Good day, ladies and gentlemen, and welcome to the General Electric third quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. My name is Shaquana, and I will be your conference coordinator today. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Trevor Schauenberg, Vice President of Investor Communications. Please proceed sir?

Thank you, Shaquana. Good morning and welcome, everyone. We are pleased to host today's third quarter webcast. Regarding the materials for this webcast, we issued the press release as well as the presentation slides at 6:30 this morning, which is something new for us. Slides are also available for download and printing on our website at www.ge.com/investor. As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. Those elements can change as the world changes. Please interpret them in that light. For today's webcast, we have our Chairman and CEO, Jeff Immelt and our Senior Vice Chairman and CFO, Jeff Bornstein. Now, I would like to turn it over to our Chairman and CEO, Jeff Immelt.

Great, Trevor. Thanks and good morning, everyone. You know what? GE had a good third quarter in an improving environment. Our orders grew 19% with great balance. Our growth markets were up 22%, the U.S. was up 18% and Europe up 17%. Earnings per share was up 18% ex-unusual items, industrial earnings growth 11% with six or seven segments growing all by double digits. Capital continues to execute on our strategic objectives. Earnings were up 13%, while our financial position continued to strengthen and we had $0.04 of uncover charges in the quarter and no industrial gains. Operations were very strong. Our margins grew by 120 basis points behind strong value gap performance in simplification. Our industrial cost out reached to $1 billion through the third quarter and we are significantly ahead of our plan and CFOA is up 5% operationally. This includes a $3.9 billion dividend from GE Capital year-to-date. We have returned about $14 billion to investors year-to-date, well on our way to our $18 billion goal. At that the same time, we continue to invest in strategic acquisitions like, Avio and Lufkin, so overall this was a good quarter for GE team. Our orders were highlight for the quarter. Overall growth was up 19% with strength in equipment and services. Every business grew and backlog reached $229 billion, equipment orders grew 32% with strength across the board and orders price was flat. The orders profile is very encouraging. Services was up 5%, with real strength in power gen services and aviation commercial spares. Total orders in the U.S. and Europe were both robust and seven growth regions had double-digit orders growth. These include Australia, Canada, Middle East, North Africa and Turkey, up 17%. Africa up 18%, Russia up 51%, China up 18% and ASEAN up 100%. Power…

Thanks, Jeff. I will start with third quarter total results. Revenue from containing operations of $35.7 billion was down 1% from last year. Industrial sales of $25.3 billion were up 2% driven principally by oil and gas and aviation, partly offset by Power & Water, as you can see on the right side of the page. GE Capital revenues were down 5% to $10.7 billion on much lower investment. Operating earnings of $3.7 billion were down 3% and operating earnings per share was flat at $0.36. That includes $0.02 for the Avio acquisition charges and $0.02 of restructuring in the quarter. We also no longer have earnings from the NBCU JV which was $0.02 in the third quarter 2012. I will cover these items on the next page. Continuing EPS of $0.32 includes the impact of non-operating pension and net earnings per share includes discontinued operations which I will also cover on the next page. Adjusted CFOA, year-to-date, was $7.8 billion with solid industrial performance and $2 billion GE Capital dividends were paid in the quarter. The GE tax rate in the quarter was 20% and the GE Capital tax rate was zero. GE Capital continued the benefits associated with loss recapture in real-estate and tax efficient asset reductions. In the second quarter, we said that we expect the GE capital tax rate to be in the mid single-digits for the year but that could be lower depending upon higher IRS solutions that could happen in the fourth quarter as well as expected dispositions in the fourth quarter which could impact tax rates. On the right side of the page, segment results were positive. Industrial segment profit was up 11% with six of seven industrial segments improving. GE Capital also had a positive quarter growing earnings 13% versus 2012. I…

