1、2012 Annual ReportGeneral Electric CompanyFairfield,Connecticut GE 2012 Annual ReportGE Works3.EPC055148101A.10315015418014714720082009201020112012CONSOLIDATED REVENUES(In$billions)20092008201020112012OPERATING EARNINGS(In$billions)2009200820102011201219.117.816.414.712.1CASH FLOW FROM OPERATING ACT
2、IVITIES(CFOA)(In$billions)14.916.19.916.912.4ON THE COVER Top left:Shelli Wilding and George Crichton,GE Oil&Gas.Top right:Juana Hoskins,GE Healthcare.Bottom right:Phan Ng.oc ang,GE Power&Water.Bottomleft:GE Aviation jet engine testing facility,Peebles,OhioGE SCORECARD2012 RESULTSIndustrial Segment
3、Earnings Growth+10%Industrial Operating Earnings%of Total55%Cash from GE Capital$6.4 billionIndustrial Segment Organic Revenue Growth+8%Margin Growth+30 bps,15.1%Cash Returned to Investors$12.4 billionReturns on Total Capital11.7%RELATIVE PERFORMANCEINDUSTRIAL VS.20 PEERSGEPEERS QUARTILEOrganic Grow
4、th(%)831stMargin(%)15.111.52ndReturns(%)15.510.32ndGE CAPITAL VS.BANKSGEREGIONAL BANKSMONEY CENTER BANKSTier 1 Common RatioBasel 3(%)8.88.18.7Liquidity Coverage Ratio(%)29661116Net Interest Margin(%)4.93.72.9 GECC is not currently subject to minimum regulatory capital requirements.This U.S.Basel 3 e
5、stimate is based on GECCs current understanding of the Standardized Approach as issued in a Notice of Proposed rulemaking by U.S.federal banking agencies in 2012.This estimate may evolve over time as U.S.Basel 3 rules and their applicability to GECC are finalized.Peer data is based on publicly avail
6、able information incorporating either U.S.Basel 3 standardized or U.S.advanced approaches.Financial data as of 3Q 2012.GECC information;Peer comparisons using assumptions based on December 2010 guidance and publicly available company data.It does not reflect the revised guidance issued in January 20
7、13.GECC elevated due to 4Q 2012 maturities;4Q 2012 LCR estimate 211%.GECC includes operating lease income(net of depreciation)and excludes retailer payments,cash and the legacy insurance business.Note:Financial results from continuing operations unless otherwise noted.PICTURED:Dr.Tianhong Zhang,GE P
8、ower&Water“Last year we set focused execution goals for GE:double-digit industrial earnings growth;margin expansion;restarting the GE Capital dividend to the parent;reducing the size of GE Capital;and balanced capital allocation.We achieved all of our goals for the year.”JEFF IMMELT,CHAIRMAN AND CEO
9、2012 PERFORMANCEVisit our interactive online annual report at to the customers,partners and GE employees who appear in this annual report for contributing their time and support.The paper used in this report was supplied by participants of the Responsible Initiative Programs.The majority of the powe
10、r utilized to manufacture this paper was renewable energy,produced with GEs wind and biogas technologies,and powered by GE steam engines and turbine engines.CITIZENSHIP AT GEAs a 130-year-old technology company,GE has proven its sustainability.Working to solve some of the worlds biggest challenges,C
11、itizenship is in the products we make,how we make them,and in the difference we make in communities around the GEs newest Evolution Series locomotive prototype(pictured)reduces emissions by more than 70%compared with 2005 engines,saving railroad customers more than$1.5 billion in infrastructure and
12、operational costs.GE is one of the largest employers in the U.S.and the world,with 134,000 U.S.employees and 305,000 employees globally,as of the end of 2012.IN 2012,WE?nonprofit organizations.?breast cancer technologies to women.Healthymagination and Susan G.Komen for the Cure have partnered to bri
13、ng the latest breast cancer technologies to more women,by encouraging women to be screened through targeted programs in the U.S.,China and Saudi Arabia.?product portfolio.GE and the New York Stock Exchange have been partners for more than 120 years and share a commitment to innovation.GE is a proud
14、partner of NYSE Big StartUp,an initiative that includes Corporate Connections,a unique technology-matching platform designed to connect companies like ours with innovative young companies and entrepreneurs in the U.S.To learn more,visit ?BARRONSWorlds Most Respected Companies FORBESWorlds Most Innov
15、ative CompaniesBLOOMBERG BUSINESSWEEKBest Companies for Leadership ETHISPHERE Worlds Most Ethical Companies FORTUNE Worlds Most Admired CompaniesDesign by Addison Printing by CenveoA REAL OPPORTUNITY FOR CHANGE IS HERE,and change will come through a relentless focus on performance and productivity.G
16、E has made strategic decisions in key areas that will drive growth in the Company and create better outcomes for our customers and the world.*SeatedPICTURED(left to right):Jeffrey R.ImmeltChairman of the Board and Chief Executive OfficerBrackett B.Denniston III*Senior Vice President and General Coun
17、selMichael A.NealVice Chairman,GE,and Chairman and Chief Executive Officer,GE CapitalSusan Peters*Vice President,Executive Development and Chief Learning OfficerKeith S.SherinVice Chairman,GE and Chief Financial OfficerJohn F.Lynch*Senior Vice President,Human ResourcesJohn G.Rice*Vice Chairman,GE an
18、d President and Chief Executive Officer,Global Growth&OperationsBeth ComstockSenior Vice President and Chief Marketing OfficerGE 2012 ANNUAL REPORT 1THE 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
19、 better+=PICTURED:Leonardo Nogueira de Oliveira(left)and Wellington Pereira dos Santos(right),GE Oil&GasLast fall,we hosted a conference in Silicon Valley to launch what we call the Industrial Internet,an open,global network that connects people,data and machines.Its about mak-ing infrastructure mor
20、e intelligent and advancing the industries critical to the world we live in.We believe its about the future of industryenergy,healthcare,transportation,manufac-turing.Its about making the world work better.At the conference,we put a GEnx engine on the stage.People posed for pictures with the engine;
21、they marveled at the technology and its sheer size.It was a reminder of two things.First,few companies can do what GE does;the scale we operate on and our decades of investment are a competitive advantage.Second,in an uncertain economy,long-term growth and competitiveness require the end-less pursui
22、t of innovative productivity.Similarly,I recently returned from Sub-Saharan Africa,a region that was“off the radar”when I became CEO.Today,we are at a$3 billion annual run rate,and that could double in the next few years.GE could have“$1 bil-lion Franchises”in Nigeria,South Africa,Mozambique and Ang
23、ola.We are investing in capability and people.There are very few American compa-nies in the region.But we could sell more gas turbines in Africa than in the U.S.in the next few years.A GE annual report has never fully featured software and Africa.Today,we feel they are essential and we can lead.Our
24、ability to create our own future is why GE can win in any environment.It starts with a culturethe foundation for any successful enterprisea culture that inspires our people to improve every day.Our team is mission-based:We build,move,power and cure the world.We believe in a better way:We constantly
25、learn from our customers,our competition and each other.We seek solutions for our cus-tomers and society.And we are a “We Company.”We know that strong teams with great people outperform individuals.That is why GE Works.The global economy for 2012 was within our planning scenario,but short of our hop
26、es.Maybe the best newsbelieve it or notwas Europe.It didnt implode!The U.S.is improving,driven mainly by housing and the consumer,but capital investment remains slug-gish.As a result,the U.S.continued its weakest recovery since the 1930s.China slowed as it went through a political transition.Because
27、 of a weak macro environment,we were able to lower input costs,and that had a posi-tive impact on our margins.We expect 2013 to be another“typi-cal year”in the Reset Era.We remain confident in the economic strength of the emerging markets.We are encour-aged by renewed growth and reform in China,whic
28、h has a positive impact on other big resource-rich regions like Africa,Latin America and the Middle East.At the same time,we are in unprecedented fiscal territory in the GE WORKSAt GE,we look forward with confidence.That is because we can shape some of the big growth drivers in any era.GE 2012 ANNUA
29、L REPORT 3LETTER TO SHAREOWNERSA PORTFOLIO THAT PLAYS TO STRENGTHPREMIERINFRASTRUCTURECOMPANYVALUABLE SPECIALTY FINANCEStrengthCashSTRATEGIC IMPERATIVESSuperior technologyEnhancing customer services and analyticsLeading in growth marketsSimple and competitive cost structureU.S.and Europe,which will
30、keep a limit on growth in the short term.The major source of volatility in corpo-rate planning is the U.S.,something I never thought I would see.We would all like to believe that the U.S.will con-tinue at a steady rate of 3%4%GDP growth,as we saw in the 30 years before the global financial crisis.Ho
31、wever,the U.S.faces more major“political storms”this year:the fiscal situation,repeated debt-limit contro-versy and tax reform.We fear that this uncertainty will impact capital invest-ment.And the amount of regulation tends to grow during periods of fiscal strain,and we are certainly seeing that in
32、the U.S.The number of“major regu-lations”regulations with more than$100 million of impacthas exploded in the last few years.The result has been an additional burden on business.Until we solve for these constraints,it is hard to see that the U.S.will return to its full growth potential.We have demons
33、trated that GE can perform in this environment.In 2012,we grew our segment profits by 11%to$22.9 billion.We generated$17.8 billion of cash from operating activities(CFOA),up 48%,and returned$12.4 billion of cash to investors through dividends and stock buybacks.Our total shareholder return grew by 2
34、1%,well ahead of the 16%growth in the S&P 500.Our market cap grew by about$30 billion,and we remain the seventh most valuable company in the world.We like the way GE is positioned in this environment:a great portfolio of world-class,technology-leading businesses;a strong position in fast-growth glob
35、al markets;leading-edge service technologies that achieve cus-tomer productivity;high visibility with a backlog of$210 billion;and a strong financial position.We want investors to see GE as a safe,long-term invest-ment.One with a great dividend that is delivering long-term growth.FIVE CHOICES THAT D
36、RIVE THE FUTUREStrategy is about making choices,building competitive advantage and planning for the future.Strategy is not set through one act or one deal.Rather,we build it sequentially through making decisions and enhancing capability.As we look forward,it is important that investors see the Compa
37、ny through a set of choices we make for the purpose of creating value over time.First,we have remade GE as an“Infrastructure Leader”with a smaller financial services division.We like infrastructure markets because they are growing and because they utilize GE capabilities in technology,globalization,
38、financing and customer relationships.About$60 trillion of infra-structure investment is needed by 2030 to support billions of new consumers joining the middle class in the emerging world,and to support developed-market productivity.At$100 billion of revenue with 15%margins,we are the largest and mos
39、t profitable infrastruc-ture company in the world.Over the last decade,we have grown our infrastructure platforms by investing in adjacencies,pursuing opportunities that are closely related to our core.About one-third of our infrastructure revenues comes from businesses we werent in a decade ago.The
40、se include fast-growth busi-nesses like Oil&Gas,Life Sciences,and Distributed Power.This growth has come through organic investment and focused acquisitions.4 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERSDIVIDEND HISTORYTOTAL DOLLAR AMOUNT OF DIVIDENDS PAID TO SHAREHOLDERS189218991900190919101919192019
41、291930193919401949195019591960196919701979198019891990199920002012TOTAL DIVIDENDS 18921999:$45 BILLIONTOTAL DIVIDENDS 20002012:$106 BILLIONDOLLARSIN BILLIONS$0$20$40$60$80$100$120At the same time,we are creating a smaller,more focused financial ser-vices companyone that has a lower risk profile and
42、adds value to our industrial businesses.We will continue to reduce the size of GE Capital from the$600 billion of assets it was in 2008 to a goal of$300$400 billion in the future.GE Capital has a sound fiscal position,with Tier 1 capital above 10%and strong liquidity.We can generate returns above ou
