Item 2.01 Completion of Acquisition or Disposition of Assets.
On November 1, 2021, General Electric Company (the "Company" or "GE") completed
the previously announced combination of its GE Capital Aviation Services
("GECAS") business in its Capital segment with AerCap Holdings N.V. ("AerCap")
for total consideration
consisting of $22.6 billion cash, subject to future contract closing
adjustments, 111.5 million ordinary shares of AerCap (approximately 46%
ownership interest), valued at $6.6 billion based on the closing share price of
$59.04 on October 29, 2021, and $1 billion in AerCap senior notes with an
interest rate of 1.899% and a maturity date of November 1, 2025. Pursuant to the
shareholders' agreement entered in connection with the transaction, GE also has
the right to nominate two board members of AerCap so long as it owns at least
10% of the ordinary shares of AerCap, or one board member so long as it owns any
of the ordinary shares of AerCap.
In connection with the transaction, the historical results of GECAS were
reported in GE's consolidated financial statements as discontinued operations
beginning in the first quarter of 2021. Upon completion of the transaction, GE
deconsolidated GECAS and expects to use the proceeds to further reduce debt,
with total reduction since the end of 2018 now expected to reach approximately
$75 billion.
GE will elect to prospectively measure its equity method investment in AerCap at
fair value. This investment and the related earnings impact from subsequent
changes in fair value in the investment will be recognized in continuing
operations.
The unaudited pro forma financial information giving effect to this transaction
is filed herewith as Exhibit 99.1.
Unaudited pro forma financial information included in this Current Report on
Form 8-K has been presented to illustrate the estimated effects of the GECAS
transaction and is not necessarily indicative of the results of operations that
GE would have achieved had the GECAS transaction been completed as of the dates
indicated or of the results that may be obtained in the future.
Item 7.01 Regulation FD Disclosure.
As previously disclosed in our Quarterly Reports on Form 10-Q, with the
completion of the GECAS transaction, the remainder of GE Capital, including
Energy Financial Services (EFS) and our run-off insurance operations, will be
reported within Corporate. This means we will transition from three-column to
simpler one-column financial statement reporting effective with our 2021 Annual
Report on Form 10-K ("2021 Form 10-K").
To assist investors and others in advance of this financial reporting
transition, we are providing the supplemental financial information in Exhibit
99.2 with key financial metrics for the nine months ended September 30, 2021,
that were presented in our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2021, retroactively restated on the one-column consolidated basis
that will be presented in our 2021 Form 10-K. While not required in this Form
8-K, we believe this supplemental one-column financial statement information
will be useful to evaluate performance and period-to-period comparability of
consolidated company results.
The information provided pursuant to this Item 7.01, including Exhibit 99.2, 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.
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information of the Company is filed
as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by
reference:
•Unaudited Pro Forma Condensed Consolidated Statement of Earnings (Loss) for
each of the years ended December 31, 2020, 2019, and 2018.
•Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
No pro forma consolidated condensed statement of earnings for the nine months
ended September 30, 2021 or related balance sheet as of September 30, 2021 are
provided in this report, as GECAS was presented as discontinued operations in
the interim financial statements included in the Company's Quarterly Report on
Form 10-Q for the nine months ended September 30, 2021, filed on October 26,
2021. Total assets held for sale had a carrying value of $37.2 billion and $33.8
billion as of December 31, 2020 and September 30, 2021, respectively, and total
liabilities held for sale had a carrying value of $5.0 billion and $4.8 billion
as of December 31, 2020 and September 30, 2021, respectively. After transaction
costs of $0.3 billion, GE expects to incur an estimated pretax loss of $3.1
billion ($3.7 billion after tax).
(d) Exhibits.
99 .1. General Electric Company Unaudited Pro Forma Condensed Consolidated
Financial Statements.
99.2 . Supplemental One-column Financial Statement Information.
104. The cover page from this Current Report on Form 8-K, formatted in Inline
XBRL.
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Forward-Looking Statements
This document contains "forward-looking statements"-that is, 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; 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, including global supply chain disruptions, 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 exit our equity
ownership positions in AerCap and Baker Hughes, the timing of such transactions,
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
inflation, interest rates, the value of securities and other financial assets
(including our equity ownership position in AerCap and 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 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 its equity interest in AerCap 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 demand and the financial
performance of major industries and customers we serve, such as secular,
cyclical and competitive pressures in our Power business; pricing, the timing of
customer investment and other factors in renewable energy markets; 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 and
incentives related to climate change (including extension of the U.S. wind
Production Tax Credit), 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 our Annual
Report on Form 10-K for the year ended December 31, 2020 and our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2021, 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.
(3)
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