Jeff, thanks. We really have no material changes in the 2013 operating objective framework. Our industrial earnings will expand by double-digits in the second half and we are on track for solid growth in the year. We have no change for expectations in GE Capital. We continue to originate business at high returns while repositioning our capital portfolio and earnings growth remain solid in GE Capital. Our corporate cost reflects our Avio adjustment, as Jeff described earlier, and we continue to see good opportunity for restructuring and our positioning offers to continue. Our cash and revenues remain on track. We should see earnings growth accelerated in the fourth quarter with more volume and lower costs and with a large backlog in improving margins we feel good about 2014. We have several of our communications sessions with investors in the fourth quarter. In November Keith and Jeff will update our portfolio and business strategy of GE Capital and give you a sense for our long-term goals and simplification across the company. And in December, I will give you a strategic update for GE and our outlook for 2014. So we look forward to those sessions. So in summary, we are making progress on our investor objectives for the year. Our industrial earnings grew by double digits in third quarter and we expect a stronger fourth quarter. Strength is broad based and we expect Power & Water to be a key contributor going forward in the fourth quarter and into 2014. We grew margins by 120 basis points in the quarter and we expect to hit 70 basis points for the year. In the event we have any gains on the in the fourth quarter, we expect them to be applied to restructuring. GE Capital continues to strengthen and we are on track for up to $6.5 billion of cash to be returned to the parent. We expect organic growth of at least 5% in the fourth quarter for the industrial segments and we have solid momentum in growth markets, services and NPI and we have more favorable comparisons in Power & Water. So we are on track and we are on track to return substantial cash for investors this year. So the team executed well in the quarter and with a strong backlog and expanding margins investors should be confidence in GE's future. So Trevor, with that, let's turn it over to you and take some questions.

Great. Thanks, Jeff. I know there is other earnings call coming up. So Shaquana, let's open the phone lines.

(Operator Instructions) Your first question comes from the line of John Inch representing Deutsche Bank. Please proceed.

Good morning, everyone.

Hey, John.

Good morning, guys. So the fact that we did $100 million more restructuring in this quarter, do you anticipate more restructuring in the fourth quarter? I realize, Jeff you just said if there were gains you would offset that but how does that pertain to your plan and how are you thinking about the restructuring opportunity?

May be why don't I start and Jeff, I will turn it you, but we continue to have good opportunities for restructuring throughout the company and I would expect us to do some in the fourth quarter but, again, I think if we have gains, we expect those to be offset with restructuring.

Okay.

I don't have a lot to add to that. I think that's right. I think the more we get deeper into the simplification effort, we just see increasing numbers of opportunities to take cost out of the company and make the company faster and more customer centric. So I think we will do restructuring in the fourth quarter and as Jeff said more likely than not we will reflect the gains in the we expect as well.

And Jeff, one of thing you have been at this for a little of time now. As you said, are you finding more opportunity or is it still a little early in the process before you would care to comment? If there is a -

I think -

Passed out. Sorry

Yes. So I would say around the simplification effort, I think everyday we identify more opportunities to do what we do smarter. More shared services, a smaller manufacturing footprint, rationalizing capacity, executing our functions in a more consolidated way. So I would say, the list is growing with time and we are in the early innings of the simplification effort in this company. So I am quite emboldened with what we can accomplish over the next few years.

And just I want to go back to the fourth quarter. You guys had great results this quarter. It still is a pretty big V, though, in terms that, and I think, the delta is really, the expectation is around power shipments. Is that really still on track or it just looks like it's a very high contributive quarter versus even historical years, although you did put up the margins this quarter? Just is there anything you can say to us about the fourth quarter? I don't know progress to date or what's you are seeing or anything like that?

Well, I think power was obviously a big contributor in the third quarter. We are ahead a little bit on derivatives and the fourth quarter ramp for Power & Water, I think we feel very good about. When we think about units for the fourth quarter, the large units gas turbines, et cetera, most of that is in backlog, but it is 95% of it, so I think we feel very good about how we feel power is moving into the fourth quarter. We de-risk the fourth quarter little bit with the out performance here in the third quarter.

John, I think you started 40 and set at that 36, so you go from 40 in March from there. We typically get a lot more revenue in Q4 than Q3. It's typical for us to get 300 basis points on margin Q4 versus Q3, and Power & Water is very backend loaded as we have always said, so you have got a bunch of stuff that really - little bit better in GE Capital, I think you have got a lot of stuff that says we are kind of ready for a very strong fourth quarter.

Your next question comes from the line of Scott Davis representing Barclays. Please proceed.

Hi, good morning everybody. I wanted to get a sense, when I look at the results one of the thing that really stands out to me was the Power & Water orders, particularly excluding Algeria. I mean, up 37% I really wasn't aware that anybody in the world was buying a gas turbine right now or distribute power for that matter, so can you give us a little granularity, help us understand, where geographically these orders are coming from and just a little help here.

