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General Electric Company
Fairfi eld, Connecticut 06828
www.ge.com
GE 2011 Annual Report
2011 Annual Report
GE Works
3.EPC055148101A.102
150
154
180
170
147
133
139
163
155 142
20082007 2009 2010 2011
CONSOLIDATED REVENUES
(In $ billions)
NBCU
GE
ex NBCU
16.8
16.0
20082007
GECS
Dividend
Industrial
CFOA
2009 2010 2011
19.1
23.3
16.4 14.7
12.1
CASH FLOW FROM OPERATING
ACTIVITIES (CFOA)
(In $ billions)
10.8
17.8
22.3
12.5 14.1
9.5
15.9
20.4
11.3 13.0
20082007 2009 2010 2011
EARNINGS ATTRIBUTABLE TO GE
(In $ billions)
NBCU
GE
ex NBCU
22%
GROWTH CONTINUES
22% increase in Operating
EPS excluding impact
of the preferred stock
redemption, and 20% rise
in Operating earnings.
$200B
RECORD INDUSTRIAL
BACKLOG
Record equipment and service
orders drove the backlog to a
record of $200 billion.
$85B
FINANCIAL FLEXIBILITY
GE had $85 billion of cash and
equivalents at year-end 2011.
70%
DIVIDEND INCREASES
GE announced two dividend
increases in 2011 following
two increases in 2010: a total
70% increase over the two years.
18%
INTERNATIONAL GROWTH
GE’s global growth initiative
helped drive 18% growth in
industrial international revenue.
$18B
U.S. EXPORTS
International sales of American-
made products totaled $18 billion
in 2011, a $1 billion increase
from 2010.
6%
R&D SPEND
GE continued its strong research
and development investment
with total spending at 6% of
industrial revenue.
13,000
U.S. JOBS
GE has announced the creation
of 13,000 jobs in the United States
since 2009.
2011 SUMMARY nancial and strategic highlights
Note: Financial results from continuing operations unless otherwise noted.
CONTENTS
2 Letter to Shareowners
10 Business Overview
29 Board of Directors
31 Financial Section
142 Corporate Information
ON THE COVER
Wellington Pereira dos Santos
Operator II
GE’s Wellstream facility in Niterói, Brazil,
is a leading producer of high-quality
exible pipe equipment for the Brazilian
offshore drilling market, part of a
$500 million expansion of operations
in the country.
GE Works
At GE, we put our ideas to work. Taking them off the paper, out
of the lab and into the world. Engineers, scientists, teachers,
leaders and doers, all sharing a belief that things can be made
to work better. It’s why we come to work every day. To build,
power, move and cure the world. We are at work making the
world work better.
Jeffrey R. Immelt
Chairman of the Board and
Chief Executive Offi cer
John Krenicki, Jr.
Vice Chairman, GE and
President & Chief Executive
Offi cer, Energy Infrastructure
Keith S. Sherin
Vice Chairman, GE and
Chief Financial Offi cer
Michael A. Neal
Vice Chairman, GE
and Chairman &
Chief Executive Offi cer,
GE Capital Corp.
John G. Rice
Vice Chairman, GE and
President & Chief Executive
Offi cer, Global Growth &
Operations
Pictured, left to right:
GE 2011 ANNUAL REPORT 1
We look at
what the
world needs
A belief
in a better
way
A relentless
drive to invent
and build things
that matter
A world
that works
better
X+=
THE GE WORKS EQUATION
Culture is the foundation for any
successful enterprise, and ours
inspires our people to improve
every day. It is why GE Works.
It starts by being “mission-based.” We have a relentless
drive to invent things that matter: innovations that
build, power, move and help cure the world. We make
things that very few in the world can, but that everyone
needs. This is a source of pride. To our employees and
customers, it defi nes GE.
We build on this mission with a belief
in a better way. We are constantly
learning and driving best practices. We
invest to train our people and develop
leaders. We learn from customers,
competitors, peers and each other.
Because we know we can get better,
we are never afraid. Competition is in
our blood.
GE is a “We Company,” not a “Me
Company.” We want people who listen
more than they talk. We want leaders
who build teams. Bob Santamoor
represents labor; he is the Chairman of
the IUE-CWA GE Aerospace Conference
Board. We have worked together for
years. We don’t agree on everything,
but we respect each other. When we
meet, we talk about jobs. We need
each other to be successful.
We made the decision to invest $1 billion
in our Appliance business, modernizing
our factories in the U.S. Our fi rst two
new products will be introduced early
in 2012, with other major launches
throughout the next two years. Most of
LETTER TO SHAREOWNERS
2 GE 2011 ANNUAL REPORT
THE ECONOMY IN 2012
Four things we’re watching
Infl ation is the
“wild card”
Prepare for
high infl ation
Prices have
moderated in
recent quarters
INFLATION
Will it derail the
recovery?
Do not believe
European
governments
will allow for a
“catastrophic
event”
Plan for a
recession
Committed for the
long term to an
important region
EUROPE
What’s the
outlook?
U.S. economy
strengthening
each day
Could be a
pleasant surprise
UNITED STATES
Will politics hurt
the consumer?
Transitioning to a
consumer-driven
economy
Government
investing in
growth
The economic
engine for most
of the emerging
markets
CHINA
Will it grow?
our appliance product manufacturing
will move back from China and Mexico
to the U.S. We think we can make
more money and serve our customers
better. We also think this will make us
a better manufacturing company in
every corner of the world. But it is only
possible because our designers, factory
workers, managers and marketers
work together. GE is a “We Company.
We are solving problems, tough prob-
lems. We are in the seventh year of a
clean energy business strategy called
ecomagination. Clean energy goes in
and out of focus for governments and
consumers. But, at GE, we are steadfast
in our investing. In 2011, we had $21 bil-
lion of clean energy revenue, growing
twice as fast as the Company average.
Ecomagination drives growth because
we are solving problems for our custom-
ers. At coal mines, from Pennsylvania
to Peru, our water solutions allow
custom ers to operate productively
while achieving high environmental
standards. We demonstrate every day
that, through innovation, we can meet
societal needs and do it profi tably.
We deliver results. That is the ultimate
output of a strong culture. Over the
next few years, our performance will
accelerate. We aim to reward investors
by delivering a more valuable company
and returning cash. We want to earn
your trust.
We believe that culture and resiliency
count in a company. At GE we have a
quiet confi dence in our willingness to
work hard, to learn and, ultimately,
to prevail. This is how we work and how
we earn your trust. It is how we com-
pete and win. GE Works.
A POSITION OF STRENGTH
GE’s Operating EPS growth was 22%
last year. We bought back preferred
shares of stock we issued during the
nancial crisis and increased our
dividend twice. Our stock price fi nished
about fl at, in line with the broader
S&P 500 Index. We outperformed the
S&P Financial and Industrial sectors—
the “GE neighborhood”—which declined
by 18% and 3%, respectively, in 2011.
Despite our growth, it was tough for GE
to break away from investor concerns
about macroeconomic risk. Investor
anxiety is understandable. Europe took
center stage as a source of instability.
Daily headlines about Greece, Italy and
the volatility of the European banks
frayed nerves. And, U.S. politics and
defi cit concerns worried investors in
the second half of 2011.
I have been CEO for ten years. In that
time, we have experienced the 9/11
tragedy, Hurricane Katrina, the 2002
recession, the 2008 fi nancial crisis, the
Gulf oil spill, “Arab Spring,” the Japan
tsunami, and now the European crisis—
quite a bit.
Today, we live in what most business
commentators call a volatile world.
I would argue that when the environ-
ment is continuously unstable, it is no
longer volatile. Rather, we have entered
a new economic era. The emerging
economies grow, while the developed
world slows. Some of the world’s largest
economies face massive fi scal defi cits
and must deleverage. Interest rates are
likely to stay low for extended periods.
Material prices are moving higher. There
is broad-based social unrest. And, it
could remain this way for a long time.
I have learned that nothing is certain
except for the need to have strong risk
management, a lot of cash, the willing-
ness to invest even when the future is
unclear, and great people.
We have great fi nancial strength.
Between GE Capital and GE Parent, we
have $85 billion of cash. And we sur-
rounded the Company with a strong
enterprise risk model that has been
GE 2011 ANNUAL REPORT 3
tested. We are restructuring our
European operations to sustain our
profi tability at lower levels of growth.
We accelerated global and technical
investments, ahead of competition,
during the downturn to ensure growth
in a choppy environment. We redeployed
capital from NBCU to support $11 billion
of Energy acquisitions, which should
provide an earnings boost in 2012. We
nished 2011 with $200 billion of product
and service backlog, more than at any
time in our history.
We also have a talented and committed
team. In December, I had dinner with
our Aviation supply chain leaders from
around the world. I do this regularly
with different operating teams. It allows
me to “go deep” and understand chal-
lenges through their eyes. My dinner
partners are the ones who have to
meet record engine demand with high
quality and low cost. They are also the
leaders of our fi ne frontline workforce,
the best in the world. They understand
technology, globalization, innovation
and lean manufacturing. Their tough-
minded, competitive attitude inspires
me. I know that with our team, we will
succeed in this environment.
GE Works for investors, and you should
benefi t from our people and our prep-
aration. As business leaders, we cannot
create the environment, but we can
shape our own destiny. Today, GE has
a stronger portfolio, large-scale
competitive advantage, product and
technology leadership, and strength in
the growth markets. We are ready
to compete. We are positioned to win
right now.
WE HAVE BUILT A
STRONGER PORTFOLIO
We have our strongest portfolio in
recent history. This year, we expect to
have organic growth of 5 to 10% with
expanding margins. GE Capital is
smaller and focused on specialty
nance, particularly in mid-market
segments. We expect GE Capital’s
earnings rebound to continue in 2012.
Together, this portfolio is built to grow
earnings and return cash to investors.
Our top strategic priority has been to
build a strong, competitively advan-
taged infrastructure business that
grows ahead of our peers and faster
than the global GDP. Over the last
decade, we have refashioned GE from
an “industrial conglomerate” to an
“infrastructure leader.” This has been
disruptive at times, but it has several
advantages. Infrastructure businesses
use GE’s core strengths in technology,
globalization and services. Infra struc-
ture is also positioned to bene t from
several long-term tailwinds, especially
growth in emerging markets. Infra-
structure requires scale and fi nancial
strength. Deep customer relationships,
built on long-term thinking, really count.
We have diversifi ed and strengthened
our core businesses, like Energy.
Historically, this business was based
largely on selling one product—heavy
duty gas turbines—in one market—the
U.S. That kind of concentration creates
volatility as markets rise and fall.
Today, we have a broad Energy portfolio,
including a range of gas power
generation products, oil and gas tech-
nology, renewables, smart grid
services, energy management tech-
nologies and controls; these products
and services are sold around the world.
As an energy leader, our earnings are
more diversifi ed, less volatile and
should grow through the cycles. This is
the same model we are using in the
rest of our businesses.
We have boosted the growth rate
of our infrastructure portfolio by
investing in adjacencies, promising
opportunities that are outside of, but
closely related to, our core businesses.
PORTFOLIO STRATEGY
Improved portfolio positioned for a variety of outcomes
Revenue ~$150B
+ $100B of cash: 2012–2016
+ Fund growth and reward investors
EARLY DECADE
Transformation
Begins
MID-DECADE
Reposition, Simplify
and Invest
GOING FORWARD
Growth and Value
Creation
GE Capital
24%
Insurance
15%
Plastics, Media
20%
Infrastructure
41%
36%
Focused Leader
Simple and Safe
64%
High Tech
Global Leader
High Margin/
Returns
15%
8%
43%
34%
4 GE 2011 ANNUAL REPORT
I have written in the past about “bets”
we have made in Aviation Systems,
Life Sciences and other industries.
Adjacencies have allowed us to grow
$35 billion of incremental revenue in a
decade, with more to come. We believe
in a long-term approach to entering
these fast growth segments. For
instance, we have about a $4 billion
position in Life Sciences that could
double in the next few years. We are
building strength in drug discovery,
molecular medicine, bioprocess
manufacturing and digital pathology.
All of these segments will grow at two to
three times global GDP.
GE Capital’s earnings grew more than
100% in 2011. It is stronger and safer.
Our Capital team has executed on
every commitment it made during the
nancial crisis. We have reduced
leverage, improved liquidity and shed
assets, while growing at high margins.
Commercial Real Estate, previously a
major investor concern, is positioned
for solid earnings growth in the future.
From 2008 to 2011, GE Capital’s fi nancial
performance compares favorably to
most other fi nancial services fi rms in
the world.
Financial services have been deeply
out of favor with investors.
Nonethe less, there are large segments
where GE Capital will lead and build
upon GE’s strengths. These include
mid-market lending and leasing,
nancing in GE domains and a few
other specialty fi nance segments.
Here, we have a clear advantage over
banks and can grow profi tably.
GE Capital has strengthened its balance
sheet immensely. Our Tier One Common
Ratio is about 10%, well in excess of the
levels set by fi nancial regulators. Now,
because of our fi nancial strength and
earnings power, and subject to Federal
Reserve review, we expect GE Capital
to resume paying a dividend this year
to GE. Ultimately, the size of GE Capital
depends on several factors: returns,
competitive advantage, dividend
capability and regulatory burdens. In
the near term, GE Capital should see
sustained earnings growth with good
margins and lower risk.
Our goal is to have GE Capital make
sense for GE investors. First and
foremost, we have more liquidity and
a safer profi le. We believe that having
the Federal Reserve as a regulator is
a positive. We are winning in the mar-
ketplace. The one area that we cannot
control is external “headline risk.” The
nancial services industry is still going
through transitions, and we are part
of that change. Regulators, governments
and rating agencies will have their say.
But that doesn’t change our fundamental
strength. We have successfully navigated
through this volatility, and we aim
to create value through GE Capital.
We have the world’s best infrastructure
company, positioned for multi-year
growth. We have a valuable specialty
nance company that is safer and
stronger than ever. Together we build,
power, move and help cure the world.
INITIATIVES DRIVE PERFORMANCE
We aspire to drive organic growth
faster than our peers, with expanding
margins. We drive company-wide
initiatives to achieve technical superiority,
growth market leadership, service
expansion based on profi table cus-
tomer relationships, and operational
action to achieve margin growth.
For each initiative we have bold
aspirations, and we utilize the
GE enterprise to achieve results.
We have a full pipeline of great new
products. Technical superiority is the
most sustainable form of competitive
advantage. We will invest $16 billion
in R&D from 2010 to 2012, more than
double our historical average and about
GE CAPITAL
TRANSFORMATION
Pre-Crisis 2011
TIER ONE
COMMON RATIO 4% 10%
LEVERAGE 8:1 4:1
CP COVERAGE 74% 292%
DEBT RATING AAA AA
GROWTH ADJACENCIES
Promising opportunities for expansion, such as in Oil & Gas
and Life Sciences, are closely related to our core businesses
and have helped fuel GE’s growth over the last decade.
FOCUS:
Life Sciences, Aviation Systems, Oil & Gas, Mining, Distributed Energy and Pathology,
among others
(Revenues)
2011 $39B
2001 $4B
GE 2011 ANNUAL REPORT 5
6% of our revenue. This has impacted
our margins in the short term, but the
bet is paying off.
Technology allows us to win in the
market. GE Aviation and its partners
are the world’s largest producers of
jet engines, and last year received
$23 billion of orders, our biggest year
in history. Together, we will launch
12 new jet engines this decade. This
will result in signifi cant future growth.
Technical strength drives growth.
Based on our industry-leading technol-
ogy, we will install about 40% of the
wind turbines in the U.S. this year. At
Healthcare, we are launching 100 new
products that lower cost, improve
quality and expand access. Over the
next fi ve years, GE will be dedicating
$1 billion to the development of new
cancer solutions. In Transportation, we
are building six new rail platforms that
capitalize on global growth. We have
launched new businesses in solar
energy and power management.
Technology adds value to our acquisi-
tions. In 2007, we acquired Smith’s
Aerospace Group to give us a small
position in aircraft avionics and energy
management. Then our researchers
went to work. We are building solutions
for integrated power management,
distributed engine control and onboard
advanced computing. These technolo-
gies will help our engines be even
more fuel-effi cient, and allow us to
develop more content on the plane. We
are building novel solutions for our
customers and should be in the top tier
of the avionics industry by the end of
the decade.
We have scale advantage in technol-
ogy. We have the fi nancial strength to
make big bets. Our Global Research
Center spreads ideas and lowers risks.
Our technical teams execute complex
projects better than anyone.
We win in growth markets. In 2012,
our growth market revenues will near
$40 billion, expanding by about 15%.
We are a reliable, high-integrity
partner and are actively investing in
our leadership, capability, coverage
and the supply chain.
Operating around the world is not
without its challenges. There is
volatility and risk. But there is also
great opportunity. In the emerging
markets, we’ve added about 1,000
infrastructure salespeople every year
for the last four years. Since 2005,
we have increased our senior leaders
outside the United States by 50%.
We are committed to serve our global
customers better and faster.
Our geographic footprint is diversifi ed.
Latin America will approach $10 billion
in revenue in 2012, and could double
again in a few years. In Russia, we are
building ventures in two important
growth markets: gas power generation
and diagnostic imaging equipment.
