Good day, ladies and gentlemen, and welcome to the General Electric second quarter 2015 earnings conference call. At this time all participants are in a listen-only mode. My name is Jeanette, and I will be your conference coordinator today. As a reminder, this conference is being recorded. I will now turn the program over to your host for today's conference, Matt Cribbins, Vice President of Investor Communications. Please proceed.

Good morning and welcome to our second quarter earnings call. We issued the press release, presentation, and supplemental earlier this morning 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. Please interpret them in that light. For today's webcast we have our Chairman and CEO, Jeff Immelt; and Senior Vice President and CFO, Jeff Bornstein. Now I'll turn it over to Jeff Immelt. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Thanks, Matt. The team had a strong quarter in a slow growth and volatile environment. We're executing both organic growth and cost initiatives. Specifically, Industrial EPS grew by 18% and earnings at the combination of Industrial and the Capital Verticals, which is the way we think about GE going forward, grew by 19%. Organic growth and earnings performance was very strong. Orders were up 13%, revenue was up 5% and profit would have grown by 11% organically. Our operations were strong. Margins expanded by 70 basis points with gross margins up 60 basis points and Industrial CFOA grew by 79%. Our Oil & Gas business met expectations for the quarter for orders, revenue and profit. Organic profit was up 5%, and we continue to grow margins despite a tougher environment. We end the half with our goals on track. Meanwhile, we have a number of portfolio actions underway. GE Capital asset sales were robust, and we will achieve $100 billion of deals closed in 2015. We still expect the Synchrony split to take place by the end of this year. Appliances and Alstom are in the middle of regulatory reviews, but we still expect both deals to close by the end of the year. We…

Thanks, Jeff. I'll now turn it over to the operator to open up the phone lines for questions.

Our first question comes from Scott Davis with Barclays.

Hi. Good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Scott.

Happy Friday summer. Hopefully we can all go home a little early, as this earnings release is relatively easy to get through versus the past, so thanks for that. I wanted to ask a couple questions, and first one just related to Oil & Gas. When you take the order book and the pricing in that order book and you push it forward to whatever the typical backlog of that is, let's say it's six months or so, can you hold margins when you get to that timeframe? How does that mix shift look? I'm just trying to get a sense of how you even think about modeling a down 20%-plus order book in that business. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Scott, I'll start and then let Jeff also add some perspective. I think our expectation always was that we could hold margins as we went through this process. And you've seen that so far this year. I think going into the cyclicality in oil and gas, there were a number of, I would say, inefficiencies already in the industry. So I think there were good productivity opportunities from the start. We'll take out $600 million-ish of cost this year. That will be more next year. So we've been able to do a good job on cost. And I think the combination of those things and the mix of businesses we have I think gives us a perspective that we should be able to hold on margins going forward despite a more challenging market. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: The only thing I would add is that $1 billion cost-out target for 2016 is absolutely critical to me. There's no question that although we've not repriced any of the existing order book, there's no question that new orders are going to be challenging from a pricing perspective. That's why all the work around restructuring and product service cost is so critical in terms of profitability and operating margins. So the team is executing ahead of plan. We feel really good about their ability to execute on that cost roadmap that we've laid out with them.

Okay, that's helpful. And then as a follow -p just on asset sales you made a commentary and said that things are ahead of plan. Volume is certainly ahead of plan. But can you give us a sense of the pricing and how – and I know this stuff hasn't happened yet, but indications of interest and such, and you're probably in various stages of price discovery. But give us a sense of really where pricing is coming in versus your expectations. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: So if you think about it in terms of deals that Keith and the team have signed, right now we're roughly – excluding real estate, we're about 5%, a little over 5% ahead of the fair values we used on the April 10 call over the baseline, if you will, for the Hubble. So so far I think we're doing better on price than that baseline. Having said that, because we're accelerating the sales of these portfolios and franchises, that means the earnings that we're going to enjoy over what we thought the whole period was going to be, is shortened. And so right now I would say those two things more or less offset each other. Better on price for what we signed so far, but we're selling them quick and we'll earn less as a result of not owning them as long as we thought.

We can live with that. Jeffrey R. Immelt - Chairman & Chief Executive Officer: So still on track for the prices. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Yes, still on track.

Yeah, now, I get it. Okay. Thanks, guys, and good luck. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Great. Thanks, Scott.

