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FORWARD -LOOKING S TATEMENT S
Some of the information we provide in this document is forward-looking and therefore
could change over time to reflect changes in the environment in which GE competes.
For details on the uncertainties that may cause our actual results to be materially different
than those expressed in our forward-looking statements, see https://www.ge.com/
We do not undertake to update our forward-looking statements.
NON-GAAP FINANCIAL MEASURES
We sometimes use information derived from consolidated financial data but not presented
in our financial statements prepared in accordance with U.S. generally accepted accounting
principles (GAAP). Certain of these data are considered “non-GAAP financial measures”
under the U.S. Securities and Exchange Commission rules. These non-GAAP financial
measures supplement our GAAP disclosures and should not be considered an alternative
to the GAAP measure. The reasons we use these non-GAAP financial measures and the
reconciliations to their most directly comparable GAAP financial measures can be found
on pages 43-49 of the Management’s Discussion and Analysis within our Form 10-K and in
GE’s fourth-quarter 2019 earnings materials posted to ge.com/investor, as applicable.
INSIDE FRONT COVER
Wysheka Austin, Senior Operations
Manager, works on a combustion unibody
for GE Gas Power’s 7HA gas turbine in
Greenville, South Carolina.
Kevin Jones, a Development Assembly
Mechanic, performs a perfection review on
the propulsor for GE Aviation’s GE9X engine
before it is shipped for certification testing.
Dear fellow shareholder,
Over 60 GE wind turbines work together at Meikle Wind Farm, the largest wind farm in Western Canada, to generate
enough energy to power over 54,000 homes in British Columbia. GE uses drones to safely inspect these turbines.
First, a sincere thank you for sharing
your ideas and counsel over the
last year. When I began as CEO,
it was critical for me to listen, not
just to replicate what’s worked
for me elsewhere. Your feedback
is playing an important role in our
efforts to make GE a stronger, more
As I laid out in my last letter, I want
this document to serve as a reference
point for how we run the company so
that we can all keep score together.
Looking back at 2019, I hope you see
a GE that diligently addressed its
most pressing issues with grit and
reset its foundation to drive long-term
profitable growth. I am proud of the
progress our team made together,
especially in how we operate. While
the impact of this work is only starting
to become visible to our investors, I’m
confident that the “game of inches”
we’re playing will become more
evident through our results over time.
From the outset, we focused
2019 on two strategic priorities:
1) improve our financial position and
2) strengthen our businesses. We’re
doing what we said we would do on
both fronts, and we’re on a positive
trajectory for 2020.
Last year, I shared that GE had too
much debt and we needed to reduce it
thoughtfully and soon. Our work is by
no means finished, but we are on the
In 2019, we moved with speed on asset
sales to demonstrate that we are serious
about reducing both our Industrial and
Capital leverage. We began to put that
cash to work, including a tender offer for
$5 billion of outstanding Industrial debt.
GE Capital continued its efforts to shrink
both its asset base and risk exposure,
reducing assets by approximately
$27 billion over two years, exceeding its
plan. We also enhanced transparency
about the assumptions and sensitivities
related to GE Capital’s run-off long-term
care insurance operations for our investors.
Looking forward, we expect to achieve
our leverage targets in 2020. Closing the
sale of our BioPharma business and selling
our remaining 37-percent stake in Baker
Hughes over time will give us more cash
to further reduce our Industrial leverage,
including pre-funding our U.S. pension
and repaying GE’s loans from GE Capital.
This will also help GE Capital reduce its
external debt, including $16 billion that
matures in 2020.
2019 DELE VERAGING ACTIONS
% Reduced GE Industrial leverage: $7B net
debt* reduction, ending 2019 with 4.2x
net debt* to EBITDA* vs. 4.8x in 2018.
% Reduced GE Capital leverage: $7B debt
reduction, ending 2019 with 3.9x debt to
equity vs. 5.7x in 2018.
% Agreed to sell BioPharma, part of GE
Healthcare, to Danaher for ~$21 billion.
% Completed spin-off and subsequent
merger of GE Transportation with
Wabtec and exited stake for ~$6 billion
of total proceeds.
% Executed market’s largest secondary
offering in 2019 to reduce Baker Hughes
ownership and collected ~$3 billion of
% Completed ~$5 billion debt tender.