In Nigeria, we are building out a com-
prehensive “Company-to-Country
approach to address infrastructure
challenges; Nigeria should be our next
billion-dollar country. In Saudi Arabia,
we will invest to localize capability,
better serve our customers and help
the government address healthcare
needs for its citizens. We are playing to
win in every corner of the world.
The best global companies are devel-
oping new business models tailored
for growth markets. For instance, in the
next 25 years, 1.5 billion people will
gain access to power, much of it “off
the electricity grid. This will result in a
$16 trillion power opportunity. Today
we have $5 billion of revenue in distrib-
uted energy, and our revenue should
almost double in the next three years.
Similarly, there are 50,000 locomotives
around the world that are more than
25 years old. Replacing or retrofi tting
those locomotives to be more fuel-
ef cient is a $15 billion opportunity.
GE has deep relationships and operating
advantages in growth markets.
John Rice, our vice chairman, leads the
initiative to win globally. I consider the
development of growth markets to
be the most profound economic change
for this generation of GE leaders. This is
a transition where GE must win.
BUILDING COMPETITIVE
ADVANTAGE
Superior technology
Leadership in growth markets
Services & customer relationships
Margin expansion
Smart capital allocation
6 GE 2011 ANNUAL REPORT
We are building mutually profi table
relationships with our customers. Our
service business has a $147 billion
backlog and will generate $45 billion in
revenue in 2012. Service is a strength
for GE because we understand our
products and the ways in which
they are used. When we do well, our
customers benefi t. And we’re continuing
to do everything we can to increase
their productivity and help them
optimize their assets. That is why last
year we invested so heavily in
analytics, controls, monitoring and
diagnostics integration. And we are
building a new software center of
excellence in California.
I don’t see GE as a software company.
However, we will lead in the productivity
of our installed products and their
ecosystems. This will require leadership
of the “Industrial Internet,” making
infrastructure systems more intelligent.
This will show up in more profi table
Contractual Service Agreements (CSAs)
and a software business that could
double to $5 billion in the next few years.
Here is how it could work. The GE90 is
the world’s most powerful engine; it
powers the Boeing 777. Each engine has
17 sensors. These sensors constantly
take complete performance data from
the engine. From this data, we can
build sophisticated analytics that can
avoid unplanned outages, provide
repair data in real time, increase fuel
performance and optimize fl eet
performance. This analytical capability,
applied with domain expertise across
our large fl eet of engines, could save
billions for our customers.
Relationships are also a critical part of
what differentiates the smaller, more
focused GE Capital. We decided from a
strategic standpoint that we should
concentrate on the industries and
sectors where we have a strong com-
petitive advantage versus banks.
That’s the way we think about the
portfolio. Last year we helped launch a
center at The Ohio State University that
is dedicated to the middle market, the
segment that consists of companies
ranging in revenues from $10 million to
$1 billion, including almost 200,000
businesses in the U.S. We have great
origination capability, industry domain
expertise and relationships in that
segment, all of which will fuel GE Capital’s
recovery and growth.
Deep relationships are a competitive
advantage at GE. They are long-term,
and they start at the top. Our leaders
spend a lot of time in the market with
our customers. I chair our Service and
Commercial Councils so that I can
relate to our leaders, follow the metrics
and understand competition. We must
execute for our customers.
We aim to grow margins. Our margins
were about 15% in 2011; we expect
to drive them up by 50 basis points
next year. We are near the top of all
industrial companies, but we can get
even better.
It begins with the way we think about
our cost structure. In the last generation,
GE and our industrial peers began a
long-term trend to outsource our supply
==
GE90 ANALYTICS BENEFIT
90,000
ight records analyzed
~200
parameters per
ight record
~18MM
parameters per
month
Enhances asset utilization
Increases system performance
Drives strong alignment with
customers
Facilitates securing of long-term
service agreements
Provides additional revenue
streams
THE POWER OF THE INDUSTRIAL INTERNET
Advanced Analytics drives strong alignment with customers
GE 2011 ANNUAL REPORT 7
chain to other companies. This made
sense in an era when labor was expen-
sive and material was cheap. Today, our
material costs are more important. So
we have to control our supply chain to
achieve long-term productivity.
To control our product cost, we leverage
both human and technical innovation.
Human innovation comes in the form of
lean manufacturing. At Appliance Park,
in Louisville, Kentucky, we have torn
down functional silos and replaced them
with a “one team” mentality. We know
that one key to success is driving down
manufacturing hours per unit. In some
factories it takes nine hours to build a
refrigerator. Our employees in Louisville
are working to cut that to three hours.
By revamping what was a 25-year-old
dishwasher line, the Appliance Park
team has reduced the time to produce
by up to 68%, and the space required by
more than 80%.
Our Aviation business and its sophisti-
cation—in advanced manufacturing,
computer modeling, and material
sciences and composites—is a great
example of technical innovation. For
instance, the use of different qualities
of carbon fi ber and resins enabled us
to create unique fan blades, fan cases
and components that sharply reduce
engine weight compared to traditional
all-metal versions. Impact-resistant
properties make these fan blades
extremely durable. This allows us to
substantially lower engine cost and
accelerate “speed to market.”
In 2010, we launched an enterprise
initiative called “GE Advantage”
to drive operating results. We have
30 industrial projects under way,
utilizing ideas from thousands of
employees and targeting $2 billion of
margin improvements. Our team is
using classic GE tools like lean, work
out and Six Sigma. Projects have
big payoffs.
In our Oil & Gas business, our goal is to
give customers a new business quote in
a day, have a project be operational
in a year, and have our equipment
always available for customers’ use.
This would result in several hundred
million dollars of benefi t for our
customers and GE. Our Aviation supply
chain team is trying to compress the
learning curve on new engines, again
with a huge payoff in margins and
cash, with improved customer quality.
This is the GE team, fi nding a better
way. This is how we will become leaner
and more productive. This is how we
will sustain improvements in margins.
We will reward investors through
smart allocation of capital. Our busi-
ness model generates a lot of cash.
Over the next few years, thanks to
NBCU monetization, dividends from GE
Capital and solid growth, we expect to
have about $30 billion in available cash.
This will provide us with an opportunity
to reward investors while protecting us
against a volatile economy.
One of our top priorities is to grow
dividends. We’ve increased the
dividend four times in the last two
years, and we have a dedicated
focus on increasing the GE dividend
in line with future earnings. We have
found that focusing on acquisitions
between $1 billion and $3 billion in
industries we know improves our
chance for success. Don’t look for
any big deals in 2012. Ultimately, if
GE ADVANTAGE
Our rejuvenated focus on process excellence and process improvement is already delivering big returns.
Nearly 40 GE-wide projects currently under way will yield billions in margins over the next three years.
New product
introduction
Commercial
excellence
Service and Contractual
Service Agreement
excellence
Acquisition
integration
Order to
remittance
Inquiry
to order
GE Capital
deal conversion
Speed/
Bureaucracy
8 GE 2011 ANNUAL REPORT
2012: FOCUS FOR INVESTORS
you view GE as a safe growth company,
with an attractive dividend yield
that can invest and achieve returns
well above our cost of capital, we are
in a good place for investors.
Competitive advantage is about
outperforming our peers, building an
attractive fi nancial profi le and
rewarding investors. In our chosen
industries, we are ahead today. Our
nancial results should exceed the
S&P 500, with a more valuable profi le.
THE VALUE OF COMPETITIVENESS
We live in a tough era in which the
public discourse, in general, is negative.
I worry that the mood of the times
prevents us from moving forward.
American companies, particularly
big companies, are vilifi ed. There is
social unrest in many corners of the
world. This should not be a surprise.
Our problems are dif cult; when
economic progress is uneven and
unemployment is high, we need to
work together to fi nd a better way.
In these times, it is dif cult to explain
the benefi ts of globalization. GE is an
infrastructure company. The U.S. is
not investing much in infrastructure,
but most other countries are. We will
sell 140 heavy duty gas turbines in
2012; fewer than fi ve will go to the U.S.
So, we must sell in 120 countries;
we must build global capability; we
must export. In the last decade our
exports have more than doubled,
creating thousands of high-paying
American jobs. We are consistently
among America’s top exporters. Are
we “un-American” because we sell
around the world? No. Our company,
because of our great people, can win.
And, that is the American spirit.
Last year, I told you that I was asked to
lead the President’s Council on Jobs and
Competitiveness. When the President
asked, and given the state of the coun-
try, I felt that saying “yes” was the right
thing to do. I was honored to do so.
In January, we gave our year-end
report to the President. We had three
key messages: the country has lost
ground in relative global capability; we
have multiple ways to create more
jobs, but they require leadership and
teamwork; and our long-term success
must be built on a foundation of com-
petitiveness. The Council delivered
more than 80 specifi c recommenda-
tions to the President, half of which are
being implemented. I know that the
U.S. can and will do better in the future.
In the process of leading the Council,
I learned a few things. Competitiveness
comes fi rst. As a country, we must
love to compete again. As a nation,
we must love to win. We simply must
create more competitive structures
in this country, improving areas like
education, infrastructure and regulation.
If we focus again on competition and
innovation, I know we will win and
create jobs.
Words and actions count. People in this
country can work together, but only
if they are properly led. It starts by
solving tough problems together, like
the defi cit. We need to be a country of
action, not just words. We need to be
a country where we engage everyone,
the entire team.
At GE, we like working together. We see
the future as interesting, exciting and
lled with opportunity. We have a
better portfolio, we have invested in
competitive advantage, and we have
the culture of GE Works.
GE will compete. And we will win in
every corner of the world. We are
optimistic and ready for the future. We
are proud of our company.
GE Works. For investors, this means
solid earnings growth and a solid
dividend foundation. For employees,
it means a belief in a better way,
a relentless drive to invent and build
things that matter. For customers,
it means more profi table solutions.
And for society, GE will help create a
world that works better.
Jeffrey R. Immelt
Chairman of the Board
and Chief Executive Offi cer
February 24, 2012
1
INDUSTRIAL
GROWS 10%+
AND
RETURN CASH
FROM
GE CAPITAL
2
BUILD
SOFTWARE
AND
ANALYTICS
CAPABILITY
3
INVEST IN
GLOBAL
GROWTH
AND BUILD
SUSTAINABLE
PROCESSES
4
BEST-IN-
CLASS
OPERATING
PERFORMANCE:
GROW
MARGINS
5
CAPITAL
ALLOCATION:
ATTRACTIVE
DIVIDEND
GE 2011 ANNUAL REPORT 9
GE Model C30ACi Locomotive Assembly
Transnet Freight Rail
Pretoria, South Africa
GE works on things that matter. The best
people and the best technologies taking on the
toughest challenges. Finding solutions in energy,
health and home, transportation and fi nance.
Building, powering, moving and curing the world.
Not just imagining. Doing. GE works.
ge 2011 annual report 11
BUILDING
GE Builds the World
GE builds the world by providing capital, expertise and infrastructure for a global
economy. In the past year, GE Capital provided billions in financing so businesses
could build and grow their operations and consumers could build their financial futures.
We build appliances, lighting, power systems and other products that help millions
of homes, offices, factories and retail facilities around the world work better. We aren’t
afraid of the future. We build it.
BUILDING
GE GeoSpring™ Hybrid
Water Heater Assembly
GE Appliances
Louisville, Kentucky
Left to right:
Travis Saylor
Final Assembly Operator
Randy Barger
Replacement Operator
Kevin Moore
Final Assembly Operator
Middle market businesses lead the way in the U.S. in creating jobs and
pumping life into the economy. They can’t do it without funding, expertise
and solid business-building advice. GE Capital is a major source of funding
for the middle market, committing $122 billion in the U.S. in the past
year. For example, we helped snack manufacturer Shearer’s Foods, Inc.
with financing. Shearer’s Foods updated and expanded operations, added
359 new jobs and grew revenue to $405 million in 2011. GE works for
customers—helping them build businesses, and build them better.
Photo above and right: Shearer’s Foods, Millennium Manufacturing Facility, Massillon, Ohio
Dan Henson (third from left),
President & CEO, GE Capital, Americas,
pictured with (from left to right):
Bob Shearer, Lee Cooper, Scott W.
Smith, Sharon Garavel, Tom Quindlen
and Fritz Kohmann.
Leading from
the Middle
14 GE 2011 ANNUAL REPORT
REBUILDING
EXCELLENCE America needs investment to stay
competitive, create jobs and drive economic
opportunity. GE is investing more than $1 billion to
transform the appliances we make, leading to
the creation of 1,300 U.S. jobs. By combining
design and production in one site and using lean
manufacturing, we’re able to bring better products to
market faster and more cost-effectively, reflecting
the world-class competitiveness of our U.S. facilities. ACCESSING
GE’S EXPERTISE Through Access GE,
GE Capital brings a broad range of tools,
resources and expertise to help customers
solve their most pressing challenges and find
new ways to grow. When electronic security
provider ADT was looking to upgrade its fleet
of full-size service vans, GE Capital helped
determine the most cost-effective and fuel-
efficient replacement. The deployment of the
new vehicles will help ADT save more than
$6 million a year and reduce CO2 emissions 40%.
This year, GE Capital will launch the Access GE
online portal, a new way to deliver crucial
knowledge and expertise to our customers.
GE 2011 ANNUAL REPORT 15
Stephen Fitzgibbon
Mechanical Fitter I
Gorgon Tree
Subsea Control Systems
GE Oil & Gas
Aberdeen, Scotland
GE Powers the World
GE’s advanced technologies and energy solutions provide a powerful advantage for
millions of people. Our technology helps to deliver a quarter of the world’s electricity.
We are one of the largest clean energy companies in the world. We deliver innovation
that the world needs: from an integrated wind, solar and natural gas project, to smart
grids that help utilities manage electricity demand, to gas engines that run on organic
waste, to more accessible charging stations for electric vehicles. We don’t just imagine
a cleaner and more productive world. We power it.
PIPELINE OF
INNOVATION Competitive and
environmental challenges in the oil and gas
industry are driving energy producers to seek
better efficiency, reliability and environmental
protection. Tackling these complex challenges
takes leadership, teamwork and innovation.
The GE Oil & Gas team in Aberdeen, Scotland,
is leading many of our technology and service
solutions for the sector.
Innovations in recent years have included
next-generation valves with improved nano-
coatings for increased safety and reliability;
pipe inspection technology; and other
advances that enable oil and gas companies
to produce the energy the world needs more
safely, reliably and cost-effectively.
Rod Christie (second from left),
VP & GM, GE Advanced Subsea
Power & Processing Systems,
pictured with (from left to right):
Balazs Somogyi, Gerry McCue
and Neil Saunders.
LEADERSHIP IN
WIND POWER The world needs
clean, renewable energy, and wind power
is a big part of the answer. GE wind
turbines, among the most widely used
in the world, will soon power the largest
wind farm in the U.S. The Shepherds
Flat project in Oregon, developed by
Caithness Energy, will get its power from
338 advanced GE 2.5xl ecomagination-
qualified wind turbines, which deliver
greater efficiency, reliability and grid
connectivity. The Shepherds Flat turbines
will produce enough clean energy
to power about 235,000 households.
18 ge 2011 annual report
To integrate more renewable resources into the power grid, the world
needs a better way to obtain power when the sun isn’t shining or the wind
blowing. The ecomagination-qualified Flex family of products helps meet
this need. The FlexEfficiency 50 Heavy Duty Gas Turbine and the FlexAero
LM6000-PH Aeroderivative Gas Turbine allow for flexible, efficient and
environmentally friendly power generation day or night. The FlexAero is
the world’s most efficient combined-cycle gas turbine in its class and will
save 26 million gallons of water annually with its innovative eco-friendly
technology. The first FlexEfficiency 50 plant will go online in 2015.
Fast, Flexible
Power
Anytime
FlexAero LM6000-PH
Aeroderivative Gas Turbine,
being built in Houston, Texas.
ge 2011 annual report 19
GE Moves the World
When the world needs a better way to get there faster, we work to make the trip safer
and more cost-effective, with lower carbon emissions, too. We make the world’s largest
jet engine—and among the world’s most efficient. We build locomotives that reduce
emissions. And we provide advanced air traffic and rail freight management systems.
We don’t just dream of a world where people and goods travel more safely, quickly and
efficiently around the globe. We move it.
GE90 Aircraft Engine Testing
GE Aviation
Peebles, Ohio
Airlines are demanding record numbers of advanced aircraft
engines, including the GEnx and LEAP, to power their next-
generation fleets. Our aviation supply chain team is meeting the
challenge. New manufacturing facilities in Ellisville, Mississippi,
and Auburn, Alabama, will add capacity and create jobs. We
are also integrating suppliers into new programs and driving
big improvements in quality and delivery through a team-based
culture and lean manufacturing techniques. We do all this so
we can deliver a record number of aircraft engine orders with
maximum cost-efficiency, productivity and quality.
Photo: GE Aviation’s Evendale, Ohio, world headquarters
Strong Supply
Chain Links
Colleen Athans (third from left),
VP & GM, GE Aviation Supply Chain,
pictured with (from left to right):
Bob Briggs, Joe Allen,
Melissa Twiningdavis and
Denice Biocca.