43、r cost of capital.Over the next few years,we plan for GE Capital to return about$20 billion of dividends back to the parent.We will purposefully reallocate capital from financial services to infrastructure and grow it faster.Our goal is to have infra-structure earnings reach 70%of our total over tim
44、e.We have dramatically simplified GE over the past decade.The last major portfolio move we made was exit-ing NBC Universal(NBCU).In the first phase,we sold 51%,and reallocated$11 billion from the proceeds to pur-chase new platforms in Energy and Oil&Gas.These businesses already have generated$1 bill
45、ion of earnings and are growing 20%annually.Recently,we announced an agreement for the disposition of the remainder of NBCU,and its real estate,for$18.1 bil-lion.This creates additional cash for value creation in the short term,through increased share repurchase and investment in growth.Second,we ar
46、e committed to allo-cating capital in a balanced and disciplined way,but with a clear priority for dividend growth.GE will generate$100 billion for allocation over the next few years,including cash from existing operations,dividends from GE Capital and dispositions.The top priority remains growing t
47、he dividend.Since 2000,we have paid out$106 billion in dividends,more than any company except Shell,and more than we paid out in the first 125 years of the Company combined.We like GE to have a high dividend yield,which is appealing to the majority of our investors.We plan to buy back shares to get
48、below 10 billion,where we were before the crisis.We will make significant progress toward that goal in 2013 by allocating a significant portion of the NBCU cash to repurchase our shares.In total,we plan to return$18 billion to investors this year through dividend and buyback.We will continue to exec
49、ute on focused acquisitions,a capital-efficient way to grow the Company.We will keep our focus on acquiring specific capabilities where GE can add substantial value.We can execute on a few of these each year.Third,we have significantly increased investment in organic growth,focus-ing on R&D and glob
50、al expansion.In doing so,we have invested ahead of our competition.We believe that investing in technology and globaliza-tion is key to gaining market share.Annually,we invest more than$10 bil-lion to launch new products and build global capability.We make these investments with the full benefit of
51、GEs scale.Over the past decade,we have doubled our annual R&D investment,increasing$2$3 billion to 5%6%of revenue.Because of this investment,we have progressed from a company that can launch one new commercial engine each decade to a company that can launch one each year.We will launch 10 new gas tu
52、rbines this decade,significantly more than in previous times.We are a broader and deeper technology leader than at any time in our history.We have built a company that has high share in growth regions.In 2012,we had$40 billion of orders in growth regions,a 12%increase over the prior year and a three
53、fold increase in the last decade.GE 2012 ANNUAL REPORT 5 SHALE GAS REVOLUTION Access to shale gas is opening new possibilities for energy use,and GE is involved in almost every aspect of this“Shale Revolution.”To make compressed natural gas(CNG)more accessible as a transportation fuel,GE Oil&Gas and
54、 Chesapeake Energy created a compact refueling solution,the CNG In A Box system.The benefits are impressive:For every fleet vehicle filled with CNG instead of gasoline,carbon dioxide emissions equivalents are reduced about 24%,or 2.2 metric tons per vehicle annually.Were also creating new ways to he
55、lp manage impact on the environment during extraction.GE Power&Water is partnering with memsys,a water technology company,to develop membrane distillation technology,which promises to be an effective,energy-efficient solution for treating wastewater generated during the gas extraction process.PICTUR
56、ED:Ujjwal Kumar(left),GE Oil&Gas;Kent Wilkinson(right),Chesapeake Energy Corporation6 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERSAchieving these results has required substantial investment in capabil-ity and people.Between 2010 and 2014,we are making 30 investments in manufacturing,research,services,
57、customer innovation and training in growth markets.We have developed and repositioned our leaders to capi-talize on growth-market opportunities.We have 10,000 commercial resources focused on the needs of our customers in growth markets.We have achieved local relevance with global scale.We use the en
58、tire GE enterprise to improve the value of our investments in technology and globalization.For technology,we have a“Global Research Center Network”that builds strategic capability,spreads technol-ogy around the world and innovates for local markets.We have a“Global Growth Organization,”led by a GE V
59、ice Chairman,that allows GE to better compete by using our talent.Fourth,we have built deep customer relationships based on an outcomes-oriented model.Our growth is aligned with customer outcomes,and our products improve their productivity.We have grown our service revenue from$21 billion to$43 bill
60、ion over the past decade.Services represent about 75%of our industrial earnings.With$157 billion of service backlog,we have the momentum to grow in the future.We believe in a solutions-oriented selling model,one that can deliver out-comes for customers.In Healthcare,we are aligned around the major a
61、ccounts so that we can help them transform ahead of U.S.healthcare reform.In Oil&Gas,we deliver com-prehensive technical solutions for our customers.In Aviation,we create value through the performance of our new technologies.We only win when our customers win.Fifth and finally,we have positioned GE
62、to lead in the big productivity drivers of this era.This is important for growing our margins while keep-ing our customers competitive.The levers of productivity are constantly changing.For more than a century,GE has been a leader in productivity and innovation.We will lead in the shale gas revoluti
63、on.The volume of and access to shale gas and other unconventional resources in the U.S.(and other regions)will change the competitive balance in energy for a generation.This gives the U.S.one of the lowest costs of electricity in the world and the chance to be an energy exporter.Big industries like
64、railcould convert from diesel to gas.The option of becoming energy-independent is now possible for North America.Through our Oil&Gas busi-ness we can provide important content in extraction,development,and envi-ronmental protection of shale gas.We are the world leader in gas-powered generation and t
65、ransportation.We are extending GEs lead in advanced manufacturing.Manufacturing is a major source of competitive advantage.After decades of outsourcing capability,we now see companies rebuilding their manu-facturing strength.Companies used to make investment decisions purely on labor cost.However,th
66、ere are new materials that can revolutionize performance,and precision technolo-gies and high-power computing are transforming how we manufacture.GE will“insource”more manufacturing content.We are investing in process-ing technologies such as additive manufacturing.In the future,we aspire to reduce
67、the cycle times for complex systems and lower cost.GE 2012 ANNUAL REPORT 7 NEXT-GENERATION MATERIALS Our newest jet engines use next-generation materials and manufacturing processes to reduce weight,improve fuel consumption and lower maintenance.Were pioneering the use of parts made from non-metalli
68、c,composite materials.On the CFM LEAP engine,GE will provide the first ceramic matrix composites in a commercial jet engines “hot section.”The resulting increase in heat tolerance will help lead to a projected 15%reduction in fuel consumption compared to prior-generation engines,saving billions of d
69、ollars for our customers.Also,scientists and engineers at GEs Global Research Center are developing techniques to fabricate lightweight structures using metal additive manufacturing processes that were previously not feasible.We anticipate this will result in millions of dollars in fuel savings for
70、GEs aircraft engine customers every year.PICTURED:Troy Brenner,GE Aviation8 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERSWe are making a major investment in software and analytics.We know that industrial companies need to be in the software business.We want to make the analytics around our products,rea
71、l-time data,and operating solutions a GE core competency.We have built a Software and Analytical Center of Excellence in California,where we are adding a vast array of human talent to achieve our goals.We know that our services in the coming year depend on building smarter machines with the ability
72、to extract and analyze data.We will be a leader in analytics.And that will make GE more valuable to our customers.This is the power of the Industrial Internet.The reason why analytics are impor-tant in the infrastructure industry relates to what we call“The Power of 1%.”Across our customer base,impr
73、oving asset performance by 1%can add$20 billion of customer profit annually.In our world,small changes mean big outcomes.For investors,we have defined where we play,how we win,our capital allo-cation priorities and investments for the future.These“five choices”will set up our performance and drive o
74、ur suc-cess over the long term.WE ARE EXECUTING ON OUR COMMITMENTSLast year,we set focused execution goals for GE:double-digit industrial earnings growth;margin expansion;restarting the GE Capital dividend to the parent;reducing the size of GE Capital;and balanced capital alloca-tion.We achieved all
75、 of our goals for the year.Our businesses are performing.In 2012,our industrial segment earn-ings grew by 10%to$15.5 billion.Our GE 2012 ANNUAL REPORT 9 DRIVING THE INDUSTRIAL INTERNET Our Rail Optimization Solutions help railroads move freight faster and more cost-effectively.The RailConnect Transp
76、ortation Management System and Movement Planner System help railroads analyze critical information in real time to plan and optimize business outcomes,operations and asset utilization.These intelligent solutions deliver real efficiencies:Norfolk Southern,a major Movement Planner customer,estimates t
77、hat every 1 mph increase in network speed saves an estimated$200 million in annual capital and operating expenses.In 2012,we expanded our Optimization Solutions portfolio by acquiring RMI,a leading supplier of transportation management systems used by railroads across North America to manage operati
78、ons,improve information flow,increase productivity and reduce cost.industrial segment organic revenue growth was 8%and margins grew by 30 basis points,both metrics compar-ing favorably to peers.Growth was broad-based;all of our reported seg-ments grew earnings for the first time since 2006.We finish
79、ed the year with$210 billion of backlog,a record for the Company.We grow our industrial businesses by pulling the same“levers.”We lead with technology,invest in fast-growth markets,drive value in the installed base,invest in adjacencies and grow margins.Oil&Gas is our fastest-growing busi-ness,with
80、revenue of$15 billion and earnings growing 16%.We compete in high-growth markets.We are investing to launch new products fully utilizing our broad technical capabil-ity.For instance,we launched the first subsea compressor at Statoil,creat-ing an industry-leading position.Our orders grew by 16%in the
81、 year,and we are winning new business around the world.Our Power&Water business grew earnings by 8%in 2012,and we expect to be about flat in 2013.We are well-positioned for long-term growth in natural gas power generation,distrib-uted power,and services.However,Wind power generationwhere GE leadsis
82、more volatile.We had a very strong year in 2012 but,due to U.S.regulatory uncertainty,this year will be difficult.Based on strong global demand with expanding service,we expect Power&Water growth to resume in 2014.Over the next few years,we see earnings upside by improving our performance in markets
83、 like PICTURED:Rachna Pitts,Norfolk Southern10 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERSPICTURED:ES44AC Evolution Series locomotiveGE 2012 ANNUAL REPORT 11Energy Management.This business is complementary to our core infra-structure franchise,yet our share is less than 10%and our margins are lower t
