jp morgan conference - ge...repositioned portfolio delivers • experiencing some challenging...

JP Morgan Conference

Lloyd G. TrotterVice Chairman, GEPresident & CEO, GE Industrial

June 11, 2007

““This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.””

JRI Security Analyst 12-12-06/2

Agenda

• GE Strategy: Invest and Deliver

• GE Industrial: Positioned to Win

• Delivering Profitable Growth

• Summary

Invest & Deliver


Invest & deliver

Revenue Earnings Returns

2-3XGDP

10%+

20%

Invest in leadership businesses

Growthas a

process

Reliable execution &

financial discipline

Great people &

team

Safe & reliable growth company

“Built for the future”

+ Infrastructure technology + Demographics+ Developing markets + Value from liquidity+ Digital connections + Scarcity/environmental


Leadership businesses

IndustrialHealthcare NBCUInfrastructureCommercial

FinanceConsumer Finance

35% 20% 15% 10% 10% 10%

~$163B revenue

~$20-21Bnet income

~$25B cash from operations

~320K employees

% of earnings

Revenue $B $47.4 $23.8 $21.8 $16.6 $33.5 $16.2

OP $B $9.1 $5.0 $3.5 $3.1 $2.7 $2.9

’06 Growth 13% 15% 12% 9% 3% 10%

ROTC / ROE 29% 25% 28% 13% 13% 10%

GE Industrial: Repositioned to Win


Infrastructure

Commercial FinancialServices

NBCUniversal Healthcare

ConsumerFinanceIndustrial

GE Industrial

Consumer & Industrial … lighting / appliances / industrial products

Plastics … engineered thermoplastics

Security … commercial / industrial protection technology

Equipment Services … full service transportation equipmentleasing & rental

Sensing / Inspection Technologies … sensors / non-destructive testing & inspection technology

GE Fanuc … automation systems / devices


GE Industrial: Repositioned to win

• Product / Brand leadership

• Consistent performance

• Strong Cash generation

• Capitalize on Brand• Invest in Technology• Invest in Growth Areas

Microwave Data SystemsGELCore

• Dispose Non-CoreGE Supply InstrumentationMV ANSI Switchgear

• Lower Growth, lower margins

• Results volatile, cyclical• Stronger synergies with external buyers

Sold

BusinessAttributes

Strategy

• Growth Industries• High Tech Content• High Margins

• Invest in Technology• Invest in Growth Areas

Embedded• Partner with key players

HomelandCommerceguard

SecuritySensing & Inspection

GE Fanuc

PlasticsAdvanced Materials

Consumer & Industrial

Equipment Services

• Domain expertise• Solutions Oriented• Potential for high ROEs

• Leverage Domain expertise

Terion• Improve Asset Quality / Defleet

• Divest Non-CoreMod US

Brand Technology Domain


PlasticsTransaction

� Sell to SABIC

� Price: $11.6B … 10.3X ’07 EBITDA

� Targeted close: 3Q’07

Creates a modern plastics leader

� Gain $1.5B � restructuring� Cash $9B � buyback� Expand relationships in

Saudi Arabia/Middle East

Great deal: investors & customers & GE team

GEP

SABIC

Global technology+

Marketing/distribution

Supply chain+

Cost/availability

Win: customers & employees

� Accounted as Discontinued Operations 2Q’07

� No change to earnings guidance

Benefits Going forward


Smiths-GE Detection JV

• CT and trace detection products• Primarily focused on aviation

applications (USG)

• Integrated provider of detection solutions

… broad offering with global reach

• Service platform synergies

• X-ray, trace, and bio-detection products• Focus on aviation, commercial, first

responder, military, and cargo applications

Trace22%

X-ray21%Cargo

7%

Chem-bio20%

CT9%

Service21%

($ billions)

� Stronger & more diversified business� Significant synergies� GE committed to Security business long term

GE benefits

$1.1

Revenues

$B

GE

Smiths

+

=

$0.3

$0.8


GE Fanuc

Radstone(11/’06)

Condor

(3/’06)

SBS

(6/’06)

Automation: Embedded Platform($ in millions) Market

Revenue US/Global Segment Growth

$120 80%/20% Military 6%Commercial 8%

$25 80/20 Aviation 6%

Military 6%$180 55/45 Communication 9%

Commercial 8%

$120 55/45 Military 6%Aero 6%

+

+

+

Transformed GE Automation Business


Equipment Services

Yesterday

Reposition Core Acquire/ grow

Asset quality

• Defleeting old assets

• Expanded maintenance capability

• Further strengthened risk process

Business sale

•Mod US

• Other non core business sales in North America and Europe

Build

• Terion – 1Q’07

• Security

• Cold Chain

• Logistics

• Port equipment management

• IM hub services

Emerging Markets

• India & China railcar supply

New Capex

• Service products @ 40%+ margin

• Lease products @ ~20% ROE

Equipment leasing

Transportsolutionsprovider


Consumer & Industrial

’06 Portfolio Actions:

+ Acquired - Microwave Data Systems

/Invested in: - GELcore / Lumination

- Sold: - Instrumentation Services

- MV ANSI Switchgear

- GE Supply

Repositioned Portfolio Delivers

• Experiencing some challenging industry dynamics

• Continuing to invest in new products with focus on energy leadership

• Driving localization/growth in emerging markets

• Focused on minimizing inflation impact through pricing and cost-out

• On track to deliver double-digit performance through ‘07

Comments

Revenues

Segmentprofit

$1.1

$14~$15

$1.4

’06A ’07EOP% 8% 10%ROTC 32% 35%

($B)


'06 '07E

Industrial – ex. dispositions & Plastics($ in billions)

Revenues

Segmentprofit

$1.8

25-30%$23

~$25

Segment 8% ~9%profit %ROTC +2 pts

Focus on growth, returns& redeployment

Businesses in good shape

C&I Brand 20+% + High-end NPI

+ Global factory

Security/ Technology 15-20 + High-end NPI

Sensing/ + Global growth

Controls

Equipment Domain 20+ + High utilization

Services expertise + Asset mgmt.

