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THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT GE - General Electric Co at Electrical Products Group Conference

EVENT DATE/TIME: MAY 20, 2015 / 03:30PM GMT

Forward-Looking Statements: 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 financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about our announced plan to reduce the size of our financial services businesses, including expected cash and non-cash charges associated with this plan; expected income; earnings per share; revenues; organic growth; margins; cost structure; restructuring charges; cash flows; return on capital; capital expenditures, capital allocation or capital structure; dividends; and the split between Industrial and GE Capital earnings. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward- looking statements include: obtaining (or the timing of obtaining) any required regulatory reviews or approvals or any other consents or approvals associated with our announced plan to reduce the size of our financial services businesses; our ability to complete incremental asset sales as part of this plan in a timely manner (or at all) and at the prices we have assumed; changes in law, economic and financial conditions, including interest and exchange rate volatility, commodity and equity prices and the value of financial assets, including the impact of these conditions on our ability to sell or the value of incremental assets to be sold as part of this plan as well as other aspects of this plan; the impact of conditions in the financial and credit markets on the availability and cost of GECC’s funding, and GECC’s exposure to counterparties; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; pending and future mortgage loan repurchase claims and other litigation claims in connection with WMC, which may affect our estimates of liability, including possible loss estimates; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flows and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level or to repurchase shares at planned levels; GECC’s ability to pay dividends to GE at the planned level, which may be affected by GECC’s cash flows and earnings, financial services regulation and oversight, and other factors; our ability to convert pre-order commitments/wins into orders; the price we realize on orders since commitments/wins are stated at list prices; customer actions or developments such as early aircraft retirements or reduced energy demand and other factors that may affect the level of demand and financial performance of the major industries and customers we serve; the effectiveness of our risk management framework; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation and litigation; adverse market conditions, timing of and ability to obtain required bank regulatory approvals, or other factors relating to us or Synchrony Financial that could prevent us from completing the Synchrony Financial split-off as planned; our capital allocation plans, as such plans may change including with respect to the timing and size of share repurchases, acquisitions, joint ventures, dispositions and other strategic actions; our success in completing, including obtaining regulatory approvals for, announced transactions, such as the proposed transactions and alliances with Alstom, Appliances and Real Estate, and our ability to realize anticipated earnings and savings; our success in integrating acquired businesses and operating joint ventures; the impact of potential information technology or data security breaches; and the other factors that are described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014. These or other 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. This document includes certain forward-looking projected financial information that is based on current estimates and forecasts. Actual results could differ materially. This document also contains non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.” In this document, “GE” refers to the Industrial businesses of the Company including GECC on an equity basis. GE Capital or GECC refers to the financial services businesses of the company. “GE (ex-GECC)” and/or “Industrial” refer to GE excluding Financial Services.” 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.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

CORPORATE PARTICIPAN TS Jeff Immelt General Electric Company - Chairman & CEO Jeff Bornstein General Electric Company - SVP & CFO

CONFERENCE CALL PART ICIPANTS Deane Dray RBC Capital Markets - Analyst Steven Winoker Sanford C. Bernstein & Co. - Analyst Andrew Obin BofA Merrill Lynch - Analyst Shannon O'Callaghan UBS - Analyst Jeff Sprague Vertical Research - Analyst Nigel Coe Morgan Stanley - Analyst

PRESENTATION

Unidentified Participant

Okay, everyone, let's get started. We've got the anchor presentation with GE, Jeff Immelt, CEO and Chairman. Thank you, Jeff.

Jeff Immelt - General Electric Company - Chairman & CEO

Great, thanks. Good morning, everybody. It's great to be back in a luxurious setting, so it's good to be back at EPG.

I'm going to start just -- I think you have heard a lot about the environment this week, but I would say the world we are seeing is kind of the world we prepared for. Decent growth out there. Volatility. The world [wind] infrastructure is still pretty strong. I don't see anything at all that is inflationary. So we still see good opportunities on value gap and then the Oil and Gas industry is what we prepared for and FX is headwind, but it has stabilized, so that's kind of the world we thought we were going to get into in December and that's the world we are seeing today.

So I am going to go through four things today. We're going to have a good 2015, so everything is on track there. I'll talk a lot about how we grow the industrial business consistently and the initiatives we have in place are going to continue to drive great growth there. Going to give you an update on GE Capital and where we stand from a capital allocation standpoint in general. And then just talk about the earnings potential of the Company going forward and how we see the next few years playing out. And these are the things that I think ultimately create shareholder value for GE investors.

So first, just no surprises on the year. I think the year has kind of come out the way we thought. The Power business is going to have a good year, good solid year even in a tougher market. The Oil and Gas business I will talk a little bit more about, but kind of what we expected for the year. The team is executing well on a tougher environment.

Energy Management is a turnaround story, so earnings growth there is really driven more by our improved execution than it is by industry tailwind. Aviation is going to be better than we thought when we sat here in -- when we were in the December Outlook meeting. Healthcare actually, we see the US market in healthcare getting better. That is still the biggest market for healthcare, so we are encouraged by the results we see there.

