GE 2014 Annual Report Download - page 35

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“We are executing on a balanced and disciplined capital allocation
plan that returns signifi cant capital to investors, invests in the Company’s
future growth, and keeps GE safe and secure.”
Jeff Bornstein, SVP & Chief Financial Offi cer
How We Allocate Your Capital
$1.5B
$9.0B
$2.1B
$7.2B $7.8B $8.9B
HOW CAPITAL ALLOCATION DRIVES RESULTS
Margins
(Industrial segments,
’15 & ’16 ex. M&A3)
Returns1
(Industrial ROTC,
’15 & ’16 ex. M&A3)
’13 ’14 ’15E ’16F ’13 ’14 ’15E ’16F
ALLOCATION /AMOUNTS ALLOCATION /AMOUNTSGOALS GOALS
Acquisitions
75% 25%
Industrial GE Capital
Continue to reshape portfolio…
targeting for 2016
Dividends
Grow in line
with earnings... 1¢
per share
quarterly increase
for 2015
Buyback
(reported on a book basis)
Plant & Equipment
Focus on low-cost multimodal
facilities in key growth markets
HOW WE BALANCE CAPITAL ALLOCATION
Targeting world-class industrial
cost structure & margins…
~12% Industrial SG&A expenses
as a percentage of sales in 2016
Restructuring &
Other Charges
Research &
Development Annual investment at
~5%
Industrial sales
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 94.
2. Subject to regulatory approvals.
3. We are excluding M&A transactions from the margin & Industrial ROTC targets because these targets were set prior to the Company’s announcement of the
Alstom acquisition (which is subject to regulatory approvals).
• 2012 • 2013 • 2014
$5.2B $5.5B $5.3B
$0.7B $2.0B $1.8B
$0.7B $0.8B $1.0B
~17%
15.7% 16.2% +~17%
+
’13 ’14 ’15E
Organic
Revenue Growth1
(Industrial segments)
0%
7%
2%–5%
’13 ’14 ’15E
Free Cash Flow1
(GE CFOA–P&E)
$10.6B $11.2B $10B–$12B
$5.2B
$10.4B
$1.9B $3.9B $3.7B $4.0B
CFOA
Externally funded portion
~$76B
capital
to allocate in
2015 & 2016
ALLOCATING CAPITAL
1 Return ~$40B to investors in dividends & shares
repurchased through Synchrony Financial split-off
2 Focus on Alstom…other M&A focused & smaller
3 Invest organically
GENERATING CAPITAL
Focus on free cash fl ow1 (GE CFOA less P&E)
Synchrony Financial split-off…investor friendly
GE Capital dividend
Dispositions…~$2B/year
+
+
+
+
Offset employee share program dilution
& reduce share count (including through
Synchrony Financial split-off2) to
9.0B–9.5B shares outstanding
14.3% 14.0%
GE 2014 FORM 10-K 15