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GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
GE-2009 Annual Meeting of Shareowners
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GE-2009 Annual Meeting of Shareowners

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  • 1. Positioning GE for long-term growth Jeff Immelt, Chairman and CEO Keith Sherin, Vice Chairman and CFO GE Shareowners Meeting April 22, 2009
  • 2. Presentation Keith Sherin (CFO): Operating GE in a challenging environment Jeff Immelt (CEO): Positioning GE for long- term growth 20090196-1/2 4/22/2009
  • 3. Operating in a challenging environment 20090196-1/3 4/22/2009
  • 4. Global economic recession U.S. housing U.S. unemployment Global GDP 210 1st time since ~30% decline Great Depression Average home prices ($) 200 in house 2% 8.5% global GDP prices from negative 190 peak 180 5.1% 1Q’09E 160 1Q’08 150 March ’08 March ‘09 2007 2008 2009 (2)% S&P/Case-Schiller Price Index Recession now affecting all pockets of global economy 20090196-1/4 4/22/2009
  • 5. Financial system in crisis Peak Cumulative bank losses to date Founded valuation 1850 $46B Bankruptcy ~$1.5T 1879 $130B Sold for $15B 1889 $40B Sold for $2B 1920 $262B $4B market cap 1923 $20B Sold for $2B ~$500B 1938 $86B $1B market cap 1969 $26B Sold for $4B U.S. Global 1970 $51B $0.5B market cap Fundamental reset of financial services landscape 20090196-1/5 4/22/2009
  • 6. Capital markets not functioning Gov. equity Bank holding co. Avg. debt issuance per month–a) $3B Converted ~$30B+ $10B Converted $10B Converted $25B Existing ~$2B $45B Existing $25B Existing Pre-crisis Today $45B Existing (a- excludes government guaranteed debt issuance  GE is paying the government to participate in loan programs  GE has not had to convert to a bank holding company  GE has received NO government equity 20090196-1/6 4/22/2009
  • 7. GE Capital impact What we don’t do + Originate risky debt (CLO, CDO, SIV) Earnings + Sell credit default insurance + Trade securities ~$12B + Originate high-yield debt ~$8B What we do + Senior and secured leader + Diversified portfolio + Operate assets ‘07 ‘08 + Work out problems + Underwrite to hold + Conservative funding GE Capital earnings will be under pressure Expect GE Capital to be profitable in 2009 20090196-1/7 4/22/2009
  • 8. Dividend GE had communicated flat dividend S&P 500 dividend reductions in 2008 … what changed in 2009? significantly increased in 2008 -  Unemployment spiked to 7.6% in 50 January already in ‘09  Capital markets deteriorated in Feb. 2009 62  Loss expectations at GE Capital  … government stress tests for banks  Moody’s and S&P ratings review 11 9 12 2005 2006 2007 2008  Sustained $0.31/share through 2Q’09 … $0.10 per share starting 3Q’09  Environment continued to deteriorate and GE was not immune 20090196-1/8 4/22/2009
  • 9. GE earnings performance 2008 actuals 2009 +10% Industrial • 1Q ’09 … $0.26 EPS vs. $0.21 consensus  Infrastructure earnings +11%  Capital Finance earns $1.1B (1)% S&P GE–a) • Operating with intensity  Aggressive cost out (193)% (29)% Capital  $171B infrastructure backlog  Solid cash performance • Increase disclosure + transparency S&P GE–b) (a- GE Industrial excluding C&I (b- Capital Finance  Performance > peers in ’08 … but below expectations 20090196-1/9 4/22/2009
  • 10. Global markets 43% over last year World equity index April 2008 – April 2009 returns 1,800 (52)% 1,600 1,400 (38)% (36)% 1,200 (39)% 1,000 (51)% 800 (48)% 600 2004 2005 2007 2009 ~$30 trillion in wealth destroyed 20090196-1/10 4/22/2009
  • 11. GE stock (50)% Ind. peers (64)% GE (71)% Fin. peers April ’08 Aug ’08 Dec ’08 April ’09  Concerns on GE Capital weighing on stock … but significantly off March lows – Stock +15% since March 19 meeting on financial services – Continuing to proactively communicate 2009/2010 scenarios  Stock performance in 2008 and 2009 disappointing to all of us 20090196-1/11 4/22/2009