Transportation, sold out, big backlog, nice position there and Appliances we will sell this year. Lighting is doing okay. LED is replacing incandescent light, so that is kind of the tale of the tape. The segments are in pretty good shape and we will continue to do restructuring, but all our restructuring will be offset by gains for the year.

Then here is the framework we shared with you at the first-quarter conference call for the Company. It is still on track. Good solid industrial EPS growth, $1.10 to $1.20. GE Capital verticals at $0.15, like we have said, going forward. We think we are kind of ahead of plan. I will talk more about GE Capital, but we talked about having $90 billion of assets sold. We think that will be $100 billion or more as we look at the year.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

Free cash flows, we're going to have a good second quarter on cash, so free cash flow and cash generation on track and then the amount returned to investors really depends a lot on Synchrony. It is still our expectation that we get Synchrony done by the end of this year and we don't see anything standing in the way, or that should stand in the way of our ability to do that. So that's kind of the framework for the Company and where we stand.

So here is the Company. So if you think about all the portfolio moves we have made and think about the Company going forward, I would say we are financially strong, financially in good shape and the strategies that we've put in place over the years are quite well-positioned for the Company. So post-Alstom, the ins and outs will be about $135 billion, leadership businesses, strong backlog, at the top of the stack in margins and returns, financially really strong, returning $90 billion to investors in terms of what we've talked about with GE Capital and dividends and the Synchrony split. The capacity for another $20 billion as we really bring the GE balance sheet in line with other industrial peers, so lots of cash optionality. So the Company is very financially, I would say, well-positioned.

And then strategically, all of our initiatives are in full flight. So generational leadership in NPI, we've got the broadest, deepest, global footprint. We've got a services backlog that is huge. We've got 65% of the Company's processes going into shared services and on a pathway to 12% of SG&A to revenue. And I think from a digital standpoint both in terms of productivity inside the Company and also our ability to drive incremental service growth, we are ahead of our peers and well-positioned on the age of the industrial Internet to really be a leader in this space. So financially and strategically, I think the Company is in very good shape going forward.

Now Oil and Gas is kind of what we thought it was going to be. We are still on track operationally to have earnings from flat to down 5. I think when you add in FX, we look at earnings this year between down 5 and down 10 versus last year. We have taken a lot of strong actions. We've continued to invest in NPI. Our portfolio has really been, I would say, working to our advantage. So businesses like turbomachinery, downstream are still quite strong and able to offset some of the headwind in some of the other segments. We will take $600 million of cost out this year and we are really, I think, positioning ourselves well with our customers. So Oil and Gas I would say operationally the team is doing a good job in the environment and look, we are going to be well-positioned and agile when we look at 2016. So we have taken lots of actions. I think we're pretty well-positioned for the orders that are out there and we will see how it goes the rest of this year, but we expect to have a good business going forward in Oil and Gas.

And then we've always talked about making this business better during the cycles and I think what it takes to be better during this cycle is really three big things. One is you've got to do technically those things that are going to offer better solutions for the customers in a lower oil price environment and we are doing those things. Product structuring, services and that is really positioning us to win. You've got to continue to take costs out, so we'll have -- between what we do this year and what we do next year, we will have $1 billion of costs out, so that creates I would say a good buffer in terms of where the industry is going and you've got to win where it counts. So the balance of the portfolio, positioning ourselves with national oil companies, things like that, that's very important in this business. So we know we're going to go through the cycle better than we came in. I think from a financial standpoint, we are going to look better than our peers and continue to execute in this cycle.

Alstom, we still really like this deal. We think strategically it does a lot for the Company. It is broadly supported in the marketplace. We've got a huge pool of synergies that we can execute on in Alstom. It builds out a lot of capability in terms of a global footprint and services. It gives us a chance to really reposition the grid business for future growth, so a ton of things we really like in Alstom. We have had a chance I think to eliminate risk from a compliance standpoint. We have hired people from Bechtel to help us on integration, to look at the project and project management. So we've had a chance to dig through all the projects and the challenges on the deal is that the market's flat, so the market is sluggish and the processes in Europe have put this company in play for 15 months and that is tough on a business like this.

But we like this deal. We are confident it is going to get approved. This is a deal that is good for GE. It is good for Europe. It is good for investors. It is a competitive market and we remain confident that this deal will get approved around the world. We've already seen a number of approvals already take place. And again, like I've always said, we are only going to do a deal here that is good for investors and that is the way I would look at Alstom going forward.