Yes. When you look at orders in the quarter, geographically, for we will start with gas turbines. In the resource-rich regions, we were 18 units in the quarter versus 22, so down four there. Middle East, we were down 10 units from 11 to 21. A little bit better in Asia, we were flat five units versus five units year-over-year. Most of the order strength really for our Power & Water has been around our aeroderivatives units. It has been very strong and our wind units have been incredibly strong. In the third quarter, we had 477 orders in the developed markets on wind. That's up 390 units and that explains most of the strength around wind and the balance is really Aero.

I would say, Scott, if you look at Q4, we expect Power & Water orders to be at the high end of the range of what we talked about. So my hunch is that the orders will be clean in the 100 and a lot of that's Middle East. So we will book some of the Algerian orders in Q4. We have got some big orders in Saudi, some nice orders in Russia, couple in Africa, couple in Brazil and on the aeroderivative market, we are seeing pretty good growth in places like Canada, Middle East. So you have just got to be - the GGO and the investments we have made in emerging markets, I think has really helped us collect the orders.

Okay, that is very helpful. And lastly guys, Jeff, the big team in the year really for your communications have done simplification, you have put a couple of sentences on that in the annual report last year and you were able to sell the other half of NBCU, which I think helps a lot, but we haven't seen a lot of other portfolio actions. I mean what's holding you back? The Wall Street Journal reported there was chatter around spinning of the credit card business, but we haven't seen any announcements there. Is this stuff all just being embedded at present and we are likely to see some announcements in the next couple of months? Or is there - maybe you can just help us understand what's -

You know, all these things always take a little bit of time but we are still planning staged exits of the value maximizing platforms of GE Capital. We have got a big meeting set November 15, with Keith and Jeff. I think there will be more clarity at that time on the capital side. And we continue and the rest the company continue to look at ways to make the company more streamlined and more effective. So you are going to see those in good time. I think we just want to be thorough in our planning and you will get a lot more detail soon.

Okay, very helpful. Thanks guys and congrats on the margin line.

Great, thanks. Thanks, Scott.

Your next question comes from the line of Nigel Coe representing Morgan Stanley. Please proceed.

Yes, thanks, good morning.

Hey Nigel.

Yes, hi. Just going back to Power & Water, I mean that was obviously the big driver, obviously, this quarter and congratulations on margins there, but $100 million of EBIT growth year-over-year with sales down $7 million, I understand price gap was a big benefit as was simplification. But just want to confirm that with surface down 5%, that's a negative mix and big volume deleverage on gas and wind, I just want to confirm that 3Q was a good run rate for 4Q and beyond?

Well, Nigel, what I would say, the third quarter was slightly better than even what I had thought just by little bit, but a little bit better. We had better mix. So when you have more aeroderivatives and less wind, that's a mix adder. Then we have got the simplification efforts, which Jeff said with margins or with value gap and with SG&A down 10%, that really - it's a much leaner organization. Then when you look at Q4, you are going to get kind of ball wave of more wind business, aeroderivatives is still pretty strong, heavy duty gas services are still pretty strong. I think what you are going to see in Q4, is revenue growth, our profit growth and margin growth. So what you are going to see in Q4 in Power & Water, I think it's pretty typical of what you are going to see I think going forward in the business into '14.

Okay, understood. Obviously, you broke the parts of your energy business into two and half segments, Power & Water, energy management and oil and gas. Are we seeing the benefit of that simplification through here or is it more restructuring actions that you are taking year-to-date?

Okay. So I would say, Nigel, as we took out the layer, we got hundreds of million of dollars of benefits as we did that. So I think that was just a starting point and then inside each business, look, we are committed to getting SG&A as a percentage of revenue down to a world-class, best-in-class level and we are on our way. We made good progress but we are not where we want to be yet. So you have some of those benefits, for sure, show up in the businesses but we have got a ways to go yet.

Okay, and just finally going back to Jeff Bornstein's comments on BAY. If that creeps into 4Q, obviously the intention is to offset that with the restructuring. That could be a pretty meaningful gain. So I am just wondering do you have a pipeline of opportunities already set to absorb that kind of gain, and maybe any color in terms of the focused areas from here for that kind of restructuring action?