84、han those of our competitors.We are seeing outstanding opportuni-ties for growth in power conversion and digital energy.We expect another year of strong industrial performance in 2013.Oil&Gas,Aviation,Healthcare and Transportation should hit“all-time-high earnings”in 2013.Our plan targets 10%industr
85、ial earnings growth.GE Capital had earnings of$7.4 billion,up 12%.Our Tier 1 common ratio is 10.2%,well above the regulatory goals.GE received a$6.4 billion dividend from Capital.Our team has done a great job of reducing commercial real estate exposure,which was$46 billion at year-end,down 50%from i
86、ts peak.GE Capital continues to outperform regional and money center banks in important areas like net interest mar-gins and losses.The“core”of GE Capital is being a leading lender to middle market customers,building on our deep experience in,and understanding of,these markets and assets.In busi-nes
87、ses like sponsor finance,aircraft leasing and retail services,and middle market lending and leasing,GE Capital has deep domain experience and will continue to grow.Our initiatives are delivering results.We drive cross-company initiatives to generate organic growth and improve margins.We review our p
88、rogress against our long-term goals and through relative performance of 20 industrial peers and large banks.Our performance is near the top in almost every category,but we still have room for improvement.We have built broad technical capa-bility that can deliver big systems and foster innovation.Eac
89、h year we file about 2,000 patents in the U.S.,putting GE in the top 10 for innova-tion.GE engineers and scientists from around the world collaborate and demonstrate a real culture of execution.GE products deliver vast customer value.Over the next few years,we will transform our aviation engine prod
90、uct line with several new models,including the launches of GEnx,the CFM LEAP and the GE9X.Each engine will improve airline fuel efficiency by 15%,while reducing emissions.By 2020,we will have 46,000 GE engines in service,up from 4,100 in 1990.That is a prod-uct of our technical expertise.In Healthca
91、re,we are launching high-margin products at every price point and across all modalities.This is how we win around the world.In computed tomography(CT),we launched the Discovery CT750 HD FREEdom,a high-end scanner,which can greatly reduce radiation dose.At the same time,we launched the CT Brivo,sold
92、at 20%of the price of a high-end scanner,which is growing share in global markets.In fact,in the first six months,we sold 100 Brivos to Chinese customers,many of whom had never owned a CT.We leverage technology to launch new businesses.Our Energy Storage business is a great example of how we innovat
93、e and bring to scale state-of-the-art technologies.Researchers in our GRC labs invented a new battery based on technology from more than 30 patents.GE teams also designed an THE INDUSTRIAL INTERNET IN CUSTOMERS HANDSGE GIVES CUSTOMERS ACCESS TO THE INDUSTRIAL INTERNET WHEREVER THEY ARE.RailConnect T
94、ransportation Management,GE TransportationIntelligent Operations,GE AviationAgileTrac,GE Healthcare12 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERSAVIATION1%Fuel Savings$30BPOWER1%Fuel Savings$66BRAIL1%Reduction in System Inefficiency$27BHEALTHCARE1%Reduction in System Inefficiency$63BOIL&GAS1%Reductio
95、n in Capital Expenditures$90B15-YEAR SAVINGSINDUSTRIAL INTERNET=CUSTOMER OUTCOMESTHE POWER OF 1%Through efficiencies enabled by the Industrial Internet,a 1%change can deliver tremendous value to customers.advanced manufacturing process to build the battery efficiently.In essence,we created a start-u
96、p within the Company,and we expect the business will generate more than$1 billion in revenue annually in just a few years.Our growth-market revenue expanded by 11%to$37 billion.We have a segmented global strategy.We aspire to grow in China.We will lead the industrialization of resource-rich regions.
97、And we will retain our operating presence in Europe as it restructures.GE has a strong franchise in China that grew by 19%in 2012.Our advantage is in localization and partnerships.Last year,we opened two customer inno-vation centers,in Chengdu and Xian.At the same time,we are partnering with Chinese
98、 state-owned enterprises,achieving global scale.In 2012,we announced a joint venture with XD,a Chinese leader in transmission and distribution equipment,and digital energy.This allows us to capture global growth,in an industry where we have low share,with a Chinese cost base.Our other fast-growth gl
99、obal oppor-tunity is in resource-rich countries,where we have built a competitive advantage.From Latin America to the Middle East to Africa to Russia to Australia to Canada,their goals are the same:converting resource wealth into industrial expertise and jobs.In these regions,we remain committed to
100、a“Company-Country”approach.Last year we announced a$1 billion investment in Saudi Arabia across four GE platforms.The payback from global investments is huge.Our recent acquisition in Power Conversion received$600 mil-lion of orders in Brazil alone by leveraging GEs presence and rela-tionships in th
101、e country.Similarly,GE Transportation is building a$1 billion business in Russia and Kazakhstan,based on local capabili-ties.Excellence in localization is a GE competitive advantage.GE has a productive manufacturing and engineering base in Europe.We recently entered into an agreement to acquire Avio
102、,an Italian high-tech aviation supplier that would add to this base.While Europe may remain slug-gish for a while,we have an important installed base and smart and dedi-cated teams helping our customers.We will continue to be a good partner for Europe,sustaining a robust manu-facturing and engineeri
103、ng base.Services growth was 4%,fueled by a growing installed base and expanding content.The Industrial Internet is revolutionizing the services we provide our customers,helping them to become more productive operations.GE will leverage our vast service backlog to develop technolo-gies that enhance t
104、he performance of our productsand the enterprises in which they operatewhile growing our dollars per installed base.The Industrial Internet is built on intelligent machines,advanced analytics and people at work that can save airlines,railroads,hospitals and utilities billions of dollars each year.Th
105、e impact of these solutions is being felt by customers across vari-ous industries.Norfolk Southern is a large North American Class I railroad and our launch customer for GE Rail Network Optimization.This solution uses data and analytics to improve operating decisions across the entire GE 2012 ANNUAL
106、 REPORT 13 FUELING AIRLINE PRODUCTIVITY GEs Fuel&Carbon Solutions(FCS)helps airlines reduce fuel consumption by combining advanced data analytics and industry expertise.FCS can integrate and analyze vast amounts of dataabout 1.5 terabytes per customer per yearfrom flight operations,airline systems a
107、nd flight data recorders.It then uses the resulting operational intelligence to identify,implement and monitor changes in the way flights are planned and flown,saving fuel and improving efficiency.FCS has already helped customers like Brazils GOL Airlines cut fuel consumption significantly.We estima
108、te that it could save the entire global airline industry more than 1.3 billion gallons of fuel per year,valued at more than$4 billion,and eliminate more than 12.4 million metric tons of carbon dioxide emissions.PICTURED:Daniel Davim Rebello,GE Aviation14 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERS40
109、PROJECTS TO IMPROVE PROCESSES ACROSS GE$800 MILLION INCREMENTAL INDUSTRIAL MARGIN BENEFIT ANNUALLY1,000 DEDICATED GE PROFESSIONALSGE ADVANTAGEBENEFITSIncreases our speed to marketImproves the quality of our products and servicesDrives competitive advantage for our customers and our companySignifican
110、tly reduces coststransportation network,including railroads,shippers,intermodal termi-nals and repair shops.They estimate that every 1 mph increase in network speed saves them$200 million in annual capital and operating expense.In Healthcare,weve deployed our Hospital Operation Management(HOM)soluti
111、ons in more than 50 hos-pitals.HOM tracks hospital assets to ensure that quality care is delivered across a patients stay,from admission to discharge.The HOM launch cus-tomer was Mt.Sinai Hospital,where we help them track 15,000 assets and have shown a 10%improvement in patient throughput.We are tak
112、ing a few bigger swings where we are improving the enter-prises in which our assets operate.In Aviation,to address the fleet perfor-mance of global airlines,we launched Taleris,a joint venture with Accenture.This analytical tool will allow air-lines to predict maintenance events before they happen.T
113、he goal is“Zero unplanned downtime.”Taleris aids air-lines such as Qantas and JetBlue with their fleet performance,maintenance and operations,allowing them to save millions of dollars annually through more efficient use of their airplanes.Margins grew by 30 basis points to 15.1%.Our goal is to grow
114、another 70 bps in 2013.We will achieve this by improving processes while reducing structural cost.We are in our third year of GE Advantage,our process-improvement program.Our teams are improving on 40 big processes throughout the Company.I review each of these fre-quently,and we realized$800 million
115、 of margin improvement in 2012.One good example is our“Transportation:Requisition to Platform”process,which facilitates our new product launches.Results so far include:80%system reuse;six-month reduction in cycle;and a 35%reduction in sole-source suppliers and overtime.GE Advantage helps us sus-tain
116、 a competitive advantage.We are also simplifying the way we run GE,with an eye to lowering our structural cost and improving our speed.In 2011,our selling,general and administrative expenses(SG&A)as a percentage of industrial sales were 18.5%.We are aiming to reduce this structure to below 16%by 201
117、4.This is a total of$2.5 billion of cost out;by the end of 2012,we achieved 40%of our goal.Another big contributor to better mar-gins involves attacking product cost through better design.In our Aviation business,where we have a solid back-log for many years,we are reshaping our supply chain to incr
118、ease GE con-tent.We are investing in advanced materials,manufacturing technologi-cal global capacity.In Appliances,we launched four new products in 2012.In 2013,we will launch four more.All are increasing share and margins.We are executing on our commit-ments.In 2013,we would like to:grow industrial
119、 earnings by 10%;achieve 2%6%industrial organic revenue growth;return a significant amount of cash from GE Capital to the parent;and return$18+billion of capital to investors in dividends and buyback.WE CONTINUE TO IMPROVE OUR CULTUREOver the holidays,I was reviewing the annual Gallup poll that rate
120、s institutions in the U.S.Once again,big business has a low overall rating,with 21%favorability,roughly a third of the approval for small business.The mood reflects the economic environment.GE 2012 ANNUAL REPORT 15LOCALIZING FOR UNDERSERVED MARKETS GEs innovation is extending healthcareresources to
121、parts of the world where access to quality care has been far from certain.In China,we introduced the Brivo CT325,delivering the benefits of computed tomography in a compact,easy-to-use,affordable system that is ideal for clinics in remote areas:88%of units sold are now in use in rural hospitals that
122、 previously could not afford a CT scanner,helping them better diagnose cancers and injuries for some 3.6 million people in China.With the opening of our new innovation center in Chengdu,which is focused on developing products and solutions specifically for the China market,we plan to drive further a
123、dvances in local healthcare and other sectors.$00203040506070809101112$1B$2B$3B$4B$5B$4.6BHealthcare revenue inGEs nine growth regions16 GE 2012 ANNUAL REPORTLETTER TO SHAREOWNERS 1Double-digit earnings growth for GE industrial 2Significant cash returned to parent from GE Capital 3Significant margin
124、 expansion 4Solid industrial segment organic revenue growth 5Return cash to shareholders2013:WHAT IS IMPORTANT TO INVESTORSWe are lucky that government can set the“floor”with favorability at 13%.So is size inherently bad?I dont think so.But size can breed a perversion of bureaucracy,a sense of entit
