Ge 2011 Annual Report 1 the Ge Works Equation
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General Electric Company Fairfi eld, Connecticut 06828 www.ge.com GE Works GE 2011 Annual Report Annual 2011 Annual Report 3.EPC055148101A.102 CONTENTS 2 Letter to Shareowners 10 Business Overview 29 Board of Directors 31 Financial Section 142 Corporate Information 2011 SUMMARY fi nancial and strategic highlights CONSOLIDATED REVENUES (In $ billions) 20072008 2009 2010 2011 180 170 NBCU 154 150 147 $ 155 163 139 142 22% 200B 133 GROWTH CONTINUES RECORD INDUSTRIAL GE ex NBCU 22% increase in Operating BACKLOG EPS excluding impact Record equipment and service of the preferred stock orders drove the backlog to a redemption, and 20% rise record of $200 billion. in Operating earnings. EARNINGS ATTRIBUTABLE TO GE (In $ billions) 20072008 2009 2010 2011 $ 22.3 85B 70% 17.8 NBCU 20.4 FINANCIAL FLEXIBILITY DIVIDEND INCREASES 14.1 15.9 12.5 GE had $85 billion of cash and GE announced two dividend 10.8 13.0 equivalents at year-end 2011. increases in 2011 following GE 11.3 ex NBCU 9.5 two increases in 2010: a total 70% increase over the two years. $ CASH FLOW FROM OPERATING 18% 18B ACTIVITIES (CFOA) INTERNATIONAL GROWTH U.S. EXPORTS (In $ billions) 2007 2008 2009 2010 2011 GE’s global growth initiative International sales of American- 23.3 helped drive 18% growth in made products totaled $18 billion GECS 19.1 industrial international revenue. in 2011, a $1 billion increase Dividend 16.4 from 2010. 14.7 16.8 16.0 12.1 Industrial CFOA 6% 13,000 R&D SPEND U.S. JOBS GE continued its strong research GE has announced the creation and development investment of 13,000 jobs in the United States with total spending at 6% of since 2009. ON THE COVER industrial revenue. Wellington Pereira dos Santos Operator II GE’s Wellstream facility in Niterói, Brazil, is a leading producer of high-quality fl exible pipe equipment for the Brazilian offshore drilling market, part of a $500 million expansion of operations in the country. Note: Financial results from continuing operations unless otherwise noted. GE Works At GE, we put our ideas to work. Taking them off the paper, out of the lab and into the world. Engineers, scientists, teachers, leaders and doers, all sharing a belief that things can be made to work better. It’s why we come to work every day. To build, power, move and cure the world. We are at work making the world work better. Pictured, left to right: Jeffrey R. Immelt John Krenicki, Jr. Keith S. Sherin Michael A. Neal John G. Rice Chairman of the Board and Vice Chairman, GE and Vice Chairman, GE and Vice Chairman, GE Vice Chairman, GE and Chief Executive Offi cer President & Chief Executive Chief Financial Offi cer and Chairman & President & Chief Executive Offi cer, Energy Infrastructure Chief Executive Offi cer, Offi cer, Global Growth & GE Capital Corp. Operations GE 2011 ANNUAL REPORT 1 THE GE WORKS EQUATION A belief A relentless We look at A world in a better drive to invent what the that works X way +=and build things world needs that matter better LETTER TO SHAREOWNERS Culture is the foundation for any We build on this mission with a belief in a better way. We are constantly successful enterprise, and ours learning and driving best practices. We invest to train our people and develop inspires our people to improve leaders. We learn from customers, competitors, peers and each other. every day. It is why GE Works. Because we know we can get better, we are never afraid. Competition is in It starts by being “mission-based.” We have a relentless our blood. drive to invent things that matter: innovations that GE is a “We Company,” not a “Me build, power, move and help cure the world. We make Company.” We want people who listen more than they talk. We want leaders things that very few in the world can, but that everyone who build teams. Bob Santamoor needs. This is a source of pride. To our employees and represents labor; he is the Chairman of customers, it defi nes GE. the IUE-CWA GE Aerospace Conference Board. We have worked together for years. We don’t agree on everything, but we respect each other. When we meet, we talk about jobs. We need each other to be successful. We made the decision to invest $1 billion in our Appliance business, modernizing our factories in the U.S. Our fi rst two new products will be introduced early in 2012, with other major launches throughout the next two years. Most of 2 GE 2011 ANNUAL REPORT our appliance product manufacturing S&P Financial and Industrial sectors— I would argue that when the environ- will move back from China and Mexico the “GE neighborhood”—which declined ment is continuously