GE 2015 Annual Report Download - page 100

MD&A OTHER CONSOLIDATED INFORMATION
72 GE 2015 FORM 10-K
We expect to contribute $0.9 billion to our other pension plans in 2016, as compared to $0.5 billion in 2015 and $0.7 billion in 2014. GE
Capital is a member of certain GE pension plans. As a result of the GE Exit Plan, GE Capital will have additional funding obligations for
these pension plans. These obligations do not relate to the Verticals and aUHUHFRJQL]HGDVDQH[SHQVHLQ*(&DSLWDO¶VRWKHUFRQWLQXLQJ
operations when they become probable and estimable. In 2015, the additional funding obligations recognized by GE Capital was $0.1
billion. This additional funding is recorded as a contra expense IRU*(DV*(¶VIXWXUHSHQVLRQREOLJDWLRQVZLOOEH paid by GE Capital. On
a consolidated basis, the additional required pension funding does not affect current period earnings but rather will be reflected as a
reduction of the pension liability when paid.
We also expect to contribute $0.5 billion to our principal retiree benefit plans in 2016 similar to our actual contributions of $0.5 billion in
both 2015 and 2014.
The funded status of our postretirement benefit plans and future effects on operating results depend on economic conditions and
investment performance. For further information about our benefit plans and the effects of this activity on our financial statements see
the Critical Accounting Estimates section within the MD&A and Notes 12 and 27 to the consolidated financial statements.
INCOME TAXES
GE pays the income taxes it owes in every country it does business. While GE and GE Capital file a consolidated U.S. federal income
tax return, many factors impact our income tax expense and cash tax payments. The most significant factor is that we conduct
business in approximately 180 countries and more than half of our revenue is earned outside the U.S., often in countries with lower tax
rates than in the U.S. We reinvest most of our foreign earnings overseas to be able to fund our active non-U.S. business operations.
Our tax liability is also affected by U.S. and foreign tax incentives designed to encourage certain investments, like research and
development; and by acquisitions, dispositions and tax law changes. Finally, our tax returns are routinely audited, and settlements of
issues raised in these audits sometimes affect our tax rates.
GE and GE Capital file a consolidated U.S. federal income tax return. This enables GE and GE Capital to use tax deductions and
credits of one member of the group to reduce the tax that otherwise would have been payable by another member of the group. The GE
Capital effective tax rate reflects the benefit of these tax reductions in the consolidated return. GE makes cash payments to GE Capital
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CONSOLIDATED
(Dollars in billions)
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EFFECTIVE TAX RATE (ETR) PROVISION FOR INCOME TAXES CASH INCOME TAXES PAID
2015 ± 2014 COMMENTARY
x The consolidated income tax rate for 2015 was greater than 35% due to charges associated with the GE Capital Exit Plan.
x As discussed in Note 14 to the consolidated financial statements, in 2015 in conjunction with the GE Capital Exit Plan, we incurred
tax expense of $6.3 billion related to expected repatriation of foreign earnings and write-off of deferred tax assets.
x The increase in the income tax expense is primarily due to the tax expense incurred as part of the GE Capital Exit Plan.
x The consolidated tax provision includes $1.6 billion and $1.5 billion for GE (excluding GE Capital) for 2014 and 2015, respectively.
72 GE 2015 FORM 10-K