125、lement and a distance from reality.Size is bad when it crushes innovation.A good culture is the only filter that can make size a strength and not a weakness.Over the past year or so,I have made it a priority to personally connect with entrepreneurs and venture capital-ists.I wanted to understand mor
126、e about the start-up culture and the ways that smart entrepreneurs run their companies.Now,I dont want to make GE a start-up.GEs great strength is our scale.GE has more than 40,000 salespeople,supported by 50,000 engineers and scientists;we can sell in more than 160 countries with the worlds sixth m
127、ost valuable brand.The trick is to keep all of that,but with-out the bureaucracy and arrogance that can often accompany size.The fact is that GE was becoming too complicated.We were simply working on too many things that arent impor-tant.We had too many“checkers”and not enough“doers.”Visiting with e
128、ntrepreneurs has helped me focus on complexity,accountability and purpose.I have found two booksThe Lean Startup and The Startup Playbookto be particularly useful.Entrepreneurs simplify everything.They are purpose-driven.They focus on customers,people and solving problems.They do fewer things,but wi
129、th bigger impact.They dont del-egate important decisions;rather,they position decision-makers close to the action.There is no headquar-ters,no layer of“checkers.”They use judgment,they move fast,and they are accountable.The unique leadership movement inside GE today is Simplification.Part of it is s
130、tructural.We want the Company to be lower-cost,have shorter cycle times,and match author-ity to accountability.And we need to accomplish this across multiple plat-forms,in diverse markets,living in an era of hyper-regulation.But the other part of Simplification is cultural.Big companies fail when th
131、ey lose a culture of accountabil-ityaccountability for outcomes.We must compete with purpose.And we must deliver outcomes for custom-ers,investors,society and each other.We are building processes that drive speed,accountability and compliance.We are committed to long-term think-ing despite volatilit
132、y in the current environment.The decisions we are making today will shape the Company for years to come.GE can execute on a scale few can match.I hope,as an investor,that makes you proud.So,what is leadership?It is the har-nessing of culture,the culture of GE Works.We are mission-based.We search for
133、 a better way.We drive solutions for our customers and society.We are a“We Company.”It is driving accountability for outcomes.It is fostering smart risk-taking and business judgment.You have invested in GE.You know the choices we have made for the next decade.You have seen our execution and the key
134、metrics we use to manage the Company.You have a sense for our culture and leadership team.You will see this reinforced in the rest of this report.Let me know what you think.You can e-mail me at .Jeffrey R.Immelt Chairman of the Board and Chief Executive Officer February 26,2013GE 2012 ANNUAL REPORT
135、17engineers and scientists at GE,constantly refining and enhancing our products and services50,000More than 7,000customers of GE Capital have used the Access GE program to work directly with our experts to solve their most pressing challenges and find new ways to growGE locomotives moving products a
136、nd materials all over the worldGE lti20,000To help usher in this new generation of engines,we announced the acquisition of Avio in December 2012,allowing GE to bring an essential part of our aviation supply chain in-houseEvery year,GE Aviation invests more than$1 billion to develop technologies like
137、 ceramic matrix composites and additive manufacturing to support these next-generation engines20112016FutureGEnxLEAPGE9xBUILDINGMOVING18 GE 2012 ANNUAL REPORT15,000megawatts of installed capacity in more than 120 countriesGEs installed base of steam and heavy-duty gas turbines represents more thanme
138、dical devices tracked by GEs AgileTrac in a single hospital1MGE subsea systems around the world1,200The culture of GE Works is mission-based.We search for a better way.We drive solutions for our customers and society,and we are accountable for outcomes.We are a“We Company.”We put our scale,industry
139、expertise,technology andmost of allthe ingenuity of our people to work,creating a world that works better.The solutions we provide are building,powering,moving and curing the world.We take on the biggest challenges in order to make the greatest impact:advancing our customers businesses,driving globa
140、l economic opportunity,creating shareholder value,and improving peoples lives.This is how GE Worksand why we are committed to keep working for the future.POWERINGCURINGGE 2012 ANNUAL REPORT 19commercial customersGE Capital is a leading lender in the middle market1MCommitted to Middle Market Customer
141、s Around the world,were helping middle market companies drive economic growth by providing business-building expertise and financial resources.GE Capital services more than 1 million commercial customers in 15 coun-tries and is a leading lender in the middle market,composed of medium-size businesses
142、.Its a fast-growing segment in many key economies,such as Australias,where the middle market represents about AUD$425 billion of rev-enue and 3.2 million jobs.Were providing solutions to Australian customers such as recreational vehicle maker Jayco,including finance,as well as train-ing and promotio
143、nal programs for RV dealers.Our services have helped drive Jaycos business to AUD$300 million in sales.In Germany,another important market for GE Capital,middle market companies employ 9.4 million people and generate 32.5%of private-sector revenues.The diversified German steelmaker GMH Group turned
144、to us for financing solutions and advice that enabled the company to make strategic acquisitions and become a market leader.BUILDINGMore than20 GE 2012 ANNUAL REPORTin local investmentsover the next three years is our latest commitment in an almost 80-year history with the Kingdom$1BVision for Saudi
145、 Arabia:Building a Knowledge-Based Society Together To support Saudi Arabias vision of diversifying its economy,GE has committed$1 billion to local investments over the next three years to strengthen manufacturing capabilities and drive innovation.Our invest-ment will support the goals of Saudi Visi
146、on 2020,the governments plan to advance socioeconomic progress by building the capabilities and enhancing the opportunities for its young people.Key areas for invest-ment include a new Saudi-GE Innovation Center in Dhahran,as well as expansion of GEs efforts in healthcare systems and energy programs
147、.These initiatives build on GEs history in the Kingdom,spanning almost 80 years.Our latest commitment will double our local workforce,primar-ily through local hiring,helping the next generation of Saudis build the Kingdoms talent pool,economic diversity and growth potential.At the Saudi-GE Innovatio
148、n Center inauguration,guests learn how GE is empowering youth,fostering entrepreneurship and supporting women in the workplace to unlock potential in the Kingdom.PICTURED:Khaled AlHinti(left)and Rakan AlHubaishi(right),Saudi students in a GE co-op programGE 2012 ANNUAL REPORT 2190-95%Mine operators
149、that deploy AquaSel,GEs ecomagination-qualified technology for water discharge,can achieverecovery rates of MOVINGDigging Deeper for Mine Productivity To satisfy the worlds growing demand for natural resources,the mining industry must expand to deeper,more remote and more extreme locations.We launch
150、ed the GE Mining business to serve those needs.Were applying our full port-folio of products and services to improve mine productivity by transporting materials more efficiently,managing water use,and using advanced software to monitor systems.We are also developing new energy-storage devices such a
151、s our Durathon batteries,developed by GEs Global Research Center,which are half the weight of conventional lead acid batteries,last twice as long,are produced using abundantly available raw materials such as salt and nickel,and can be recycled.By using Durathon in underground mining vehicles(just on
152、e of its applications),we can help the mining industry with two of its biggest challenges:decreasing envi-ronmental impact by reducing emissions,and increasing productivity with a long-lasting power solution.GE offers the mining industry solutions such as electric drive systems,in these Komatsu truc
153、ks(right,below),and vehicles including GEs Fairchild battery-powered scoop(inset).22 GE 2012 ANNUAL REPORTgreater fuel efficiencyfor offshore vehicles using Diesel-Electric vs.Diesel-Mechanic5-10%Electrifying Change GE Power Conversion is helping customers move toward cleaner,more efficient and more
154、 reliable energy manage-ment systems,based on electrical rather than mechanical technology.Our solutions are derived from three technol-ogy platformshigh-speed electric motors and generators,high-performance variable-speed drives,and industry-leading software automation.Recognizing the potential of
155、electrification,GE acquired Converteam in 2011.Renamed GE Power Conversion,we offer advanced electrical solu-tions across the oil and gas,mining,power-generation and industrial sectors.In the marine industry,were delivering innovative electrical and propulsion systems,as well as vessel automation an
156、d satellite positioning systems,for off-shore drill ships and support vessels,LNG transport carriers,cruise ships,and navies.GE 2012 ANNUAL REPORT 23The five gas turbine generators supplied by GE for Gorgon could power homes for one hour584KBig Projects to Power the World The Gorgon Project is one o
157、f the worlds biggest natural gas projects and the largest single resource development in Australias history.When completed,Gorgon will produce 15 million tons of liquefied natural gas per year.GE Oil&Gas is providing subsea equipment and compression trains,along with a multi-decade services agreemen
158、t to keep operations at peak performance.The Gorgon Project has imple-mented strict environmental standards to preserve Barrow Islands unique ecology,including the worlds largest non-governmental quarantine initiative to prevent the introduction of non-indigenous animal and plant species.To power th
159、e projects liquefaction facilities,GE is also supplying five massive gas turbine generators built in Avenza,Italy(below).POWERINGGorgon Project facilities on Barrow Island.24 GE 2012 ANNUAL REPORTA Lift for Hard-to-Find Oil Enhanced oil recovery is a major tool in meeting the worlds energy needs.To
160、extract oil from mature fields,electric submersible pumps(ESPs)must withstand extreme heat,pressure,corrosion and highly abrasive conditions.A joint effort between GEs Artificial Lift team and a customer in Africa has improved ESP product life by two years,provid-ing vital savings that can be used t
161、o recover even more oil from older fields.Our ESPs can pump up to 45,000 barrels of oil daily,operating as deep as 12,000 feet belowground at temperatures up to 230C.Now,scientists at our Global Research Center are working to further enhance the ESP technology GE acquired in 2011.The Path to Flexibl
162、e,Efficient Power Global electric utilities are generating power more efficiently with our FlexEfficiency Advantage Advanced Gas Path(AGP)solution.Korea Southern Power Company,Ltd.(KOSPO)upgraded its Shinincheon plant with our AGP system.AGP technology uses data analyzed by facilities,including our
163、Monitoring&Diagnostics Center,to help improve gas turbine output up to 4.8%,reduce fuel consumption up to 1%,and lessen environmental impact.Now,KOSPOs plant is generating an additional 130 megawatts of power while reducing nitrogen oxide emissions.*We also offer solutions for new power facilities,i
164、ncluding our FlexEfficiency 60 Combined Cycle Power Plant,designed for countries such as Korea that operate on 60Hz power frequency.FlexEfficiency 60 uses heat exhaust from a gas turbine to drive a steam turbine during periods of heavy power consumption,delivering flexible and reliable power from a
165、mix of sources.*As applied to GE 7F-3 series heavy-duty gas turbines.Performance on other frame types may vary.PICTURED:Craig Foster(left)and Karen Miller(right),GE Power&WaterPICTURED:Jeremy Van Dam,GE Global ResearchGE 2012 ANNUAL REPORT 25Shhhh:The Sound of Better MR Scans Silent Scan,a revolutio