% Announced multiple changes related to
U.S. pension benefits that are expected to
reduce Industrial net debt* by $5-6 billion.
% Completed majority of sale of GECAS’
PK AirFinance aviation lending platform
and $3.6 billion in receivables to Apollo
% Completed $27 billion total asset reduction
in GE Capital for 2018 and 2019, exceeding
$25 billion target.
2020 LE VER AGE TARGE T S
GE 2019 ANNUAL REPORT
As we solidify our financial position,
it is our next priority—strengthen our
businesses—that will drive our long-term
transformation. We began with the
premise that the people closest to the
customer know best how to serve them,
so we shifted resources and accountability
from Corporate to empower our business
units and removed overhead layers in
Power and Renewable Energy. These
efforts will continue into 2020 and beyond.
We got back to basics in how we work,
standardizing common operating metrics
the course of 2019, we laid the foundation
to apply lean more systematically across
GE, driving better results and, in turn, a
In my experience, lean transformations
succeed when the senior team leads by
example. So, in June, more than 100 of
our leaders and I spent five days at Power
in Greenville, South Carolina, for a Lean
Action Workout. We divided into 10 teams
focused on improving our gas turbine
manufacturing, repair, and services.
We failed a lot that week. We tried things
that didn’t work and went back to the
drawing board to attack the problem
differently. Doing this day after day, a
We’re doing what we said we would do, and
we’re on a positive trajectory for 2020
with safety always at the core and focusing
our attention on customers, operations,
and priority-setting. I’m also encouraged
by how our team is embracing candor,
transparency, and humility with each other.
We can solve just about any challenge we
encounter, but to do so, we need to put
the good and the bad on the table in equal
measure. While it takes discipline, we’re
fostering this at all levels of the company.
remarkable thing happened. Rather than
growing tired with each turn, the teams
became more energized. Vidya Ravishankar
from the materials planning team in
Greenville summed up the week perfectly
when she said: “The energy levels just kept
skyrocketing. The senior leadership at GE
cleared their calendars and focused—with
such respect—on the problem.” It was an
important moment. And a really fun week.
The best tool I know to drive this type
of positive change at a fundamental
level is lean management, in which
a relentless focus on customer value
helps leaders get to the root cause of
problems, continuously eliminate waste,
and ruthlessly prioritize their work. Over
After Greenville, we held lean events
almost every week across the company.
One of the most pleasant surprises for
me as the year went on was the flood
of people who began reaching out,
raising their hands, and looking to help.
Phil Lawrence, a welder at our Aviation
Component Service Center in Springdale,
Ohio, shared with me how he was hopeful
the changes they were making at his
site would stick. His site leaders were
unequivocal; if anything started to slide
back to the way it was, they told him,
he should call them immediately. Phil
shared that he had never experienced
that attitude before at GE—and
that improvements at the site were
Across our businesses and around
the world, we’re using lean to make
real improvements in safety, quality,
delivery, and cost. For example, in 2018,
a different Aviation plant in Batesville,
Mississippi, was losing up to 15 percent
of its output due to production defects.
Using lean tools, the plant has been able
to reduce losses by more than 60 percent
so far, saving millions of dollars’ worth
of waste. And it applies well beyond
manufacturing; our Digital team uses
lean to shorten the time it takes for
our customers to install or update our
software while also creating software
for customers to map and eliminate
waste in their own processes. This is
resulting in significantly quicker turns; for
example, we reduced planned downtime
on a software upgrade for one major
manufacturer by 50 percent.
There are thousands of opportunities
like this within GE, each representing
untapped potential for customers
and investors. This is why prioritizing
the goals toward which we channel these
improvements is so important. Our new
series of operational, talent, strategic,
and budget reviews is helping our leaders
define what “game” we are playing in
each business and how we “win.” At the
BUILDING A WORLD THAT WORK S
Alex Saldana, the Executive Project Fulfillment
Leader in charge of commissioning and testing
the prototype of the world’s most powerful
offshore wind turbine, the Haliade-X. The
machine’s rotor and 12-megawatt generator
started supplying electricity to Dutch customers
for the first time in December of 2019.
GE 2019 ANNUAL REPORT
Additive technologies are transforming
the world of manufacturing. A GE Additive
AddWorks team in Cincinnati, Ohio, review a
3D-printed helicopter engine frame designed
for a CT7.
