GE 2015 Annual Report Download - page 98

MD&A OTHER CONSOLIDATED INFORMATION
70 GE 2015 FORM 10-K
OTHER CONSOLIDATED INFORMATION
INTEREST AND OTHER FINANCIAL CHARGES
Interest on borrowings and other financial charges amounted to $3.5 billion, $2.7 billion and $2.9 billion in 2015, 2014 and 2013,
respectively. Substantially all of our borrowings are in Financial Services, where interest expense was $2.3 billion (including $0.1 billion
in debt extinguishment cost), $1.6 billion and $2.0 billion in 2015, 2014 and 2013, respectively. GE Capital average borrowings declined
from 2014 to 2015 and from 2013 to 2014. Interest rates have been flat over the three-year period primarily attributable to a mix shift in
funding sources, in addition to declining global benchmark interest rates. GE Capital average borrowings were $217.5 billion, $267.6
billion and $297.3 billion in 2015, 2014 and 2013, respectively. The GE Capital average composite effective interest rate (including
interest allocated to discontinued operations) was 2.6% in 2015, 2.6% in 2014 and 2.6% in 2013. In 2015, GE Capital average assets
continue to decrease in line with the GE Capital Exit Plan. See the Liquidity and Borrowings section within the MD&A for a discussion of
liquidity, borrowings and interest rate risk management.
It is our policy to allocate Capital interest expense that is either directly attributable or related to discontinued operations. The allocation
is based on a market based leverage ratio, taking into consideration the underlying characteristics of the assets for the specific
discontinued operations. Interest expense that is associated with debt that is not assumed by the buyer or required to be repaid as a
result of the disposal transaction is reflected in continuing operations after the disposal occurs.
POSTRETIREMENT BENEFIT PLANS
(Dollars in billions)
PRINCIPAL PENSION PLANS
BENEFIT PLANS COST DISCOUNT RATES (December 31) EXPECTED RATE OF RETURN
2015 ± 2014 COMMENTARY
x Postretirement benefit plans cost increased in 2015, primarily because of the effects of lower discount rates and new mortality
assumptions, which were partially offset by lower loss amortization related to our principal pension plans and by changes to
principal retiree benefit plans.
x In 2015, we amended our principal retiree benefit plans affecting post-65 retiree health and retiree life insurance for certain
production participants. These plan amendments reduced our principal postretirement benefit obligations by approximately
$3.3 billion.
2014 ± 2013 COMMENTARY
x Postretirement benefit plans cost decreased due to higher discount rates and lower loss amortization related to our principal
pension plans, partially offset by a lower expected investment return on pension plan assets.
x We updated our mortality assumptions at December 31, 2014 based on tables issued by the Society of Actuaries to reflect
longer life expectancies. The new mortality assumptions increased our principal postretirement benefit obligations by $4.6
billion at year-end 2014.
70 GE 2015 FORM 10-K