166、nary technology,*is designed to improve the patient experience by reducing noise generated during an MR scan.While conventional MR scanners can generate in excess of 110 decibels,roughly as loud as a rock concert,Silent Scan is designed to reduce noise to near-ambient levels in the room.Historically
167、,noise-reduction techniques have focused on muffling sound;however,Silent Scan essentially eliminates the noise with new advanced scanning techniques in combination with GEs proprietary MR components.Silent Scan is one way that GE is Humanizing MR by putting patients first while deliv-ering superb i
168、mage quality.*Silent Scan is 510(k)pending at the U.S.FDA and not available for sale.Lifesaving Innovation on a Molecular Scale GE solutions are helping researchers and medical professionals understand the structure of diseases at a molecular level,offering new hope for preventing,diag-nosing,treati
169、ng and curing diseases.Our Global Research Center and Clarient,a GE Healthcare Company,developed MultiOmyx,a tissue analysis platform to diagnose and dismantle secrets about cancer.The platform can image information hidden deep in cancerous cells.Such pioneering solutions help uncover previously inv
170、isible details that may lead to patient-specific therapies.GEs Silent Scan technology is designed to eliminate excessive noise,a complaint that has not been adequately addressed since MR was introduced in 1984.GE SILENT SCAN73 dBCONVENTIONAL SCAN110 dBCURINGPICTURED:Mark Woltjen,Grant Medical Center
171、PICTURED:Ovarian cancer cell culture26 GE 2012 ANNUAL REPORT$6Msavedin St.Lukes operating costs through GEs Patient Care Capacity Management Solution“Through these efforts well be able to operate at higher occupancy,and we can improve patient experience.”DR.PEG VAN BREE,ST.LUKES EPISCOPAL HOSPITALHe
172、althy Improvements in Hospital Operations GEs Patient Care Capacity Management Solution helps hospitals find ways to provide patients with better carefaster and more cost-effectively.St.Lukes Episcopal Hospital in Houston,Texas,a 650-bed teaching hospital with more than 30,000 admissions a year,is u
173、sing GE Healthcares advi-sory services and AgileTrac software to improve capacity utilization and enhance the patient experience.GEs Performance Solutions group uses proprietary simulation models to design operational care pathways that balance supply and demand and advance patient care.The GESt.Luk
174、es team has used these designs to optimize surgical capacity and efficiency,streamline bed assignment,and improve discharge planning.Less than two years into this effort,the hospital has freed operating room capacity for 750 more patients each year,reduced average length of stay by approxi-mately ha
175、lf a day,and saved more than$6 million in operating costs.PICTURED:Angelle Rhemann,St.Lukes Episcopal HospitalGE 2012 ANNUAL REPORT 27A“WE COMPANY”THIS IS HOW GE WORKSThe GE Capital Regulatory team guided the Company through a changing regulatory landscape in 2012Our Oil&Gas team in Aberdeen,Scotlan
176、d,builds subsea equipment for some of the worlds most extreme operating conditionsAt Appliance Park in Louisville,Kentucky,ourteam helps innovate products and constantly refines the manufacturing processThe team at the GE Global SoftwareCenter in San Ramon,California,is bringing the Industrial Inter
177、net to our customersThe GE Board held 13 meetings during 2012,including four meetings of the non-management directors of the Board.Each outside Board member is expected to visit at least two GE businesses,without the involvement of corporate management,in order to develop his or her own feel for the
178、 Company.Board members focus on the areas that are important to shareownersstrategy,risk management,leadership develop-ment,and regulatory and compliance matters.In 2012,they received briefings on a variety of issues,including capital alloca-tion and business development,margin dynamics,risk manage-
179、ment,technology excellence and IT strategy,regulatory trends,healthcare and social cost,capital market trends,the global economic environment,and GEs branding,marketing and operating initiatives.At the end of the year,the Board and each of its committees conducted a thorough self-evaluation.DIRECTOR
180、S left to right James J.Mulva 1,4Former Chairman of the Board and Chief Executive Officer,ConocoPhillips,international,integrated energy company,Houston,Texas.Director since 2008.Robert W.Lane 1,2Former Chairman of the Board and Chief Executive Officer,Deere&Company,agricultural,construction and for
181、estry equipment,Moline,Illinois.Director since 2005.Susan Hockfield 3,4President Emerita and Professor of Neuroscience,Massachusetts Institute of Technology,Cambridge,Massachusetts.Director since 2006.Marijn E.Dekkers Chairman of the Board of Management,Bayer AG,global healthcare,crop science and ma
182、terial science,Leverkusen,Germany.Director since 2012.W.Geoffrey Beattie 1,5Deputy Chairman,Thomson Reuters,global media and financial data,Toronto,Canada.Director since 2009.John J.Brennan 5Chairman Emeritus and Senior Advisor,The Vanguard Group,Inc.,global investment management,Malvern,Pennsylvani
183、a.Director since 2012.Ralph S.Larsen 2,3,6Former Chairman of the Board and Chief Executive Officer,Johnson&Johnson,pharmaceutical,medical and consumer products,New Brunswick,New Jersey.Director since 2002.Andrea Jung 2,3Former Chairman of the Board and Chief Executive Officer,Avon Products,Inc.,beau
184、ty products,New York,New York.Director since 1998.James S.Tisch 5President and Chief Executive Officer,Loews Corporation,diversified holding company,New York,New York.Director since 2010.Sam Nunn 2,4Co-Chairman and Chief Executive Officer,Nuclear Threat Initiative,Washington,D.C.Director since 1997.
185、Ann M.Fudge 4Former Chairman of the Board and Chief Executive Officer,Young&Rubicam Brands,global marketing communications network,New York,New York.Director since 1999.Douglas A.Warner III 1,2,3Former Chairman of the Board,J.P.Morgan Chase&Co.,The Chase Manhattan Bank,and Morgan Guaranty Trust Comp
186、any,investment banking,New York,New York.Director since 1992.Alan G.(A.G.)Lafley 3,5Former Chairman of the Board and Chief Executive Officer,Procter&Gamble Company,personal and household products,Cincinnati,Ohio.Director since 2002.Roger S.Penske 4Chairman of the Board,Penske Corporation,diversified
187、 transportation company,and Penske Truck Leasing Corporation,Chairman of the Board and Chief Executive Officer,Penske Automotive Group,Inc.,automotive retailer,Detroit,Michigan.Director since 1994.Rochelle B.Lazarus 3,4Chairman Emerita and former Chief Executive Officer,Ogilvy&Mather Worldwide,globa
188、l marketing communications company,New York,New York.Director since 2000.Robert J.Swieringa 1Professor of Accounting and former Anne and Elmer Lindseth Dean,Johnson Graduate School of Management,Cornell University,Ithaca,New York.Director since 2002.James I.Cash,Jr.1,2,4Emeritus James E.Robison Prof
189、essor of Business Administration,Harvard Graduate School of Business,Boston,Massachusetts.Director since 1997.Jeffrey R.Immelt 4Chairman of the Board and Chief Executive Officer,General Electric Company,Fairfield,Connecticut.Director since 2000.(pictured on page 1)1 Audit Committee2 Management Devel
190、opment and Compensation Committee3 Nominating and Corporate Governance Committee4 Public Responsibilities Committee5 Risk Committee6 Presiding DirectorTHE GE BOARDGE 2012 ANNUAL REPORT 29Each year,I write on behalf of the Board and as Chair of the Management Development and Compensation Committee to
191、 share our perspective on governance,how we evaluate performance,and the strategy for creating shareowner value.This year,I will do that in the context of a belief that defines GEs culture.An organization cannot sustain itself for more than 130 years,as GE has,unless it is always striving to improve
192、.GE works because the Company understands that organizations must continuously evolve and improve to stay relevant.That is the rationale for the GE Opinion Survey,or GEOS,conducted every two years.The survey provides an invaluable platform through which the people who know GE bestits employeescan ca
193、ndidly and confidentially share their perspectives on the work environment and key business issues that influence company success:innovation,strategy,execution,and customer alignment.Shareowners can be proud that GEs employees score the Company extremely highly when it comes to compliance and trusti
194、ng executives to do the right thing.This is essential to building the reputation required to maintain a competitive advantage when pursuing opportunities around the globe.Employee engagement scores were also very high,signaling a GE team motivated by the Companys mission and its ability to foster in
195、novation,make smart investments and execute.The GEOS results were not as strong in the areas of customer alignment and complexity.Addressing this is an imperative.GE leaders are committed to streamlining operations and processes to move faster,be smarter and get closer to the customer.The effort,kno
196、wn inside the Company as“Simplification,”is about increasing margins not only by cutting costs but also by working smarter and by removing unnecessary barriers that stand in the way of GE employees around the world.It is about creating an entrepreneurial environment that fosters innovation and allow
197、s us to move faster.Simplification is already producing significant results.Last summer,for instance,GE replaced the headquarter layer of the Energy business with three stand-alone businesses,all now reporting directly to the Chairman:Oil&Gas,Power&Water,and Energy Management.The restructuring saved
198、 close to$300 million and removed administrative barriers,empowering employees.There are many other projects under way,and we have set bold but realistic goals.The GEOS and the Simplification initiative are just two of the many tools GE leaders use to listen,learn,grow and get better year after year
199、.This is critical at a company such as GE.Many of our top executives have spent most or all of their careers at GE and have unparalleled domain expertise,a hallmark of the Company.At the same time,we cannot allow longevity to mean becoming insular or stale;the ability to evolve and keep ones thinkin
200、g and perspectives fresh and relevant is imperative for success.We believe that GE leaders understand this inherently.Today,GEs senior management is a proven team of strategic thinkers who are always learning and always improving.In fact,we measure our leaders on how they adapt in real time to an ev
201、er-changing world,perform amidst ambiguity and execute to achieve long-term goals.We align compensation with strong company financial and strategic performance.Ours is a balanced approach that,we believe,enables us to attract and retain the best people for the Companys long-term success.Just as stri
202、ving to be better is a cultural marker for GE and its executives,the same is true of its independent Board of Directors.We will continue to ensure that the Company never becomes stagnant.We also will always do our best to be transparent in explaining our approach to issues such as governance and com
203、pensation.When we see an area for improvement,we will take the appropriate steps.Simply put,we remain committed to working on behalf of the Companys investors.GE works to deliver shareowner value by offering real and sustainable solutions to the worlds toughest problems.Were proud to be part of that
204、,and we take our role seriously.Sincerely,Ralph S.Larsen Presiding Director February 26,2013TO OUR SHAREOWNERS“An organization cannot sustain itself for more than 130 years,as GE has,unless it is always striving to improve.”30 GE 2012 ANNUAL REPORT GE 2012 ANNUAL REPORT 31financial sectionContents32
205、 Management s Discussion of Financial Responsibility.We begin with a letter from our Chief Executive and Financial Officers discussing our unyielding commitment to rigorous oversight,control-lership,informative disclosure and visibility to investors.32 Management s Annual Report on Internal Control
206、Over Financial Reporting.In this report our Chief Executive and Financial Officers provide their assessment of the effectiveness of our internal control over financial reporting.33 Report of Independent Registered Public Accounting Firm.Our independent auditors,KPMG LLP,express their opinions on our