22 ge 2011 annual report
ON TRACK FOR EXPANSION
Transnet Freight Rail (TFR), one of South
Africa’s largest rail freight operators,
is striving to meet the growing needs
of a rapidly developing region. The GE
locomotive is delivering the solution. Three
of our locomotives can do the work of
four older models, with lower costs, better
fuel efficiency and reduced emissions.
Producing the 143 locomotives ordered by
TFR will be a global effort: locomotive
components manufactured at GE plants
in the U.S. will be fully assembled in South
Africa. This will create jobs in both countries
and help TFR meet the demand for reliable
freight transportation.
A LEAP FORWARD IN AIRCRAFT
ENGINES Airlines are purchasing new
planes to update and expand their fleet
while balancing high fuel costs and new
international environmental standards.
GE and its CFM International 50/50 joint
venture partner Snecma, created the
LEAP engine to meet this demand.
Ecomagination-qualified LEAP engines use
the latest-generation materials and design
processes to reduce weight, improve
performance and lower maintenance.
This means planes are more likely to
take off and land on time and spend less
time in the shop and more time moving
passengers and cargo around the world.
ge 2011 annual report 23
William Hunn
CT Gantry Assembly Production Associate
Optima 580 CT System
GE Healthcare
Waukesha, Wisconsin
GE Helps Cure the World
GE Healthcare technology is helping doctors and caregivers save nearly 3,000 lives
every day and address the world’s biggest healthcare challenges. GE is at work providing
advanced diagnostic tools as well as systems that help researchers discover lifesaving
solutions, and patient record systems that help lower costs and enhance patient care. Our
technology is designed to help medical professionals detect disease earlier and treat it
better. And, we’re investing to create new solutions to develop groundbreaking products
and processes. We see a world where cost, quality and lack of access prevent too many
people from getting the healthcare they need. We’re helping to cure it.
A CLEAR PICTURE
OF HEALTH To help physicians provide patients
with accurate diagnoses and targeted treatments,
healthcare organizations need advanced imaging
technology. GE entered into a strategic alliance with
OhioHealth, a nationally recognized, not-for-profit
healthcare system, to bring cutting-edge computed
tomography (CT) and magnetic resonance (MR)
imaging systems to patients across central Ohio.
The GE Healthcare team listened to OhioHealth’s
needs and delivered a better way—including our
Optima CT660, Optima MR450w and Discovery
MR750w systems—that provide real-time, high-
resolution imaging.
SOLUTIONS FOR THE
PHARMA INDUSTRY Advanced medicines
create new challenges for pharmaceutical
companies. GE technology is used to manufacture
many of these medicines, which gives us the
experience to help these companies tackle key
issues such as safe and cost-effective delivery
and reducing time to market. Our innovative
ReadyToProcessTM single-use platform enables
flexible manufacturing, faster process design and
quicker changeover between production campaigns,
without compromising quality or safety. Single-use
technologies: an affordable solution that drives
medical progress and helps save lives.
HIGH DEFINITION,
LOW-DOSE SCANS Computed
tomography is widely used to help
physicians detect cancers, other
diseases and injuries. GE continues
to work to produce CT systems that
provide high image clarity for physicians
and reduced patient exposure to
radiation. Our Veo image reconstruction
technology uses modeling and complex
data analysis to enhance clinical images
even at lowered doses. GE not only
makes tools to help doctors, we also
provide entire healthcare systems with
services and technology to meet the
needs of their patients.
26 GE 2011 ANNUAL REPORT
Taking
the Fight
to Cancer
Yousef Alohali (second from
right), Director, Clinical
Education, GE Healthcare Saudi
Arabia, pictured with (from left
to right): Victor Delos Santos,
Noor Hanifa Palala (Saudi
Ministry of Health), Majed Nasser
and Golnar Kamalvand.
Cancer is among the world’s leading causes of death, and GE is committed
to helping cure it. GE’s global fight against cancer is backed by a five-
year, $1 billion commitment to improve screening and diagnosis to help
doctors fight cancer more effectively. In 2011, as part of this commitment
and in partnership with prominent venture capitalists, GE launched a
$100 million healthymagination open innovation Challenge to find the
next generation of cancer diagnostic tools and treatments, starting with
breast cancer. Innovations now in the pipeline include a mobile mammography
device and molecular diagnostics to enable patient-specific cancer
therapies. We’re also bringing new weapons to the fight against breast cancer
by increasing access to mammography screenings in underserved areas,
like Wyoming, Saudi Arabia and China.
Photo left and above: Riyadh, Saudi Arabia
GE 2011 ANNUAL REPORT 27
At GE, we aren’t afraid of the future,
were building it. Were growing
global leaders, investing in new
technologies, developing advanced
manufacturing skills, applying
intelligent software to make things
work smarter, and partnering with
customers and communities around
the globe. GE works by delivering
economic growth, shareholder value
and, most of all, solutions that make
the world work better.
Board members focus on the areas that are important to
shareowners—strategy, risk management, leadership development
and regulatory and compliance matters. In 2011, they received
briefi ngs on a variety of issues, including capital allocation and
business development, risk management, technology excellence,
regulatory trends, social cost, capital market trends, service
contract performance, political contributions and lobbying
activities, and GE’s branding, marketing and operating initiatives.
At the end of the year, the Board and each of its committees
conducted a thorough self-evaluation.
The GE Board held 15 meetings during
2011, including three 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 Company.
Directors (left to right)
Rochelle B. Lazarus
3,4
Chairman of the Board and former
Chief Executive Of cer, Ogilvy & Mather
Worldwide, global marketing
communications company,
New York, New York. Director since 2000.
Robert W. Lane
1,2
Former Chairman of the Board and
Chief Executive Of cer, Deere & Company,
agricultural, construction and forestry
equipment, Moline, Illinois.
Director since 2005.
Alan G. (A.G.) Lafl ey
3,5
Former Chairman of the Board and
Chief Executive Of cer, Procter & Gamble
Company, personal and household
products, Cincinnati, Ohio.
Director since 2002.
Roger S. Penske
4
Chairman of the Board, Penske Corporation,
diversifi ed transportation company,
and Penske Truck Leasing Corporation,
Chairman of the Board and Chief Executive
Offi cer, Penske Automotive Group, Inc.,
automotive retailer, Detroit, Michigan.
Director since 1994.
Sam Nunn
2,4
Co-Chairman and Chief Executive Of cer,
Nuclear Threat Initiative, Washington, D.C.
Director since 1997.
Andrea Jung
2,3
Chairman of the Board and
Chief Executive Of cer, Avon Products, Inc.,
beauty products, New York, New York.
Director since 1998.
Ann M. Fudge
4
Former Chairman of the Board and
Chief Executive Of cer, Young & Rubicam
Brands, global marketing communications
network, New York, New York.
Director since 1999.
Ralph S. Larsen
2,3,6
Former Chairman of the Board and Chief
Executive Of cer, Johnson & Johnson,
pharmaceutical, medical and consumer
products, New Brunswick, New Jersey.
Director since 2002.
W. Geoffrey Beattie
1,5
President, The Woodbridge Company
Limited, Toronto, Canada.
Director since 2009.
James S. Tisch
5
President and Chief Executive Of cer,
Loews Corporation, diversifi ed holding
company, New York, New York.
Director since 2010.
Susan Hockfi eld
3,4
President, Massachusetts Institute
of Technology, Cambridge, Massachusetts.
Director since 2006.
James J. Mulva
1,4
Chairman of the Board and Chief Executive
Offi cer, ConocoPhillips, international,
integrated energy company,
Houston, Texas. Director since 2008.
Douglas A. Warner III
1,2,3
Former Chairman of the Board, J.P. Morgan
Chase & Co., The Chase Manhattan Bank,
and Morgan Guaranty Trust Company,
investment banking, New York, New York.
Director since 1992.
Robert J. Swieringa
1
Professor 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.
1,2,4
Emeritus James E. Robison
Professor of Business Administration,
Harvard Graduate School of Business,
Boston, Massachusetts.
Director since 1997.
Jeffrey R. Immelt
4
Chairman of the Board and Chief
Executive Of cer, General Electric
Company, Fairfi eld, Connecticut.
Director since 2000.
(pictured on page 1)
1 Audit Committee
2 Management Development and
Compensation Committee
3 Nominating and Corporate
Governance Committee
4 Public Responsibilities Committee
5 Risk Committee
6 Presiding Director
GE 2011 ANNUAL REPORT 29
At its heart,
the Board believes
GE Works is about GE’s
most valuable asset:
its people.
long- and short-term incentives, we reward our
executives’ discipline in consistently making
smart decisions over the course of their careers
at GE. We particularly value those individuals
who have the good judgment and ability to
balance risk and return and deliver long-term
results for shareowners.
At the same time, we do not ignore annual
performance, because we understand that if we
don’t turn in good short-term performance,
there won’t be a long term. We evaluate annual
performance both in terms of executing on long-
term strategies and in meeting specifi c annual
objectives. What is critical to note, however, is
that because we take the long view, good years
do not result in outsized payouts.
Similarly, in off years, compensation appropriately
considers the current year’s performance, but also
aligns it in the context of long-term performance.
Furthermore, we measure executives’ contribu-
tions to the Company’s overall performance rather
than focusing only on their individual business
or function. We reward sustained nancial
and operating performance and leadership
excellence. In short, we use a balanced approach,
one that enables us to attract and retain the best
people for the Company’s long-term success.
All our investors should know that the directors of
GE remain committed to working on your behalf.
And we will continue to take seriously our role in
ensuring that GE has the right strategies and the
right people to help make the world work better.
Sincerely,
Ralph S. Larsen
Presiding Director
February 24, 2012
As Presiding Director and Chair of the Management
Development and Compensation Committee of
GE’s Board of Directors, I write each year to
share our perspective on how GE measures
performance, how we motivate and reward our
executives, and how we work to align both
performance measurement and compensation
with the interests of our shareowners. This year,
I will focus on three areas: fi rst, how the theme
of our annual report, GE Works, fi ts with our
governing philosophy and why we believe it
provides an important business-building
advantage; second, our commitment to developing
leaders; and fi nally, executive compensation.
At its heart, the Board believes GE Works is about
GEs most valuable asset: its people. It provides a
valuable platform for the Company to talk about
its defi ning culture and to tell the story of the
impact our people make around the world.
Furthermore, it serves as a powerful reminder
that GE works to deliver shareholder value
by offering real and sustainable solutions to the
world’s toughest problems.
It is a fi tting way to talk about the Company,
because GE has always taken a long-term view.
Through its more than 130-year history, the
Company has successfully weathered many
economic cycles. GE has done this over and over
again by fostering innovation, making smart
investments, and, of course, hiring and training
disciplined leaders who focus on achieving our
long-term strategies.
Developing leaders has always been a hallmark of
the Company, re ecting a commitment to
meritocracy and a belief that when one person
grows and improves, all may grow and improve
that together, we all rise. The collaborative,
evolutionary nature of GE’s leadership culture
inspires many of our top executives to spend most
or all of their careers here. This provides the
Company with unparalleled domain expertise; it
also creates an environment of loyalty where our
leaders are deeply invested in and committed to
the Company. Today, GE’s senior management,
under the exceptional leadership of Jeff Immelt, is
a proven team that we believe is among the best
in the world.
Our compensation programs are designed and
operate to support our leadership culture and
long-term emphasis. They are not formula-driven,
nor do we reward our executives for taking
outsized risks that produce short-term gains.
Instead, with a mix of cash and equity and
TO OUR SHAREOWNERS
30 GE 2011 ANNUAL REPORT
GE 2011 ANNUAL REPORT 31
financial section
Contents
32 Management’s Discussion of Financial Responsibility ............................ We begin with a letter from our Chief Executive and Financial Offi cers
discussing our unyielding commitment to rigorous oversight, control-
lership, informative disclosure and visibility to investors.
32 Management’s Annual Report on Internal Control
Over Financial Reporting ...................................................................................... In this report our Chief Executive and Financial Offi cers provide
their assessment of the effectiveness of our internal control over
nancial reporting.
33 Report of Independent Registered Public Accounting Firm .................. Our independent auditors, KPMG LLP, express their opinions on our
nancial statements and our internal control over fi nancial 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 the last three years.
We then discuss various key operating results for GE industrial (GE)
and fi nancial services (GECS). Because of the fundamental differences
in these businesses, reviewing certain information separately for
GE and GECS offers a more meaningful analysis. Next we provide a
description of our global risk management process. Our discussion
of segment results includes quantitative and qualitative disclosure
about the factors affecting segment revenues and profi ts, and the
effects of recent acquisitions, dispositions and signifi cant trans-
actions. We conclude the Operations section with an overview of
our operations from a geographic perspective and a discussion
of environmental matters.
49 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
nancial position and insight into the liquidity and cash fl ow activities
of GE and GECS.
64 Critical Accounting Estimates .................................................................. Critical Accounting Estimates are necessary for us to prepare
our fi nancial statements. In this section, we discuss what these
estimates are, why they are important, how they are developed
and uncertainties to which 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 2012.
69 Selected Financial Data ............................................................................... Selected Financial Data provides fi ve years of fi nancial information
for GE and GECS. This table includes commonly used metrics that
facilitate comparison with other companies.
70 Audited Financial Statements and Notes
70 Statement of Earnings
70 Consolidated Statement of Changes in Shareowners’ Equity
72 Statement of Financial Position
74 Statement of Cash Flows
76 Notes to Consolidated Financial Statements
137 Supplemental Information ................................................................................... We provide Supplemental Information to reconcile certain “non-GAAP
nancial measures” referred to in our report to the most closely
associated GAAP fi nancial measures. We also provide information
about our stock performance over the last fi ve years.
140 Glossary ....................................................................................................................... For your convenience, we also provide a Glossary of key terms used in
our fi nancial statements.
We also present our fi nancial information electronically at
www.ge.com/investor.
32 GE 2011 ANNUAL REPORT
Management’s Discussion of Financial Responsibility
We believe that great companies are built on a foundation of
reliable fi nancial 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 fi nancial disclosures in this
report are one product of our commitment to high-quality
nancial 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 fi nancial results in a
manner that is complete and understandable.
Members of our corporate leadership team review each of our
businesses routinely on matters that range from overall strategy
and fi nancial performance to staf ng and compliance. Our busi-
ness leaders monitor fi nancial and operating systems, enabling us
to identify potential opportunities and concerns at an early stage
and positioning us to respond rapidly. Our Board of Directors over-
sees management’s business conduct, and our Audit Committee,
which consists entirely of independent directors, oversees our
internal control over nancial reporting. We continually examine
our governance practices in an effort to enhance investor trust
and improve the Board’s overall effectiveness. The Board and
its committees annually conduct a performance self-evaluation
and recommend improvements. Our Presiding Director led three
meetings of non-management directors this year, helping us
sharpen our full Board meetings to better cover signi cant 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 procedures—including internal control over fi nancial
reporting—designed to ensure reliable fi nancial recordkeeping,
transparent fi nancial reporting and disclosure, and protection of
physical and intellectual property. We recruit, develop and retain
a world-class fi nancial team. Our internal audit function, includ-
ing members of our Corporate Audit Staff, conducts thousands
of fi nancial, 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 integrity
policies—“The Spirit & The Letter”—require compliance with law
and policy, and pertain to such vital issues as upholding fi nan-
cial integrity and avoiding confl icts of interest. These integrity
policies are available in 31 languages, and are provided to all of
our employees, holding each of them 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 independent 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 fi nancial position and operating results, and
rely for this purpose 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 evaluate the fairness of our nancial and non-fi nancial dis-
closures, and to report their fi ndings to us. We further ensure
strong disclosure by holding approximately 300 analyst and
investor meetings annually.
We welcome the strong oversight of our fi nancial reporting
activities by our independent registered public accounting
rm, KPMG LLP, engaged by and reporting directly to the Audit
Committee. U.S. legislation requires management to report on
internal control over nancial reporting and for auditors to
render an opinion on such controls. Our report follows and the
KPMG LLP report for 2011 appears on the following page.
Management’s Annual Report on Internal Control
Over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over fi nancial reporting for the
Company. With our participation, an evaluation of the effective-
ness of our internal control over fi nancial reporting was
conducted as of December 31, 2011, based on the framework
and criteria established in Internal Control—Integrated Framework,
issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Based on this evaluation, our management has concluded
that our internal control over fi nancial reporting was effective as
of December 31, 2011.
Our independent registered public accounting fi rm has issued
an audit report on our internal control over nancial reporting.
Their report follows.