  • 12. Safe and secure in summary ($ in billions) GE cash GE borrowings $45B less debt including $30B $31B more less commercial cash since paper September $549 $504 $47 $16 Commercial paper $88 $58 September Today September Today 2008 2008  Equity issuance provided $15B additional cash in hand  Dividend cut will provide ~$9B in cash annually  Retained strong, stable debt rating 20090196-1/12 4/22/2009
  • 13. Final thoughts  GE is a big company … impacted when the system collapsed  GE Capital is a good business … must be smaller as the financial markets reset  Made difficult decisions to protect the company over the long term  Performance builds trust Focused on keeping GE safe and secure 20090196-1/13 4/22/2009
  • 14. Positioning GE for long-term growth 20090196-1/14 4/22/2009
  • 15. A new era Cycle Reset Housing Financial services restructuring Unemployment Role of government Credit Wealth reduction/transfer Capital investment Reputation + trust Happens once Happens once each decade each generation 20090196-1/15 4/22/2009
  • 16. How we plan to win 1 Build strong businesses 2 Invest in innovation, services and globalization 3 Position in essential themes 4 Drive competitiveness through scale 5 Commit to people: strong leaders + loyal team 20090196-1/16 4/22/2009
  • 17. 1 Strong businesses GE has leadership franchises Segment / 15-year growth Strength (’93-’08) Energy Infrastructure ~15% (Power Gen, Wind, O&G) Technology Infrastructure 10+ (Aviation, Trans., Healthcare) NBCU 15+ (Cable, Film) Capital Finance 10+ (Verticals, Mid-Market Finance) 20090196-1/17 4/22/2009
  • 18. 1 Strong businesses Must create a smaller + more focused GE Capital Reduce assets ($B) + Connection with GE Exit product lines + High margin + Competitive advantage + Reliable lender Past Future GE Capital investor value 2000 Today Future $100B+ Low + 20090196-1/18 4/22/2009
  • 19. 1 Strong businesses Portfolio has been rebuilt for growth Businesses we sold Businesses we acquired – Reinsurance + Renewable energy – Financial Assurance + Oil & Gas/Water – Plastics/Silicones + Healthcare IT/Life sciences – Industrial supply + Avionics – TV stations + Cable media Underperformed Made billions post-GE for GE 20090196-1/19 4/22/2009
  • 20. 2 Invest in growth Lead in technology and content + 2000-09  Leadership in sciences $50B in technology  Continuous innovation 20,000 patents  Positioned in important industries $40B in content Energy/Water Media Healthcare Oil & Gas Global deployment Transportation Consumer Investment GE has scale advantage 20090196-1/20 4/22/2009
  • 21. 2 Invest in growth: Smart grid GE story Marriage of IT with electrical infrastructure to support 21st century energy needs … drives efficiency and renewables use Only GE …  Technology to integrate systems  Domain knowledge from generation through end use  Innovating for the future at our Global Research Centers Could be a $5B+ new business 20090196-1/21 4/22/2009
  • 22. 2 Invest in growth: sodium battery GE story  Increasing demand across GE industries + new markets  Unique technology…patented  $150 million in investments  Novel chemistry + materials + intelligent controls  Major investment planned Could be $1B+ new business Energy storage 20090196-1/22 4/22/2009
  • 23. 2 Invest in growth: hulu GE story  #2 online video site in the U.S.  Nearly 200 advertisers  More than 140 content providers  “50 Most Innovative Companies of 2009,” Fast Company  “The Best New Way to Watch TV,” BusinessWeek $100M revenue within first 24 months 20090196-1/23 4/22/2009
