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2Q 2011 GE Transportation Earnings

ERIE, Penn. –– GE [NYSE: GE] announced today strong second-quarter 2011 operating earnings from continuing operations of $3.7 billion, up 18%, or $0.34 per share, up 17%, from the second quarter of 2010. Revenues were $35.6 billion for the quarter, down 4% from a year ago, primarily driven by the absence of NBCU revenues after the sale of GE’s majority position to Comcast. Excluding this impact, revenues were up 7%.

“With our fifth-consecutive quarter of double-digit earnings growth, we continue to execute in a volatile environment,” GE Chairman and CEO Jeff Immelt said. “We posted solid overall operating earnings growth of 18%, with strong contributions from GE Capital, Healthcare, Transportation, Aviation, and Oil & Gas. GE’s backlog grew to a record high of $189 billion. Total infrastructure orders were up 24%, reflecting robust strength in equipment orders, up 33%, and service orders up 16%.”

International revenues from Industrial (ex NBCU) were $13.4 billion, up 23% representing 59% of total Industrial revenues. GE revenue for the Industrial segments accelerated in growth regions, including double-digit increases in India, China, Southeast Asia, Africa, Russia, Australia, Canada, and Latin America.

“GE Capital continued to deliver strong performance through the second quarter, earning $1.7 billion after tax,” Immelt said. “GE Capital’s portfolio transformation is ahead of schedule. Consumer and Commercial Lending and Leasing (CLL) led with earnings growth of 57% and more than 100%, respectively. We continue to see strong demand for credit with CLL new volume originations at $10.8 billion for the quarter, up 33% from prior year.

”As previously communicated, Energy earnings and margins were down primarily as a result of pressure in the renewable sector,” Immelt said. “In addition, margins were impacted by the integration of Energy acquisitions. Indicators are pointing to a stronger second half in 2011 for Energy when we expect approximately 17% unit volume growth versus 2010. Integration of strategic Energy acquisitions is ahead of plan, further positioning Energy Infrastructure for growth in the second half of this year. Overall, Industrial earnings should improve in the second half of 2011 and the cycle is expected to accelerate in 2012.”

In the second quarter, the Company increased R&D investment 40% above a year ago to ensure GE continues to lead in technology innovations, products and services that drive strong organic revenue growth and future margin expansion. The investment is showing results. For example, GE Aviation and its joint ventures announced record wins of $27 billion at the Paris Air Show in June. The LEAP-X engine (a CFM International engine) has taken the lead in narrow-body orders on the new Airbus A320neo and is positioned as the sole source for Boeing’s 737 re-engine program. In Energy, GE launched the FlexEfficiency 50 Combined Cycle Power Plant, which delivers an unprecedented combination of flexibility and fuel efficiency, announced the world’s most efficient wind turbine, and achieved the highest reported efficiency for thin-film solar panels.

Cash generated from Industrial operating activities totaled $4.4 billion in the first half of 2011, on track for full-year plan of $12-$13 billion. At quarter-end, GE had $91 billion of consolidated cash. Year-to-date, the Company has executed on $1 billion of stock buybacks and $2.7 billion of stock buybacks since restarting the program in the third quarter of 2010. The Company plans to retire the preferred stock issued to Berkshire Hathaway Inc. in October 2011.

“We are very encouraged by second-quarter orders and earnings momentum across the company,” Immelt said. “We are optimistic about our growth prospects in the second half and beyond.”

Second-quarter 2011 Financial Highlights:

Second-quarter operating earnings were $3.7 billion, up 18% from $3.2 billion in the second quarter of 2010 and operating EPS was $0.34, up 17% from $0.29 in the second quarter of last year. Segment profit increased 18% compared with the second quarter of 2010, as increases of more than 100% at GE Capital, more than 500% at Transportation, 9% at Aviation and 8% at Healthcare more than offset earnings decreases of 19% at Energy Infrastructure and 26% at Home & Business Solutions.

Including the effects of discontinued operations, second-quarter net earnings attributable to GE were $3.8 billion ($0.35 per share attributable to common shareowners) in 2011 compared with $3.1 billion ($0.28 per share attributable to common shareowners) in the second quarter of 2010.

Second-quarter revenues decreased 4% to $35.6 billion, up 7% excluding NBCU revenues. GE Capital Services’ (GECS) revenues decreased 1% from last year to $12.4 billion. Industrial sales of $23.0 billion decreased 6% versus 2010.

Cash generated from GE Industrial operating activities in the first six months of 2011 totaled $4.4 billion, down 31% from $6.3 billion last year.

GE Transportation reported $1.2 billion in second-quarter revenues, up 74% year-over-year. Segment profits for the same period were $178 million, nearly seven times higher than second-quarter profits in 2010.

GE Transportation received $1.4 billion of orders in the second quarter, up 19% compared to last year. GE Transportation’s performance was driven by orders for mining equipment, locomotives, parts and services.

“We continue on our path of double-digit growth in the second quarter,” said Lorenzo Simonelli, President and CEO of GE Transportation. “GE remains an integral part of infrastructure growth around the globe. We are making big investments in leading technologies, product innovation and the expansion of our manufacturing footprint to serve our customers worldwide. 2011 is our year of renewal.”

GE (NYSE: GE) is a diversified infrastructure and finance company taking on the world’s toughest challenges. From aviation and power generation to financial services, healthcare solutions, oil and gas and rail, GE operates in more than 100 countries and employs about 300,000 people worldwide. For more information, visit the company's website at www.ge.com.

Caution Concerning Forward-Looking Statements:

This document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: current economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of conditions in the financial and credit markets on the availability and cost of General Electric Capital Corporation’s (GECC) funding and on our ability to reduce GECC’s asset levels as planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; changes in Japanese consumer behavior that may affect our estimates of liability for excess interest refund claims (Grey Zone); potential financial implications from the Japanese natural disaster; our ability to maintain our current credit rating and the impact on our funding costs and competitive position if we do not do so; the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and rail transportation, energy generation, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, including the impact of financial services regulation; strategic actions, including acquisitions, joint ventures and dispositions and our success in completing announced transactions and integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

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