GE 2015 fourth quarter performance Financial results & Company highlights January 22, 2016 CAUTION CONCERNING FORWARD-LOOKING STATEMENTS: This document contains "forward-looking statements" – that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. For details on the uncertainties that may cause our actual future results to be materially different than those expressed in our forward-looking statements, see http://www.ge.com/investor-relations/disclaimer-caution-concerning-forwardlooking-statements as well as our annual reports on Form 10-K and quarterly reports on Form 10-Q. We do not undertake to update our forward-looking statements. This document also includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. NON-GAAP FINANCIAL MEASURES: In this document, 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 are posted to the investor relations section of our website at www.ge.com. We use non-GAAP financial measures including the following. • Operating earnings and EPS, which is earnings from continuing operations excluding non-service-related pension costs of our principal pension plans. • GE Industrial operating & Verticals earnings and EPS, which is operating earnings of our industrial businesses and the GE Capital businesses that we expect to retain. • GE Industrial & Verticals revenues, which is revenue of our industrial businesses and the GE Capital businesses that we expect to retain. • Industrial segment organic revenue, which is the sum of revenue from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange. • Industrial segment organic operating profit, which is the sum of segment profit from all of our industrial segments less the effects of acquisitions/dispositions and currency exchange. • Industrial cash flows from operating activities (Industrial CFOA), which is GE’s cash flow from operating activities excluding dividends received from GE Capital. • Capital ending net investment (ENI), excluding liquidity, which is a measure we use to measure the size of our Capital segment. • GE Capital Tier 1 Common ratio estimate is a ratio of equity to total risk-weighted assets . General Electric Capital Corporation (GECC) has been merged into GE and our financial services business is now operated by GE Capital Global Holdings LLC (GECGH). In this document, we refer to GECC and GECGH as “GE Capital”. We refer to the industrial businesses of the Company including GE Capital on an equity basis as “GE”. “GE (ex-GE Capital)” and /or “Industrial” refer to GE excluding GE Capital. Our financial services segment previously referred to as GE Capital is now referred to as Capital. GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted. Imagination at work. 4Q’15 overview Environment Slow growth and volatile environment FX EPS headwind of $(.05) in 2015 Capital exits ahead of plan … $157B signed, $104B closed in 2015 GE executing well: Industrial + Verticals-a) operating EPS $.52, +27% … Industrial +27% Industrial segment OP margins-b) +50 bps. with gross margins-b) +110 bps. Total Industrial op profit margins ex. Alstom-c) 18.3%, +80 bps. Total year CFOA $16.4B, +8% Industrial Reported Organic Orders 3% 1% Segment revenue (1)% (1)% Segment op profit (8)% (1)% Total Industrial profit-c) (6)% 3% Execution versus goals 2015 Goals Grow Industrial segments Organic growth (2-5%) Margin expansion Verticals-a) EPS ~$.15 Capital cash to parent TY ’15 +7% 1% organic 3% 80 bps. $.17 $4.3B dividend Disciplined/balanced capital allocation CFOA $14-16B-d) $16.5B FCF + disp. $12-15B $15.2B Cash to investors $10-30B-e) $33B Portfolio actions (a- Verticals include businesses expected to be retained including allocated corporate costs (b- Excluding Alstom (c- Excluding gains and restructuring (d- CFOA excludes deal taxes related to the Signaling disposition (e- Includes Synchrony exchange $157B Capital deals signed Synchrony split-off complete Alstom closed; EPS impact $0 Appliances signed 2 4Q’15 orders $32.5B, 3% … 1% organic ($ in billions) Equipment $ V% Power $5.0 Ren. Energy 2.3 Oil & Gas 1.2 Energy Mgmt. 2.0 Aviation 2.8 Healthcare 3.2 Transportation 2.6 Total $18.7 Organic 58% (1 ) (52) 20 (36) (5) F 2% (1)% Services $ V% $4.6 0.2 2.1 0.6 4.0 2.0 0.6 $13.8 25% 40 (17 ) 2 9 (2) (12 ) 5% 3% Orders price ex. Alstom +0.9% +3.8% +1.9% +1.2% (1.6)% (0.4)% Power Ren. O&G EM (1.6)% -% Aviation Healthcare Trans. Backlog ($B) $249 $315 $266 $268 $272 $270 71 70 72 70 Equip. 