207、 financial statements and our internal control over financial reporting.34 Management s Discussion and Analysis(MD&A)34 Operations.We begin the Operations section of MD&A with an overview of our earnings,including a perspective on how the global economic environment has affected our businesses over
208、the last three years.We then discuss various key operating results for GE industrial(GE)and financial services(GECC).Because of the fundamental differences in these businesses,reviewing certain information separately for GE and GECC offers a more meaningful analysis.Next we provide a description of
209、our global risk management process.Our discussion of segment results includes quantitative and qualitative disclosure about the factors affecting segment revenues and profits,and the effects of recent acquisitions,dispositions and significant trans-actions.We conclude the Operations section with an
210、overview of our operations from a geographic perspective and a discussion of environmental matters.48 Financial Resources and Liquidity.In the Financial Resources and Liquidity section of MD&A,we provide an overview of the major factors that affected our consolidated financial position and insight i
211、nto the liquidity and cash flow activities of GE and GECC.63 Critical Accounting Estimates.Critical Accounting Estimates are necessary for us to prepare our financial statements.In this section,we discuss what these estimates are,why they are important,how they are developed and uncertainties to whi
212、ch they are subject.68 Other Information.We conclude MD&A with a brief discussion of new accounting standards that will become effective for us beginning in 2013.69 Selected Financial Data.Selected Financial Data provides five years of financial information for GE and GECC.This table includes common
213、ly used metrics that facilitate comparison with other companies.70 Audited Financial Statements and Notes 70 Statement of Earnings 70 Consolidated Statement of Comprehensive Income 71 Consolidated Statement of Changes in Shareowners Equity 72 Statement of Financial Position 74 Statement of Cash Flow
214、s 76 Notes to Consolidated Financial Statements140 Supplemental Information.We provide Supplemental Information to reconcile certain“non-GAAP financial measures”referred to in our report to the most closely associated GAAP financial measures.We also provide information about our stock performance ov
215、er the last five years.144 Glossary.For your convenience,we also provide a Glossary of key terms used in our financial statements.We also present our financial information electronically at GE 2012 ANNUAL REPORTManagements Discussion of Financial ResponsibilityWe believe that great companies are bui
216、lt on a foundation of reliable financial information and compliance with the spirit and letter of the law.For General Electric Company,that foundation includes rigorous management oversight of,and an unyielding dedication to,controllership.The financial disclosures in this report are one product of
217、our commitment to high-quality financial reporting.In addition,we make every effort to adopt appropriate accounting policies,we devote our full resources to ensuring that those policies are applied properly and consis-tently and we do our best to fairly present our financial results in a manner that
218、 is complete and understandable.Members of our corporate leadership team review each of our businesses routinely on matters that range from overall strategy and financial performance to staffing and compliance.Our busi-ness leaders monitor financial and operating systems,enabling us to identify pote
219、ntial opportunities and concerns at an early stage and positioning us to respond rapidly.Our Board of Directors over-sees managements business conduct,and our Audit Committee,which consists entirely of independent directors,oversees our internal control over financial reporting.We continually examin
220、e our governance practices in an effort to enhance investor trust and improve the Boards overall effectiveness.The Board and its committees annually conduct a performance self-evaluation and recommend improvements.Our Presiding Director led four meetings of non-management directors this year,helping
221、 us sharpen our full Board meetings to better cover significant top-ics.Compensation policies for our executives are aligned with the long-term interests of GE investors.We strive to maintain a dynamic system of internal controls and proceduresincluding internal control over financial reportingdesig
222、ned to ensure reliable financial recordkeeping,transparent financial reporting and disclosure,and protection of physical and intellectual property.We recruit,develop and retain a world-class financial team.Our internal audit function,includ-ing members of our Corporate Audit Staff,conducts thousands
223、 of financial,compliance and process improvement audits each year.Our Audit Committee oversees the scope and evaluates the overall results of these audits,and members of that Committee regularly attend GE Capital Board of Directors,Corporate Audit Staff and Controllership Council meetings.Our global
224、 integrity policies“The Spirit&The Letter”require compliance with law and policy,and pertain to such vital issues as upholding finan-cial integrity and avoiding conflicts of interest.These integrity policies are available in 31 languages,and are provided to all of our employees,holding each of them
225、accountable for compli-ance.Our strong compliance culture reinforces these efforts by requiring employees to raise any compliance concerns and by prohibiting retribution for doing so.To facilitate open and candid communication,we have designated ombudspersons through-out the Company to act as indepe
226、ndent resources for reporting integrity or compliance concerns.We hold our directors,con-sultants,agents and independent contractors to the same integrity standards.We are keenly aware of the importance of full and open presentation of our financial position and operating results,and rely for this p
227、urpose on our disclosure controls and procedures,including our Disclosure Committee,which comprises senior executives with detailed knowledge of our businesses and the related needs of our investors.We ask this committee to review our compliance with accounting and disclosure requirements,to evaluat
228、e the fairness of our financial and non-financial dis-closures,and to report their findings to us.We further ensure strong disclosure by holding approximately 400 analyst and investor meetings annually.We welcome the strong oversight of our financial reporting activities by our independent registere
229、d public accounting firm,KPMG LLP,engaged by and reporting directly to the Audit Committee.U.S.legislation requires management to report on internal control over financial reporting and for auditors to render an opinion on such controls.Our report follows and the KPMG LLP report for 2012 appears on
230、the following page.Managements Annual Report on Internal Control Over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.With our participation,an evaluation of the effective-ness of our internal control ov
231、er financial reporting was conducted as of December 31,2012,based on the framework and criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.Based on this evaluation,our management has concluded that our internal c
232、ontrol over financial reporting was effective as of December 31,2012.Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting.Their report follows.JEFFREY R.IMMELT KEITH S.SHERINChairman of the Board and Vice Chairman andChief Exec
233、utive Officer Chief Financial OfficerFebruary 26,2013 GE 2012 ANNUAL REPORT 33Report of Independent Registered Public Accounting FirmTo Shareowners and Board of Directors of General Electric Company:We have audited the statement of financial position of General Electric Company and consolidated affi
234、liates(the“Company”)as of December 31,2012 and 2011,and the related statements of earn-ings,comprehensive income,changes in shareowners equity and cash flows for each of the years in the three-year period ended December 31,2012 appearing on pages 70 through 139.We also have audited the Companys inte
235、rnal control over financial report-ing as of December 31,2012,based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(“COSO”).The Companys management is responsible for these consolidated financial statement
236、s,for maintaining effective inter-nal control over financial reporting,and for its assessment of the effectiveness of internal control over financial reporting.Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Companys internal control over
237、financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States).Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial state-ments are free
238、 of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial state-ments included examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements,assess
239、-ing the accounting principles used and significant estimates made by management,and evaluating the overall financial state-ment presentation.Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,assessing the risk tha
240、t a material weak-ness exists,and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.Our audits also included performing such other procedures as we considered necessary in the circumstances.We believe that our audits provide a reasonable bas
241、is for our opinions.A companys internal control over financial reporting is a pro-cess designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principl
242、es.A companys internal control over financial reporting includes those policies and procedures that(1)pertain to the maintenance of records that,in reason-able detail,accurately and fairly reflect the transactions and dispositions of the assets of the company;(2)provide reasonable assurance that tra
243、nsactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,and that receipts and expendi-tures of the company are being made only in accordance with authorizations of management and directors of the company;and(3)prov
244、ide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,use,or disposition of the companys assets that could have a material effect on the financial statements.Because of its inherent limitations,internal control over financial reporting may not prevent or detec
245、t misstatements.Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inad-equate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate.In our opinion,the consolidated financi
246、al statements referred to above present fairly,in all material respects,the financial posi-tion of General Electric Company and consolidated affiliates as of December 31,2012 and 2011,and the results of their operations and their cash flows for each of the years in the three-year period ended Decemb
247、er 31,2012,in conformity with U.S.generally accepted accounting principles.Also in our opinion,the Company maintained,in all material respects,effective internal control over financial reporting as of December 31,2012,based on crite-ria established in Internal ControlIntegrated Framework issued by C
248、OSO.As discussed in Note 1 to the consolidated financial state-ments,in 2010 the Company changed its method of accounting for consolidation of variable interest entities.Our audits of the consolidated financial statements were made for the purpose of forming an opinion on the consoli-dated financial
249、 statements taken as a whole.The accompanying consolidating information appearing on pages 71,73 and 75 is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position,results of operations and cash flows of the individual entit
250、ies.The consolidating information has been subjected to the audit-ing procedures applied in the audits of the consolidated financial statements and,in our opinion,is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole.KPMG LLP Stamford,Connect
251、icut February 26,201334 GE 2012 ANNUAL REPORTmanagements discussion and analysisOperationsThe consolidated financial statements of General Electric Company(the Company)combine the industrial manufactur-ing and services businesses of General Electric Company(GE)with the financial services businesses