Yes. We are constantly in flight on value maximizing and the [red book] and GE Capital non-core book that we have talked about, so the gain could be sizable. We expect it will be quite profitable for us and we are working on list of items to position the portfolio for how we want to take it forward, so I think the team has got a pipeline of stuff they are working.

Nigel, the point I have made earlier I think on both, I mean we still have to see how the Swiss IPO goes, but we could have gains in both of those.

Your next question comes from the line of Julian Mitchell representing Credit Suisse. Please proceed.

Hi. Thank you. Just on the margin performance, again. I mean, the overall industrial margin was up as you say 120 bps, services was up 60, so that means equipment was up 160 bps, 170 bps of flat revenues. When you think about the mix going forward, the mix in your recurring backlog today and what that means for revenue going forward. Do you think that kind of equipment margin growth is sustainable, because obviously you have a lot of mix hit coming into that equipment margin from wind and solar in the next sort of six months?

Yes. I think, what I would say right now is that we are running ahead of the game on value gap. We are two, three quarters of the year, we are almost $700 million value gap. We expect that to continue to accelerate into the fourth quarter. On simplification and restructuring, Jeff talked about the fact that we are at the $1 billion through the third quarter. We expect that to continue and accelerate into fourth quarter. I think on the cost side of the equation, we have got enough leverage that we are working very dramatically to deal with the fact that we are going to have more equipment shipments as we move into the fourth quarter and I think those cost opportunities are going to accelerate into 2014.

Thanks. Then within oil and gas, 18% revenue growth much more subdued profit growth and obviously the margins were down. I guess, what's behind the confidence that the margins in oil and gas year-on-year will be up in Q4, because you had a pretty good margin in Q4 last year and you are coming after off the Q3 where the margin was down year-over-year?

Again, I would say we did have some execution issues in the third quarter, getting the backlog out, getting it out into cost structure was supposed to go out. We expect that we are going to improve on that in the fourth quarter, we got a volume lift in the fourth quarter versus the third quarter, we expect to with all the cost actions and the value gap we have created in the business over the first three quarters, we expect to get some leverage on that in the fourth quarter. I think, we feel pretty good about the fact that we will grow margins rates in the fourth quarter in oil and gas. They will not grow to the levels we thought they would for the year and that's really mostly above the M&C business. We came into the year thinking the business is going to grow something like 16% or low single-digits and that's a real missed challenge for us, but we try to get it done with better execution in the shop, the better execution on the cost structure.

Got it. Thanks. Lastly, very quickly just U.S. gas turbine aftermarket business gasified power gen consumption is down 9% or 10% year-to-date. What are you thinking about your U.S. gas services business sort of looking out from here?

The orders were pretty good. We can probably get back to you with that, but I can tell you. Do you have it, Jeff?

Yes. Just give me one second.

I would tell Jeff - in that coating activity in North America is actually higher now in gas turbines than we have seen in a while, so I think we are kind of optimistic at least on the unit side for '14.

I think, in the U.S. we have been pretty strong. I think, we are up 8% PGS in the U.S. in the third quarter. There is still some strength in U.S. As we said, Europe was top down 18% on services related to heavy duty gas turbine, but sequentially that's a bit of an improvement from where we were in the first and second quarter. I think really what's driving us here in the third and fourth quarter in North America, our PGS growth is our advanced - have upgrades, we did 15 in the third quarter versus four a year ago. We expect to do more than that in the fourth quarter. And that's very good business for us at very high margin. So I think we see a way forward here around services.

Right. Thank you.

Your next question comes from the line of Joe Ritchie representing Goldman Sachs. Please proceed.

Hi, good morning, everyone.

Hey, Joe.

So I just wanted to tackle this margin question little differently. As you look at the 4Q, you have got to - in order to hit your 70 basis point target margins, you have to expand by about 170 basis points and the comp is a little bit tougher. You did about 17.3% last year. So can you help me understand across each of the different industrial segments, which segments do you think are going to be above or below that 170 number and is it going to be disproportionately skewed towards Power & Water getting much better?

Joe, I can start and then maybe Jeff kicks in, but I think we see pretty broad based expansion in Q4. Power & Water expands but it's not the biggest driver and we have got every business up a bit and a couple, maybe three or four businesses, up 100 basis points plus. I don't know if Jeff if you want to.