Now the synergies have only grown. So when we were here a year ago, we talked about $1.2 billion of synergies. Today, we have got a funnel at $3 billion or above, so we've got a deep pool of synergies. This adds up to $0.06 to $0.09 a share in 2016, $0.15 to $0.20 a share by 2018. We've had hundreds of people working on the integration and synergy process, so I would say the one advantage to having time to work on it is this is probably the most studied synergy team and synergy plan in the history of the Company. So we feel really good that we are well-grounded and then I show you the walk from $1.2 billion to $3 billion in terms of where the synergies come from, more in service. We do see bigger potential there. A lot we can do with the manufacturing footprint. SG&A, we will take out 25% plus of the combined SG&A and more technical synergies. So we've got, I think, a well-underwritten investment for our investors that is well-positioned in terms of where we are going in the future.

And then I think when you think about how to grow a business like this, one of the most straightforward ways to grow is just pullthrough. So if you look at a combined cycle power plant, today, we have 30% of the content. Post-Alstom, we will have 60% of the content available. If you look at a wind turbine plant today, we have 65% of the content. With Alstom, we will have 75% of the content. On an eBOP, so balance of plant, we have almost none, 30%. With Alstom, we have 70%.

So the ability to put together the GE and the Alstom components and technologies on a combined cycle power plant, we think this is a big competitive advantage. On wind turbine, this is a very straightforward, low-risk synergy and this gives us a gain versus Siemens and ABB we just haven't had before from a standpoint of

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference technology and then think about a business like power conversion, this really transforms the power conversion business that we acquired a couple years ago from $2 billion to one that we are growing earnings. Alstom gives us fantastic capability to go with that new technology and we will come out in our power conversion business as a much stronger competitor with ABB going forward, rapid earnings growth, more capability. So I think financially, strategically growth and cost, we like the Alstom deal and where we stand and how it positions the Company.

We have a generational leadership in NPI. So we have invested in the past and the investment is paying off for all of us in this room as we stand here today. The H- turbine, really the only segment of the global power market that is growing right now is the large scale, the H segment and that is now 30% of the market and we have strong marketshare there. The lead product will be $200 billion in its lifetime. We just flew the Airbus Neo yesterday on the LEAP engine, so we feel great about that, where we stand from an engine technology standpoint, 79% marketshare.

Tier 4, very strong leadership in the Tier 4. The only one that is approved that will ship this year. We've got a great array of healthcare products coming through the system and will allow us to gain share in that market as US gets better. Strong LNG leadership in turbomachinery. We're doing all of the inverters in solar and wind, so real strength.

But beyond that, I was at a research center on Monday. The amount of manufacturing technology we have today is really going to allow us to work -- I think really get our product costs down as we launch these new technologies and drive product margins up. So should-cost, new technology, brilliant factories, this is all in really good shape inside the Company. So in addition to the moves we've made in the portfolio, our initiative like NPI is quite strong.

Globally, the Company continues to be in excellent shape. We will continue to grow our growth market orders in revenue this year even with the amount of volatility that is going on around the world. We see great balance and strength. China will be good for us for the year and we will see good growth in other regions as well. Alstom adds maybe $10 billion of revenue in growth markets, so we will be $60 billion plus or minus in the growth markets. This gives us tremendous scale advantage versus anybody else that is out there. It gives us more capability in places like the Middle East and Africa, so we feel good about that. And look, there's orders out there to be had right now. There's going to be a lot of power deals in the Middle East this year. There's oil and gas deals in Africa, Sub-Saharan Africa. There's big rail deals in Africa and Brazil.

We are building out the life sciences business globally, so there's $0.5 billion of business for the bioprocess manufacturing business in China and India this year. There will be $3 billion worth of narrowbody orders this year in China. So look, there's plenty of growth out there when you look at growth markets and where we stand and we will get more than our fair share in this activity.

Services continues to grow. Our margins are up to 32%. We have grown the dollars per installed base by 3%. Again, when you think about Alstom's synergies, Alstom has $5 billion of service revenue with 10 points less of margins than we've got today, so tremendous synergy. Alstom expands our installed base by 50%, so this is another 500 gigawatts of installed base that we get with Alstom and closing the gap with upgrades, using the same footprint. Alstom brings some multivendor service capability that we really like, so services is a core part of our competitive advantage, a core part of our synergy and we see good opportunities here as well.

We have talked in the past about the investments we have made. We had an investor meeting last year in New York City around the investments we've made in analytics and this continues to build out. I would say on the growth side, we are launching this year Predix, which is the operating platform for analytics that GE is going to offer to both customers and noncustomers as well. Packaging software with controls, which is a great way to approach the installed base. We've got individual software suites, what we call asset performance management that goes out after all of our assets and upgrades, services and service capability and enterprise software. So we've got all the technical components.

On the right-hand side, we are also taking this same technology to our plants. So a big driver of our variable cost productivity is going to be the ability to do analytics on our own plants where the suppliers are, what we can get from a productivity standpoint in terms of uptime and also driving services productivity. So a big suite of field engineers and the like. You're going to see 1000 commercials about Internet of Things, industrial Internet. Everybody down here I am sure talked about it. Mark my words, the ability to combine knowledge of the assets, physics and analytics is a killer competitive advantage and we can demonstrate failure in performance better than any horizontal company or any vertical company as we look to that. And you can eat it. Investors are going to be able to eat this in terms of the investment that we have made.