The next question comes from Steven Winoker with Bernstein. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Hey. Thanks, and good morning, guys. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Steve. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: So I just want to make sure I understand a little bit how you're thinking about the one-time items and restructuring offsetting the gains. On the NBCU gains side, what drove that this many years later? And how do you think about that from an accounting or maybe reporting perspective, in terms of comparison with Lake and other things that you treated in discontinued operations, versus putting this one in continued op? I just want to understand the logic there. Jeffrey R. Immelt - Chairman & Chief Executive Officer: It was a result of an agreement when the initial JV was set up. It hit a life span that spanned many years, and in the second quarter, we and Comcast agreed to settle that arrangement, if you will. It was $450 million in the quarter as we talked about, about $0.03 after tax. The accounting around it has it in continuing operations, the accounting doesn't push it into discontinued operations. So it's just a function of how the accounting works. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay. But why would Lake have been in DiscOps, but not this? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Because we moved the whole Lake operation into discontinued operations, and including the liability that we had with Shinsei associated with it around the guarantee and the runoff of that book. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay. Jeffrey R. Immelt - Chairman & Chief Executive Officer: We had…

The next question comes from Shannon O'Callaghan with UBS.

Good morning. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Good morning, Shannon.

Hey. Can we go through a little bit more on these margin drivers, they moved a decent bit from what they were in the first quarter. The mix got a lot more negative. I think GEnx was a good part of that, and then value gap and cost productivity got a lot better. Can you just run through kind of what moved those things, relative to what we saw last quarter? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Yeah, sure, Shannon. So as you know, mix was actually a good guy in the first quarter. It was negative during the second quarter at 70 basis points. For the half, it's negative 10 basis points. As we said in the first quarter, we expected mix to turn around a little bit here in the second quarter, and in fact it did. And you're correct, part of that is the higher GEnx shipments and it's also a function of higher wind shipments and lower distributed power quarter-to-quarter. So that's what happened on the mix line. Value gap got substantially better. Value gap in the second quarter was about $193 million. It's $221 million for the half, so up substantially from $28 million of value gap in the first quarter. And we continue to deliver cost productivity on product and service. And so the second quarter, we had 60 basis points of margin improvement in the gross margin line, and then 70 basis points at op profit. So the net of simplification and other inflation added 10 basis points below gross margins. So that gave us, first half of 70 basis points improvement in the gross margin line and 100 basis points at op profit, so those were really the dynamics. I think mix turned around like we thought it would, versus extremely strong first quarter, and value gap got substantially better.

And how should we think about these different dynamics playing out for the rest of the year? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: So I think what we said earlier in the year is that we thought mix would be plus or minus for the year. And I think we still feel like, based on backlog and what we expect order shipments to look like, for that to be roughly correct. I said value gap for the year would be roughly as it was in 2014. 2014 was about $300 million. We're a little ahead of that run rate here through the half. We'll see how that plays out. Price has been pretty good actually, both in Power & Water and Aviation. So that's how I – I don't think the framework is changed materially from what we told you earlier in the year.

Okay. And then just on assessing this 2015 Capital dividend, we got the $100 billion of sale assumptions and the 14% Tier-1. Is there something else that could move that significantly off of being a $1 billion dividend plan for the year for Capital? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Well, I think, we're hopeful that as we move through, and Keith and the team close these $100 billion of transactions, that that 11.4% Tier-1 common rate is going to move to 14% and beyond. And for them to be in a position to dividend as money this year, we need to be above the 14%. We have a few other moving pieces we're working. We have a stress test we got to do, et cetera. But we're hopeful that we can outperform the $500 million, certainly, they've given us so far. And we gave you a range here of $0.5 billion to $7 billion in April 10, and I think we're kind of still in that range.

And is there a time when you make that decision, or is it based on the timing of asset sales? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: It's based on the timing of asset sales, and more likely not would be late fourth quarter.

Okay. All right. Thanks a lot.

The next question comes from Deane Dray with RBC Capital Markets.

Thank you. Good morning, everyone. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Deane. How are you doing?

Doing really well, thanks. Hey, just going back to the Alstom deal, and I know there's sensitivities here, but can we talk about the plan B? If you do have to walk away from a compromised deal, is it clear that you would put all that deal Capital right into buybacks? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Deane, I'm just not going to go there. I think we like this deal. It's our intention to really close the deal, and that's really where our stand is. So let's just leave it at that.