Well, let me go back to the framework we have set for people. So we described the businesses in one of three ways. We said the businesses we thought would grow margins for the year better than 70 basis points, those that would grow 0 to 70 and those that we expect to be flat. I think if we relook that framework today, we would say oil and gas is clearly going to grow margins less than 70 basis points. We thought they would do better than that. And energy management, I would say, is on a trend today to grow margins between 0 and 70 basis points, not the greater than 70 basis points we thought. A contrast of that, I think transportation is going to be much stronger than what we originally said. We originally thought they would be flat but we think they are going to grow margins pretty substantially for the year. Then we have the a shot here, we will see how appliance strength looks in the fourth quarter but the appliance business actually may push through the 0 to 70 category or better than 70. And aviation, healthcare, as well as Power & Water are going to be right about where we said they would be. So I think those are really the changes, which is better than this 0 to 70 improvement.

Okay. No, that's helpful color. And I guess a follow up to that is, I know that you booked a big Algeria order and there is some short cycle.

Joe, we didn't book the Algeria order in the quarter.

It's going to book. It's going to come through orders in 4Q but it's also booking ship on the aeroderivatives. I think there were 26 aeroderivatives that you are going to book and ship in 4Q. My question is based on what you either already have an backlog today or what you know is going into backlog in 4Q, how much more do you have to do to get to the margin targets that you set out?

I think the Power & Water is almost all in backlog.

Yes, so what I would say is, on the unit side, gas turbines, wind turbines, more than 95% of what we will do in the fourth quarter is in backlog today. Our services business runs 50% to 60% backlog and that's kind of where we sit today. I think we have, within that we have very good line of sight to what we are going to do on AGPs in the quarter. So I think we are largely in pretty good shape. We will probably do about 70 distributor power units in the quarter and one of the reasons we will shape on those, as they tend to be a little bit shorter cycle. So I think we have pretty good visibility.

Okay, great. Thanks guys.

Your next question come from the line of Steven Winoker representing Sanford Bernstein. Please proceed.

Thanks.

Hi, wind power.

Hey, I have been called worse.

Is that you, wind power?

That will be me, right. As I said, I have been called worse, and not only by you guys.

Never better than us.

So two things I would love to dig into. The first one is just pricing versus cost value gap. What was the shipping price index? The industrial price index for shipments overall in the quarter?

Do you have that? Yes.

Give me one second, Steve.

Hey, while you are doing that? My question here is, this has been such a tremendous tailwind across the businesses and as we look out and we look at the sustainability based on the order pricing over time, when I start steering into next year. Relative to commodities, just question is, I know you guys say you feel good about it, but maybe give us a little more confidence about what drives your conviction that you can continue to create a positive value gap there as we look at longer term past the fourth quarter.

Steve, we got to do detailed business plans for 2014, but we have running positive OPI on pricing on orders. I think, we expect across most of the businesses that's going to continue and the early reads I have gotten on direct material deflation for next year and material productivity, but direct material deflation for next year is still very favorable for us. Last year, we were $350 million, something like that on a value gap. This year, we are at $660 million.

Just under $700 million.

Just under $700 million, but on the way to the higher number than that, I think, Steve, we are going to be positive again next year and that will be something I will give you more flavor for in the Outlook Meeting in December.

Okay. The selling price quarter was 70 basis points positive.

Okay. Great. Then another question, so when you think about Avio and some of the capital deployment and I guess the pricing the $0.02 charge that you sort of fair market value, the pricing on GAAP. I mean, did that change your view of the financial metrics for the deal originally and how do you think about that? Maybe also broader context on oil and gas and some of those M&A that you now got a lot more track record now behind you, how are you thinking about that, Jeff, in terms of performance relative to your original expectations?

Well let me give Jeff the Avio question now.

Yes. What I would say, Steven, Avio is, I think what part of those fair value adjustments tell you is the business was actually more profitable than what we thought we were buying when we finally got in there to see a lot of the detail, because of antitrust constraints, we couldn't see a lot of detail around parts of our Aviation business. The adjustments were larger than we expected initially, but they are larger for all the right reasons, meeting the margins on the parts, particularly GE90, they have got a ton of productivity over the last number of years, simply for GE90 program, so that will work well with us or for us going forward.