So when we look at kind of software and Predix-related businesses growing 20% a year, we are already at scale. We see this growing to $8 billion by 2017. 70% of it is going to be on Predix, so 70% is going to be on our own operating system. This is going to get $300 million to $500 million of productivity. We are basically paying for this investment with our own productivity savings, incremental productivity savings. So as an investor, you kind of get the growth for free as you look at this investment. $500,000 assets under management, dollars per installed base. The lower left is an example of what we can do in any one of our businesses, which is to build a suite of applications that we can now write rapidly for our investors -- or for our customers.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

And on the right-hand side, Field Vantage is a combination of sensors and software that goes into an onshore drilling system. This gives you 6% more output. That ought to be a $100 million business within three years. Digital Wind we launched yesterday. This ought to give a customer 20% more output of their wind investment, so tremendous opportunities for incremental service revenue growth.

Imaging Cloud, that will be $2 billion of let's say post-processing imaging will be in the cloud by 2019. We ought to have at least a third of that, maybe a half of that. Sensor Enablement, just by putting sensors on manufacturing floors and getting more visibly on uptime, that is $9 million per factory just in transportation. So this is now real inside GE and we are making great progress in terms of where we go.

I love where we are on margins. We are making great progress. I'm proud of the team. Fantastic momentum in margins. You saw that the last couple years, but certainly in the first quarter. We are on track for a 17% goal by 2016. Jeff and Dan Heintzelman are leading the initiative around gross margins, so we have targeted 50 basis points a year. We are way above that in the first quarter. We see good progress there. We are attacking every element of the cost base, so the teams are looking at what we call the critical Xs of how do you get variable costs down, how do you get gross margins up. So supplier productivity, cost of quality, we've got teams that are targeted around each one of the areas of gross margin. So we've got really great momentum, I would say as a company, around where we are going in margins.

Our businesses are all fundamentally in the game. So you've got Aviation, which is really --. On the Aviation side, we're really working hard on getting costs out at the launch. So the goal in Aviation is to get to target cost in half the time. So if you hung around this business, it's worth hundreds of millions of dollars as we do it.

In Power, it is all about operating cost per hour, OCPH. So with all the facilities we are bringing with Alstom, that is going to be a core driver of long-term productivity. Healthcare that has the most rapid product cycles, this is all about getting should-cost and all the products that we've launched through there. In Oil and Gas, as we integrate all of our acquisitions, this is really about leveraging our supply chain and getting more efficiency there. So company-wise, we drive tools like should-costs into the system. Each individual business with the new incentive comp plan is really wired to want to generate gross margin and gross margin goals. So we've got this really well-positioned inside the Company.

Simplification, we are on track to 12% by 2016. Here, again, Alstom has higher SG&A than GE has on about half the revenue. So we've got a massive opportunity to get synergies out of putting Alstom and GE together. We are targeting about 25% of the cost out. I think we can still do better than that and we continue to make progress on ERP reduction as being a big source of simplification savings, so we are well on our way to being under 100 ERPs going forward.

Restructuring, we have done $5 billion since 2013, so we've done a lot on the footprint. And FastWorks, which is our tool to drive better NPI speed, better capability inside the business, is making good progress as well. So we continue to be on a great pathway on SG&A and gross margins.

And then the last piece of cost is just corporate cost. So we are on path for $2.3 billion to $2.5 billion this year. We will be below that next year. We continue to make good moves around corporate costs going forward. I think the big challenges for us going forward are when we really reduce GE Capital substantially, we've got to run the place with one corporate. So that is going to be a cost take-out challenge that we are going to have to do as we shrink GE Capital.

With Alstom, the notion on corporate cost is one plus one equals one. There will be one corporate function in terms of how we run the Company going forward. Just in general, we are going to invest in the GE store, those things we do horizontally. We are going to have one layer of governance. And we just aren't going to have hobbies and we just have to continue to drive corporate costs down. So our pension continues to be a drag as you look forward. Improvement in interest rates certainly helps as that goes forward, but I think we've got a pretty good bandwidth to continue to take corporate costs down as time goes on.

We think the verticals are a good advantage for GE. These are good financing businesses, so we can generate returns well in excess of our cost of capital. We've got domain expertise as it pertains to the industries we are in. So we see these as really excellent financing businesses and ones that we can continue to invest in and grow, but they are also good for the entire Company. They are also good for our industrial company as well, so it gives us a unique knowledge of the assets. It allows us, I think, to do a better job of picking which engines we fund and which engines we don't fund, the knowledge of financing.

GE Capital does a great job of underwriting project finance globally around energy. So it gives us a tremendous advantage when we are trying to pull together export finance and other financing pieces and it will really help us in areas like healthcare where customers want to go from CapEx to OpEx. GE Capital adds a ton of value for that. So again, we like how the GE Capital businesses are fitting with the industrial portfolio.