JEFFREY R. IMMELT KEITH S. SHERIN
Chairman of the Board and Vice Chairman and
Chief Executive Of cer Chief Financial Of cer
February 24, 2012
GE 2011 ANNUAL REPORT 33
Report of Independent Registered
Public Accounting Firm
To Shareowners and Board of Directors
of General Electric Company:
We have audited the accompanying statement of fi nancial
position of General Electric Company and consolidated af liates
(“GE”) as of December 31, 2011 and 2010, and the related state-
ments of earnings, changes in shareowners’ equity and cash
ows for each of the years in the three-year period ended
December 31, 2011. We also have audited GE’s internal control
over fi nancial reporting as of December 31, 2011, based on
criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). GE management is responsible
for these consolidated fi nancial statements, for maintaining
effective internal control over fi nancial reporting, and for its
assessment of the effectiveness of internal control over fi nancial
reporting. Our responsibility is to express an opinion on these
consolidated fi nancial statements and an opinion on GE’s internal
control over fi nancial 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 fi nancial state-
ments are free of material misstatement and whether effective
internal control over nancial reporting was maintained in all
material respects. Our audits of the consolidated fi nancial state-
ments included examining, on a test basis, evidence supporting
the amounts and disclosures in the fi nancial statements, assess-
ing the accounting principles used and signifi cant estimates
made by management, and evaluating the overall fi nancial state-
ment presentation. Our audit of internal control over fi nancial
reporting included obtaining an understanding of internal control
over fi nancial reporting, assessing the risk that 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 basis for our opinions.
A company’s internal control over fi nancial reporting is a pro-
cess designed to provide reasonable assurance regarding the
reliability of fi nancial reporting and the preparation of fi nancial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over fi nancial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reason-
able detail, accurately and fairly refl ect the transactions and
dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of nancial 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) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition
of the company’s assets that could have a material effect on the
nancial statements.
Because of its inherent limitations, internal control over
nancial reporting may not prevent or detect 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 fi nancial statements appear-
ing on pages 70, 72, 74, 76–136 and the Summary of Operating
Segments table on page 42 present fairly, in all material
respects, the fi nancial position of GE as of December 31, 2011
and 2010, and the results of its operations and its cash fl ows for
each of the years in the three-year period ended December 31,
2011, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, GE maintained, in all material
respects, effective internal control over fi nancial reporting as
of December 31, 2011, based on criteria established in Internal
Control—Integrated Framework issued by COSO.
As discussed in Note 1 to the consolidated fi nancial state-
ments, GE, in 2010, changed its method of accounting for
consolidation of variable interest entities; and, in 2009, changed
its method of accounting for impairment of debt securities, busi-
ness combinations and noncontrolling interests.
Our audits of GE’s consolidated fi nancial statements were
made for the purpose of forming an opinion on the consoli-
dated fi nancial 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 consoli-
dated fi nancial statements rather than to present the nancial
position, results of operations and cash fl ows of the individual
entities. The consolidating information has been subjected to
the auditing procedures applied in the audits of the consoli-
dated fi nancial statements and, in our opinion, is fairly stated
in all material respects in relation to the consolidated fi nancial
statements taken as a whole.
KPMG LLP
Stamford, Connecticut
February 24, 2012
34 GE 2011 ANNUAL REPORT
managements discussion and analysis
Operations
The consolidated fi nancial statements of General Electric
Company (the Company) combine the industrial manufacturing
and services businesses of General Electric Company (GE) with
the fi nancial services businesses of General Electric Capital
Services, Inc. (GECS or fi nancial services). Unless otherwise indi-
cated by the context, we use the terms “GE,” “GECS” and “GECC
on the basis of consolidation described in Note 1 to the consoli-
dated fi nancial statements.
In the accompanying analysis of fi nancial information, we
sometimes use information derived from consolidated nan-
cial information but not presented in our fi nancial statements
prepared in accordance with U.S. generally accepted account-
ing principles (GAAP). Certain of these data are considered
“non-GAAP fi nancial measures” under the U.S. Securities and
Exchange Commission (SEC) rules. For such measures, we have
provided supplemental explanations and reconciliations in the
Supplemental Information section.
We present Management’s Discussion of Operations in ve
parts: Overview of Our Earnings from 2009 through 2011, Global
Risk Management, Segment Operations, Geographic Operations
and Environmental Matters. Unless otherwise indicated, we
refer to captions such as revenues and earnings from continu-
ing operations attributable to the company simply as “revenues
and “earnings” throughout this Management’s Discussion and
Analysis. Similarly, discussion of other matters in our consolidated
nancial statements relates to continuing operations unless
otherwise indicated.
Effective January 1, 2011, we reorganized the former
Technology Infrastructure segment into three segments—
Aviation, Healthcare and Transportation. The prior-period results
of the Aviation, Healthcare and Transportation businesses are
unaffected by this reorganization. Results for 2011 and prior
periods are reported on the basis under which we managed our
businesses in 2011.
On February 22, 2012, we merged our wholly-owned sub-
sidiary, GECS, with and into GECS’ wholly-owned subsidiary,
GECC. The merger simpli ed our fi nancial services’ corporate
structure by consolidating fi nancial services entities and assets
within our organization and simplifying Securities and Exchange
Commission 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 fi nancial services segment, GE Capital, will
continue to comprise the continuing operations of GECC, which
now includes the run-off insurance operations previously held
and managed in GECS. References to GECS, GECC and the GE
Capital segment in this Management’s Discussion and Analysis
relate to the entities or segment as they existed during 2011 and
do not re ect the February 22, 2012 merger.
We supplement our GAAP net earnings and earnings per share
(EPS) reporting by also reporting an operating earnings and EPS
measure (non-GAAP). Operating earnings and EPS include service
cost and plan amendment amortization for our principal pen-
sion plans as these costs represent expenses associated with
employee benefi ts earned. Operating earnings and EPS exclude
non-operating pension cost/income such as interest cost,
expected return on plan assets and non-cash amortization of
actuarial gains and losses. We believe that this reporting provides
better transparency to the employee benefi t costs of our principal
pension plans and Company operating results.
Overview of Our Earnings from 2009 through 2011
Earnings from continuing operations attributable to the Company
increased 12% in 2011 and 16% in 2010, refl ecting the stabiliza-
tion of overall economic conditions during the last two years,
following the challenging conditions of 2009. Operating earnings
(non-GAAP measure) which exclude non-operating pension costs
increased 20% to $14.8 billion in 2011 compared with $12.3 billion
in 2010. Operating earnings per share (non-GAAP measure)
increased 15% to $1.29 in 2011 compared with $1.12 in 2010.
Operating earnings per share excluding the effects of our pre-
ferred stock redemption (non-GAAP measure) increased 22% to
$1.37 in 2011 compared with $1.12 in 2010. We believe that we
are seeing continued signs of stabilization in much of the global
economy, including in fi nancial services, as GECS earnings from
continuing operations attributable to the Company increased
113% in 2011 and 157% in 2010. Net earnings attributable to the
Company increased 22% in 2011 refl ecting the lack of prior year
losses from discontinued operations and a 12% increase in earn-
ings from continuing operations, after increasing 6% in 2010, as
losses from discontinued operations in 2010 partially offset the
16% increase in earnings from continuing operations. We begin
2012 with a record backlog of $200 billion and expect to continue
our trend of revenue and earnings growth.
Energy Infrastructure (27% and 39% of consolidated three-
year revenues and total segment profi t, respectively) revenues
increased 16% in 2011 primarily as a result of acquisitions dur-
ing 2011 and higher volume due to increased sales of services at
Energy and Oil & Gas, after decreasing 8% in 2010 as the world-
wide demand for new sources of power, such as wind and thermal
declined with the overall economic conditions. Segment profi t
decreased 9% in 2011 primarily on lower productivity, driven
by the wind turbines business, acquisitions and investment in
our global organization and new technology, and lower prices.
Segment profi t increased 2% in 2010 primarily on higher prices
and lower material and other costs. We continue to invest in mar-
ket-leading technology and services at Energy and Oil & Gas.
Aviation (12% and 20% of consolidated three-year revenues
and total segment profi t, respectively) revenues and segment
profi t increased 7% and 6%, respectively, in 2011 and fell 6%
managements discussion and analysis
GE 2011 ANNUAL REPORT 35
and 16%, respectively, in 2010. We continue to invest in market-
leading technologies and services at Aviation. Aviation revenues
and earnings increased in 2011 as a result of higher volume
and higher prices primarily driven by increased services and
equipment sales. In 2010, Aviation revenues decreased from a
reduction in volume refl ecting decreased commercial and mili-
tary equipment sales and services. Earnings decreased as a result
of lower productivity primarily due to product launch and produc-
tion costs associated with the GEnx engine shipments.
Healthcare (11% and 15% of consolidated three-year revenues
and total segment profi t, respectively) revenues and segment
profi t increased 7% and 2%, respectively, in 2011 and 6% and 13%,
respectively, in 2010. We continue to invest in market-leading
technologies and services at Healthcare. Healthcare revenues
increased over this period on increased volume from higher equip-
ment sales and services and the effects of the weaker U.S. dollar.
Healthcare earnings improved over this period on increased pro-
ductivity, higher volume and the effects of the weaker U.S. dollar.
Transportation (3% and 3% of consolidated three-year rev-
enues and total segment profi t, respectively) revenues and
segment profi t increased 45% and more than 100%, respectively,
in 2011 and fell 12% and 33%, respectively, in 2010. We con-
tinue to invest in market-leading technologies and services at
Transportation. Transportation revenues improved in 2011 due
to higher volume related to increased equipment sales and ser-
vices. Transportation earnings increased as a result of increased
productivity, refl ecting improved service margins and higher vol-
ume, while they declined in 2010 as the weakened economy had
driven overall reductions in U.S. freight traf c and we updated our
estimates of long-term product service costs in our maintenance
service agreements.
Home & Business Solutions (6% and 2% of consolidated
three-year revenues and total segment profi t, respectively) rev-
enues have decreased 2% in 2011 and increased 2% in 2010.
Home & Business Solutions revenues trended down as a result
of lower volume in Appliances. The revenue increase in 2010 was
related to increased volume across all businesses. Segment profi t
decreased 34% in 2011 after increasing 24% in 2010 primarily as a
result of lower volume and the effects of infl ation.
GE Capital (31% and 21% of consolidated three-year revenues
and total segment profi t, respectively) net earnings increased
to $6.5 billion in 2011 and $3.2 billion in 2010 due to the contin-
ued stabilization in the overall economic environment. Over the
last several years, we tightened underwriting standards, shifted
teams from origination to collection and maintained a proactive
risk management focus. This, along with recent increased sta-
bility in the fi nancial markets, contributed to lower losses and a
signifi cant increase in segment profi t in 2011 and 2010. We also
reduced our ending net investment (ENI), excluding cash and
equivalents, from $526 billion at January 1, 2010 to $445 billion at
December 31, 2011. General Electric Capital Corporation (GECC)
is a diversely funded and smaller, more focused fi nance company
with strong positions in several commercial mid-market and con-
sumer fi nancing segments.
Overall, acquisitions contributed $4.6 billion, $0.3 billion and
$2.9 billion to consolidated revenues in 2011, 2010 and 2009,
respectively, excluding the effects of acquisition gains follow-
ing our adoption of an amendment to Financial Accounting
Standards Board (FASB) Accounting Standards Codifi cation (ASC)
810, Consolidation. Our consolidated net earnings included an
insignifi cant amount, $0.1 billion and $0.5 billion in 2011, 2010
and 2009, respectively, from acquired businesses. We integrate
acquisitions as quickly as possible. 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 affected our ongoing results through lower
revenues of $12.6 billion, $3.0 billion and $4.7 billion in 2011, 2010
and 2009, respectively. The effects of dispositions on net earnings
was a decrease of $0.3 billion in 2011 and increases of $0.1 billion
and $0.6 billion in 2010 and 2009, respectively.
DISCONTINUED OPERATIONS. Consistent with our goal of reducing
GECC ENI and focusing our businesses on selective fi nancial
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 2011,
we sold Consumer RV Marine, Consumer Mexico, Consumer
Singapore and Australian Home Lending. Discontinued operations
also includes BAC Credomatic GECF Inc. (BAC), our U.S. mortgage
business (WMC) and 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.). All of these
operations were previously reported in the GE Capital segment.
We reported the operations described above as discontin-
ued operations for all periods presented. For further information
about discontinued operations, see the “Segment Operations—
Discontinued Operations” section and Note 2.
WE DECLARED $7.5 BILLION IN DIVIDENDS IN 2011. Common per-
share dividends of $0.61 increased 33% from 2010, following a
25% decrease from the preceding year. In February 2009, we
announced the reduction of the quarterly GE stock dividend by
68% from $0.31 per share to $0.10 per share, effective with the
dividend approved by the Board in June 2009, which was paid in
the third quarter of 2009. In July 2010, our Board of Directors
approved a 20% increase in our regular quarterly dividend from
$0.10 per share to $0.12 per share and in December 2010,
approved an additional 17% increase from $0.12 per share to
$0.14 per share. On April 21, 2011, our Board of Directors
approved an increase in our regular quarterly dividend to $0.15
per share. On December 9, 2011, our Board of Directors approved
an increase in our regular quarterly dividend to $0.17 per share.
On February 10, 2012, our Board of Directors approved a regular
quarterly dividend of $0.17 per share of common stock, which is
payable April 25, 2012, to shareowners of record at close of busi-
ness on February 27, 2012. In 2011, 2010 and 2009, we declared
$1.0 billion (including $0.8 billion as a result of our redemption of
preferred stock), $0.3 billion and $0.3 billion in preferred stock
dividends, respectively. See Note 15 for additional information.
managements discussion and analysis
36
GE 2011 ANNUAL REPORT
Except as otherwise noted, the analysis in the remainder of
this section presents the results of GE (with GECS included on a
one-line basis) and GECS. See the Segment Operations section for
a more detailed discussion of the businesses within GE and GECS.
Signifi cant matters relating to our Statement of Earnings are
explained below.
GE SALES OF PRODUCT SERVICES were $41.9 billion in 2011, an
increase of 14% compared with 2010, and operating profi t from
product services was $11.8 billion in 2011, an increase of 15%
compared with 2010. Both the sales and operating profi t of prod-
uct services increases were at Energy Infrastructure, Aviation,
Transportation and Healthcare.
POSTRETIREMENT BENEFIT PLANS costs were $4.1 billion, $3.0 bil-
lion and $2.6 billion in 2011, 2010 and 2009, respectively. 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 December 31, 2010). Costs
increased in 2010 primarily due to the amortization of 2008
investment losses and the effects of lower discount rates (princi-
pal pension plans discount rate decreased from 6.11% at
December 31, 2008 to 5.78% at December 31, 2009), partially
offset by lower early retirement costs.
Our discount rate for our principal pension plans at
December 31, 2011 was 4.21%, which re ected current histori-
cally low interest rates. Considering the current and expected
asset allocations, as well as historical and expected returns on
various categories of assets in which our plans are invested, we
have assumed that long-term returns on our principal pension
plan assets will be 8.0% for cost recognition in 2012, compared
to 8.0% in 2011 and 8.5% in both 2010 and 2009. GAAP pro-
vides recognition of differences between assumed and actual
returns over a period no longer than the average future service
of employees. See the Critical Accounting Estimates section for
additional information.
We expect the costs of our postretirement benefi ts to
increase in 2012 by approximately $1.3 billion as compared to
2011, primarily because of the effects of additional 2008 invest-
ment loss amortization and lower discount rates.
Pension expense for our principal pension plans on a GAAP
basis was $2.4 billion, $1.1 billion and $0.5 billion for 2011, 2010
and 2009, respectively. Operating pension costs (non-GAAP) for
these plans were $1.4 billion in both 2011 and 2010 and $2.0 billion
in 2009. Operating earnings include service cost and plan amend-
ment amortization for our principal pension plans as these costs
represent expenses associated with employee benefi ts earned.
Operating earnings exclude non-operating pension cost/income
such as interest cost, expected return on plan assets and non-cash
amortization of actuarial gains and losses. We expect operating
pension costs for these plans will be about $1.7 billion in 2012.
The GE Pension Plan was underfunded by $13.2 billion at the
end of 2011 as compared to $2.8 billion at December 31, 2010.
The GE Supplementary Pension Plan, which is an unfunded plan,
had projected benefi t obligations of $5.2 billion and $4.4 billion
at December 31, 2011 and 2010, respectively. The increase in
underfunding from year-end 2010 was primarily attributable to
the effects of lower discount rates and lower investment returns.
Our principal pension plans discount rate decreased from 5.28%
at December 31, 2010 to 4.21% at December 31, 2011, which
increased the pension benefi t obligation at year-end 2011 by
approximately $7.4 billion. A 100 basis point increase in our pen-
sion discount rate would decrease the pension benefi t obligation
at year end by approximately $7.0 billion. Our GE Pension Plan
assets decreased from $44.8 billion at the end of 2010 to $42.1 bil-
lion at December 31, 2011, primarily driven by benefi t payments
made during the year which were partially offset by investment
returns. Assets of the GE Pension Plan are held in trust, solely for
the benefi t of Plan participants, and are not available for general
company operations.
On an Employee Retirement Income Security Act (ERISA) basis,
the GE Pension Plan was 92% funded at January 1, 2012. We will
contribute approximately $1.0 billion to the GE Pension Plan in
2012. Funding requirements are determined as prescribed by
ERISA and for GE, are based on the Plan’s funded status as of the
beginning of the previous year and future contributions may vary
based on actual plan results. Assuming our 2012 actual experi-
ence is consistent with our current benefi t assumptions (e.g.,
expected return on assets and interest rates), we expect to make
about $2.1 billion in contributions to the GE Pension Plan in 2013.