V%Value

Delivering Profitable Growth


Profitable Organic Growth

• Technology Leadership

• Brand Management

• Capitalizing on GE / One GE

• Commercial Excellence

• Ecomagination

• Global Growth

Revenue

’07E ’10E

~$30

~$25

Equipment

Security

S&I

Automation

’06 Act

$23

C&I

Org’06-’10

’10 RevCAGR

$1.3 9%

1.4 9%

1.8 8%

9.6 8%

$15.8 3%

Drivers

2~3x GDP Across the Business


Technology … Devices to Solutions

Breakthrough Best in Class Designs from• Multi-modality Instruments

…best in class, ease of use

• Applications focused

…simple, easy, and accurate

• Platform standardization

…modular designs, CUIs

• Platform rationalization

…low cost design and build

Measure

Analyze

Inspect

Control

Optimize

Best in Class Instrumentationand Identification

Data Acquisition and Imaging

Automatic Defect Reorganization , Situational Awareness, Report & Archive

Leverage Data to Improve Process

Discrete & Continuous Process

Sensing & Inspection

Fanuc EquipmentServices

Security

Tire PSI

location

Temp

ID


Investing for leadership in Appliances

2007 MY Celaya

MonogramDD Cooktop

Dual CavityRange

Monogram Upgrade

Bottom Freezer

Comm. Kitchen

Wall-oven Upgrade

FSE Upgrade

40% increase in spending since ‘04


13%savings

Brand management & Global Sourcing

Profile ASP $687 $705 $727

Monogram ASP $1,321 $1,343 $1,364

OP% 9.8 10.3 12.2

ROTC% 40 61 92

’04 ‘05

High-end sales ($B)

China sourcing

$1.8$1.6

'04 '05

$400

U.S. ChinaCost to produce

$460

’06

$2.0

'06


The Monogram Experience Center


ecomaginationsm

Global industry sales (’05-’09)

CFL+16%

INC(5)%

35% AAG

R

GE CFL sales growth (’04-’06)

‘04 ‘06

Lighting Consumers want long life, energy savings, eco benefits…GE Industrial delivers


Fencing Gymnasium, National Conference CenterIBC, MPCElectrical DistributionSecurity

National StadiumAthletics, Football, Opening & Closing CeremoniesElectrical DistributionLightingSecurity

National Aquatics CenterSwimming, Diving, Water Polo, Synch SwimmingLighting

Laoshan VelodromeCycling (track)Electrical DistributionSecurity

Beijing Shooting Range Hall10-meter, 25-meter, 50-meter Electrical DistributionLighting

National Indoor StadiumGymnastics, Trampoline, HandballLightingSecurity

Olympic Sports Center StadiumFootball,Modern Pentathlon (running and equestrian)Lighting

Workers' StadiumFootballElectrical ComponentsSecurity

Capital Indoor StadiumIndoor VolleyballLightingSecurity

National Tennis CenterLightingSecurity

Global Growth :Olympics StadiumsTop Ten Results


Integrating & rationalizing cost …

� Simplifying P&Ls, organization,

legal entities… Security, C&I

� Driving Integration… Fanuc,


� Establishing COEs… Equipment

Services

� Driving total G&A% to lowest

cost model … C&I, Security,


5.3%

'06

60 bps reduction in G&A %

‘07E

4.7%

IndustrialG&A % of Revenue


Leveraging emerging market growth

• $700Bn in investments ’08-’12

• Construction industry continuing to drive momentum

Saadiyat Island $27B

Middle East

• India and China double-digit GDP growth

• Mega projects dominating industrial growth

Asia

• Panama Canal and adjacent opportunities

• Strong residential and commercial growth fueling IEC opportunities

Latin America

Macau Casinos $750MM Panama Canal $75MM

Summary


'06 '07E

Industrial – ex. dispositions & Plastics($ in billions)

Revenues

Segmentprofit

$1.8

25-30%$23

~$25

Focus on growth, returns& redeployment

Businesses in good shape

C&I Brand 20+% + High-end NPI

+ Global factory

Security/ Technology 15-20 + High-end NPI

Sensing/ + Global growth

Controls

Equipment Domain 20+ + High utilization

Services expertise + Asset mgmt.

V%Value

Segment 8% ~9%profit %ROTC +2 pts


'07E

'07E

'06 '07E '06 '07E

GE Key performance metrics:’07 outlook

Orders Revenues Assets

10+%~8%

+14%

Growth (V%) EPS (V%)

Returns Margins Cash

~$24B18.4% ~19.0% Ind’l.+10% V

G

G G

15.5% ~16.5%

Segment op. profit %ROTC CFOA

Solid performance

+10-12%

(Continuing operations)

G

+1 pt.

� Dividend $12B

� Buyback $7-8B

G

Tax ratein line

with ’06

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