So if I just capped off how you think about us growing industrial earnings over time, I think we've got substantial -- even a company our size -- substantial initiatives around NPI, improving the service growth rates, portfolio strength that, through the cycles, good times and bad, we ought to be able to grow the place organically at least 5%. That is kind of the way I think about the Company and how you go forward.

From a margin standpoint, if you get 50 basis points improved on your gross margins, and you take SG&A down to 12% and you fix underperforming assets, this is just arithmetic. We ought to hit 17%. We are on that pathway. The execution momentum is there. 17% returns, we will make good progress this year. We just have to get

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference our cash conversion up. We want to get over the next few years from 85% to 95%. You get -- we've had -- we've been in a big reinvestment cycle around the new products we've launched and some of the global footprint, but we've probably got $1 billion in CapEx that we can continue to see our way through. And we've got to get another $1 billion out of working capital and that gets you up to 95% and that's about where we should be going forward.

And then Alstom is what I just talked about. This is a complementary business in industries we know. We have thousands of GE people that know how to run these businesses. This is one that is not a far away, far-flung enterprise. This is kind of what we know how to do and how to get there, so you really have the levers of driving industrial growth in place on the field. We've got to execute, but these initiatives are already delivering and we feel good about how they are positioned for the future.

So shift gears. Let's talk about GE Capital execution. On the left-hand side is what we've talked about on April 10 mainly. So $65 billion of Synchrony, which, again, our expectation is this gets executed by the end of this year. Then we said we'd do $90 billion in 2015, $70 billion in 2016, $17 billion in 2017 and then we would release $20 billion that will go into the stock exchange split in Synchrony and $35 billion that we get from the capital exits that we've used to buy back stock.

And the right-hand side is kind of -- what we said on April 10 was this is a great time to be selling assets because growth is slow, interest rates are low, there's a ton of liquidity and I would say we are right on this. We are fundamentally right. There is 450 inbound inquiries. We had already done $45 billion, including commercial real estate in Australia, the deals you saw announced. We will have another $20 billion or $30 billion signed by the end of the second quarter. I would say if you think about what we thought in the year, we said $90 billion, we will do $100 billion. We said we would have all sales committed by 2017. I think we will be done by 2016. $35 billion, we are confident of that number, but let's see as deals close, I don't want to jinx it or anything like that, but we will see as deals close. Timing of dividends on track.

SIFI de-designation, look, we are going to go for it next year and there's a formal process in terms of how we do it. But, look, I would be disappointed if we don't beat these numbers. I think we've got the potential to do very well on this transaction at this time and we are going to start off extremely well.

So who gets the money? This is again just talking about -- there is going to be a ton of cash generated and the answer is primarily you. Primarily our investors are going to get dividend growth. You're going to get -- the Synchrony split comes back in $20 billion, the $35 billion coming from GE Capital, that comes back. And then if you think about all the companies that are here this week, how their balance sheet is levered, where we are today -- again, this is something that is not going to happen overnight, but as we continue to shrink in GE Capital, it doesn't really make sense for us to have a AA balance sheet and things like that. We're going to have more of what I would say an industrial balance sheet. That should free up another $20 billion.

Now, in our base plan, we have already allowed for $10 billion to do M&A over the next few years. We will generate another $5 billion to $10 billion through dispositions let's say over that time period. So that is not the $20 billion. The $20 billion is above all that, above and beyond all that. So just in our flow, we are going to do some acquisitions as time goes on and these are going to be core bolt-on deals, good returns, mixture of growth and cost and take it from there.

Look, guys, we are investing plenty in our core platforms. We've got great Aviation business, great Healthcare business; we just don't need big deals. We can continue to grow the Company just fine and so you've basically got $90 billion spoken for, $20 billion that is going to be available. We've got money dedicated to M&A that is already in the plan and this is kind of the framework that we are going to execute on. So that ain't bad. That's where the Company is and that's what GE Capital gives us a chance to do.

And then what that all adds up to is just how you think about the Company going forward. So you start with $1.10 to $1.20 a share. You do verticals and industrial; that's $1.25 to $1.35. The Synchrony and the GE Capital exit, that's announced and in process. We are pretty confident with where we are going to end up, but that is what is underway. You've got Alstom at $0.15 to $0.20 a share, but again a lot of execution has to go to that, but that is where we are. And then you say, okay, industrially -- if you grow your industrial EPS, industrial OP-profit EPS, 4% a year over the next couple of years, that gets you to $2. Now I'm going to run the Company to a higher number than that. But, again, in this room, you guys can build your own models and think about how you run the place, but that is just a baseline of the economics of how you think about the Company going forward. So if you get 5% organic growth, or if we are able to do the job on margins, if we execute the way we think we can execute on all the core growth initiatives we have inside the Company, we are going to be substantially above 4% annual growth, but that is the way you can look at the Company going forward.