At December 31, 2011, the fair value of assets for our other
pension plans was $3.3 billion less than the respective projected
benefi t obligations. The comparable amount at December 31,
2010, was $2.1 billion. We expect to contribute $0.7 billion to our
other pension plans in 2012, compared with actual contributions
of $0.7 billion and $0.6 billion in 2011 and 2010, respectively. We
fund our retiree health benefi ts on a pay-as-you-go basis. The
unfunded liability for our principal retiree health and life plans
was $12.1 billion and $10.9 billion at December 31, 2011 and
2010, respectively. This increase was primarily attributable to the
effects of lower discount rates (retiree health and life plans dis-
count rate decreased from 5.15% at December 31, 2010 to 4.09%
at December 31, 2011), partially offset by lower cost trends. We
expect to contribute $0.6 billion to these plans in 2012 compared
with actual contributions of $0.6 billion in both 2011 and 2010.
The funded status of our postretirement benefi ts 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.
managements discussion and analysis
GE 2011 ANNUAL REPORT 37
GE OTHER COSTS AND EXPENSES are selling, general and adminis-
trative expenses. These costs were 18.5%, 16.3% and 14.3% of
total GE sales in 2011, 2010 and 2009, respectively. The vast major-
ity of this 2011 increase was driven by higher pension costs and
increased research and development spending. The increase in
2010 was primarily due to higher research and development
spending, increased selling expenses to support global
growth and higher pension costs, partially offset by lower restruc-
turing and other charges.
INTEREST ON BORROWINGS AND OTHER FINANCIAL CHARGES
amounted to $14.5 billion, $15.6 billion and $17.7 billion in 2011,
2010 and 2009, respectively. Substantially all of our borrowings
are in fi nancial services, where interest expense was $13.9 billion,
$14.5 billion and $16.9 billion in 2011, 2010 and 2009, respectively.
GECS average borrowings declined from 2010 to 2011 and from
2009 to 2010, in line with changes in average GECS assets.
Interest rates have decreased over the three-year period primar-
ily attributable to declining global benchmark interest rates. GECS
average borrowings were $453.2 billion, $472.6 billion and
$484.9 billion in 2011, 2010 and 2009, respectively. The GECS
average composite effective interest rate was 3.1% in 2011, 3.1%
in 2010 and 3.5% in 2009. In 2011, GECS average assets of
$592.9 billion were 3% lower than in 2010, which in turn were
3% lower than in 2009. See the Liquidity and Borrowings
section for a discussion of liquidity, borrowings and interest
rate risk management.
INCOME TAXES have a signifi cant effect on our net earnings. As a
global commercial enterprise, our tax rates are affected by many
factors, including our global mix of earnings, the extent to which
those global earnings are indefi nitely reinvested outside the
United States, legislation, acquisitions, dispositions and tax char-
acteristics of our income. Our tax rates are also affected by tax
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 GECS fi le a consolidated U.S. federal income tax return.
This enables GE to use GECS tax deductions and credits to reduce
the tax that otherwise would have been payable by GE.
Our consolidated income tax rate is lower than the U.S. statu-
tory rate primarily because of benefi ts from lower-taxed global
operations, including the use of global funding structures, and
our 2009 decision to indefi nitely reinvest prior-year earnings out-
side the U.S. There is a benefi t from global operations as non-U.S.
income is subject to local country tax rates that are signifi cantly
below the 35% U.S. statutory rate. These non-U.S. earnings have
been indefi nitely reinvested outside the U.S. and are not subject
to current U.S. income tax. The rate of tax on our indefi nitely rein-
vested non-U.S. earnings is below the 35% U.S. statutory rate
because we have signifi cant business operations subject to tax
in countries where the tax on that income is lower 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.
Income taxes (benefi t) on consolidated earnings from continu-
ing operations were 28.5% in 2011 compared with 7.3% in 2010
and (11.6)% in 2009.
We expect our ability to benefi t from non-U.S. income taxed
at less than the U.S. rate to continue, subject to changes of U.S. or
foreign law, including, as discussed in Note 14, the expiration of
the U.S. tax law provision deferring tax on active fi nancial services
income. In addition, since this benefi t depends on management’s
intention to indefi nitely reinvest amounts outside the U.S., our tax
provision will increase to the extent we no longer indefi nitely rein-
vest foreign earnings.
Our benefi ts from lower taxed global operations declined to
$2.1 billion in 2011 from $2.8 billion in 2010 and from $3.9 billion
in 2009 principally because of lower earnings in our operations
subject to tax in countries where the tax on that income is lower
than the U.S. statutory rate, and from losses for which there was
not a full tax benefi t. These decreases also refl ected manage-
ment’s decision in 2009 to indefi nitely reinvest prior year earnings
outside the U.S. The benefi t from lower taxed global operations
increased in 2011 by $0.1 billion and in 2010 by $0.4 billion due
to audit resolutions. To the extent global interest rates and non-
U.S. operating income increase we would expect tax benefi ts to
increase, subject to management’s intention to indefi nitely rein-
vest those earnings.
Our benefi t from lower taxed global operations included the
effect of the lower foreign tax rate on our indefi nitely reinvested
non-U.S. earnings which provided a tax benefi t of $1.5 billion in
2011, $2.0 billion in 2010 and $3.0 billion in 2009. The tax benefi t
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 lineTax on global earnings including exports.”
The increase in the consolidated effective tax rate from 2010
to 2011 was due in signifi cant part to the high effective tax rate
on the pre-tax gain on the NBC Universal (NBCU) transaction
with Comcast Corporation (Comcast) discussed in Note 2. This
gain increased the consolidated effective tax rate by 12.9 per-
centage points. The effective tax rate was also higher because
of the increase in 2011 of income in higher taxed jurisdictions.
This decreased the relative effect of our tax benefi ts from lower-
taxed global operations. In addition, the consolidated income tax
rate increased from 2010 to 2011 due to the decrease, discussed
above, in the benefi t from lower-taxed global operations and the
lower benefi t from audit resolutions.
Cash income taxes paid in 2011 were $2.9 billion, refl ecting
the effects of changes to temporary differences between the car-
rying amount of assets and liabilities and their tax bases and the
timing of tax payments to governments.
managements discussion and analysis
38
GE 2011 ANNUAL REPORT
Our consolidated income tax rate increased from 2009 to 2010
primarily because of an increase during 2010 of income in higher-
taxed jurisdictions. This decreased the relative effect of our tax
benefi ts from lower-taxed global operations. In addition, the con-
solidated income tax rate increased from 2009 to 2010 due to the
decrease, discussed above, in the bene t from lower-taxed global
operations. These effects were partially offset by an increase in
the benefi t from audit resolutions, primarily a decrease in the bal-
ance of our unrecognized tax benefi ts from the completion of our
2003–2005 audit with the Internal Revenue Service (IRS).
A more detailed analysis of differences between the U.S. fed-
eral statutory rate and the consolidated rate, as well as other
information about our income tax provisions, is provided in
Note 14. The nature of business activities and associated income
taxes differ for GE and for GECS and a separate analysis of each is
presented in the paragraphs that follow.
We believe that the GE effective tax rate is best analyzed in
relation to GE earnings before income taxes excluding the GECS
net earnings from continuing operations, as GE tax expense does
not include taxes on GECS earnings. GE pre-tax earnings from
continuing operations, excluding GECS earnings from continuing
operations, were $12.6 billion, $12.0 billion and $12.6 billion for
2011, 2010 and 2009, respectively. On this basis, GE’s effective tax
rate was 38.3% in 2011, 16.8% in 2010 and 21.8% in 2009.
Resolution of audit matters reduced the GE effective tax
rate throughout this period. The effects of such resolutions are
included in the following captions in Note 14.
Audit resolutions—effect on GE
tax rate, excluding GECS earnings
2011 2010 2009
Tax on global activities
including exports (0.9)% (3.3)% (0.4)%
U.S. business credits (0.4) (0.5) —
All other—net (0.7) (0.8) (0.2)
(2.0)% (4.6)% (0.6)%
The GE effective tax rate increased from 2010 to 2011 primarily
because of the high effective tax rate on the pre-tax gain on the
NBCU transaction with Comcast refl ecting the low tax basis in our
investments in the NBCU business and the recognition of deferred
tax liabilities related to our 49% investment in NBCUniversal LLC
(NBCU LLC). See Note 2. This gain increased the GE effective tax
rate by 19.7 percentage points. In addition, the effective tax rate
increased because of the 2.6 percentage point decrease in the
benefi t from audit resolutions shown above.
The GE effective tax rate decreased from 2009 to 2010 primar-
ily because of the 4.0 percentage point increase in the bene t
from audit resolutions shown above.
The GECS effective income tax rate is lower than the U.S. stat-
utory rate primarily because of benefi ts from lower-taxed global
operations, including the use of global funding structures. There
is a tax bene t from global operations as non-U.S. income is sub-
ject to local country tax rates that are signi cantly below the 35%
U.S. statutory rate. These non-U.S. earnings have been indefi nitely
reinvested outside the U.S. and are not subject to current U.S.
income tax. The rate of tax on our indefi nitely reinvested non-
U.S. earnings is below the 35% U.S. statutory rate because we
have signifi cant business operations subject to tax in countries
where the tax on that income is lower than the U.S. statutory rate
and because GECS funds the majority of its non-U.S. operations
through foreign companies that are subject to low foreign taxes.
We expect our ability to benefi t from non-U.S. income taxed
at less than the U.S. rate to continue subject to changes of U.S. or
foreign law, including, as discussed in Note 14, the expiration of
the U.S. tax law provision deferring tax on active fi nancial services
income. In addition, since this benefi t depends on management’s
intention to indefi nitely reinvest amounts outside the U.S., our tax
provision will increase to the extent we no longer indefi nitely rein-
vest foreign earnings.
As noted above, GE and GECS fi le a consolidated U.S. federal
income tax return. This enables GE to use GECS tax deductions
and credits to reduce the tax that otherwise would have been
payable by GE. The GECS effective tax rate for each period refl ects
the benefi t of these tax reductions in the consolidated return.
GE makes cash payments to GECS for these tax reductions at
the time GE’s tax payments are due. The effect of GECS on the
amount of the consolidated tax liability from the formation of the
NBCU joint venture will be settled in cash when GECS tax deduc-
tions and credits otherwise would have reduced the liability of the
group absent the tax on joint venture formation.
The GECS effective tax rate was 12.0% in 2011, compared with
(48.4)% in 2010 and 144.3% in 2009. Comparing a tax benefi t to
pre-tax income resulted in a negative tax rate in 2010. Comparing
a tax benefi t to a pre-tax loss resulted in the positive tax rate in
2009. The GECS tax expense of $0.9 billion in 2011 increased by
$1.9 billion from a $1.0 billion benefi t in 2010. The higher 2011
tax expense resulted principally from higher pre-tax income
in 2011 than in 2010, which increased pre-tax income $5.4 bil-
lion and increased the expense ($1.9 billion). Also increasing the
expense was a bene t from resolution of the 2006–2007 IRS audit
($0.2 billion) that was less than the benefi t from resolution of the
2003–2005 IRS audit ($0.3 billion) both of which are reported in
the caption “All other—net” in the effective tax rate reconciliation
in Note 14.
The GECS tax benefi t of $3.9 billion in 2009 decreased by
$2.9 billion to $1.0 billion in 2010. The lower 2010 tax benefi t
resulted in large part from the change from a pre-tax loss in
2009 to pre-tax income in 2010, which increased pre-tax income
$4.7 billion and decreased the benefi t ($1.7 billion), the non-repeat
of the one-time benefi t related to the 2009 decision to inde nitely
reinvest undistributed prior year non-U.S. earnings ($0.7 billion),
and a decrease in lower-taxed global operations in 2010 as com-
pared to 2009 ($0.6 billion) caused in part by an increase in losses
for which there was not a full tax benefi t, including an increase
in the valuation allowance associated with the deferred tax asset
related to the 2008 loss on the sale of GE Money Japan ($0.2 billion).
These lower benefi ts were partially offset by the bene t from the
resolution of the 2003–2005 IRS audit ($0.3 billion).
managements discussion and analysis
GE 2011 ANNUAL REPORT 39
Global Risk Management
A disciplined approach to risk is important in a diversifi ed organi-
zation like ours in order to ensure that we are executing according
to our strategic objectives and that we only accept risk for which
we are adequately compensated. We evaluate risk at the indi-
vidual transaction level, and evaluate aggregated risk at the
customer, industry, geographic and collateral-type levels,
where appropriate.
Risk assessment and risk management are the responsibility
of management. The GE Board of Directors (Board) has oversight
for risk management with a focus on the most signifi cant risks
facing the Company, including strategic, operational, fi nancial and
legal and compliance risks. At the end of each year, management
and the Board jointly develop a list of major risks that GE plans to
prioritize in the next year. Throughout the year, the Board and the
committees to which it has delegated responsibility dedicate a
portion of their meetings to review and discuss specifi c risk top-
ics in greater detail. Strategic, operational and reputational risks
are presented and discussed in the context of the CEO’s report
on operations to the Board at regularly scheduled Board meet-
ings and at presentations to the Board and its committees by the
vice chairmen, Chief Risk Offi cer (CRO), general counsel and other
employees. The Board has delegated responsibility for the over-
sight of specifi c risks to Board committees as follows:
• In 2011, the Board established a Risk Committee. This
Committee oversees GE’s risk management of key risks,
including strategic, operational (including product risk), fi nan-
cial (including credit, liquidity and exposure to broad market
risk) and reputational risks, and the guidelines, policies and
processes for monitoring and mitigating such risks. Starting
in 2011, as part of its overall risk oversight responsibilities for
GE, the Risk Committee also began overseeing risks related
to GE Capital, which previously was subject to direct Audit
Committee oversight.
• The Audit Committee oversees GE’s and GE Capital’s policies
and processes relating to the fi nancial statements, the fi nan-
cial reporting process, compliance and auditing. The Audit
Committee monitors ongoing compliance issues and matters,
and also annually conducts an assessment of compliance
issues and programs.
• The Public Responsibilities Committee oversees risk manage-
ment related to GE’s public policy initiatives, the environment
and similar matters, and monitors the Company’s environ-
mental, health and safety compliance.
• The Management Development and Compensation
Committee oversees the risk management associated with
management resources, structure, succession planning, man-
agement development and selection processes, and includes
a review of incentive compensation arrangements to confi rm
that incentive pay does not encourage unnecessary risk taking
and to review and discuss, at least annually, the relationship
between risk management policies and practices, corporate
strategy and senior executive compensation.
• The Nominating and Corporate Governance Committee over-
sees risk related to the Company’s governance structure and
processes and risks arising from related-person transactions.
The GE Board’s risk oversight process builds upon management’s
risk assessment and mitigation processes, which include stan-
dardized reviews of long-term strategic and operational planning;
executive development and evaluation; code of conduct compli-
ance under the Company’s The Spirit & The Letter; regulatory
compliance; health, safety and environmental compliance; fi nan-
cial reporting and controllership; and information technology and
security. GE’s CRO is responsible for overseeing and coordinating
risk assessment and mitigation on an enterprise-wide basis. The
CRO leads the Corporate Risk Function and is responsible for the
identifi cation of key business risks, providing for appropriate
management of these risks within GE Board guidelines, and
enforcement through policies and procedures. Management has
two committees to further assist it in assessing and mitigating
risk. The Corporate Risk Committee (CRC) meets periodically, is
chaired by the CRO and comprises the Chairman and CEO, vice
chairmen, general counsel and other senior level business and
functional leaders. It has principal responsibility for evaluating
and addressing risks escalated to the CRO and Corporate Risk
Function. The Policy Compliance Review Board met 15 times in
2011, is chaired by the Company’s general counsel and includes
the Chief Financial Of cer and other senior level functional lead-
ers. It has principal responsibility for monitoring compliance
matters across the Company.
GE’s Corporate Risk Function leverages the risk infrastructures
in each of our businesses, which have adopted an approach that
corresponds to the Company’s overall risk policies, guidelines and
review mechanisms. Our risk infrastructure operates at the busi-
ness and functional levels and is designed to identify, evaluate
and mitigate risks within each of the following categories:
STRATEGIC. Strategic risk relates to the Company’s future
business plans and strategies, including the risks associated
with the markets and industries in which we operate, demand
for our products and services, competitive threats, technol-
ogy and product innovation, mergers and acquisitions and
public policy.
OPERATIONAL. Operational risk relates to risks (systems, pro-
cesses, people and external events) that affect the operation
of our businesses. It includes product life cycle and execution,
product safety and performance, information management
and data protection and security, business disruption, human
resources and reputation.
FINANCIAL. Financial risk relates to our ability to meet fi nancial
obligations and mitigate credit risk, liquidity risk and exposure
to broad market risks, including volatility in foreign currency
exchange rates and interest rates and commodity prices.
Liquidity risk is the risk of being unable to accommodate
liability maturities, fund asset growth and meet contractual
managements discussion and analysis
40
GE 2011 ANNUAL REPORT
obligations through access to funding at reasonable market
rates, and credit risk is the risk of fi nancial loss arising from a
customer or counterparty failure to meet its contractual obli-
gations. We face credit risk in our industrial businesses, as well
as in our GE Capital investing, lending and leasing activities
and derivative nancial instruments activities.