252、of General Electric Capital Corporation(GECC or financial services).Unless otherwise indi-cated by the context,we use the terms“GE”and“GECC”on the basis of consolidation described in Note 1.In the accompanying analysis of financial information,we sometimes use information derived from consolidated f
253、inan-cial information but not presented in our financial statements prepared in accordance with U.S.generally accepted account-ing principles(GAAP).Certain of these data are considered“non-GAAP financial measures”under the U.S.Securities and Exchange Commission(SEC)rules.For such measures,we have pr
254、ovided supplemental explanations and reconciliations in the Supplemental Information section.We present Managements Discussion of Operations in five parts:Overview of Our Earnings from 2010 through 2012,Global Risk Management,Segment Operations,Geographic Operations and Environmental Matters.Unless
255、otherwise indicated,we refer to captions such as revenues and other income and earnings from continuing operations attributable to the Company simply as“revenues”and“earnings”throughout this Managements Discussion and Analysis.Similarly,discussion of other matters in our consolidated financial state
256、ments relates to continuing oper-ations unless otherwise indicated.On February 22,2012,we merged our wholly-owned sub-sidiary,General Electric Capital Services,Inc.(GECS),with and into GECS wholly-owned subsidiary,GECC.The merger simpli-fied our financial services corporate structure by consolidatin
257、g financial services entities and assets within our organization and simplifying SEC and regulatory reporting.Upon the merger,GECC became the surviving corporation and assumed all of GECS rights and obligations and became wholly-owned directly by General Electric Company.Our financial services segme
258、nt,GE Capital,continues to comprise the continuing operations of GECC,which now include the run-off insurance operations previously held and managed in GECS.Unless otherwise indicated,refer-ences to GECC and the GE Capital segment in this Managements Discussion and Analysis relate to the entity or s
259、egment as they exist subsequent to the February 22,2012 merger.Effective October 1,2012,we reorganized the former Energy Infrastructure segment into three segmentsPower&Water,Oil&Gas and Energy Management.We also reorganized our Home&Business Solutions segment by transferring our Intelligent Platfor
260、ms business to Energy Management.Results for 2012 and prior periods are reported on this basis.We supplement our GAAP net earnings and earnings per share(EPS)reporting by also reporting operating earnings and operat-ing EPS(non-GAAP measures).Operating earnings and operating EPS include service cost
261、s and plan amendment amortization for our principal pension plans as these costs represent expenses associated with employee benefits earned.Operating earnings and operating EPS exclude non-operating pension cost/income such as interest costs,expected return on plan assets and non-cash amortization
262、of actuarial gains and losses.We believe that this reporting provides better transparency to the employee benefit costs of our principal pension plans and Company operating results.Overview of Our Earnings from 2010 through 2012Earnings from continuing operations attributable to the Company increase
263、d 3%to$14.7 billion in 2012 and 13%to$14.2 billion in 2011,reflecting the relative stabilization of overall economic condi-tions during the last two years.Operating earnings(non-GAAP measure)which exclude non-operating pension costs increased 8%to$16.1 billion in 2012 compared with a 20%increase to$
264、14.9 billion in 2011.Earnings per share from continuing operations increased 12%to$1.39 in 2012 compared with an 8%increase to$1.24 in 2011.Operating EPS(non-GAAP measure)increased 16%to$1.52 in 2012 compared with a 16%increase to$1.31 in 2011.Operating EPS excluding the effects of our 2011 preferre
265、d stock redemption(non-GAAP measure)increased 10%to$1.52 in 2012 compared with$1.38 in 2011.We believe that we are seeing con-tinued signs of stabilization in much of the global economy,including in financial services,as GECC earnings from continuing operations attributable to the Company increased
266、12%in 2012 and 111%in 2011.Net earnings attributable to the Company decreased 4%in 2012 reflecting an increase of losses from discontinued operations partially offset by a 3%increase in earnings from continuing operations.Net earnings attributable to the Company increased 22%in 2011,as losses from d
267、iscontinued operations in 2011 decreased and earnings from continuing operations increased 13%.We begin 2013 with a record backlog of$210 bil-lion,continue to invest in market-leading technology and services and expect to continue our trend of revenue and earnings growth.Power&Water(18%and 27%of con
268、solidated three-year rev-enues and total segment profit,respectively)revenues increased 10%in 2012 primarily as a result of higher volume mainly driven by an increase in equipment sales at the Wind business after increasing 4%in 2011 primarily as a result of higher volume.Segment profit increased 8%
269、in 2012 primarily driven by higher volume.Segment profit decreased 13%in 2011 primarily due to lower productivity and lower prices in the wind turbines business.Oil&Gas(9%and 8%of consolidated three-year revenues and total segment profit,respectively)revenues increased 12%in 2012 primarily as a resu
270、lt of higher volume driven by acquisitions and higher sales of both equipment and services,after increas-ing 44%in 2011 as a result of acquisitions and higher volume.Segment profit increased 16%in 2012 primarily on higher volume and increased productivity reflecting increased equipment mar-gins.Segm
271、ent profit increased 18%in 2011 primarily driven by higher volume.managements discussion and analysis GE 2012 ANNUAL REPORT 35Energy Management(4%and 1%of consolidated three-year revenues and total segment profit,respectively)revenues increased 15%in 2012 primarily as a result of acquisitions after
272、increasing 24%in 2011 driven by acquisitions and higher volume.Segment profit increased 68%in 2012 primarily driven by higher prices and increased other income.Segment profit decreased 50%in 2011 primarily driven by the effects of inflation and decreased other income.Aviation(13%and 17%of consolidat
273、ed three-year revenues and total segment profit,respectively)revenues increased 6%in 2012 as a result of higher prices and higher volume primar-ily driven by increased commercial and military engine sales.Segment profit increased 7%in 2012 as a result of higher prices partially offset by the effects
274、 of inflation and lower productivity.In 2011,Aviation revenues increased 7%as a result of higher vol-ume and higher prices driven by equipment sales and services.Segment profit increased 6%in 2011 as a result of higher volume and higher prices.Healthcare(12%and 14%of consolidated three-year rev-enue
275、s and total segment profit,respectively)revenues increased 1%in 2012 on higher equipment sales,with the strongest growth in emerging markets.Segment profit increased 4%in 2012 as a result of increased productivity.Revenues increased 7%in 2011 due to higher volume of both equipment and ser-vice sales
276、.Segment profit increased 2%in 2011 primarily due to increased productivity.Transportation(3%and 3%of consolidated three-year rev-enues and total segment profit,respectively)revenues increased 15%in 2012 due to higher volume and higher prices related to increased equipment sales and services.Segment
277、 profit increased 36%in 2012 as a result of higher prices and increased productivity,reflecting improved service margins.Revenues increased 45%in 2011 as a result of higher volume related to increased equipment sales and services.Segment profit increased over 100%in 2011 as a result of increased pro
278、ductivity,reflecting improved service margins and higher volume.Home&Business Solutions(5%and 2%of consolidated three-year revenues and total segment profit,respectively)rev-enues increased 4%in 2012 and decreased 3%in 2011.In 2012,revenues increased as a result of higher prices at Appliances.The re
279、venue decrease in 2011 was related to lower volume at Appliances.Segment profit increased 31%in 2012 primarily as a result of higher prices partially offset by the effects of inflation.Segment profit decreased 41%in 2011 as a result of the effects of inflation.GE Capital(33%and 28%of consolidated th
280、ree-year revenues and total segment profit,respectively)net earnings increased 12%in 2012 and 111%in 2011 due to the continued stabilization in the overall economic environment.Increased stability in the financial markets has contributed to lower losses and a significant increase in segment profit t
281、o$7.4 billion in 2012 and$6.6 billion in 2011.We also reduced our ending net investment(ENI),excluding cash and equivalents,from$513 billion at January 1,2009 to$419 billion at December 31,2012.GECC is a diversely funded and smaller,more focused finance company with strong positions in several comme
282、rcial mid-market and consumer financing segments.Overall,acquisitions contributed$2.8 billion,$4.6 billion and$0.3 billion to consolidated revenues in 2012,2011 and 2010,respectively,excluding the effects of acquisition gains.Our consolidated net earnings included$0.2 billion,an insignificant amount
283、 and$0.1 billion in 2012,2011 and 2010,respectively,from acquired businesses.We integrate acquisitions as quickly as pos-sible.Only revenues and earnings from the date we complete the acquisition through the end of the fourth following quarter are attributed to such businesses.Dispositions also affe
284、cted our ongoing results through lower revenues of$5.1 billion,$12.6 bil-lion and$3.0 billion in 2012,2011 and 2010,respectively.The effects of dispositions on net earnings were decreases of$0.3 bil-lion in both 2012 and 2011 and an increase of$0.1 billion in 2010.DISCONTINUED OPERATIONS.Consistent
285、with our goal of reducing GECC ENI and focusing our businesses on selective financial services products where we have domain knowledge,broad distribution,and the ability to earn a consistent return on capital,while managing our overall balance sheet size and risk,in 2012,we sold Consumer Ireland.Dis
286、continued operations also includes GE Money Japan(our Japanese personal loan business,Lake,and our Japanese mortgage and card businesses,excluding our investment in GE Nissen Credit Co.,Ltd.),our U.S.mortgage busi-ness(WMC),BAC Credomatic GECF Inc.(BAC),our U.S.recreational vehicle and marine equipm
287、ent financing business(Consumer RV Marine),Consumer Mexico,Consumer Singapore and our Consumer home lending operations in Australia and New Zealand(Australian Home Lending).All of these operations were previ-ously reported in the GE Capital segment.We reported the operations described above as disco
288、ntin-ued operations for all periods presented.For further information about discontinued operations,see the Segment OperationsDiscontinued Operations section and Note 2.WE DECLARED$7.4 BILLION IN DIVIDENDS IN 2012.Common per-share dividends increased 15%to$0.70 in 2012 after an increase of 33%to$0.6
289、1 in 2011.We increased our quarterly dividend three times during 2011 and 2012,and on February 15,2013,our Board of Directors approved a quarterly dividend of$0.19 per share of common stock,which is payable April 25,2013,to share-owners of record at close of business on February 25,2013.In 2011 and
290、2010,we declared$1.0 billion(including$0.8 billion as a result of our redemption of preferred stock)and$0.3 billion in preferred stock dividends,respectively.See Note 15.Except as otherwise noted,the analysis in the remainder of this section presents the results of GE(with GECC included on a one-lin
291、e basis)and GECC.See the Segment Operations section for a more detailed discussion of the businesses within GE and GECC.managements discussion and analysis36 GE 2012 ANNUAL REPORTSignificant matters relating to our Statement of Earnings are explained below.GE SALES OF PRODUCT SERVICES were$43.4 bill
292、ion in 2012,an increase of 4%compared with 2011,and operating profit from product services was$12.5 billion in 2012,an increase of 6%compared with 2011.Both the sales and operating profit of prod-uct services increases were at Power&Water,Oil&Gas,Transportation and Energy Management.GE sales of prod