Sure. I appreciate that. And then just moving the focus over to geographical for a moment. And I don't know, it just struck me as ironic that this quarter the growth markets were the laggards. And maybe you can comment on that, in particular, the 2% Healthcare was weak in China, but it doesn't seem to be a longer term trend. But just kind of parse through the dynamics on the growth markets. Jeffrey R. Immelt - Chairman & Chief Executive Officer: So let's see, Deane. I'd say the – if I just gave you a kind of half to-date, on China, the orders are up 15% and the revenue's up 12%, that's kind of, let's say, first half 2015 versus first half 2014. And then if you looked at some of the growth regions from a standpoint of orders, I'd say Latin America and Middle East/North Africa, those places are hanging in there. We're certainly seeing pressure in places like Russia and ASEAN countries. But I'd say the strength is the diversity of the portfolio, and it's our expectation for the year that these are kind of ex-FX, probably high single digits, mid to high single-digits on the growth regions for the year. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Yeah, I would just add, Jeff, that we're kind of in the cycle now where the developed markets are stronger than... Jeffrey R. Immelt - Chairman & Chief Executive Officer: Yeah. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: So in the U.S. in the second quarter we were up 10% on orders. I talked about Japan being up, ex-FX up very strong, up 86%. And Europe was actually up 4% ex the effects of exchange. So the developed markets seem to be getting a little bit stronger and the developing markets are certainly much more mixed. Jeffrey R. Immelt - Chairman & Chief Executive Officer: I'd say mixed, yeah.

Great. Thank you. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Thanks, Deane.

The next question comes from Jeff Sprague with Vertical Research.

Thank you. Good morning, gentlemen. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Jeff.

Hey, just a couple questions. Just on the additional restructuring, I was just wondering what it is you might be targeting? And I guess specifically thinking about the quarter, it sounds like only about 40% of the restructuring spend is actions that might have some kind of payback as opposed to mortality and other kind of loose ends cleanup. Is that correct, and how do we think about that going forward? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: So we think we have a number of opportunities to increase the amount of restructuring to get ourselves positioned for 2016 and beyond, particularly around competitiveness. As I said earlier, if for some reason we didn't close Appliances, we may take a harder look at that. Of the restructuring we spent in the quarter, about $140 million of that was in Oil & Gas, and we see very good paybacks around that. All the projects we're working on today are all inside of the 1.5 year payback kind of benchmark that we've shared with you over time. The nature of the restructuring has changed pretty dramatically, though. There's about – less than a third of what we're doing today is SG&A related, and more like 70% – 75% of it is product and services. We really focus on gross margins in products and service cost competitiveness. So I think we're on track to invest at very good returns and restructuring this year, and they're critical to delivering not only the year but setting us up to deliver on 2016 and beyond.

And is the mortality hit just a one-time adjustment? I thought that was more of an ongoing change in pension costs. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: It's a change for the year that we planned out in restructuring and other charges. It's about $40 million in the quarter pre-tax, so it's $20 million after tax. It's not a big item.

And then just switching gears, Oil & Gas Services, the weakness in orders there, what's actually driving that? It's a little surprising it's weaker than equipment orders. Do you see people pulling back on OpEx as opposed to CapEx or some other timing noise there in the quarter? Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: Some of it's timing. Services across the board were pretty challenged here in the quarter. I would say the biggest driver, as you would probably expect, has been surface. Orders were quite weak around pressure control, well performance solutions. Lufkin was down 40% in the quarter. So that's really where the challenge is. But each one of the businesses had a challenge around service in the quarter.

Great, thank you.