LEGAL AND COMPLIANCE. Legal and compliance risk relates to
risks arising from the government and regulatory environment
and action, compliance with integrity policies and procedures,
including those relating to fi nancial reporting, environmental
health and safety, and intellectual property risks. Government
and regulatory risk includes the risk that the government or
regulatory actions will impose additional cost on us or cause
us to have to change our business models or practices.
Risks identifi ed through our risk management processes are
prioritized and, depending on the probability and severity of the
risk, escalated to the CRO. The CRO, in coordination with the CRC,
assigns responsibility for the risks to the business or functional
leader most suited to manage the risk. Assigned owners are
required to continually monitor, evaluate and report on risks for
which they bear responsibility. Enterprise risk leaders within each
business and corporate function are responsible to present to the
CRO and CRC risk assessments and key risks at least annually. We
have general response strategies for managing risks, which
categorize risks according to whether the Company will avoid,
transfer, reduce or accept the risk. These response strategies are
tailored to ensure that risks are within acceptable GE Board
general guidelines.
Depending on the nature of the risk involved and the particular
business or function affected, we use a wide variety of risk mitiga-
tion strategies, including delegation of authorities, standardized
processes and strategic planning reviews, operating reviews,
insurance, and hedging. As a matter of policy, we generally hedge
the risk of fl uctuations in foreign currency exchange rates, inter-
est rates and commodity prices. Our service businesses employ
a comprehensive tollgate process leading up to and through the
execution of a contractual service agreement to mitigate legal,
nancial and operational risks. Furthermore, we centrally man-
age some risks by purchasing insurance, the amount of which
is determined by balancing the level of risk retained or assumed
with the cost of transferring risk to others. We manage the risk of
uctuations in economic activity and customer demand by moni-
toring industry dynamics and responding accordingly, including
by adjusting capacity, implementing cost reductions and engag-
ing in mergers, acquisitions and dispositions.
GE CAPITAL RISK MANAGEMENT AND OVERSIGHT
GE Capital has a robust risk infrastructure and robust processes
to manage risks related to its businesses, and the GE Corporate
Risk Function relies upon them in ful lling its mission.
The GE Risk Committee was established to oversee GE
Capital’s risk appetite, risk assessment and management pro-
cesses previously undertaken by the GE Audit Committee. The
GECC Board of Directors oversees the GE Capital risk manage-
ment framework, and approves all signifi cant acquisitions and
dispositions as well as signifi cant borrowings and investments.
The GECC Board of Directors exercises control over investment
activities in the business units through delegations of authority.
All participants in the GE Capital risk management process must
comply with approval limits established by the GECC Board.
The Enterprise Risk Management Committee (ERMC), which
comprises the most senior leaders in GE Capital as well as the
GE CRO, oversees the implementation of GE Capital’s risk appetite,
and senior management’s establishment of appropriate systems
(including policies, procedures, and management committees) to
ensure enterprise risks are effectively identifi ed, measured, mon-
itored, and controlled. Day-to-day risk oversight for GE Capital is
provided by an independent global risk management organiza-
tion which includes the GE Capital corporate function in addition
to risk of cers embedded in the individual business units. The
Risk Leaders in the business units have dual reporting relation-
ships, reporting both into the local business management and
also to the GE Capital corporate-level function leader, which fur-
ther strengthens their independence.
GE Capital’s risk management approach rests upon three
major tenets: a broad spread of risk based on managed exposure
limits; senior, secured commercial fi nancings; and a hold-to-
maturity model with transactions underwritten to “on-book”
standards. Dedicated risk professionals across the businesses
include underwriters, portfolio managers, collectors, envi-
ronmental or engineering specialists, and specialized asset
managers. The senior risk of cers have, on average, over 25 years
of experience.
GE Capital manages risk categories identifi ed in GE Capital’s
business environment, which if materialized, could prevent GE
Capital from achieving its risk objectives and/or result in losses.
These risks are de ned as GE Capital’s Enterprise Risk Universe,
which includes the following risks: strategic (including earnings
and capital), liquidity, credit, market and operational (including
nancial, compliance, information technology, human resources
and legal). Reputational risk is considered and managed
across each of the categories. GE Capital has made signifi cant
investments in resources to enhance its risk management infra-
structure, in particular with regard to compliance, market and
operational risk, liquidity and capital management.
GE Capital’s Corporate Risk function, in consultation with the
ERMC, updates the Enterprise Risk Appetite Statement annually.
This document articulates the enterprise risk objectives, its key
universe of risks and the supporting limit structure. GE Capital’s
risk appetite is determined relative to its desired risk objectives,
including, but not limited to credit ratings, capital levels, liquidity
managements discussion and analysis
GE 2011 ANNUAL REPORT 41
management, regulatory assessments, earnings, dividends and
compliance. GE Capital determines its risk appetite through
consideration of portfolio analytics, including stress testing and
economic capital measurement, experience and judgment of
senior risk of cers, current portfolio levels, strategic planning,
and regulatory and rating agency expectations.
The Enterprise Risk Appetite is presented to the GECC Board
and the GE Risk Committee for review and approval at least annu-
ally. On a quarterly basis, the status of GE Capital’s performance
against these limits is reviewed by the GE Risk Committee.
GE Capital acknowledges risk-taking as a fundamental charac-
teristic of providing nancial services. It is inherent to its business
and arises in lending, leasing and investment transactions under-
taken by GE Capital. GE Capital utilizes its risk capacity judiciously
in pursuit of its strategic goals and risk objectives.
GE Capital uses stress testing for risk, liquidity and capital
adequacy assessment and management purposes, and as an
integral part of GE Capital’s overall planning processes. Stress
testing results inform key strategic portfolio decisions such
as capital allocation, assist in developing the risk appetite and
limits, and help in assessing product specifi c risk to guide the
development and modifi cation of product structures. The ERMC
approves the high-level scenarios for, and reviews the results of,
GE Capital-wide stress tests across key risk areas, such as credit
and investment, liquidity and market risk. Stress test results are
also expressed in terms of impact to capital levels and metrics,
and that information is reviewed with the GECC Board and the
GE Risk Committee at least twice a year. Stress testing require-
ments are set forth in GE Capital’s approved risk policies. Key
policies, such as the Enterprise Risk Management Policy, the
Enterprise Risk Appetite Statement and the Liquidity and Capital
Management policies are approved by the GECC Board and the
GE Risk Committee at least annually. GE Capital, in coordination
with and under the oversight of the GE CRO, provides risk reports
to the GE Risk Committee. At these meetings, which occur at least
four times a year, GE Capital senior management focuses on the
risk strategy and the risk oversight processes used to manage the
elements of risk managed by the ERMC.
Operational risks are inherent in GE Capital’s business
activities and are typical of any large enterprise. GE Capital’s
Operational Risk Management program seeks to effectively
manage operational risk to reduce the potential for signi cant
unexpected losses, and to minimize the impact of losses experi-
enced in the normal course of business.
Additional information about our liquidity and how we man-
age this risk can be found in the Financial Resources and Liquidity
section. Additional information about our credit risk and GECS
portfolio can be found in the Financial Resources and Liquidity
and Critical Accounting Estimates sections. Additional informa-
tion about our market risk and how we manage this risk can be
found in the Financial Resources and Liquidity section.
Segment Operations
Effective January 1, 2011, we reorganized the former Technology
Infrastructure segment into three segments—Aviation,
Healthcare, and Transportation. The prior-period results of the
Aviation, Healthcare and Transportation businesses are unaf-
fected by this reorganization. Results of our formerly consolidated
subsidiary, NBCU, and our current equity method investment in
NBCU LLC are reported in the Corporate items and eliminations
line on the Summary of Operating Segments.
Our six segments are focused on the broad markets they
serve: Energy Infrastructure, Aviation, Healthcare, Transportation,
Home & Business Solutions and GE Capital. In addition to pro-
viding information on segments in their entirety, we have also
provided supplemental information for certain businesses within
the segments for greater clarity.
Segment profi t is determined based on internal performance
measures used by the Chief Executive Of cer to assess the per-
formance of each business in a given period. In connection with
that assessment, the Chief Executive Offi cer may exclude matters
such as charges for restructuring; rationalization and other simi-
lar expenses; in-process research and development and certain
other acquisition-related charges and balances; technology and
product development costs; certain gains and losses from acqui-
sitions or dispositions; and litigation settlements or other charges,
responsibility for which preceded the current management team.
Segment profi t excludes results reported as discontinued
operations, earnings attributable to noncontrolling interests of
consolidated subsidiaries and accounting changes. Segment
profi t excludes or includes interest and other fi nancial charges
and income taxes according to how a particular segment’s man-
agement is measured—excluded in determining segment profi t,
which we sometimes refer to as “operating profi t,” for Energy
Infrastructure, Aviation, Healthcare, Transportation and Home &
Business Solutions; included in determining segment profi t, which
we sometimes refer to as “net earnings,” for GE Capital. Prior to
January 1, 2011, segment profi t excluded the effects of principal
pension plans. Beginning January 1, 2011, we began allocating
service costs related to our principal pension plans and no longer
allocate the retiree costs of our postretirement healthcare ben-
efi ts to our segments. This revised allocation methodology better
aligns segment operating costs to the active employee costs,
which are managed by the segments. This change does not sig-
nifi cantly affect reported segment results.
To better serve Oil & Gas customers, Energy’s Measurement
& Control business was moved to Oil & Gas in October 2011.
Measurement & Control addresses sensor-based measurement,
inspection, asset condition monitoring and controls needs. In
addition, three business units from Energy’s acquisition of Dresser
were also transferred to Oil & Gas in 2011. We have reclassifi ed
certain prior-period amounts to conform to the current-period
presentation. For additional information about our segments,
see Note 28.
managements discussion and analysis
42
GE 2011 ANNUAL REPORT
Summary of Operating Segments
General Electric Company and consolidated affiliates
(In millions) 2011 2010 2009 2008 2007
REVENUES
Energy Infrastructure $ 43,694 $ 37,514 $ 40,648 $ 43,046 $ 34,880
Aviation 18,859 17,619 18,728 19,239 16,819
Healthcare 18,083 16,897 16,015 17,392 16,997
Transportation 4,885 3,370 3,827 5,016 4,523
Home & Business Solutions 8,465 8,648 8,443 10,117 11,026
Total industrial revenues 93,986 84,048 87,661 94,810 84,245
GE Capital 45,730 46,422 48,906 65,900 65,625
Total segment revenues 139,716 130,470 136,567 160,710 149,870
Corporate items and eliminations (a) 7,584 19,123 17,871 19,127 20,094
CONSOLIDATED REVENUES $147,300 $149,593 $154,438 $179,837 $169,964
SEGMENT PROFIT
Energy Infrastructure $ 6,650 $ 7,271 $ 7,105 $ 6,497 $ 5,238
Aviation 3,512 3,304 3,923 3,684 3,222
Healthcare 2,803 2,741 2,420 2,851 3,056
Transportation 757 315 473 962 936
Home & Business Solutions 300 457 370 365 983
Total industrial segment profit 14,022 14,088 14,291 14,359 13,435
GE Capital 6,549 3,158 1,325 7,841 12,179
Total segment profit 20,571 17,246 15,616 22,200 25,614
Corporate items and eliminations (a) (359) (1,105) (593) 1,184 1,441
GE interest and other financial charges (1,299) (1,600) (1,478) (2,153) (1,993)
GE provision for income taxes (4,839) (2,024) (2,739) (3,427) (2,794)
Earnings from continuing operations 14,074 12,517 10,806 17,804 22,268
Earnings (loss) from discontinued operations, net of taxes 77 (873) 219 (394) (60)
CONSOLIDATED NET EARNINGS ATTRIBUTABLE TO THE COMPANY $ 14,151 $ 11,644 $ 11,025 $ 17,410 $ 22,208
(a) Includes the results of NBCU, our formerly consolidated subsidiary, and our current equity method investment in NBCUniversal LLC.
See accompanying notes to consolidated financial statements.
managements discussion and analysis
GE 2011 ANNUAL REPORT 43
ENERGY INFRASTRUCTURE
(In millions) 2011 2010 2009
REVENUES $43,694 $37,514 $40,648
SEGMENT PROFIT $ 6,650 $ 7,271 $ 7,105
REVENUES
Energy $31,080 $29,040 $31,858
Oil & Gas 13,663 9,483 9,701
SEGMENT PROFIT
Energy $ 4,992 $ 5,887 $ 5,736
Oil & Gas 1,872 1,553 1,532
Energy Infrastructure revenues increased 16% or $6.2 billion
(including $4.1 billion from acquisitions) in 2011 as higher volume
($5.8 billion) and the effects of the weaker U.S. dollar ($0.9 billion)
were partially offset by lower prices ($0.5 billion). Higher volume
was mainly driven by acquisitions and an increase in sales of
services at both Energy and Oil & Gas. The effects of the weaker
U.S. dollar and lower prices were at both Energy and Oil & Gas.
Segment profi t decreased 9%, or $0.6 billion, as lower produc-
tivity ($1.4 billion), driven primarily by the wind turbines business,
acquisitions and investment in our global organization and new
technology, and lower prices ($0.5 billion), driven primarily by the
wind turbines business, were partially offset by higher volume
($1.1 billion), and the effects of defl ation ($0.1 billion). Lower pro-
ductivity, lower prices, higher volume and the effects of de ation
were at both Energy and Oil & Gas.
Energy Infrastructure segment revenues decreased 8%, or
$3.1 billion, in 2010 as lower volume ($3.3 billion) and the stron-
ger U.S. dollar ($0.4 billion) were partially offset by higher prices
($0.5 billion) and higher other income ($0.1 billion). Lower volume
primarily refl ected decreases in thermal and wind equipment
sales at Energy. The effects of the stronger U.S. dollar were at
both Energy and Oil & Gas. Higher prices at Energy were partially
offset by lower prices at Oil & Gas. The increase in other income at
Energy was partially offset by lower other income at Oil & Gas.
Segment profi t increased 2% to $7.3 billion in 2010, compared
with $7.1 billion in 2009 as higher prices ($0.5 billion), the effects
of defl ation ($0.4 billion) and higher other income ($0.1 billion)
were partially offset by lower volume ($0.6 billion), the stronger
U.S. dollar ($0.1 billion) and decreased productivity ($0.1 billion).
Higher prices at Energy were partially offset by lower prices at
Oil & Gas. The effects of defl ation primarily refl ected decreased
material costs at both Energy and Oil & Gas. An increase in other
income at Energy was partially offset by lower other income at Oil
& Gas. Lower volume primarily refl ected decreases in wind and
thermal equipment sales at Energy and was partially offset by
higher volume at Oil & Gas. The effects of the stronger U.S. dollar
were at both Energy and Oil & Gas. The effects of decreased pro-
ductivity were primarily at Energy.
Energy Infrastructure equipment orders increased 39% to
$25.6 billion at December 31, 2011. Total Energy Infrastructure
backlog increased 8% to $72.7 billion at December 31, 2011, com-
posed of equipment backlog of $23.0 billion and services backlog
of $49.7 billion. Comparable December 31, 2010 equipment
and service order backlogs were $18.3 billion and $48.8 billion,
respectively. See Corporate Items and Eliminations for a discus-
sion of items not allocated to this segment.
AVIATION revenues of $18.9 billion in 2011 increased $1.2 billion,
or 7%, due primarily to higher volume ($1.1 billion) and higher
prices ($0.2 billion), partially offset by lower other income ($0.1 bil-
lion). Higher volume and higher prices were driven by increased
services ($0.9 billion) and equipment sales ($0.4 billion). The
increase in services revenue was primarily due to higher commer-
cial spares sales while the increase in equipment revenue was
primarily due to commercial engines.
Segment profi t of $3.5 billion in 2011 increased $0.2 billion, or
6%, due primarily to higher volume ($0.2 billion) and higher prices
($0.2 billion), partially offset by higher infl ation, primarily non-
material related ($0.1 billion), and lower other income ($0.1 billion).
Incremental research and development and GEnx product launch
costs offset higher productivity.
Aviation revenues of $17.6 billion in 2010 decreased $1.1 bil-
lion, or 6%, as lower volume ($1.2 billion) and lower other income
($0.1 billion), refl ecting lower transaction gains, were partially
offset by higher prices ($0.2 billion). The decrease in volume
refl ected decreased commercial and military equipment sales
and services. Lower transaction gains refl ect the absence of gains
related to the Airfoils Technologies International—Singapore
Pte. Ltd. (ATI) acquisition and the Times Microwave Systems dis-
position in 2009, partially offset by a gain on a partial sale of a
materials business and a franchise fee.
Segment profi t of $3.3 billion in 2010 decreased $0.6 billion,
or 16%, due to lower productivity ($0.4 billion), lower volume
($0.2 billion) and lower other income ($0.2 billion), refl ecting lower
transaction gains, partially offset by higher prices ($0.2 billion).
Lower productivity was primarily due to product launch and pro-
duction costs associated with the GEnx engine shipments.
Aviation equipment orders increased 33% to $11.9 billion
at December 31, 2011. Total Aviation backlog increased 24%
to $99.0 billion at December 31, 2011, composed of equipment
backlog of $22.5 billion and services backlog of $76.5 billion.