64 Services 185 195 198 200 199 '13 '14 1Q'15 2Q'15 3Q'15 89 Alstom $17B 226 Alstom $12B 4Q'15 Highlights Equipment orders +2%, (1)% organically … strength in Gas Power Systems and Transportation with India rail order offsetting O&G market & Aviation comps Service orders +5%, +3% organically … Aviation spares rate +10%, Power Services +13% ex. Alstom Record backlog $315B … core +$17B VPQ, Alstom $29B Alstom orders $2.6B: Power $1B, Renewable Energy $0.5B, Grid $1.1B Regional dynamics excluding Alstom … growth markets +7%, Europe (9)%, U.S. (16)% Power OPI +3.8% driven by HA gas turbine 3 Industrial segment execution Revenue growth +2 pts. (6) pts. TY organic +3% (1)% (1)% FX Disp. Alstom 2015 Backlog 4% 7% (5)% 4% 3% 2% 7% 6% 3% 5% 20% V% -a) 5% 27% (9)% -% 13% 4% 6% 7% 2016E + +/++ (10)-(15)% + + + − + 2-4% + ++ 27.4% (ex. Alstom) 19.3% +80 bps. 4Q’15 Total w/ Alstom 27.7% 17.0% +50 bps. +110 bps. 4Q organic Organic revenue dynamics Power Renewables Oil & Gas Energy Mgmt. Aviation Healthcare Transportation A&L Ind. segments - Services - Digital (ex. Alstom) 28.8% +4 pts. 4Q reported Segment Segment gross margins OP margins Industrial -b) OP margins (ex. Alstom) 18.3% 15.3% +80 bps. +80 bps. +110 bps. TY’15 4Q’15 TY’15 4Q’15 27.1% 17.6% 16.5% 16.6% 14.8% Segment drivers Mix Value gap (price/inflation) Cost productivity Gross Margins-c) Simplification (SG&A) Base inflation/other Op Profit Margins -c) Alstom Op Profit Margins 4Q 0.4 pts 0.6 0.1 +1.1 pts. (0.6) +0.5 pts. (1.7) (1.2) pts. TY’15 TY 0.1 pts 0.4 0.3 0.8 pts. 0.3 (0.3) 0.8 pts. (0.5) 0.3 pts. TY services margins +40 bps, equipment +20 bps.-c) (a- Power & Renewables adjusted for Alstom; Energy Mgmt. adjusted for Alstom (including Digital Energy) and dispositions (b - Industrial includes Corporate, excluding gains and restructuring (c- Excluding Alstom 4 Generating cash ($ in billions) 4Q YTD CFOA $15.2 Capital dividend 3.0 Industrial 12.2 V% $16.4 8% 4.3 43% 12.1 (1)% Core-a) +3% FCF Ind’l. FCF 2014 $11.8 $8.8 2015 $13.5 $9.2 14% 4% TY Industrial cash flow ex. Alstom & deal taxes $12.6B, +3% TY core Industrial FCF conversion 85%-a) 4Q Capital dividend $3.9B … TY $4.3B GE cash balance walk Total Beginning balance 1/1/15 $15.9 CFOA 16.4 Dividends (9.3) Net P&E (2.8) Acquisitions (10.4) Dispositions 1.7 Buyback (3.3) Debt issuance/repayment 1.4 Other 0.8 December 2015 $10.4 $33B cash returned to investors including $20B Synchrony exchange 5 (a- Core industrial excludes Alstom and Signaling deal taxes 4Q’15 consolidated results ($ in billions – except EPS) Revenues – Industrial – Verticals-a) – Other Capital-b) 4Q’15 $33.9 31.3 2.5 0.1 Industrial + Verticals EPS Operating EPS Continuing EPS Net EPS CFOA YTD - Industrial CFOA ($ in millions) V% 1% 3 (14) F .52 .31 .26 .64 27 (21) (26) 25 16.4 12.1 8 (1) Revenues $ V% Power $7,085 3% Op profit $ V% $1,628 (10)% (5)% (54)% Renewable Energy 1,938 (16) 56 (79) Oil & Gas 4,355 (16) 715 (19) Energy Mgmt. 2,375 20 33 (71) Aviation 6,734 5 1,571 12 Healthcare 4,973 (3) 938 (8) Transportation 1,612 2 339 8 Appliances & Lighting 2,282 (1) 241 28 4Q’15 4Q’14 Industrial Segments 31,352 (1)/(1) Consolidated tax rate (39)% 5% Corporate ex. gains/restructuring (1,043) 18 – GE (ex. GE Capital) 5 13 GE TY Industrial ex. gain/restructuring $30,309 (1)% – GE Capital 39 F 14% Organic Industrial + Verticals EPS Industrial operating Capital Verticals-a) 4Q’15 $.47 .04 $.52 V% 27% 0% 27% (a- Verticals include businesses expected to be retained including allocated corporate costs (b- Other Capital includes HQ run-off & exit-related items Note: Individual amounts are rounded. As a result, the sum of the