GE 2013 Annual Report - General Electric

1 2013 Annual ReportProgress22001133 AAnnnnuuaall RReeppoorrttGE WorksFocusing our best capabilities on what matters most to our investors, employees, customers and the world s progress. ON THE COVER: Shana Sands, GE Power & Water, Greenville, South Carolina. Turbine is destined for Djelfa, : Lyman Jerome, GE AviationPICTURED, PAGE 1 Back row (left to right):JOHN G. RICE Vice Chairman, GEMARK M. LITTLE Senior Vice President and Chief Technology OfficerJEFFREY R. IMMELT Chairman of the Board and Chief Executive OfficerDANIEL C. HEINTZELMAN Vice Chairman, Enterprise Risk and Operations KEITH S. SHERIN Vice Chairman, GE and Chairman and Chief Executive Officer, GE CapitalFront row (left to right):JAMIE S.

2 MILLER Senior Vice President and Chief Information OfficerBRACKETT B. DENNISTON III Senior Vice President and General Counsel SUSAN P. PETERS Senior Vice President, Human ResourcesJEFFREY S. BORNSTEIN Senior Vice President and Chief Financial OfficerBETH COMSTOCK Senior Vice President and Chief Marketing OfficerNOT PICTURED: John L. Flannery, Senior Vice President, Business DevelopmentGE CFOA (In $ billions)*Excludes NBCU niversal deal-related taxes20092010201120122013$ $ $ $ $ *CONSOLIDATED REVENUES (In $ billions)2009201020112012201315$154 CAPITALNBCUINDUSTRIAL2$1472$14617$149651 45444948$147 SEGMENT PROFIT (In $ billions)20092010201120122013$ $ $ $ $ EARNINGS PER SHARE20092010201120122013$ $ $ $ $ PERFORMANCEGE ScorecardIndustrial Segment Profi t Growth5%Cash from GE Capital$6 BMargin Growth60bpsCash Returned to Investors$ on Total Capital Tier 1 Common Year-End Market Capitalization$282B, +$64 BGE Rank by Market Capitalization#6 GE 2013 Annual Report 1 The diffi cult part about progress is that great results take time.

3 But, the pay-back can be huge. Last November, we received $40 billion of engine wins at the Dubai Air Show in two days. These commit-ments were for revolutionary new products that have come to market in the past few years. They are based on big bet technologies, years in the making and delivered ahead of the competition. Leading these results was the GE9X, which is the sole-source engine for the Boeing 777X. This plane is 20% more fuel effi cient than the one it replaced, saving airlines $11 million per airplane per year. The GE engine drives 50% of this improvement based on innovative new technology in com-pressors and combustors. This new engine the largest and most fuel effi cient in the world has only 16 fan blades, down from 22 in its prede-cessor.

4 This achieves effi ciency and reliability for our customers. And, to further performance, it is based on a GE invention: a new material called ceramic matrix composite. This material retains its strength at 2200 F 500 F higher than metal at one-third the weight. Our wins in Dubai came primarily from three customers: Emirates, Etihad and Qatar Airways. None of us grew up at GE with them as custom-ers. Each has emerged as a global leader in the past decade. And, we have built an excellent relationship with them based on solid operational performance and mutual trust. The combination of superior technol-ogy and strong relationships is the essence of competitiveness and allowed GE to win virtually all of the commitments at the takes bold commitments, a dedicated team and resilience.

5 There were at least two moments of truth as we invested in our new engine line-up. After the 9/11 tragedy, the commercial aviation industry was in full crisis. Instead of panicking, we increased our investment in the business and our customers. This has created trust and loyalty for GE that is unmatched. In 2008, during the depth of the fi nancial crisis, we substantially increased our invest-ment in commercial engine R&D. Because we made the right bets, we have the best products at the right time, securing decades of leader-ship for your Company. The desire to compete and win runs deep across the s ability to innovate is particularly crucial in the slow-growth and volatile economy we live in today.

6 Frequently I tell investors that if we ever see a economy like the ones we had in the 90s, GE will have earnings upside. While we don t expect that soon, there are signs that the economy is getting a little better each day. LETTER TO SHAREOWNERSMAKING PROGRESSGE has stayed competitive for more than a century not because we are perfect but because we make progress. Progress is about getting better, being better, doing better; this is why GE people get up every day. We are mission-based. GE technology and people move, power, build and cure the world. As investors, you can expect us to listen, learn, adapt and change. You should expect us to get better every day, to make progress.

7 2 GE 2013 Annual REPORTTHE GE WORKS EQUATIONWe look at what the world needsA belief in a better wayA relentless drive to invent and build things that matterA world that works better +=THE GEE WOOORKSS EQQUATIONWe loook at whhatt the world needsAA belieef in a bettter wayyAA releentless drrive tto invent andd build things tthat matterA wworld that wworks bettter=PICTURED: Jacob Wood, GE Power & WaterGE 2013 Annual Report 3 Meanwhile, Europe has stabilized; while its expansion is anemic, the daily crises have been eliminated. And, there are pockets in the region that are robust for GE like Germany, the Nordic region and Central Europe. We still see opportunities in emerg-ing markets.

8 China is one important engine of growth. China has mas-sive fi nancial strength, and we see its reform efforts as a positive. GE has a major role in helping China solve its healthcare, clean energy and transportation challenges. In the resource-rich countries, our prospects are bright despite a more volatile macro-situation. GE provides the capability for these countries to industrialize through our technol-ogy and localization efforts. That is why our growth is accelerating in regions like the Middle East, Russia and Africa despite social and politi-cal world is complicated. But, through the fog of the last fi ve years, I would take the 2014 economy any day.

9 The recovery is slow, but there are no major headwinds. While governments are not addressing major challenges like immigration and regulatory reform, there is less disruption. And, we have the fi nancial strength to make progress on our are positive about the future. We have positioned GE to capitalize on the growth themes of the era. We are investing to lead in the new technol-ogies that will drive effi ciency for the Company and our customers. We are improving our speed and lowering our cost. We plan to deliver a valuable fi nancial performance. We are mak-ing Are the World s Most Competitive Infrastructure CompanyInvestment in infrastructure is expected to reach $60 trillion by 2030.

10 Success requires technology, services and execution delivered at scale across a massive global footprint. With more than $100 billion in revenue and nearly 16% margins, we are the largest and most profi table infrastructure company in the world. Our goal is for infrastructure earnings to be 70% of GE s is essential. Countries must invest in infrastructure to com-pete and create jobs. For instance, Africa has a 100 gigawatt defi cit in electricity. Only by investing in power generation can it sustain growth. Fortunately, Africa is surrounded by some of the world s largest reserves of oil and gas. Converting gas to power is its infrastructure challenge.