The next question comes from Julian Mitchell with Credit Suisse. Julian C. H. Mitchell - Credit Suisse Securities (USA) LLC (Broker): Hi, thank you. I just wanted to ask around the PGS orders. I think they were very strong, up 17% or so. You called out what's going on in some of the emerging markets, but maybe give some more color on thermal power services in the U.S. and Europe, what you're seeing. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Again, excellent work on the AGPs, I would say, Julian, continues to be robust. I think just the overall mix and usage around gas turbines is high, as there's an incremental shift from coal. So those remain two big drivers I think of power gen services. And I would say DP services, despite the new unit being softer in distributed power, the distributed power service business has done very well in terms of upgrades and service performance. So I think they had another good quarter and are pretty well positioned for the rest of the year. Jeffrey S. Bornstein - Chief Financial Officer & Senior Vice President: I'll just do a quick run through. So service is up 17%, as you referred to. Jeff talked about 39 AGPs in orders in the quarter. That's up 20 versus last year, very strong. But distributed power services were up 27%, and regionally orders were very strong. In the Middle East we're up above 60%. And ASEAN, China, the combination of ASEAN, China, and India was up 38%. So very strong in the quarter, and we like where the business is heading for the year as well. Julian C. H. Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks. And Oil & Gas, a fairly disparate collection of assets and backlog…

The next question comes from Nigel Coe with Morgan Stanley. Nigel Coe - Morgan Stanley & Co. LLC: Hello, thanks. Good morning. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: Hi. I just wanted to continue with the Oil & Gas theme. Pricing this quarter is actually better than last quarter, down 1.2% versus down 1.4%. I'm just wondering. Do you feel that the boundaries on Oil & Gas are now more defined? Do you feel more confidence in where this goes in the second half of the year? And are you confident you can maintain price deflation in this zone? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Look, I still think, Nigel, the industry is forming, so I think there's still volatility around oil price. I think we've taken a lot of costs out. I think everybody's learned how to compete at lower prices for oil. So I'm very confident in our ability to execute on the cost side. I would say the repricing is still de minimis, so we're not seeing massive headwind from that. And I just think it's one of those that we're going to have to continue to give you updates on where the market is. But I just think we can manage our way through this. Nigel Coe - Morgan Stanley & Co. LLC: Okay. Julian alluded to the Healthcare margins, and I'm wondering. What is holding back the margins? We've seen a positive mix in life sciences. Obviously, there's a lot of work on G&A. So I'm wondering. Are we seeing here a negative mix as developed markets outperform emerging markets? Jeffrey R. Immelt - Chairman & Chief Executive Officer: These guys have – how much FX is in this…

The next question comes from Andrew Obin with Bank of America Merrill Lynch.

Yes, good morning. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Hey, Andrew.

Just more Oil & Gas. So what are you hearing about your customers on oil and gas side? Are you getting pressure requests to be the consolidator of the supply chain? It just seems that people broadly want to deal with people with real balance sheets and people that can survive the storm. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Look Andrew, I think that there's a certain amount that I think is going to be in play in that regard. I don't think that is a recent phenomenon. I think that started back several years. And so there remains in the oil and gas business a real opportunity to drive better system efficiency between suppliers and the IOCs and the NOCs. And we look at this cycle as a good opportunity for us to drive efficiency.

Okay, and just a follow-up question. Looking your organic growth rates and order growth rates and compare them to what we're seeing from the macro, it just seems you guys are taking market share. You're a very large company taking a lot of market share. How long do you think you can do it without triggering a price response from your competition that's seemingly getting clobbered? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Look, in our world, technology matters. And so if you look at the Aviation business, if you look at locomotives, if you look at gas turbines, if you look at Healthcare, we have a great lineup of technologies that are quite robust. And in the end, that's the way you can gain good market position and margins at the same time. And then on the service side, I think our analytics are starting to play through both from a pricing standpoint and also from a productivity standpoint. So that's another example of technology, and what it can drive. So I think...

So you'll look at it as a payoff on your investments over the past couple or many years. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Definitely. I definitely do.

Thank you.

Great. Jeff. A few quick items before you wrap up. The replay of today's webcast will be available this afternoon on our website. We'll hold our third quarter 2015 earnings webcast on Friday, October 16. And as always we'll be available later today for questions. Jeff? Jeffrey R. Immelt - Chairman & Chief Executive Officer: Great. Thanks, Matt. Again, I think you guys see the portfolio taking shape, and the hard work we've done. But I really want to call out the great execution by the GE team in the quarter. I think margins, organic growth, cash, GE Capital portfolio re-positioning, the GE team really did a great job of execution in the quarter. So Matt, back to you.

Great. Thanks. Jeffrey R. Immelt - Chairman & Chief Executive Officer: Thanks, everybody.

This concludes your conference call. Thank you for your participation today. You may now disconnect.