2. BUSINESSES HELD FOR SALE AND DISCONTINUED 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) and incurred $185 million of cash payments directly associated with the transaction. In the first half of 2020, we recognized a pre-tax gain of $12,341 million ($11,199 million after-tax) in our consolidated Statement of Earnings (Loss).

DISCONTINUED OPERATIONS primarily comprise our GE Capital Aviation Services (GECAS) business, our mortgage portfolio in Poland, and other trailing assets and liabilities associated with the dispositions of certain GE Capital and GE Industrial businesses. Results of operations, financial position and cash flows for these businesses are reported as discontinued operations for all periods presented.

GECAS. On March 9, 2021 we entered 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 interest) valued at $5,710 million based on AerCap’s closing share price of $51.21 on June 30, 2021 and $1,000 million paid in AerCap notes and/or cash upon closing at AerCap's option. As a result, we have reclassified GECAS' results to discontinued operations for all periods presented and recognized a non-cash after-tax loss of $3,869 million in discontinued operations in the first half 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. While AerCap shareholders have approved the transaction, completion remains subject to regulatory approvals and other customary closing conditions.

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 June 30, 2021, the total portfolio had a carrying value of $1,991 million with a 1.86% 90-day delinquency rate and an average loan to value ratio of approximately 59.7%. 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 six months ended June 30, 2021 included $278 million non-cash pre-tax charges, reflecting estimates with respect to ongoing litigation as well as market yields, primarily in the first quarter of 2021. 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 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.

For the six months ended June 30, 2021, we had sales of $331 million and purchases of $130 million with BKR for products and services outside of the JV. We collected net cash of $206 million from BKR related to sales, purchases and transition services.

In the first half of 2021, we had sales of $237 million to BKR for products and services from the JV, and we collected cash of $300 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, in the first half of 2021, we received $28 million of repayments on the promissory note receivable from BKR and dividends of $104 million on our investment.

RESULTS OF DISCONTINUED OPERATIONS Three months ended June 30Six months ended June 30
2021202020212020
Operations
GE Capital revenues from services$902 $1,055 $1,535 $2,065 
Cost of goods and services sold(8)(840)(376)(1,387)
Other income, costs and expenses(311)(1,248)(697)(1,709)
Earnings (loss) of discontinued operations before income taxes$583 $(1,033)$462 $(1,031)
Benefit (provision) for income taxes(50)49 (79)30 
Earnings (loss) of discontinued operations, net of taxes(a)$533 $(984)$384 $(1,001)
Disposal
Gain (loss) on disposal before income taxes$(1,133)$(10)$(3,835)$(13)
Benefit (provision) for income taxes37 — (7)— 
Gain (loss) on disposal, net of taxes(b)$(1,097)$(10)$(3,842)$(13)
Earnings (loss) from discontinued operations, net of taxes$(564)$(993)$(3,458)$(1,015)
(a) Included $496 million and $(1,024) million from GECAS operations, including zero and $838 million of depreciation and amortization, for the three months ended June 30, 2021 and 2020, respectively. Included $673 million and $(869) million from GECAS operations, including $359 million and $1,384 million of depreciation and amortization, for the six months ended June 30, 2021 and 2020, respectively. Depreciation and amortization ceased on March 10, 2021.
(b) Loss for the three months ended June 30, 2021 was primarily driven by GECAS due to a decrease in fair value of AerCap common stock to be received of $840 million and an increase in GECAS net assets of $440 million attributable to income from operations, partially offset by associated income tax benefit.
ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONSJune 30, 2021December 31, 2020
Cash, cash equivalents and restricted cash
$31 $— 
Financing receivables - net
2,102 — 
Other GE Capital receivables1,989 — 
 Property, plant, and equipment - net28,407 — 
Valuation allowance on disposal group classified as discontinued operations(3,709)— 
All other current assets
4,366 — 
Total current assets of discontinued operations
33,186 — 
Cash, cash equivalents and restricted cash
506 623 
Financing receivables - net— 2,710 
Other GE Capital receivables57 1,844 
Financing receivables held for sale (Polish mortgage portfolio)
1,991 2,461 
 Property, plant, and equipment - net 96 28,429 
All other assets
405 4,683 
Assets of discontinued operations(a)$36,244 $40,749 
Deferred income taxes$2,274 $— 
Accounts payable and all other liabilities2,648 — 
Total current liabilities of discontinued operations
4,922 — 
Deferred income taxes— 2,172 
Accounts payable and all other liabilities(b)
17 3,010 
Liabilities of discontinued operations(a)
$4,939 $5,182 
(a) Included $33,186 million and $37,199 million of assets and $4,922 million and $4,997 million of liabilities for GECAS as of June 30, 2021 and December 31, 2020, respectively.
(b) Included within All other liabilities of discontinued operations at June 30, 2021 and December 31, 2020 are intercompany tax receivables in the amount of $817 million and $704 million, respectively, primarily related to previously disposed financial services businesses, which are eliminated upon consolidation.