GE 2015 Annual Report Download - page 43

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Jeff Bornstein
SVP & Chief Financial Officer
Operating Profit Margins1, 2
(Industrial with Corporate)
Returns1
(Industrial ROTC)
Segment margin
expansion & lower
corporate costs
Higher industrial
earnings &
lower capital
ALLOCATION /AMOUNTS ALLOCATION /AMOUNTSGOALS GOALS
Dividends
Sustain attractive dividend
(currently at $.23/share) with a
dividend yield higher than peers
Buyback
(reported on a book basis)
$11.5B
$11.2B $11.5B
GROWTH FUNDING
Research & Development, Plant & Equipment, Information Technology
Priorities
• Expanding software & analytics
capabilities and investing in the
digital thread
• Supporting new product launches
• Localizing operations in key
growth markets
1. Non-GAAP Financial Measure. See Financial Measures That Supplement U.S. Generally Accepted Accounting Principles Measures (Non-GAAP Financial Measures) on page 95.
2. Excluding Alstom, restructuring and other & gains.
• 2013 • 2014 • 2015
Above-peer revenue
growth in a slower
growth environment
Organic Revenue Growth1
(Industrial segments)
Strong GE Capital
dividend &
Industrial CFOA
Free Cash Flow1
(GE CFOA – Net P&E)
$145B+
capital to allocate
from 2015–2018
(plus potential leverage
opportunity)
Reduce share count to 8-8.5B shares
outstanding through GE Capital Exit
Plan & Synchrony Financial split-off
ALLOCATING CAPITAL
1 Return ~$55B from GE Capital to investors
via buyback
2Sustain attractive dividend of $35B (yield > peers)
3 Reinvest in organic growth (plant & equipment,
technology, global scale, digital)
4Disciplined M&A (see framework below)
GENERATING CAPITAL
HOW CAPITAL ALLOCATION DRIVES RESULTS
HOW WE BALANCE CAPITAL ALLOCATION
Key Year-Over-Year Drivers
Cash from operating activities
GE Capital Exit Plan
Synchrony Financial split-off
Other dispositions
Potential for incremental debt to optimize
capital structure
+
+
+
+
“Our financial services exits are unlocking significant capital that we are reallocating to generate
higher returns. This year, we retired 6.6% of GE’s public float through the Synchrony Financial
split-off and plan to use the dividends from the GE Capital exits to fund our buyback program.”
How We Allocate Your Capital
Restructuring &
Other Charges Targeting world-class Industrial
cost structure & margins: ~12.8%
Industrial SG&A expenses as a %
of sales in 2016 (excluding Alstom)
Acquisitions M&A framework
+ Bolt-on to existing businesses
+ No growth synergies assumed
+ Market upside GE
+ Feeds GE strategic momentum
+ Additive to EPS goals
TARGET 15%+ RETURNS
2013 2014 20152013 2014 20152013 2014 2015 2013 2014 2015
12.6% 14.2% 15.3% 16.9%
0%
7%
$11.0B $11.8B$13.5B
14.3% 14.0%
3%
$7.8B $8.9B $9.3B
$10.4B
$1.9B
$23.7B
$2.0B $1.8B $1.7B $9.0B
$2.1B
$10.4B
Synchrony split-off reduced
GE public float by 6.6%
$20.4B
Synchrony
split-off
GE 2015 FORM 10-K 15