GENERAL ELECTRIC CO

FINANCIAL POLICY. GE Aerospace is committed to maintaining strong investment grade ratings with a disciplined capital allocation strategy. The Company will continue to invest in future growth and innovation through research and development and capital expenditures. We intend to return a majority of our free cash flow* to shareholders through dividends and share repurchases. Merger and acquisition investments will be pursued in a disciplined way and focused on those that offer strategic, operational and financial synergies.

LIQUIDITY POLICY. We maintain a strong focus on liquidity and define our liquidity risk tolerance based on sources and uses to maintain a sufficient liquidity position to meet our business needs and financial obligations under both normal and stressed conditions. We believe that our consolidated liquidity and availability under our revolving credit facilities will be sufficient to meet our liquidity needs.

CONSOLIDATED LIQUIDITY. Our primary sources of liquidity consist of cash and cash equivalents, free cash flows* from our operating businesses, and access to capital markets. If needed, we can also draw from short-term borrowing facilities, including revolving credit facilities. Cash generation can be subject to variability based on many factors, including seasonality, receipt of down payments on large equipment orders, timing of billings on long-term contracts, timing of customer allowances and market conditions. Total cash, cash equivalents and restricted cash was $13.7 billion at September 30, 2024, of which $4.6 billion was held in the U.S. and $9.1 billion was held outside the U.S.

Cash held in non-U.S. entities has generally been reinvested in active foreign business operations; however, substantially all of our unrepatriated earnings were subject to U.S. federal tax and, if there is a change in reinvestment, we would expect to be able to repatriate available cash (excluding amounts held in countries with currency controls) without additional federal tax cost. Any foreign withholding tax on a repatriation to the U.S. would potentially be partially offset by a U.S. foreign tax credit.

Cash, cash equivalents and restricted cash at September 30, 2024 included $0.4 billion of cash held in countries with currency control restrictions. Cash held in countries with currency controls represents amounts held in countries that may restrict the transfer of funds to the U.S. or limit our ability to transfer funds to the U.S. without incurring substantial costs. Excluded from cash, cash equivalents and restricted cash was $1.4 billion of cash in our run-off Insurance business, which was classified as All other assets in the Statement of Financial Position.

2024 3Q FORM 10-Q 9

As part of the spin-off of GE HealthCare completed in the first quarter of 2023, we retained an approximately 19.9% stake of GE HealthCare common stock upon the spin. During the nine months ended September 30, 2024, we received total proceeds of $4.1 billion from the disposition of 48.3 million shares of GE HealthCare. As of September 30, 2024, our remaining interest in GEHC investment is 13.3 million shares (2.9% ownership interest). We intend to exit our remaining stake in GE HealthCare in an orderly manner. See Notes 3 and 18 for further information.

Following approval of a statutory permitted accounting practice in 2018 by our primary insurance regulator, the Kansas Insurance Department (KID), we have since provided a total of $15.0 billion of capital contributions to our insurance subsidiaries, including the final contribution of $1.8 billion in the first quarter of 2024. See Note 12 for further information.

On March 7, 2024, the Company announced that the Board of Directors had authorized the repurchase of up to $15.0 billion of our common stock, which replaced our previous $3.0 billion share repurchase authorization. Under this program, shares may be repurchased on the open market, under accelerated share repurchase programs, or under plans complying with rules 10b5-1 and 10b-18 as amended. In connection with this authorization, we repurchased 19.6 million shares for $3.3 billion through September 30, 2024.

BORROWINGS. Consolidated total borrowings were $19.9 billion and $20.5 billion at September 30, 2024 and December 31, 2023, respectively, a decrease of $0.6 billion, mainly due to maturities. In April 2024, the Company replaced its previous $10.0 billion syndicated credit facility with a five-year unsecured revolving credit facility in an aggregate committed amount of $3.0 billion.

CREDIT RATINGS AND CONDITIONS. We have relied, and may continue to rely, on the short- and long-term debt capital markets to fund, among other things, a significant portion of our operations. The cost and availability of debt financing is influenced by our credit ratings. Moody’s Investors Service (Moody’s), and Standard and Poor’s Global Ratings (S&P) currently issue ratings on our short- and long-term debt. Fitch, which previously issued ratings on us, affirmed our BBB+ long term rating and F1 short-term rating and subsequently withdrew its ratings on us on September 13, 2024 at our request. Our credit ratings as of the date of this filing are set forth in the table below.

Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

Substantially all of the Company's debt agreements in place at September 30, 2024 do not contain material credit rating covenants. Our unused back-up revolving syndicated credit facility contain a customary net debt-to-EBITDA financial covenant, which we satisfied at September 30, 2024.