So that's GE. I think like the portfolio, like the moves we have made. Strong portfolio, balanced portfolio, really in good shape. All the initiatives I have talked about today aren't things we are going to do, but things we are doing. So organic growth, margins, all the things we have done, a tremendous amount of capital flexibility let's say, cash flexibility in terms of the Company going forward and it's all down to execution. I think you see the pathway to execution here that can create a ton of shareholder value going forward. So let me end there and take some questions. QUESTION AND ANSWER

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

Dean Dray – RBC Capital Markets – Analyst

Thank you, Jeff. Probably more change in the organization than I've ever seen all at one time -- balance sheet, P&L, returns and real specific targets. Just one of the hurdles near term that is a little bit less out of your control is the Alstom approvals and certainly the tone seems a little bit better than during earnings when there was still some uncertainty, but there are some big hurdles ahead. It just raises the question, is there a line which you would draw that says this deal is not the same that we signed up for, that returns for shareholders don't make as much sense and maybe if you just provide some color around that?

Jeff Immelt - General Electric Company - Chairman & CEO

Guys, this is a process. We have done 41 deals in the last decade through Europe. This deal is in the process of being approved all around the world. It is a competitive market. Our customers have supported us. So you have a ton of things that are just in our favor as we go through it and it is just a process. You are going to read a headline here, a headline there, but you've just got to look at the big picture. I would say what we would be willing to do is maybe sell intellectual property around a product, something like that as a remedy. What we are not going to do is anything that impacts the service revenue stream. So that gives you two guiderails I would say to think about.

Steve Winoker – Sanford C. Bernstein & Co. – Analyst

So just to be clear on this double plus sign and the $2 number that you gave us for 2018, that does not include the benefits of the $20 billion additional balance sheet. It is all on top of this $2 number, right?

Jeff Immelt - General Electric Company - Chairman & CEO

Right. What I was really trying to give you guys is an [arithmetic] thought piece in terms of saying 4% -- you get to 4% you get to $2. The last couple of years, we have done 10, 6, 10 things like that. The team is going to be doing more and it doesn't include any additional optionality around the $20 billion.

Steve Winoker - Sanford C. Bernstein & Co. – Analyst

And then you more than doubled the synergy number that you have been talking to us about for Alstom. And one question is you had about $900 million of costs associated with that original $1.2 billion. How much -- and I didn't see --.

Jeff Immelt - General Electric Company - Chairman & CEO

It is [more] cost.

Steve Winoker - Sanford C. Bernstein & Co. – Analyst

What does the $900 million go to for the $3 billion?

Jeff Immelt - General Electric Company - Chairman & CEO

Jeff, what is the cost of getting the synergies go to?

Jeff Bornstein - General Electric Company - SVP & CFO

(inaudible - microphone inaccessible)

Jeff Immelt - General Electric Company - Chairman & CEO

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

Yes, so it is more cost. So it's more like a -- Steve, it is more like $1.5 billion of cost to get to $3 billion.

Steve Winoker - Sanford C. Bernstein & Co. – Analyst

Okay. And then just in terms of getting those, there was a lot of manufacturing commentary in there and footprint and a lot of other G&A you had in the line items. And yet we know there are certain restrictions on what you can do based on your agreements to get this deal done. So how should we think about that from kind of a global perspective, the levers that you actually do have to pull so that we can believe that that is reasonable even in light of the deterioration of the core business, which I will throw in?

Jeff Immelt - General Electric Company - Chairman & CEO

Steve, what I would say is the commitments we made are in France, so we are going to honor those commitments. The way to think about -- there is footprint everywhere in a deal like this, so Croatia, Belgium, Italy, China, Mexico, US. So the way I would think about it is we are going to rationalize -- the SG&A stuff is straightforward. From a manufacturing standpoint, rationalize facilities and then fill them up and then there's things in the supply chain right now that Alstom makes. There's things that Alstom buys that GE makes and so these are extremely straightforward synergies. In other words, the execution risk on the synergies on a deal like this is relatively small. This is not a big leap in terms of how to do it. So I think that's -- France, we have commitments, the rest of the places, these are all things we have done before.

Andrew Obin – BofA Merrill Lynch – Analyst

Just a question, Alstom is done. You lose the SIFI designation. What are the three top priorities maybe by business or area for the industrial business once you have the new cleaner GE full steam ahead?

Jeff Immelt - General Electric Company - Chairman & CEO

Look, I think for you guys, if I think about what is -- what gives incremental growth, margin and returns when you think about the Company going forward, I think executing on the big product launches. If we can pull -- if we can do H learning curve a year faster, LEAP learning curve a year faster, that's not like $7 million, that's like hundreds of millions of bucks. And so the way I would think about it as an investor is to say we've already won in the marketplace on these things. In other words, the engine wars are kind of over. The H-turbine war is in the process of being over. Now the question is can we execute from a supply chain standpoint, manufacturing standpoint? I would say that is number one.