  • 24. 2 Invest in growth: molecular imaging GE story Brain imaging L R  GE leading in neuro imaging agents  Compounds being developed for early diagnosis for Alzheimer’s & Parkinson's  Therapy being developed with pharma companies Marker development  Lowers cost + improves patient + outcomes Imaging tools Commercialized by 2015 Could be $500M+ new product 20090196-1/24 4/22/2009
  • 25. 2 Invest in growth: cleaner coal GE story  Coal with a cleaner footprint  Capable of carbon capture  GE + Duke Energy building the largest commercial IGCC plant  Gives coal a future in a carbon constrained world  GE a leader … expect more business globally Duke Energy Could be $5B+ Edwardsport site construction, January 2009 new business 20090196-1/25 4/22/2009
  • 26. 2 Invest in growth: services $120B ~$40B 28% GE-Southwest story Backlog ’09 revenue Margins  Largest operator of our CFM56 engine…1,120 in Southwest fleet Business growth even  Big engine services customers … in a recession ~ $5B+ under contract through 2018  GE services help Southwest to be competitive 20090196-1/26 4/22/2009
  • 27. 2 Invest in growth: global ($ in billions) Iraq turbine order Industrial global revenues ~15% $61 CAGR $43 $26 2009 priorities '03 '06 '09F  Win major infrastructure orders % int’l. 41% 48% 53%  Establish strategic partnerships  Build capability in service, technology and manufacturing 20090196-1/27 4/22/2009
  • 28. 3 Position in essential themes Stimulus GE impact Target countries  Drive renewables $2T U.S.  Accelerate green energy Canada infrastructure China  Increase global infrastructure projects Japan  Accelerate targeted healthcare Brazil spending U.K.  Encourage innovation investment France  Aggressive export finance support Germany Announced Middle East  Governments targeting infrastructure, GE well-positioned energy, healthcare, jobs 20090196-1/28 4/22/2009
  • 29. 3 Position in essential themes ($ in billions) ecomaginationsm Revenues  72+ products $25  Big pipeline  R&D leadership $17  Reputation/brand $6  Saved $500M by reducing carbon footprint  Customer partnerships '04 '08 '10F GE the leader in clean energy 20090196-1/29 4/22/2009
  • 30. 4 Drive competitiveness 2008 industrial organic revenue growth 2008 margins 8 15.6 (in %) 2X (in %) 14.6 +100 bps. 4 GE GE Peers Peers 2008 return 2008 revenue on capital per employee 14.8 +270 bps. (in $K) 566 2X (in %) 12.1 294 GE GE Peers Peers Peers include Whirlpool, Disney, News Corp., United Technologies, Honeywell, Siemens, Philips, ABB, Rolls Royce, Alstom 20090196-1/30 4/22/2009
  • 31. 4 Drive competitiveness 2009 actions Cost out Cash $5B+ $2B+ Working capital reduced, freeing up cash Base cost  Inventory Indirect cost  Receivables Material cost  Payables Can weather the cycle 20090196-1/31 4/22/2009
  • 32. 5 Commit to people Employees Retirees  $1B training investment  You are GE  Deep expertise  Pension safe  Retention high  Good healthcare benefits  Fiercely loyal team Market-tested leaders in challenging times 20090196-1/32 4/22/2009
  • 33. Through cycles, GE performs ($ in billions) 1970-79 1980-89 1990-99 2000-09 ~165 ~90 65 29 12 8 10 4 Dividend Earnings Dividend Earnings Dividend Earnings Dividend Earnings From 2000-09, GE generated more earnings and paid more dividends than the past 30 years combined 20090196-1/33 4/22/2009
  • 34. Winning in the reset world 1 Build financial services around GE core 2 Invest more in R&D … products at all price points 3 Lead in essential themes … ecomagination  Next target is healthcare 4 Excellence in manufacturing … for the U.S. and the world 5 Retain a team that is competitive and loyal and has a long term view 20090196-1/34 4/22/2009
  • 35. There will be a future + GE will lead 20090196-1/35 4/22/2009

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