The idea was kind of unique accounting convention given their supplier relationship with us. I think that's all goodness that's going to come back to us, so this is actually I think good, helpful. On the oil and gas stuff, we like the places that we are in and the deals we have done, so but I think they are different things. Go ahead, Steve, I am sorry.

I just was trying to get a sense of the financial metrics also as you look back on the track record for the oil and gas deals a couple of years ago?

Look, I think when we do reviews with our board, if you look at the deals we have done starting in 2011, 2012 and 2013, versus deal case, we are still running ahead on those.

Your next question comes from the line of Deane Dray representing Citi Research. Please proceed.

Thank you. Good morning, everyone. Can we go back to get some color on the order pricing on Power & Water equipment coming in negative in the quarter and also slightly negative in oil and gas? Just put this in context. Is there any change in the competitive environment? Is this some FX impact, because it does break a streak of some of the positive pricing that you had?

Yes. I don't know. It relates to Power & Water. I don't think there is a huge trend change here. I think, thermal pricing on units was just under 7% down I think it's an extraordinarily competitive market globally. I don't think anything has really changed there. Those dynamics haven't changed. On wind, it really is a bifurcated world. In the U.S., we have got really good price over the first six months of the year. We feel good about where we are going with our U.S. wind. Internationally, it's more competitive around pricing and wind in the quarter on OPI was down a 130 basis points. PGS services was better. It was up 1.4% on thermal. Then oil and gas, we got two specific dynamics going on. We had a really profitable order that we took in the third quarter of 2012 in the U.S. around an LNG facility that we didn't repeat and we had the big Russian, the Yamal order here in this quarter that was not nearly as profitable as that as well. And that really drove oil and gas OPI down in the quarter. We expect oil and gas OPI in the fourth quarter to get back to a positive and we expect it to be positive for the year on a year-to-date basis.

Great, I liked that last point you made. And then, just thinking about the fourth quarter, Jeff, you said that you are tracking well for solid organic revenue growth. The slides, as you are biased towards the low end of the range, but clearly you have got momentum here and I would liked your comment that you have got a slight hedge in the plans for more contingency. How does that contingency change, let's say, versus the first quarter? Because you certainly look like you have got a lot more buffer in hitting these margin targets today versus where we were in the first quarter.

I think, Deane, it's about the same hedge we had at the end of the second quarter and then, for us on the revenue side, basically you have got the whole company, ex-Power & Water, which has operated pretty well all year and what you are going to see in fourth quarter is just a more normal run rate for Power & Water. So that's really, if you think about the range we had on the page and how I talk about the business going forward, really the only difference is Power & Water. And so you are going to see a more normal quarter for Power & Water from a revenue standpoint and that should carry forward into next year.

Great. Thank you.

Great.

Your next question comes from the line of Steve Tusa representing JPMorgan. Please proceed.

Hi, good morning.

Hey, Steve. How are you doing?

Not too bad. So I think you said 5% industrial revenue growth, as you were exiting the slide deck before Q&A through fourth quarter?

Yes.

That's organic?

Yes. That's the expectation around 5% for Q4.

Okay. So for the year, you guys are going to end up around flat for the year to up 1%, 0% to 1% type of thing?

Well, we think we will be at the lower end of the range in there, Steve.

Okay, and then I am just curious as to, ultimately there were some moving parts here with the slide you gave in the first quarter on Power & Water, I think it was slide five where you guys laid out the first and the second half and you kind of underperformed a bit in the second quarter on pure profit $1.1 billion versus $1.3 billion. You had $2.9 billion for the second half. Maybe could you just tell us where you are going to be relatively to that $2.9 billion for profit for Power & Water ?

Yes. Steve, I don't know. I don't think we are going to guide on that.

I mean you are obviously going to be above it though, right, I would assume?