I think number two is if we can use software analytics and all the things we're doing to get maybe another 2 points of organic growth around services, that is right to the bottom line. That is massively advantageous. And then I'd say in the short term it is getting our cash conversion back up to 95%. I think if we can do that, that just gives a lot of latitude around cash and capital and things like that.

Andrew Obin - BofA Merrill Lynch – Analyst

Just a follow-up question, $20 billion of capability as I think about it. Which businesses in order --?

Jeff Immelt - General Electric Company - Chairman & CEO

I think it's all about returns. In other words, guys, the way I would think about us today is we don't need to do anything. Aviation is in good shape. Power is in good shape. Healthcare is in good shape. Alstom helps Energy Management a lot. A business like Aviation, let's say the last five years in Aviation, we have done probably $5 billion of acquisitions and $1 billion of divestitures. So that's a five-year life in the history of GE land for one of our businesses.

So with that, they did Avio, they did a software acquisition, they did a service shop JV, they have done some supply chain things. That will generate a couple hundred million dollars of incremental margin over the years, blah, blah, blah. So I don't think we need to do much and it's all about returns at that point. It's what is the highest return and where can we go.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

Shannon O’ Callaghan – UBS – Analyst

Just a question on getting around to equipment margins and kind of getting around to free cash conversion. Was there a dynamic where the service growth and the service margin expansion was just so good that people get addicted to it and why is it that now has been sort of the time to turn to equipment margins to turn to free cash flow?

Jeff Immelt - General Electric Company - Chairman & CEO

I will start with the free cash flow first. I think, look, we were in, over the last five years, an incredibly heavy rampup in aviation, power and global. So you are building factories in Nigeria, you are doing all the tooling for the LEAP, the GEnx, the H-turbine, things like that. I think we see those now transitioning to being into ongoing production versus new P&E ramp and I would say, on the product margin side, I think we've made slow progress, but nowhere close to what we have done on the services side and we just want to do better. We just think we can do better and need to do better. So I would say free cash flow is a little bit different story than on the product side, but I think the -- we started heavier on manufacturing investment in terms of getting product -- really dedicated product costs over the last two or three years and so now it is more in the pipeline so that we can eat it going forward.

Shannon O’ Callaghan – UBS – Analyst

And then just on the $20 billion, how do you arrive at that number? I imagine with the stability of your service profit stream that somebody could make the case to lever up more than the average industrial, but what are the parameters (multiple speakers)?

Jeff Immelt - General Electric Company - Chairman & CEO

It's a conceptual thing. So you are going to have a couple billion dollars more let's say just EBITDA given Alstom and stuff like that as time goes on. We are assuming a little bit of growth from an interest rate standpoint to determine what the pension obligations are going to be and then the rest is just arithmetic of going from AA to A or things like that. So one is a rating metric. The other one is what is your ongoing EBITDA going to be and then the third thing is what is your assumption going to be on interest rates and pension.

Jeff Sprague – Vertical Research – Analyst

Two questions, one just following on on that. Is there any preliminary discussion with regulators about that thought process and the nature of my question is to actually succeed in de-designation, do you foresee having to make some kind of commitments or promises about how the Company might be levered given that you will still have roughly a $100 billion finance business?

Jeff Immelt - General Electric Company - Chairman & CEO

Again, we don't have to issue any new debt for probably five years, so you kind of take that off the table. I think on the de-designation, nobody really knows. We are going to be the first company that goes through that. I think we're always triangulating between -- my sense is that when you reach a certain size, you are kind of out. I don't think you are in like a halfway house or something like that. I think you are actually out. And then the conversation goes back to Moody's and S&P and how we have to issue debt and things like that.

So we don't throw that out there because we want to be foolish. In other words, we want to be safe and secure. We're going to walk before we run in terms of de- designation, but I do it as much as a signal to you guys. Look, we are not going to get out -- we're not going to get to 2017, 2018 and then say, okay, now let's grow GE Capital again. So we are an industrial company. We are going to have an industrial balance sheet. We are going to think about ourselves that way. That's how we are going to run ourselves. That's how we are going to govern ourselves.

Jeff Sprague – Vertical Research – Analyst

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

And then on the sell side of the portfolio, it does appear that the demand has been strong enough, as you said, to perhaps get this all done a year earlier. That strong demand doesn't seem like it has manifested in a change in your exit price and perhaps you are being conservative. Could you just address that? How much room do you think there is in that $35 billion?

Jeff Immelt - General Electric Company - Chairman & CEO

Jeff, again, it's a -- the early trades are going to be good compared to the $35 billion, but there is so much yet to do that I just don't want to jinx it or anything else in terms of go forward. And so we are just triangulating between speed and value and our job for you is to get those two things right. So there is so much demand, it is hard to see this not being essentially done by next year, but we want to balance that with what the exit price is.