Comparable December 31, 2010 equipment and service order
backlogs were $20.0 billion and $59.5 billion, respectively. See
Corporate Items and Eliminations for a discussion of items not
allocated to this segment.
managements discussion and analysis
44
GE 2011 ANNUAL REPORT
HEALTHCARE revenues of $18.1 billion in 2011 increased $1.2 bil-
lion, or 7%, due to higher volume ($1.0 billion) and the weaker U.S.
dollar ($0.4 billion), partially offset by lower prices ($0.3 billion). The
revenue increase was split between equipment sales ($0.7 billion)
and services ($0.5 billion). Revenue increased in the U.S. and inter-
national markets, with the strongest growth in emerging markets.
Segment profi t of $2.8 billion in 2011 increased 2%, or $0.1 bil-
lion, refl ecting increased productivity ($0.3 billion), higher volume
($0.2 billion) and the weaker U.S. dollar ($0.1 billion), partially offset
by lower prices ($0.3 billion) and higher infl ation ($0.1 billion), pri-
marily non-material related.
Healthcare revenues of $16.9 billion in 2010 increased $0.9 billion,
or 6%, refl ecting higher volume ($1.0 billion) and the weaker U.S.
dollar ($0.1 billion), partially offset by lower prices ($0.2 billion). The
increase in volume refl ected increased equipment sales ($0.7 billion)
and services ($0.2 billion).
Segment profi t of $2.7 billion in 2010 increased $0.3 billion,
or 13%, due to higher productivity ($0.3 billion), higher volume
($0.2 billion) and the weaker U.S. dollar ($0.1 billion), partially offset
by lower prices ($0.2 billion).
Healthcare equipment orders increased 7% to $10.5 billion
at December 31, 2011. Total Healthcare backlog increased 1%
to $13.5 billion at December 31, 2011, composed of equip-
ment backlog of $3.9 billion and services backlog of $9.6 billion.
Comparable December 31, 2010 equipment and service order
backlogs were $3.9 billion and $9.5 billion, respectively. See
Corporate Items and Eliminations for a discussion of items not
allocated to this segment.
TRANSPORTATION revenues of $4.9 billion in 2011 increased
$1.5 billion, or 45%, due to higher volume ($1.5 billion) related to
increased equipment sales ($0.9 billion) and services ($0.6 billion).
The increase in equipment revenue was primarily driven by an
increase in U.S. and international locomotive sales and growth in
our global mining equipment business. The increase in service
revenue was due to higher overhauls and increased
service productivity.
Segment profi t of $0.8 billion in 2011 increased $0.4 billion,
or over 100%, as a result of increased productivity ($0.4 billion),
refl ecting improved service margins, and higher volume ($0.1 bil-
lion), partially offset by higher infl ation ($0.1 billion).
Transportation revenues of $3.4 billion in 2010 decreased
$0.5 billion, or 12%, primarily due to lower volume ($0.5 billion).
The decrease in volume refl ected decreased equipment sales
($0.3 billion) and services ($0.1 billion).
Segment profi t of $0.3 billion in 2010 decreased $0.2 billion,
or 33%, due to lower productivity ($0.1 billion) and lower volume
($0.1 billion). Lower productivity was primarily due to higher
service costs.
Transportation equipment orders decreased 31% to $2.2 bil-
lion at December 31, 2011. Total Transportation backlog
decreased 1% to $15.1 billion at December 31, 2011, composed
of equipment backlog of $3.3 billion and services backlog of
$11.8 billion. Comparable December 31, 2010 equipment and
service order backlogs were $3.7 billion and $11.6 billion, respec-
tively. See Corporate Items and Eliminations for a discussion of
items not allocated to this segment.
HOME & BUSINESS SOLUTIONS revenues of $8.5 billion decreased
$0.2 billion, or 2%, in 2011 refl ecting a decrease in Appliances
partially offset by higher revenues at Lighting and Intelligent
Platforms. Overall, revenues decreased primarily as a result of
lower volume ($0.3 billion) principally in our appliances business,
partially offset by the weaker U.S. dollar ($0.1 billion) and
increased prices.
Segment profi t of $0.3 billion in 2011 decreased 34%, or
$0.2 billion, as the effects of infl ation ($0.3 billion) and lower vol-
ume were partially offset by the effects of the weaker U.S. dollar,
increased productivity and increased prices.
Home & Business Solutions revenues increased 2%, or
$0.2 billion, to $8.6 billion in 2010 compared with 2009 as higher
volume ($0.4 billion) and higher other income ($0.1 billion) was
partially offset by lower prices ($0.2 billion). The increase in vol-
ume refl ected increased sales across all businesses. The decrease
in price was primarily at Appliances.
Segment profi t increased 24%, or $0.1 billion, to $0.5 bil-
lion in 2010, primarily as a result of the effects of productivity
($0.2 billion) and increased other income primarily related to
associated companies ($0.1 billion), partially offset by lower prices
($0.2 billion).
managements discussion and analysis
GE 2011 ANNUAL REPORT 45
GE CAPITAL
(In millions) 2011 2010 2009
REVENUES $ 45,730 $ 46,422 $ 48,906
SEGMENT PROFIT $ 6,549 $ 3,158 $ 1,325
December 31 (In millions) 2011 2010
TOTAL ASSETS $552,514 $565,337
(In millions) 2011 2010 2009
REVENUES
Commercial Lending and
Leasing (CLL) $ 18,178 $ 18,447 $ 20,762
Consumer 16,781 17,204 16,794
Real Estate 3,712 3,744 4,009
Energy Financial Services 1,223 1,957 2,117
GE Capital Aviation
Services (GECAS) 5,262 5,127 4,594
SEGMENT PROFIT (LOSS)
CLL $ 2,720 $ 1,554 $ 963
Consumer 3,551 2,523 1,282
Real Estate (928) (1,741) (1,541)
Energy Financial Services 440 367 212
GECAS 1,150 1,195 1,016
December 31 (In millions) 2011 2010
TOTAL ASSETS
CLL $193,869 $202,650
Consumer 139,000 147,327
Real Estate 60,873 72,630
Energy Financial Services 18,357 19,549
GECAS 48,821 49,106
GE Capital revenues decreased 1% and net earnings increased
favorably in 2011 as compared with 2010. Revenues for 2011 and
2010 included $0.3 billion and $0.2 billion, respectively, from
acquisitions and were reduced by $1.1 billion and $2.3 billion,
respectively, as a result of dispositions. Revenues also increased
as a result of the gain on sale of a substantial portion of our
Garanti Bank equity investment (the Garanti Bank transaction),
the weaker U.S. dollar and higher gains and investment income,
partially offset by reduced revenues from lower ENI. Net earnings
increased by $3.4 billion in 2011, primarily due to lower provisions
for losses on nancing receivables, the gain on the Garanti Bank
transaction and lower impairments. GE Capital net earnings in
2011 also included restructuring, rationalization and other
charges of $0.1 billion and net losses of $0.2 billion related to our
Treasury operations.
During 2011, GE Capital provided approximately $104 billion
of new fi nancings in the U.S. to various companies, infrastruc-
ture projects and municipalities. Additionally, we extended
approximately $87 billion of credit to approximately 56 million U.S.
consumers. GE Capital provided credit to approximately 19,600
new commercial customers and 37,000 new small businesses
in the U.S. during 2011 and ended the period with outstanding
credit to more than 284,000 commercial customers and 191,000
small businesses through retail programs in the U.S.
GE Capital revenues decreased 5% and net earnings increased
favorably in 2010 as compared with 2009. Revenues for 2010
and 2009 included $0.2 billion and $0.1 billion of revenues
from acquisitions, respectively, and in 2010 were increased by
$0.1 billion and in 2009 were reduced by $2.3 billion as a result
of dispositions, including the effects of the 2010 deconsolida-
tion of Regency Energy Partners L.P. (Regency) and the 2009
deconsolidation of Penske Truck Leasing Co., L.P. (PTL). The 2010
deconsolidation of Regency included a $0.1 billion gain on the
sale of our general partnership interest in Regency and remea-
surement of our retained investment (the Regency transaction).
Revenues for 2010 also decreased $0.6 billion compared with
2009 as a result of organic revenue declines primarily driven by a
lower asset base and a lower interest rate environment, partially
offset by the weaker U.S. dollar. Net earnings increased for 2010
compared with 2009, primarily due to lower provisions for losses
on fi nancing receivables, lower selling, general and administrative
costs and the gain on the Regency transaction, offset by higher
marks and impairments, mainly at Real Estate, the absence of
the fi rst quarter 2009 tax benefi t from the decision to indefi nitely
reinvest prior-year earnings outside the U.S., and the absence of
the fi rst quarter 2009 gain related to the PTL sale. GE Capital net
earnings in 2010 also included restructuring, rationalization and
other charges of $0.2 billion and net losses of $0.1 billion related
to our Treasury operations.
Additional information about certain GE Capital businesses
follows.
CLL 2011 revenues decreased 1% and net earnings increased
75% compared with 2010. Revenues decreased as a result of
organic revenue declines ($1.1 billion), primarily due to lower ENI,
partially offset by the weaker U.S. dollar ($0.5 billion) and higher
gains and investment income ($0.4 billion). Net earnings increased in
2011, refl ecting lower provisions for losses on nancing receivables
($0.6 billion), higher gains and investment income ($0.3 billion), core
increases ($0.2 billion) and lower impairments ($0.1 billion).
CLL 2010 revenues decreased 11% and net earnings increased
61% compared with 2009. Revenues in 2010 and 2009 included
$0.2 billion and $0.1 billion, respectively, from acquisitions, and
in 2010 were reduced by $1.2 billion from dispositions, primarily
related to the 2009 deconsolidation of PTL. Revenues in 2010 also
decreased $1.2 billion compared with 2009 as a result of organic
revenue declines ($1.4 billion), partially offset by the weaker U.S.
dollar ($0.2 billion). Net earnings increased by $0.6 billion in 2010,
refl ecting lower provisions for losses on nancing receivables
($0.6 billion), higher gains ($0.2 billion) and lower selling, gen-
eral and administrative costs ($0.1 billion). These increases were
partially offset by the absence of the gain on the PTL sale and
remeasurement ($0.3 billion) and declines in lower-taxed earnings
from global operations ($0.1 billion).
Consumer 2011 revenues decreased 2% and net earnings
increased 41% compared with 2010. Revenues included $0.3 bil-
lion from acquisitions and were reduced by $0.4 billion as a result
of dispositions. Revenues in 2011 also decreased $0.3 billion as a
managements discussion and analysis
46
GE 2011 ANNUAL REPORT
result of organic revenue declines ($1.4 billion), primarily due to
lower ENI, and higher impairments ($0.1 billion), partially offset by
the gain on the Garanti Bank transaction ($0.7 billion), the weaker
U.S. dollar ($0.5 billion) and higher gains ($0.1 billion). The increase
in net earnings resulted primarily from lower provisions for losses
on fi nancing receivables ($1.0 billion), the gain on the Garanti Bank
transaction ($0.3 billion) and acquisitions ($0.1 billion), partially
offset by lower Garanti results ($0.2 billion), and core decreases
($0.2 billion).
Consumer 2010 revenues increased 2% and net earnings
increased 97% compared with 2009. Revenues in 2010 were
reduced by $0.3 billion as a result of dispositions. Revenues in
2010 increased $0.7 billion compared with 2009 as a result of
the weaker U.S. dollar ($0.4 billion) and organic revenue growth
($0.4 billion). The increase in net earnings resulted primarily from
core growth ($1.3 billion) and the weaker U.S. dollar ($0.1 bil-
lion), partially offset by the effects of dispositions ($0.1 billion).
Core growth included lower provisions for losses on fi nancing
receivables across most platforms ($1.5 billion) and lower selling,
general and administrative costs ($0.2 billion), partially offset by
declines in lower-taxed earnings from global operations ($0.7 bil-
lion) including the absence of the fi rst quarter 2009 tax benefi t
($0.5 billion) from the decision to indefi nitely reinvest prior-year
earnings outside the U.S. and an increase in the valuation allow-
ance associated with Japan ($0.2 billion).
Real Estate 2011 revenues decreased 1% and net earnings
increased 47% compared with 2010. Revenues decreased as
organic revenue declines ($0.4 billion), primarily due to lower
ENI, were partially offset by increases in net gains on property
sales ($0.2 billion) and the weaker U.S. dollar ($0.1 billion). Real
Estate net earnings increased compared with 2010, as lower
impairments ($0.7 billion), a decrease in provisions for losses
on fi nancing receivables ($0.4 billion) and increases in net
gains on property sales ($0.2 billion) were partially offset by
core declines ($0.4 billion). Depreciation expense on real estate
equity investments totaled $0.9 billion and $1.0 billion in 2011
and 2010, respectively.
Real Estate 2010 revenues decreased 7% and net earn-
ings decreased 13% compared with 2009. Revenues for 2010
decreased $0.3 billion compared with 2009 as a result of
organic revenue declines and a decrease in property sales,
partially offset by the weaker U.S. dollar. Real Estate net earn-
ings decreased $0.2 billion compared with 2009, primarily from
an increase in impairments related to equity properties and
investments ($0.9 billion), partially offset by a decrease in provi-
sions for losses on fi nancing receivables ($0.4 billion), and core
increases ($0.3 billion). Depreciation expense on real estate
equity investments totaled $1.0 billion and $1.2 billion for 2010
and 2009, respectively.
Energy Financial Services 2011 revenues decreased 38%
and net earnings increased 20% compared with 2010. Revenues
decreased primarily as a result of the deconsolidation of Regency
($0.7 billion) and organic revenue declines ($0.3 billion), primarily
from an asset sale in 2010 by an investee. These decreases were
partially offset by higher gains ($0.2 billion). The increase in net
earnings resulted primarily from higher gains ($0.2 billion), partially
offset by the deconsolidation of Regency ($0.1 billion) and core
decreases, primarily from an asset sale in 2010 by an investee.
Energy Financial Services 2010 revenues decreased 8% and
net earnings increased 73% compared with 2009. Revenues in
2010 included a $0.1 billion gain related to the Regency trans-
action and in 2009 were reduced by $0.1 billion of gains from
dispositions. Revenues in 2010 decreased compared with 2009 as
a result of organic revenue growth ($0.4 billion), primarily increases
in associated company revenues resulting from an asset sale by an
investee ($0.2 billion), more than offset by the deconsolidation of
Regency. The increase in net earnings resulted primarily from core
increases ($0.1 billion), primarily increases in associated company
earnings resulting from an asset sale by an investee ($0.2 billion)
and the gain related to the Regency transaction ($0.1 billion).
GECAS 2011 revenues increased 3% and net earnings decreased
4% compared with 2010. Revenues for 2011 increased compared
with 2010 as a result of organic revenue growth ($0.1 billion). The
decrease in net earnings resulted primarily from core decreases
($0.1 billion), refl ecting the 2010 benefi t from resolution of the 2003–
2005 IRS audit, partially offset by lower impairments ($0.1 billion).
GECAS 2010 revenues increased 12% and net earnings increased
18% compared with 2009. Revenues in 2010 increased compared
with 2009 as a result of organic revenue growth ($0.5 billion), includ-
ing higher investment income. The increase in net earnings resulted
primarily from core increases ($0.2 billion), including the benefi t from
resolution of the 2003–2005 IRS audit, lower credit losses and higher
investment income, partially offset by higher impairments related to
our operating lease portfolio of commercial aircraft.
CORPORATE ITEMS AND ELIMINATIONS
(In millions) 2011 2010 2009
REVENUES
Gains on disposed businesses $ 3,705 $ 105 $ 303
Insurance activities 3,437 3,596 3,383
NBCU/NBCU LLC 1,981 16,901 15,436
Eliminations and other (1,539) (1,479) (1,251)
Total $ 7,584 $19,123 $17,871
OPERATING PROFIT (COST)
Gains on disposed businesses $ 3,705 $ 105 $ 303
NBCU/NBCU LLC 830 2,261 2,264
Insurance activities (58) (58) (79)
Principal retirement plans (a) (1,898) (493) (230)
Underabsorbed corporate
overhead and other costs (2,938) (2,920) (2,851)
Total $ (359) $ (1,105) $ (593)
(a) Included non-operating (non-GAAP) pension income (cost) of $(1.1) billion,
$0.3 billion and $1.5 billion in 2011, 2010 and 2009, respectively, which includes
interest costs, expected return on plan assets and non-cash amortization of
actuarial gains and losses. Also included operating (non-GAAP) pension income
(costs) of $(1.4) billion, $(1.4) billion and $(2.0) billion in 2011, 2010 and 2009,
respectively, which includes service cost and plan amendment amortization.
See the Supplemental Information section.
managements discussion and analysis
GE 2011 ANNUAL REPORT 47
Corporate items and eliminations revenues of $7.6 billion in 2011
decreased $11.5 billion as a $14.9 billion reduction in revenues
from NBCU LLC operations resulting from the deconsolidation of
NBCU effective January 28, 2011 and $0.3 billion of lower rev-
enues from other disposed businesses were partially offset by a
$3.7 billion pre-tax gain related to the NBCU transaction.