Yes. I don't think I can give you any answer on that. I don't think - we don't provide guidance. I don't think I can give you that number. Here's what I would said about third quarter to fourth quarter is the way I would think about it, and power is a piece of this construct, is we will end the third quarter here on an adjusted basis at $0.40 a share. We typically get a big volume ramp from third quarter to fourth quarter. Last year that was $0.08. This year we have got a bigger ramp volume wise going from third quarter to fourth quarter. We are going to do that with a much better cost structure than what we did last year third quarter to fourth quarter. More value gap. We are ahead of the curve on SG&A and cost savings. That's going to give us additional incrementals, additional volume leverage as we move from third to fourth quarter. So Power & Water is a piece of that framework. They are a big piece of it because they have a very large volume ramp from third to fourth quarter and I think we feel very good about the construct that we have around that and all of that should help us achieve the 70 basis points for the year.

Steve, Power & Water is going to have positive revenue, positive gross profit and positive margins in Q4.

Yes, right. Thanks

It is going to perform well.

Steve, the last thing I would add is, if you go back to last seven years, five in the last seven years we have grown margins from third to fourth quarter better than 250 basis points. In four of the last seven years we have grown to more than 310 basis points from third quarter to fourth quarter, so.

Yes, clearly. And then just on the distributed power stuff. I didn't quite, again going back to that slide where you had aero of 100 units. It sounds like you are dramatically kind of outperforming. Could you just maybe talk about where the distributed power stuff came from this quarter and is this a timing issue for this year, or is that pure upside this year relative to what you expected in the fourth quarter, because I know there was a big group of distributed power stuff coming in the fourth quarter seem to come a bit early?

It's pretty global business. I would say there is more opportunities in the Middle East, and Asia and places like that. I would say there was some more in the third quarter than what we expected, but I still expect them to have a good solid growth in Q4 as well, but I would say, we probably at the end of the day, had a few more aeroderivatives in Q3 than we originally expected.

Your next question comes from the line of Shannon O'Callaghan, representing Nomura. Please proceed.

Good morning, guys. Just in terms of the restructuring and gains in the fourth quarter, it sounds like you might go ahead and do some restructuring. If you do, you will have some gains in industrial, but as it plays into the 70 basis points, right? The restructuring is incorporated, the gains are in segments. Is that all gravy on top of that? There is none of that sort of baked into getting to the 70?

Shannon, the way that I talked about it today and the way we are planning is the 70 is without gains, so basically the intent is to use the gains we had to do additional restructuring.

Okay, but like I said restructuring (Inaudible) I know weren't any in the quarter, but it is not in the quarter.

If we have, right?

Yes. Okay. Then just on the framework, the high single-digit to low double-digit operating earnings, back at EPG, you also used to show that that translated to double-digit EPS growth and now no one sort of there in terms of consensus. I mean, is this double-digit part of the equation sort of not on the table anymore? I mean, I know it's still high single digits to double-digit operating earnings, which doesn't seem like we are getting there on, on the EPS basis. Is that kind off the table at this point?

Look, we don't give guidance any more. Okay? So, let's start with that. Again, I think you have got some stuff in Avio and stuff in corporate, but when you look at Industrial and Capital, I actually view those exactly the same way we have looked at them when I was at EPG.

Shaquana, we are running up against another earnings call, so why don't we take one more question here?

Yes, sir. Your next question comes from the line of Christopher Glynn, representing Oppenheimer. Please proceed.

Hi. Thanks for fitting me in. Last year late in the year, things got a little variable up there in the economy, customers taking delivery. If we look at your backlog, I was wondering what the key variables are in terms of how backlog execution could play out? Just for example I think, from healthcare orders it would seem would be seem positive growth there by now.

Yes. Chris, I will give you a view. I actually think the backlog is pretty firm. I don't think there is commercial issues really, I think what Jeff talked about like in oil and gas is stuff that we could have executed better on, so we are not seeing really any kind of variability in the marketplace in terms of customers pushing back on deliveries.

Great. Why don't we wrap up today. Thank you everyone for attending. The replay of today's webcast will be available this afternoon on our website. We will be distributing our quarterly supplementals data for GE Capital later this morning. I have some announcement regarding the upcoming investor events. On Friday November 15th, we will host a GE Capital Investor Meeting in Norwalk, Connecticut. This meeting will begin at 10 am. We hope to see you there. Second, our Annual Outlook Investor Meeting with our Chairman will be held in New York City, again on Wednesday, December 18th. We will send a little more information closer to that date. Then finally, our fourth quarter 2013 earnings webcast will be available on Friday, January 17th. As always, we are available today to take your questions. Thank you everyone.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a great day.