Nigel Coe – Morgan Stanley – Analyst

So can you just maybe expand on what you mean by using the verticals as an advantage going forward? You have always had that advantage. Does that change the new world, the new, more focused GE Capital world and specifically if XM does go away, I'm not saying it will, but if it does, can the verticals fill that gap?

Jeff Immelt - General Electric Company - Chairman & CEO

So the way I would think about it is there has been one hallmark that has helped the Company over time here and that is we try to think about these things separately. So we don't lower our standards to just pull through product and we are not going to change that. I think the point I'm trying to make is we are the smart money on these assets. So when we sit down with an IPP in Mexico or something like that, we are the smartest money at the table. GECAS is the smartest money at the table and we plan to continue to leverage that. When it gets to XM, I think what we have the latitude to do is we are going to move production around and take advantage of other ECAs. So we can go to Canada, we can go to France, we can go to other countries and God forbid if it was ever something so stupid that the XM went away, we'd just move production around and take advantage of other places.

Nigel Coe – Morgan Stanley – Analyst

And then quickly on the Alstom project backlog, just to clarify that point, do you understand where the risks are and therefore you take marks quickly, or you are pretty comfortable with that backlog?

Jeff Immelt - General Electric Company - Chairman & CEO

Yes, so the day we announced the Alstom deal, I called Riley Bechtel, who has been a friend of mine a long time and I said I need a couple retired Bechtel guys who are going to join our integration team and help us poor through the backlog of projects and that's what we have done. So I would say it is not that all the projects are beautiful. There's a few in the portfolio that aren't that great. We just know where they are, how to remediate them and how to get on it. So we have had the advantage of having some really smart projects people work with us shoulder to shoulder as we've gone through and we've had access to all the data.

Unidentified Audience Member

Just a question on Healthcare. You haven't talked about it much today. You had a change in leadership last year, so maybe talk about how much of that business is still attractive for you. And then secondly within Oil and Gas, there's $1 billion of cost out, does that preclude acquisitions of any meaningful size?

Jeff Immelt - General Electric Company - Chairman & CEO

Yes, so the way I would think about -- we are going to have an investor meeting later this year on Healthcare, which I think will be a great chance to get everybody back in it. There's three segments of Healthcare essentially. One is diagnostic products, imaging products. That one is actually getting better. The US market is coming back. The US is still a big swinger in that space; that is really important. About a third of it is life sciences. That business is booming right now. The life science business is super strong. And then the third leg of that one is services and IT and services and IT is a place where I think we've got massive upside as we look forward in terms of the business.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

Now there are certain places that are slowing down. The China healthcare market is slower this year than it was last. Middle East is slower this year than it was last and things like that, so let's put that to one side. So I think that is Healthcare and we are actually from -- I would say from a market standpoint we are in a lot better shape today in Healthcare given US starting to rebound than we have been over the past couple of years.

And then if you look at Oil and Gas, I would say -- the first thing I would say is assets have yet to be repriced, so it's not like there is any startling deals. Within the metrics I showed you up there in terms of the $10 billion over three years or the chance to sell things to buy other things, there is still places in Oil and Gas we like that if the price got rate, we would look seriously at places. Really, I think this is a cyclical business where the endpoint is going to point up and we want to be positioned to be in a good place when that takes place.

Unidentified Audience Member

So the $3 billion number on Alstom, it's a big number. Fully recognize that's a five-year plan. How are you guys thinking about the trajectory of when you get the synergy benefits in? And as it relates to $0.15 to $0.20 that you have coming in from Alstom, but what are you expecting out of the underlying business?

Jeff Immelt - General Electric Company - Chairman & CEO

Jeff, do you have the lay in between synergies and the underlying business in Alstom?

Jeff Bornstein - General Electric Company - SVP & CFO

(inaudible - microphone inaccessible)

Jeff Immelt - General Electric Company - Chairman & CEO

In the $0.15 to $0.20 case?

Jeff Bornstein - General Electric Company - SVP & CFO

(inaudible) closing that gap. And so when we get to 2018, we are close, probably close to run rate in terms of how we think about the business going forward. From there, most of the upside from an earnings perspective will be seen through all of the growth synergies, as Jeff talked about, pulling through product, leveraging the installed base for deeper penetration on services. I think Jeff talked about the fact that margins in the services business at Alstom is about 10 points lower than it is in our own business, etc. So there will be some accretion beyond the 2018, but we are close to run rate at that point.

Unidentified Participant

We're running out of time here. Time for one last question? No? It's all yours for a wrap up then.

Jeff Immelt - General Electric Company - Chairman & CEO

So I think a lot to go through, but the Company is in -- we like how the Company is positioned right now. I have been coming down here a long time. I think everything in the next two or three years is more or less in our control to execute on and that is a good place -- if you are running any company, that is a good place to be. So I feel fantastic about being able to see it, touch it, feel it and the execution is on us. We can get this done.

Unidentified Participant

Great, thanks.

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MAY 20, 2015 / 03:30PM GMT, GE - General Electric Co at Electrical Products Group Conference

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