Scott Strazik, CEO of GE Gas Power, with
leaders from GE’s customer Azito Energie S.A.
in Abidjan, Côte d’Ivoire. Upon completion of
its plant extension project, the Azito power
plant in Abidjan is expected to generate
up to 30 percent of Côte d’Ivoire’s gridconnected power.
same time, we’re consciously aligning our
incentives with yours, tying our business
teams’ compensation more closely to
their respective business’ results as well
as executive compensation more closely
to GE’s stock performance.
simply “check the box.” We are changing
the way we run GE, business by business,
every day, from the bottom up.
we have a differentiated market position,
like medium voltage and complex
systems in Power Conversion.
Let me now take you through what our
progress looks like by business.
Additionally, I spent significant time
making sure we have the right leadership
in place. More than two-thirds of my
direct reports are new to GE or their role
since I began as CEO, and I’m looking
forward to welcoming our new CFO,
Carolina Dybeck Happe, to the team
in March. Our new, smaller Board is
also now in place, which today includes
10 directors, seven of whom are new to
the Board since 2017 and four of whom
are women—bringing fresh perspective,
Power’s focus on daily management,
particularly on the project side, is
creating a lower-risk, higher-margin
backlog for the future. I’m pleased with
the progress Power made in 2019 and
look forward to more in 2020.
We focused much of our energy this year
on Power, and our progress illustrates
the type of improvements we can make
across the company over the long term.
Power drove tremendous change in 2019,
starting by separating Gas Power from
Power Portfolio to improve visibility
and accountability in these businesses.
In Gas Power, the team reduced fixed
costs by 10 percent* and narrowed
the perimeter of projects it goes after,
As I think about the thousands of employees and
customers I met with this year, each interaction has
only deepened my excitement about our work
diversity of thought, and the right
experience for GE. This is a board that
is dedicated to doing what is right for
the company and has tough, direct, and
substantive discussions. GE is becoming
a better company as a result.
Overall, as I think about the thousands of
employees and customers I met with this
year, each interaction has only deepened
my excitement about our work. Our
people are committed, capable, and
enthusiastically driving these changes,
and our customers are rooting for us.
As we move forward with our lean
transformation, we are not looking to
GE Healthcare’s Hino factory has been
applying lean for decades, now using software
like GE Digital’s Proficy™ Operations Hub to
digitally transform its operations. The site
was recognized by the World Economic Forum
in 2020 as one of the world’s most advanced
setting evaluation standards across
price, terms, and scope. Gas Power also
booked 13.6 gigawatts in gas turbine
orders during the year, including its 100th
HA turbine order, and launched its new
7HA.03, now the world’s largest and most
efficient gas turbine.
Power Portfolio, which includes Steam,
Power Conversion, and GE Hitachi
Nuclear, also improved its commercial
discipline and cost structure, applying
more rigorous daily management both in
our operations and at our job sites. The
team is focusing on subsegments where
Santhosh Kumar C from GE’s Edison
Engineering Development Program presents in
our ForGE Lab in Bangalore, India. Researchers
and technologists use this space to test ideas
and collaborate to create technologies like
Energy Management as a Service, featured here.
RENE WABLE ENERGY
Renewable Energy is well positioned
to serve clean energy markets that are
expected to grow rapidly over the coming
decades.1 In 2019, we brought all of
GE’s renewable and grid assets into this
business, creating a differentiated offering
that can both produce renewable energy
and reliably and safely integrate it into
electrical grids. The team achieved record
unit volume for onshore wind turbines in
2019 while securing nearly 5 gigawatts of
commitments for its new offshore wind
turbine, the Haliade™-X.
Broadly, though, Renewable Energy’s
performance was mixed. I think about
the dynamics at play in Renewable
Energy in three parts. First, Onshore
Wind is our most established, profitable
business, and it is meeting high customer
demand and growing internationally.
Second, we’re placing technology bets
in fast-growing markets. In October, for
example, Offshore Wind successfully
installed the prototype for the Haliade™-X,
which already is breaking records for
power production by a wind turbine.
Third are our required turnarounds in
Grid Solutions and Hydro. Improving
project underwriting and daily execution
here will be a major focus for us in 2020.