293、uct services were$41.9 billion in 2011,an increase of 14%compared with 2010,and operating profit from product services was$11.8 billion in 2011,an increase of 15%compared with 2010.Both the sales and operating profit of product services increases were at Oil&Gas,Energy Management,Aviation,Transporta
294、tion and Healthcare.POSTRETIREMENT BENEFIT PLANS costs were$5.5 billion,$4.1 bil-lion and$3.0 billion in 2012,2011 and 2010,respectively.Costs increased in 2012 primarily due to the continued amortization of 2008 investment losses and the effects of lower discount rates(principal pension plans disco
295、unt rate decreased from 5.28%at December 31,2010 to 4.21%at December 31,2011).Costs increased in 2011 primarily due to the continued amortization of 2008 investment losses and the effects of lower discount rates(principal pension plans discount rate decreased from 5.78%at December 31,2009 to 5.28%at
296、 December 31,2010).Our discount rate for our principal pension plans at December 31,2012 was 3.96%,which reflected current histori-cally low interest rates.Considering the current and target asset allocations,as well as historical and expected returns on various categories of assets in which our pla
297、ns are invested,we have assumed that long-term returns on our principal pension plan assets will be 8.0%for cost recognition in 2013,compared to 8.0%in both 2012 and 2011 and 8.5%in 2010.GAAP provides for recognition of differences between assumed and actual returns over a period no longer than the
298、average future service of employees.See the Critical Accounting Estimates section for additional information.We expect the costs of our postretirement benefits to increase in 2013 by approximately$0.4 billion as compared to 2012,primarily because of the effects of additional 2008 invest-ment loss am
299、ortization and lower discount rates.Based on our current assumptions,we expect that loss amortization related to our principal pension plans will peak in 2013 and,as a result,our postretirement benefits costs should decline in 2014.Pension expense for our principal pension plans on a GAAP basis was$
300、3.8 billion,$2.4 billion and$1.1 billion in 2012,2011 and 2010,respectively.Operating pension costs(non-GAAP)for these plans were$1.7 billion in 2012 and$1.4 billion in both 2011 and 2010.Operating earnings include service cost and prior ser-vice cost amortization for our principal pension plans as
301、these costs represent expenses associated with employee service.Operating earnings exclude non-operating pension costs/income such as interest cost,expected return on plan assets and non-cash amortization of actuarial gains and losses.Operating pension costs increased in 2012 primarily due to the ef
302、fects of lower discount rates and additional prior service cost amortiza-tion resulting from 2011 union negotiations.We expect operating pension costs for these plans will be about$1.7 billion in 2013.The GE Pension Plan was underfunded by$13.3 billion at the end of 2012 as compared to$13.2 billion
303、at December 31,2011.The GE Supplementary Pension Plan,which is an unfunded plan,had projected benefit obligations of$5.5 billion and$5.2 billion at December 31,2012 and 2011,respectively.Our underfund-ing at year-end 2012 was relatively consistent with 2011 as the effects of lower discount rates and
304、 liability growth were primar-ily offset by higher investment returns(11.7%return in 2012).Our principal pension plans discount rate decreased from 4.21%at December 31,2011 to 3.96%at December 31,2012,which increased the pension benefit obligation at year-end 2012 by approximately$2.0 billion.A 100
305、basis point increase in our pen-sion discount rate would decrease the pension benefit obligation at year-end by approximately$7.4 billion.Our GE Pension Plan assets increased from$42.1 billion at the end of 2011 to$44.7 bil-lion at December 31,2012,primarily driven by higher investment returns that
306、were partially offset by benefit payments made dur-ing the year.Assets of the GE Pension Plan are held in trust,solely for the benefit of Plan participants,and are not available for gen-eral company operations.On July 6,2012,the U.S.Government enacted the“Moving Ahead for Progress in the 21st Centur
307、y Act,”which contained provisions that changed the interest rate methodology used to calculate Employee Retirement Income Security Act(ERISA)minimum pension funding requirements in the U.S.This change reduced our near-term annual cash funding requirements for the GE Pension Plan.We contributed$0.4 b
308、illion to the GE Pension Plan in 2012.We are not required to contribute to the GE Pension Plan in 2013.On an ERISA basis,our preliminary estimate is that the GE Pension Plan was approximately 100%funded at January 1,2013.Based on this,our current best estimate of the projected 2014 GE Pension Plan r
309、equired contribution is approximately$0.6 billion.At December 31,2012,the fair value of assets for our other pension plans was$3.9 billion less than the respective projected benefit obligations.The comparable amount at December 31,2011,was$3.3 billion.This increase was primarily attributable to lowe
310、r discount rates.We expect to contribute$0.7 billion to our other pension plans in 2013,the same as in both 2012 and 2011.The unfunded liability for our principal retiree health and life plans was$10.9 billion and$12.1 billion at December 31,2012 and 2011,respectively.This decrease was primarily att
311、ributable to a plan amendment that affected retiree health and life benefit eligi-bility for certain salaried plan participants and lower cost trends which were partially offset by the effects of lower discount rates managements discussion and analysis GE 2012 ANNUAL REPORT 37(retiree health and lif
312、e plans discount rate decreased from 4.09%at December 31,2011 to 3.74%at December 31,2012).We fund our retiree health benefits on a pay-as-you-go basis.We expect to contribute$0.6 billion to these plans in 2013 compared with actual contributions of$0.5 billion and$0.6 billion in 2012 and 2011,respec
313、tively.The funded status of our postretirement benefits plans and future effects on operating results depend on economic condi-tions and investment performance.For additional information about funded status,components of earnings effects and actu-arial assumptions,see Note 12.GE OTHER COSTS AND EXPE
314、NSES are selling,general and adminis-trative expenses.These costs were 17.5%,18.5%and 16.3%of total GE sales in 2012,2011 and 2010,respectively.The 2012 decrease was primarily driven by increased sales and the effects of global cost reduction initiatives,partially offset by increased acquisition-rel
315、ated costs.The vast majority of the 2011 increase was driven by higher pension costs and increased costs to sup-port global growth.INTEREST ON BORROWINGS AND OTHER FINANCIAL CHARGES amounted to$12.5 billion,$14.5 billion and$15.5 billion in 2012,2011 and 2010,respectively.Substantially all of our bo
316、rrowings are in financial services,where interest expense was$11.7 billion,$13.9 billion and$14.5 billion in 2012,2011 and 2010,respectively.GECC average borrowings declined from 2011 to 2012 and from 2010 to 2011,in line with changes in average GECC assets.Interest rates have decreased over the thr
317、ee-year period primarily attributable to declining global benchmark interest rates.GECC average borrowings were$421.9 billion,$452.7 billion and$472.0 billion in 2012,2011 and 2010,respectively.The GECC aver-age composite effective interest rate was 2.8%in 2012,3.1%in 2011 and 3.1%in 2010.In 2012,GE
318、CC average assets of$562.1 bil-lion were 5%lower than in 2011,which in turn were 3%lower than in 2010.See the Liquidity and Borrowings section for a discussion of liquidity,borrowings and interest rate risk management.INCOME TAXES have a significant effect on our net earnings.As a global commercial
319、enterprise,our tax rates are affected by many factors,including our global mix of earnings,the extent to which those global earnings are indefinitely reinvested outside the United States,legislation,acquisitions,dispositions and tax char-acteristics of our income.Our tax rates are also affected by t
320、ax incentives introduced in the U.S.and other countries to encour-age and support certain types of activity.Our tax returns are routinely audited and settlements of issues raised in these audits sometimes affect our tax provisions.GE and GECC file a consolidated U.S.federal income tax return.This en
321、ables GE to use GECC tax deductions and credits to reduce the tax that otherwise would have been payable by GE.Income taxes on consolidated earnings from continuing operations were 14.4%in 2012 compared with 28.3%in 2011 and 7.3%in 2010.Our consolidated income tax rate is lower than the U.S.statu-to
322、ry rate primarily because of benefits from lower-taxed global operations,including the use of global funding structures.There is a benefit from global operations as non-U.S.income is subject to local country tax rates that are significantly below the 35%U.S.statutory rate.These non-U.S.earnings have
323、 been indefinitely reinvested outside the U.S.and are not subject to current U.S.income tax.The rate of tax on our indefinitely reinvested non-U.S.earnings is below the 35%U.S.statutory rate because we have significant business operations subject to tax in countries where the tax on that income is l
324、ower than the U.S.statutory rate and because GE funds the majority of its non-U.S.operations through foreign companies that are subject to low foreign taxes.We expect our ability to benefit from non-U.S.income taxed at less than the U.S.rate to continue,subject to changes in U.S.or foreign law,inclu
325、ding the expiration of the U.S.tax law provision deferring tax on active financial services income,as discussed in Note 14.In addition,since this benefit depends on managements intention to indefinitely reinvest amounts outside the U.S.,our tax provision will increase to the extent we no longer inde
326、finitely reinvest foreign earnings.Our benefits from lower-taxed global operations increased to$2.2 billion in 2012 from$2.1 billion in 2011 principally because of the realization of benefits for prior year losses and a decrease in current year losses for which there was not a full tax benefit.Our b
327、enefits from lower-taxed global operations declined to$2.1 bil-lion in 2011 from$2.8 billion in 2010 principally because of lower earnings indefinitely reinvested in our operations subject to tax in countries where the tax on that income is lower than the U.S.statutory rate and a decrease in the ben
328、efit from audit resolu-tions.The benefit from lower-taxed global operations include in 2012 and in 2011$0.1 billion,and in 2010$0.4 billion due to audit resolutions.To the extent global interest rates and non-U.S.oper-ating income increase we would expect tax benefits to increase,subject to manageme
329、nts intention to indefinitely reinvest those earnings.Our benefit from lower taxed global operations included the effect of the lower foreign tax rate on our indefinitely reinvested non-U.S.earnings which provided a tax benefit of$1.3 billion in 2012,$1.5 billion in 2011 and$2.0 billion in 2010.The
330、tax benefit from non-U.S.income taxed at a local country rather than the U.S.statutory tax rate is reported in the effective tax rate reconcilia-tion in the line“Tax on global earnings including exports.”The decrease in the consolidated effective tax rate from 2011 to 2012 was due in significant par
331、t to the high effective tax rate in 2011 on the pre-tax gain on the NBC Universal(NBCU)transac-tion with Comcast Corporation(Comcast)discussed in Note 2.This gain increased the 2011 consolidated effective tax rate by 12.8 percentage points.The effective tax rate was also lower due to the benefit of
332、the high tax basis in the entity sold in the Business Property disposition.managements discussion and analysis38 GE 2012 ANNUAL REPORTCash income taxes paid in 2012 were$3.2 billion,reflecting the effects of changes to temporary differences between the car-rying amount of assets and liabilities and
333、their tax bases and the timing of tax payments to governments.The increase in the consolidated effective tax rate from 2010 to 2011 was due in significant part to the high effective tax rate on the pre-tax gain on the NBCU transaction with Comcast dis-cussed above and in Note 2.The effective tax rate was also higher because of the increase in 2011 of income in higher taxed juris-dictions.This decr
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