parts presented may not add to the total. Organic 5,522 (8)/(1) (417) ex. Alstom 4% (4)% 25 Organic $5,105 (6)/3% Alstom EPS $0 6 Alstom segment impact ($ in millions) Reported op profit Alstom impact $1,628 $(80) $1,708 (5)% (6)% Renewable Energy 56 (69) 125 (54)% (49)% Energy Management 33 (85)-a) 118 4% 17% Industrial Segments $5,522 $5,756 (4)% (1)% Power Corporate restructuring & other items Industrial $(234) Op profit ex. Alstom V% ex. Alstom Organic V% (160) $(394) Alstom financial summary: • Orders $2,557 … Power $1,030, Renewable Energy $469, Grid $1,058 • Revenue $1,956 … Power $917, Renewable Energy $87, Grid $952 • EPS impact $0 … $(234) op profit impact on the segments + $(160) at Corporate offset by integration tax benefits Alstom on track for ~$.05 EPS in 2016 7 (a- Represents the impact of the formation of the Grid joint venture Earnings dynamics (after tax, $ in millions – except EPS) Earnings walk Industrial operating Verticals-a) Industrial + Verticals earnings Other Capital-b) Operating earnings Non-operating pension Continuing earnings Discontinued operations Net earnings 4Q’15 net income 4Q’15 EPS EPS V% $4,629 $0.47 27% 438 0.04 0% $5,067 $0.52 27% (2,053) (0.21) U $3,014 $0.31 (21)% (447) (0.05) (67)% $2,567 $0.26 (26)% 3,716 0.38 F $6,283 $0.64 25% Industrial + Verticals EPS $0.52, +27% … strong Industrial growth, +27% (a- Verticals include businesses expected to be retained including allocated corporate costs (b- Other Capital includes HQ run-off & exit-related items Note: Individual amounts are rounded. As a result, the sum of the parts presented may not add to the total. 8 4Q’15 Industrial other items EPS Restructuring & other items Gains $(.04) $.08 Summary $(567)MM pre-tax, $(397)MM after-tax at Corporate, including Alstom deal costs & purchase accounting items of $(160)MM pre-tax $998MM pre-tax, $839MM after-tax at Corporate related to the Signaling, Embedded Controls, and Clarient dispositions and Appliances break-up fee 3Q YTD 4Q 2015 2016E Restructuring & other items $(.08) $(.04) $(.12) ~$(.25) Gains & settlements $.03 $.08 $.11 ~$.25 $(.05) $.04 $(.01) ~$- Total 2016 focus on Alstom, O&G, and product/service costs … ~60% of spend in 1H 9 Industrial segments ($ in millions) Power 4Q’15 $ Renewable Energy V% V% 4Q’15 Revenues ex. Alstom Revenues $7,085 3% (10)% Segment profit $1,628 (10)% (5)% Op profit % 23.0% (3.3) pts. 1.4 pts. 4Q dynamics Segment profit Op profit % $ V% $1,938 (16)% (20)% $56 (79)% (54)% 2.9% V% ex. Alstom (8.7) pts. (4.8) pts. 4Q dynamics • $9.6B orders, +40% ... core equipment +46% driven by GPS +60% with 55 GTs including 12 HA units; core services +8% • $2.5B orders, +1% ... core (18)% and (10)% ex. FX on lower wind orders due to higher 4Q’14 U.S. PTC volume • Revenue … core equipment (25)% driven by GPS (22)% on 16 less GT shipments, DP (36)%; services +1% driven by Power Services +8% • Revenue … core (20)% driven by foreign exchange and lower U.S. wind turbine shipments • Op profit margins … core +1.4 pts. driven by positive value gap and mix • Op profit margins … core (4.8) pts. driven by new product launch costs Strong execution in Power; Renewables impacted by new product transition 10 Industrial segments ($ in millions) Aviation 4Q’15 Oil & Gas $ V% 4Q’15 Revenues $6,734 5% Revenues Segment profit $1,571 12% Segment profit 1.6 pts. Op profit % Op profit % 23.3% 4Q dynamics • $6.8B orders, (16)% … equipment (36)% on fewer commercial engines; services +9% with spares +10% … $151B backlog, +13% VPY Strong execution V% $4,355 (16)% $715 (19)% 16.4% V% Organic (6)% TY (7)% +1% (0.7) pts. (0.1) pts. 2016 dynamics • Revenue likely at low end of range (10)-(15)% (10)-(15)% • Revenue … equipment (6)% on lower volume with Commercial (5)% and Military (1)%; services +18% • Segment profit +12% on strong volume and positive value gap … margins +160 bps. $ Organic revenue Organic op profit • 2016 base plan includes ~$400MM of cost out • Targeting additional $400MM of cost out to offset volume & price pressure More cost out