FOREIGN EXCHANGE RISK. As a result of our global operations, we generate and incur a small portion of our revenues and expenses in currencies other than the U.S. dollar. Such principal currencies include the euro, the British Sterling pound, and Brazilian real. The effect of foreign currency fluctuations on earnings was immaterial. See Note 20 for further information about our risk exposures, our use of derivatives, and the effects of this activity on our financial statements.

STATEMENT OF CASH FLOWS

CASH FLOWS FROM CONTINUING OPERATIONS. The most significant source of cash in CFOA is customer-related activities, the largest of which is collecting cash resulting from product or services sales. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and postretirement plans.

Cash from operating activities was $4.5 billion in nine months ended September 30, 2024, an increase of$1.1 billion compared to the nine months ended September 30, 2023, primarily due to: an increase in net income (after adjusting for depreciation of property, plant, and equipment, amortization of intangible assets and non-cash (gains) losses related to our retained and sold ownership interests in GE HealthCare, AerCap and Baker Hughes) driven by all segments, a decrease in income tax payments, an increase in sales discounts and allowances, primarily due to higher spare parts shipments, partially offset by working capital growth. The components of All other operating activities included:

2024 3Q FORM 10-Q 10

The cash impacts from changes in working capital was $(0.6) billion, a decrease of $0.9 billion compared to the nine months ended September 30, 2023, due to: current receivables of $(0.6) billion, driven by higher volume partially offset by higher collections, including increased collections from CFM International; inventories, including deferred inventory, of $(0.2) billion, driven by higher material purchases and lower liquidations primarily due to output challenges; current contract assets, contract liabilities and current deferred income were flat, driven by higher revenue recognition, offset by higher billings and net unfavorable changes in estimated profitability; progress collections of $0.2 billion, driven by higher collections; and accounts payable of $(0.2) billion, driven by higher disbursements related to purchases of materials in prior periods partially offset by higher volume.

Cash used for investing activities was $0.9 billion in the nine months ended September 30, 2024, an increase of $5.8 billion compared to the nine months ended September 30, 2023, primarily due to: higher cash paid related to net settlements between our continuing operations and businesses in discontinued operations of $3.7 billion, primarily related to the separation of GE Vernova of $2.0 billion in 2024 and lower cash received of $1.1 billion related to the separation of GE HealthCare in 2023 (components of All other investing activities); a decrease in proceeds of $3.0 billion from the disposition of our remaining retained ownership interests in AerCap and Baker Hughes of $4.8 billion in 2023, partially offset by an increase in proceeds of $1.9 billion from GE HealthCare. These increases in cash used were partially offset by lower net purchases of insurance investment securities of $0.5 billion and proceeds from the dispositions of our non-core licensing business and Electric Insurance Company of $0.5 billion. Cash used for additions to property, plant and equipment and internal-use software, which are components of free cash flows*, was $0.8 billion and $0.6 billion in the nine months ended September 30, 2024 and 2023, respectively.

Cash used for financing activities was $4.5 billion in the nine months ended September 30, 2024, a decrease of $5.7 billion compared to the nine months ended September 30, 2023, primarily due to: cash paid for redemption of GE preferred stock of $5.8 billion in 2023; lower net debt maturities of $2.5 billion; and an increase in cash received of $1.1 billion from stock option exercises (a component of All other financing activities); partially offset by an increase in treasury stock repurchases of $3.2 billion and higher dividends paid to shareholders of $0.2 billion.

CASH FLOWS FROM DISCONTINUED OPERATIONS

Cash used for operating activities of discontinued operations was $1.1 billion in the nine months ended September 30, 2024, a decrease of $0.2 billion compared to the nine months ended September 30, 2023, primarily driven by lower net losses from our former GE Vernova business and disbursements for purchases of materials and separation costs incurred by our former GE HealthCare business in 2023.

Cash used for investing activities of discontinued operations was $1.1 billion in the nine months ended September 30, 2024, a decrease of $1.5 billion compared to the nine months ended September 30, 2023, primarily driven by higher cash received of $3.7 billion from net settlements between our discontinued operations and businesses in continuing operations, due to cash received of $2.0 billion in 2024 related to the separation of our former GE Vernova business and cash paid of $1.1 billion in 2023 related to the separation of our former GE HealthCare business. In addition, there was a decrease in cash used due to the prior year separation of GE HealthCare cash and cash equivalents of $1.8 billion. These decreases in cash used were partially offset by a reduction of cash and cash equivalents of $4.2 billion due to the separation of GE Vernova in 2024.

Cash used for financing activities of discontinued operations was $0.1 billion in the nine months ended September 30, 2024, a decrease of $2.0 billion compared to the nine months ended September 30, 2023, primarily driven by GE HealthCare's long-term debt issuance of $2.0 billion in connection with the spin-off in 2023.