Alexis Conway, a Manufacturing Improvement
Specialist, works to lean out inspection
processes on the GE9X, the world’s most
powerful commercial aircraft engine, at
GE Aviation’s Test Operation in Peebles, Ohio.
GE 2019 ANNUAL REPORT
Aviation delivered strong performance,
closing its 100th year of operation with over
$270 billion in backlog and an installed
base of more than 64,0002 commercial and
military engines. This fleet is poised for
continued growth; for example, in our
commercial business, nearly 70 percent of
the CFM56 fleet has had one or fewer
shop visits. As these engines fly for
decades to come, they will continue to
produce predictable revenue.
and military markets. For example, in
commercial markets, Aviation’s newly
certified Passport™ engine powered
Bombardier’s record-breaking flight
between Sydney and Detroit in October,
and the GE9X™—the world’s largest,
most powerful jet engine—is on track for
certification in 2020. In military, Aviation’s
new T901 was selected for the U.S.
Army’s Improved Turbine Engine Program
to power its next-generation Apache &
Black Hawk helicopters. Finally, just like in
We are changing the way we run GE, business by
business, every day, from the bottom up
That said, 2019 wasn’t without its
challenges. Our team worked diligently
to support our customers following the
grounding of the Boeing 737 MAX, never
wavering in their commitment to safety
while navigating near-term industry
disruption. LEAP continues to be a strong
engine program for us, and we delivered
1,736 LEAP engines to Airbus and Boeing
platforms in the year.
Aviation’s long-term end-market
fundamentals remain attractive, and
the team is introducing advanced
technologies in growing commercial
Springdale and Batesville, teams across
Aviation are continuously identifying new
opportunities to improve their operations.
H E A LT H C A R E
Healthcare performed well in 2019,
growing its backlog to $18.5 billion and
segment profit margins to 19.5 percent.
The team is at the center of an ecosystem
striving for precision health. By bringing
together our machines with software,
analytics, and artificial intelligence (AI)
through our Edison software platform,
Healthcare is helping make care delivery
more efficient and personalized.
We launched seven new “mission control”
Command Centers with customers in
2019, which use predictive analytics and
AI to help hospitals coordinate patient
care more efficiently. Healthcare also
introduced on-device AI on equipment
like our Revolution™ Maxima CT, where AI
helps position the patient more precisely
to improve efficiency, accuracy, and
patient comfort during the scan.
We still see room for improvement in
Healthcare, particularly driving faster
growth and margin expansion in Healthcare
Systems. The business is embracing lean
throughout its operations; at one lean event
at our MR production facility in Florence,
South Carolina, the Healthcare team
identified $50 million of potential savings in
just four days. Even in this strong business,
we’re able to deliver further upside.
This is GE: four mission-critical, global
industrial businesses, each with
growing backlogs and sizable installed
bases where services represent more
than half of our revenue and give us daily
opportunities to serve our customers. GE
Capital’s financing capabilities, including
at GE Capital Aviation Services (GECAS)
and Energy Financial Services (EFS),
catalyze new growth and opportunity for
our Industrial businesses and customers,
enabling more than $6 billion in Industrial
orders in 2019.
Production Team Leader Milena Chapuis and Manufacturing Process Engineer Estelle Le conduct a quality check on GE Healthcare’s production line in Buc, France. The
team in Buc builds interventional imaging systems, pictured here, that are used in operating rooms as an alternative to open surgery. Buc is also a global center for
GE Healthcare’s advanced visualization software and mammography, including the recent development of Senographe Pristina with Dueta, which was named to TIME
Magazine’s “100 Best Inventions of 2019” for its patient-assisted mammography exam feature.
GE 2019 ANNUAL REPORT
We’ll continue to shift people, processes,
and accountability to the businesses to
be closer to customers and reduce cost at
Corporate. But if you look at what ties GE
together, our “mortar between the bricks”—
such as GE Research’s advanced work in
broadening access to electricity, healthcare,
and transport to enable a better quality
of life for their citizens. And we have the
long-standing knowledge of local markets,
deep expertise in technology and financing,
and the ability to manage complex global
We are doing it from a place of greater strength and with
a mission that matters—building a world that works
technology and material science, Digital’s
industrial software an ...