in tough environment 11 Industrial segments ($ in millions) Healthcare 4Q’15 Transportation 4Q’15 $ V% $4,973 (3)% Revenues Segment profit $938 (8)% Op profit % 18.9% (1.0) pts. Revenues 4Q dynamics $ V% V% Organic $1,612 2% 11% Segment profit $339 8% 18% Op profit % 21.0% 1.0 pts. 1.2 pts. 4Q dynamics • $5.2B orders, (4)%, +1% organically … emerging markets (8)%, U.S. (1)%, Europe (8)%, +4% ex. FX, China (6)% and (3)% ex. FX • $3.2B orders, +66% driven by equipment +113% with $2.2B Indian Railways order; Mining (40)% • Revenue (3)%, +3% ex. FX with HCS +3% ex. FX & Life Sciences +6% ex. FX … emerging markets +1% and developed +3% ex. FX • Revenue +2% with equipment +17%, Mining (6)%; services (16)% driven by Signaling • Segment profit (4)% organic driven by higher investment in new platforms • Margins +8% driven by higher locomotive volume, strong value gap and cost out Healthcare … positioning portfolio for stronger 2016 Transportation … strong Tier 4 execution 12 Industrial segments ($ in millions) Energy Management 4Q’15 $ Revenues Segment profit Op profit % V% Appliances & Lighting V% Organic $2,375 20% -% $33 (71)% 17% (4.3) pts. 0.5 pts. 1.4% 4Q dynamics • $2.6B orders, +15% … Alstom $1.1B; Power Conversion (17)%, (11)% organic and Industrial Solutions (17)%, (11)% organic 4Q’15 $ V% $2,282 (1)% Segment profit $241 28% Op profit % 10.6% 2.5 pts. Revenues 4Q dynamics • Appliances revenue flat … industry strength and favorable product mix offset by price • Revenue +20%, flat organically with Power Conversion +9%, Industrial Solutions (4)% • Lighting revenue (5)%, flat organically with LED +28% and traditional (17)% … LED 37% of total revenues • Segment profit +4% excluding the impact of Alstom and +17% organically • Segment profit +28% driven by strong deflation & cost productivity; margins +2.5 pts Energy Management … Alstom integration underway Appliances deal signed … targeting mid-year close 13 GE Capital ($ in millions) 4Q’15 performance GE Capital update Earnings Verticals-a) $438 Run-off/HQ (2,053) Continuing Operations (1,615) Earnings from disc. ops. 3,722 Total GE Capital $2,107 • $82B of ENI ex. liq. … $167 incl. disc. ops. • $91B of liquidity-b) … CP down to $5B • Basel 3 T1C-c) at 14.5%, up 80 bps. VPQ after $3.9B dividend in the quarter … $4.3 in ’15 Verticals … delivered $1.7B for 2015 … supporting GE Store with pull-through financing Run-off/HQ includes excess interest expense, restructuring, HQ operations and $0.8B impairment of a non-strategic power plant Synchrony split complete … $3.4B GoS & 671MM GE shares retired; Consumer now in disc. ops. $157B signings & $104B closing in ’15 … will be largely done by end of ’16, a year ahead of plan Returned $25B of capital in 2015, targeting ~$18B in 2016 and ~$13B in 2017/2018-d) Plan to apply for SIFI de-designation in 1Q Total assets down $186B … $317B at 4Q’15 Capital transformation well underway … carrying strong momentum into 2016 (a- Verticals include businesses expected to be retained including allocated corporate costs (b- Liquidity includes cash & equivalents (including discontinued operations and held for sale balances) and high quality interest bearing deposits (c- Basel 3 Tier 1 Common ratio estimated based on U.S. standardized transitional basis (d- Subject to regulatory approval Note: Individual amounts are rounded. As a result, the sum of the parts presented may not add to the total. 14 2016 operating framework 1 Operating EPS-a) $1.45-1.55 2 Free cash flow + dispositions $28-31B $29-32B 3 Cash returned to investors ~$26B • • • • • • • Organic growth of 2-4% Core margin expansion Corporate @ $2.0-2.2B Alstom ~$.05; Appliances gain ~$.20-c) Restructuring = gains FX impact ~$(.02) at today’s rates High-teens Industrial tax rate • CFOA of $30-32B-b); ~$18B Capital dividend-c) $3-4B-b) • Dispositions of $2-3B-b) • Net P&E of ~$4B • Dividend of ~$8B • Buyback of ~$18B (a- Industrial + Verticals (b- Deal taxes are excluded from CFOA and included in dispositions (c- Subject to regulatory approval 15