Corporate items and eliminations costs decreased by $0.7 billion
as $3.6 billion of higher gains from disposed businesses, primarily
the NBCU transaction, and a $0.6 billion decrease in restructuring,
rationalization, acquisition-related and other charges were par-
tially offset by $1.4 billion of higher costs of our principal
retirement plans, $1.4 billion of lower earnings from NBCU/NBCU
LLC operations and a $0.6 billion increase in research and devel-
opment spending and global corporate costs.
Certain amounts included in Corporate items and eliminations
cost are not allocated to GE operating segments because they are
excluded from the measurement of their operating performance
for internal purposes. For 2011, these included $0.4 billion at
Energy Infrastructure for acquisition-related costs and $0.4 billion
at Healthcare, $0.3 billion at Energy Infrastructure, $0.2 billion at
Aviation and $0.1 billion at both Home & Business Solutions and
Transportation, primarily for technology and product develop-
ment costs and restructuring, rationalization and other charges.
In 2011, underabsorbed corporate overhead and other costs
was fl at compared with 2010, as increased costs at our global
research centers and global corporate costs were offset by lower
restructuring and other charges (including acquisition-related
costs) of $0.6 billion. In 2010, underabsorbed corporate overhead
and other costs increased by $0.1 billion as compared with 2009,
as increased costs at our global research centers and staff costs
and lower income from operations of disposed businesses were
partially offset by lower restructuring and other charges (includ-
ing environmental remediation costs related to the Hudson River
dredging project) of $0.6 billion.
DISCONTINUED OPERATIONS
(In millions) 2011 2010 2009
Earnings (loss) from discontinued
operations, net of taxes $77 $(873) $219
Discontinued operations primarily comprised BAC, GE Money
Japan, WMC, Consumer RV Marine, Consumer Mexico, Consumer
Singapore and Australian Home Lending. Associated results of
operations, fi nancial position and cash fl ows are separately
reported as discontinued operations for all periods presented.
In 2011, earnings from discontinued operations, net of taxes,
included a $0.3 billion gain related to the sale of Consumer
Singapore and earnings from operations at Australian Home
Lending of $0.1 billion, partially offset by incremental reserves for
excess interest claims related to our loss-sharing arrangement
on the 2008 sale of GE Money Japan of $0.2 billion and the loss on
the sale of Australian Home Lending of $0.1 billion.
In 2010, loss from discontinued operations, net of taxes, primar-
ily refl ected incremental reserves for excess interest claims related
to our loss-sharing arrangement on the 2008 sale of GE Money
Japan of $1.7 billion and estimated after-tax losses of $0.2 billion
and $0.1 billion on the planned sales of Consumer Mexico and
Consumer RV Marine, respectively, partially offset by an after-tax
gain on the sale of BAC of $0.8 billion and earnings from operations
at Consumer Mexico of $0.2 billion and at BAC of $0.1 billion.
In 2009, earnings from discontinued operations, net of taxes,
primarily refl ected earnings from operations of BAC of $0.3 billion,
Australian Home Lending of $0.1 billion and Consumer Mexico
of $0.1 billion, partially offset by incremental reserves for excess
interest claims related to our loss-sharing arrangement on the
2008 sale of GE Money Japan of $0.2 billion and loss from opera-
tions at Consumer RV Marine of $0.1 billion.
For additional information related to discontinued operations,
see Note 2.
Geographic Operations
Our global activities span all geographic regions and primarily
encompass manufacturing for local and export markets, import
and sale of products produced in other regions, leasing of aircraft,
sourcing for our plants domiciled in other global regions and
provision of fi nancial services within these regional economies.
Thus, when countries or regions experience currency and/or
economic stress, we often have increased exposure to certain
risks, but also often have new profi t opportunities. New profi t
opportunities include, among other things, more opportunities
for expansion of industrial and fi nancial services activities
through purchases of companies or assets at reduced prices and
lower U.S. debt nancing costs.
Revenues are classifi ed according to the region to which prod-
ucts and services are sold. For purposes of this analysis, the U.S.
is presented separately from the remainder of the Americas. We
classify certain operations that cannot meaningfully be associated
with specifi c geographic areas as “Other Global” for this purpose.
GEOGRAPHIC REVENUES
(In billions) 2011 2010 2009
U.S. $ 69.8 $ 75.1 $ 75.8
Europe 29.1 31.0 36.3
Pacific Basin 23.2 20.8 19.3
Americas 13.2 11.7 11.3
Middle East and Africa 9.8 9.0 9.8
Other Global 2.2 2.0 1.9
Total $147.3 $149.6 $154.4
Global revenues increased 4% to $77.5 billion in 2011, compared
with $74.5 billion and $78.6 billion in 2010 and 2009, respectively.
Global revenues to external customers as a percentage of con-
solidated revenues were 53% in 2011, compared with 50% in
managements discussion and analysis
48
GE 2011 ANNUAL REPORT
2010 and 51% in 2009. The effects of currency fl uctuations on
reported results increased revenues by $2.5 billion in 2011,
increased revenues by $0.5 billion in 2010 and decreased rev-
enues by $3.9 billion in 2009.
GE global revenues, excluding GECS, in 2011 were $54.3 bil-
lion, up 9% over 2010. Increases in growth markets of 29% in
Latin America, 28% in China and 46% in Australia more than off-
set decreases of 12% in Western Europe. These revenues as a
percentage of GE total revenues, excluding GECS, were 55% in
2011, compared with 50% and 52% in 2010 and 2009, respec-
tively. GE global revenues, excluding GECS, were $49.8 billion in
2010, down 6% from 2009, primarily resulting from decreases
in Europe, Middle East and Africa, partially offset by an increase in
Latin America.
GECS global revenues decreased 6% to $23.2 billion in 2011,
compared with $24.7 billion and $25.7 billion in 2010 and 2009,
respectively, primarily as a result of decreases in Western Europe.
GECS global revenues as a percentage of total GECS revenues
were 47% in 2011, compared with 50% in both 2010 and 2009.
GECS global revenue decreased by 4% in 2010 from $25.7 billion
in 2009, primarily as a result of decreases in Europe, partially off-
set by an increase in Australia.
TOTAL ASSETS (CONTINUING OPERATIONS)
December 31 (In billions) 2011 2010
U.S. $335.6 $322.8
Europe 213.0 250.2
Pacific Basin 62.3 62.6
Americas 46.7 41.9
Other Global 58.4 57.9
Total $716.0 $735.4
Total assets of global operations on a continuing basis were
$380.4 billion in 2011, a decrease of $32.2 billion, or 8%, from
2010. GECS global assets on a continuing basis of $319.3 billion at
the end of 2011 were 1% lower than at the end of 2010, refl ecting
declines in Europe, primarily due to dispositions and portfolio
run-off in various businesses at Consumer and lower fi nancing
receivables and equipment leased to others at CLL.
Financial results of our global activities reported in U.S. dollars
are affected by currency exchange. We use a number of tech-
niques to manage the effects of currency exchange, including
selective borrowings in local currencies and selective hedging of
signifi cant cross-currency transactions. Such principal currencies
are the pound sterling, the euro, the Japanese yen, the Canadian
dollar and the Australian dollar.
Environmental Matters
Our operations, like operations of other companies engaged in
similar businesses, involve the use, disposal and cleanup of sub-
stances regulated under environmental protection laws. We are
involved in a number of remediation actions to clean up hazard-
ous wastes as required by federal and state laws. Such statutes
require that responsible parties fund remediation actions regard-
less of fault, legality of original disposal or ownership of a disposal
site. Expenditures for site remediation actions amounted to
approximately $0.3 billion in 2011, $0.2 billion in 2010 and $0.3 bil-
lion in 2009. We presently expect that such remediation actions
will require average annual expenditures of about $0.4 billion for
each of the next two years.
In 2006, we entered into a consent decree with the
Environmental Protection Agency (EPA) to dredge PCB-containing
sediment from the upper Hudson River. The consent decree
provided that the dredging would be performed in two phases.
Phase 1 was completed in May through November of 2009.
Between Phase 1 and Phase 2 there was an intervening peer
review by an independent panel of national experts. The panel
evaluated the performance of Phase 1 dredging operations with
respect to Phase 1 Engineering Performance Standards and rec-
ommended proposed changes to the standards. On December 17,
2010, EPA issued its decision setting forth the fi nal performance
standards for Phase 2 of the Hudson River dredging project,
incorporating aspects of the recommendations from the inde-
pendent peer review panel and from GE. In December 2010, we
agreed to perform Phase 2 of the project in accordance with the
nal performance standards set by EPA and increased our reserve
by $0.8 billion in the fourth quarter of 2010 to account for the
probable and estimable costs of completing Phase 2. In 2011, we
completed the fi rst year of Phase 2 dredging and commenced
work on planned upgrades to the Hudson River wastewater pro-
cessing facility. Based on the results from 2011 dredging and
our best professional engineering judgment, we believe that our
current reserve continues to refl ect our probable and estimable
costs for the remainder of Phase 2 of the dredging project.
managements discussion and analysis
GE 2011 ANNUAL REPORT 49
Financial Resources and Liquidity
This discussion of fi nancial resources and liquidity addresses the
Statement of Financial Position, Liquidity and Borrowings, Debt
and Derivative Instruments, Guarantees and Covenants, the
Consolidated Statement of Changes in Shareowners’ Equity, the
Statement of Cash Flows, Contractual Obligations, and Variable
Interest Entities.
Overview of Financial Position
Major changes to our shareowners’ equity are discussed in the
Consolidated Statement of Changes in Shareowners’ Equity
section. In addition, other signifi cant changes to balances in our
Statement of Financial Position follow.
Statement of Financial Position
Because GE and GECS share certain signi cant elements of their
Statements of Financial Position—property, plant and equipment
and borrowings, for example—the following discussion addresses
signifi cant captions in the “consolidated” statement. Within the
following discussions, however, we distinguish between GE and
GECS activities in order to permit meaningful analysis of each
individual consolidating statement.
INVESTMENT SECURITIES comprise mainly investment grade debt
securities supporting obligations to annuitants, policyholders and
holders of guaranteed investment contracts (GICs) in our run-off
insurance operations and Trinity, and investment securities at our
treasury operations and investments held in our CLL business
collateralized by senior secured loans of high-quality, middle-
market companies in a variety of industries. The fair value of
investment securities increased to $47.4 billion at December 31,
2011 from $43.9 billion at December 31, 2010. Of the amount at
December 31, 2011, we held debt securities with an estimated fair
value of $46.3 billion, which included corporate debt securities,
asset-backed securities (ABS), residential mortgage-backed secu-
rities (RMBS) and commercial mortgage-backed securities (CMBS)
with estimated fair values of $26.1 billion, $5.0 billion, $2.6 billion
and $2.8 billion, respectively. Net unrealized gains on debt securi-
ties were $3.0 billion and $0.6 billion at December 31, 2011 and
December 31, 2010, respectively. This amount included unrealized
losses on corporate debt securities, ABS, RMBS and CMBS of
$0.6 billion, $0.2 billion, $0.3 billion and $0.2 billion, respectively, at
December 31, 2011, as compared with $0.4 billion, $0.2 billion,
$0.4 billion and $0.2 billion, respectively, at December 31, 2010.
We regularly review investment securities for impairment
using both qualitative and quantitative criteria. We presently
do not intend to sell the vast majority of our debt securities and
believe that it is not more likely than not that we will be required
to sell these securities that are in an unrealized loss position
before recovery of our amortized cost. We believe that the unreal-
ized loss associated with our equity securities will be recovered
within the foreseeable future.
Our RMBS portfolio is collateralized primarily by pools of indi-
vidual, direct mortgage loans (a majority of which were originated
in 2006 and 2005), not other structured products such as collateral-
ized debt obligations. Substantially all of our RMBS are in a senior
position in the capital structure of the deals and more than 75% are
agency bonds or insured by Monoline insurers (on which we con-
tinue to place reliance). Of our total RMBS portfolio at December 31,
2011 and December 31, 2010, approximately $0.5 billion and
$0.7 billion, respectively, relate to residential subprime credit, pri-
marily supporting our guaranteed investment contracts. A majority
of exposure to residential subprime credit related to investment
securities backed by mortgage loans originated in 2006 and 2005.
Substantially all of the subprime RMBS were investment grade at
the time of purchase and approximately 70% have been subse-
quently downgraded to below investment grade.
Our CMBS portfolio is collateralized by both diversifi ed pools
of mortgages that were originated for securitization (conduit
CMBS) and pools of large loans backed by high quality properties
(large loan CMBS), a majority of which were originated in 2007 and
2006. Substantially all of the securities in our CMBS portfolio have
investment grade credit ratings and the vast majority of the secu-
rities are in a senior position in the capital structure.
Our ABS portfolio is collateralized by senior secured loans of
high-quality, middle-market companies in a variety of industries,
as well as a variety of diversifi ed pools of assets such as student
loans and credit cards. The vast majority of our ABS are in a senior
position in the capital structure of the deals. In addition, substan-
tially all of the securities that are below investment grade are in
an unrealized gain position.
If there has been an adverse change in cash fl ows for RMBS,
management considers credit enhancements such as Monoline
insurance (which are features of a speci c security). In evaluating
the overall creditworthiness of the Monoline insurer (Monoline),
we use an analysis that is similar to the approach we use for cor-
porate bonds, including an evaluation of the suf ciency of the
Monoline’s cash reserves and capital, ratings activity, whether
the Monoline is in default or default appears imminent, and the
potential for intervention by an insurance or other regulator.
Monolines provide credit enhancement for certain of our
investment securities, primarily RMBS and municipal securities.
The credit enhancement is a feature of each specifi c security that
guarantees the payment of all contractual cash fl ows, and is not
purchased separately by GE. The Monoline industry continues to
experience fi nancial stress from increasing delinquencies and
defaults on the individual loans underlying insured securities. We
continue to rely on Monolines with adequate capital and claims
paying resources. We have reduced our reliance on Monolines
that do not have adequate capital or have experienced regula-
tor intervention. At December 31, 2011, our investment securities
insured by Monolines on which we continue to place reliance
were $1.6 billion, including $0.3 billion of our $0.5 billion invest-
ment in subprime RMBS. At December 31, 2011, the unrealized loss
managements discussion and analysis
50
GE 2011 ANNUAL REPORT
associated with securities subject to Monoline credit enhance-
ment, for which there is an expected credit loss, was $0.3 billion.
Total pre-tax, other-than-temporary impairment losses dur-
ing 2011 were $0.5 billion, of which $0.4 billion was recognized
in earnings and primarily relates to credit losses on non-U.S.
government and non-U.S. corporate securities and other-than-
temporary losses on equity securities and $0.1 billion primarily
relates to non-credit related losses on RMBS and is included
within accumulated other comprehensive income.
Total pre-tax, other-than-temporary impairment losses dur-
ing 2010 were $0.5 billion, of which $0.3 billion was recognized
in earnings and primarily relates to credit losses on RMBS, non-
U.S. government securities, non-U.S. corporate securities and
other-than-temporary losses on equity securities, and $0.2 bil-
lion primarily relates to non-credit related losses on RMBS and is
included within accumulated other comprehensive income.
Our qualitative review attempts to identify issuers’ securi-
ties that are “at-risk” of other-than-temporary impairment, that
is, for securities that we do not intend to sell and it is not more
likely than not that we will be required to sell before recovery of
our amortized cost, whether there is a possibility of credit loss
that would result in an other-than-temporary impairment recog-
nition in the following 12 months. Securities we have identifi ed
as “at-risk” primarily relate to investments in RMBS and non-U.S.
corporate debt securities across a broad range of industries.
The amount of associated unrealized loss on these securities
at December 31, 2011, is $0.6 billion. Unrealized losses are not
indicative of the amount of credit loss that would be recognized
as credit losses are determined based on adverse changes in
expected cash fl ows rather than fair value. For further informa-
tion relating to how credit losses are calculated, see Note 3.
Uncertainty in the capital markets may cause increased levels of
other-than-temporary impairments.
At both December 31, 2011 and December 31, 2010, unrealized
losses on investment securities totaled $1.6 billion, including
$1.2 billion aged 12 months or longer at December 31, 2011
and $1.3 billion aged 12 months or longer at December 31, 2010.
Of the amount aged 12 months or longer at December 31, 2011,
more than 70% are debt securities that were considered to be
investment grade by the major rating agencies. In addition, of
the amount aged 12 months or longer, $0.7 billion and $0.3 billion
related to structured securities (mortgage-backed, asset-backed
and securitization retained interests) and corporate debt secu-
rities, respectively. With respect to our investment securities
that are in an unrealized loss position at December 31, 2011, the
majority relate to debt securities held to support obligations
to holders of GICs. We presently do not intend to sell the vast
majority of our debt securities and believe that it is not more likely
than not that we will be required to sell these securities that are in
an unrealized loss position before recovery of our amortized cost.
For additional information, see Note 3.
FAIR VALUE MEASUREMENTS. For fi nancial assets and liabilities
measured at fair value on a recurring basis, fair value is the price
we would receive to sell an asset or pay to transfer a liability in an
orderly transaction with a market participant at the measurement
date. In the absence of active markets for the identical assets or
liabilities, such measurements involve developing assumptions
based on market observable data and, in the absence of such
data, internal information that is consistent with what market