unstable, it is no to the U.S. We think we can make by 18% and 3%, respectively, in 2011. longer volatile. Rather, we have entered more money and serve our customers a new economic era. The emerging Despite our growth, it was tough for GE better. We also think this will make us economies grow, while the developed to break away from investor concerns a better manufacturing company in world slows. Some of the world’s largest about macroeconomic risk. Investor every corner of the world. But it is only economies face massive fi scal defi cits anxiety is understandable. Europe took possible because our designers, factory and must deleverage. Interest rates are center stage as a source of instability. workers, managers and marketers likely to stay low for extended periods. Daily headlines about Greece, Italy and work together. GE is a “We Company.” Material prices are moving higher. There the volatility of the European banks is broad-based social unrest. And, it We are solving problems, tough prob- frayed nerves. And, U.S. politics and could remain this way for a long time. lems. We are in the seventh year of a defi cit concerns worried investors in clean energy business strategy called the second half of 2011. I have learned that nothing is certain ecomagination. Clean energy goes in except for the need to have strong risk I have been CEO for ten years. In that and out of focus for governments and management, a lot of cash, the willing- time, we have experienced the 9/11 consumers. But, at GE, we are steadfast ness to invest even when the future is tragedy, Hurricane Katrina, the 2002 in our investing. In 2011, we had $21 bil- unclear, and great people. recession, the 2008 fi nancial crisis, the lion of clean energy revenue, growing Gulf oil spill, “Arab Spring,” the Japan We have great fi nancial strength. twice as fast as the Company average. tsunami, and now the European crisis— Between GE Capital and GE Parent, we Ecomagination drives growth because quite a bit. have $85 billion of cash. And we sur- we are solving problems for our custom- rounded the Company with a strong ers. At coal mines, from Pennsylvania Today, we live in what most business enterprise risk model that has been to Peru, our water solutions allow commentators call a volatile world. custom ers to operate productively while achieving high environmental standards. We demonstrate every day that, through innovation, we can meet societal needs and do it profi tably. We deliver results. That is the ultimate output of a strong culture. Over the THE ECONOMY IN 2012 next few years, our performance will Four things we’re watching accelerate. We aim to reward investors by delivering a more valuable company and returning cash. We want to earn your trust. We believe that culture and resiliency count in a company. At GE we have a CHINA EUROPE UNITED STATES INFLATION quiet confi dence in our willingness to Will it grow? What’s the Will politics hurt Will it derail the work hard, to learn and, ultimately, outlook? the consumer? recovery? to prevail. This is how we work and how we earn your trust. It is how we com- Transitioning to a Do not believe U.S. economy Infl ation is the consumer-driven European strengthening “wild card” pete and win. GE Works. economy governments each day Prepare for Government will allow for a Could be a high infl ation A POSITION OF STRENGTH investing in “catastrophic pleasant surprise event” Prices have GE’s Operating EPS growth was 22% growth moderated in last year. We bought back preferred The economic Plan for a recent quarters recession shares of stock we issued during the engine for most of the emerging Committed for the fi nancial crisis and increased our markets long term to an dividend twice. Our stock price fi nished important region about fl at, in line with the broader S&P 500 Index. We outperformed the GE 2011 ANNUAL REPORT 3 tested. We are restructuring our European operations to sustain our PORTFOLIO STRATEGY profi tability at lower levels of growth. Improved portfolio positioned for a variety of outcomes We accelerated global and technical Revenue ~$150B investments, ahead of competition, + $100B of cash: 2012–2016 during the downturn to ensure growth + Fund growth and reward investors in a choppy environment. We redeployed capital from NBCU to support $11 billion 8% 36% of Energy acquisitions, which should Insurance 15% 43% Focused Leader provide an earnings boost in 2012. We GE Capital Simple and Safe fi nished 2011 with $200 billion of product 24% and service backlog, more than at any Infrastructure time in our history. 41% 64% 34% High Tech We also have a talented and committed Global Leader team.