Good day, ladies and gentlemen, and welcome to the General Electric Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Ellen and I will be your conference coordinator today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like turn the program over to your host for today’s conference, Matt Cribbins, Vice President of Investor Communications. Please proceed.

Good morning and thanks for joining our fourth quarter 2015 webcast. Earlier today we posted the press release, presentation, and supplemental 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. Today I’m joined by our Chairman and CEO, Jeff Immelt; and our CFO, Jeff Bornstein. Now, I’d like to turn it over to Jeff Immelt.

Thanks, Matt. Let me start with some thoughts on the macro environment and GE’s fit in it. For the last few years I’ve talked about a slow growth and volatile economy. This is still my view. In the fourth quarter across our own large industrial footprint orders grew are 1% organically and our backlog is at a record of $315 billion up 7% organically. Our biggest industrial business which is power had organic orders growth of 29% in the quarter. I’ve a difficult time reconciling this with the mood that is in the markets. Clearly oil pricing is a concern and will have an impact. But our organic orders growth in the Middle East were up 14% in the quarter. So our economic activity is ongoing. I know there is a concern about emerging markets in total, but our organic growth was up 7% in the quarter ex-Alstom. And our business in China grew slightly organically in the year and backlog grew by 11%. So we are seeing a lot of the economic volatility, but there is still enough business out there for GE to hit its goals. The GE team had a good quarter in a volatile environment, total operating EPS was $0.52 up 27% and industrial EPS was $0.47 up 27%. Orders were up slightly in organic growth as down slightly versus a year ago. Total industrial margins expanded by 80 basis points, and 2015 CFOA grew by 8% to $16.4 billion. Industrial profit expanded by 3% organically. We hit or exceeded all of our goals in 2015, organic growth was 3% with 80 basis points of margin expansion leading to 7% organic profit growth. EPS was $1.31 up 17%. We achieved this despite having $0.05 of FX headwind. The verticals hit their plan and capital return $4.3…

Thanks, Jeff, I’ll start with the fourth quarter summary. Revenues were $33.9 billion, up 1% in the quarter. Industrial revenues including corporate were up 3% to $31.3 billion. You could see on the right side that Industrial segments were down 1% reported and down 1% organic. Alstom revenue up $2 billion in the quarter was offset by $1.3 billion of foreign exchange and dispositions of $700 million. Industrial operating plus verticals EPS was $0.52, up 27% and that’s driven by industrial up 27%, and verticals flat. The Operating EPS number of $0.31 includes other continuing GE Capital activity including headquarter run-off and other exit related items I’ll cover in more details shortly. $0.26 of continuing EPS includes the impact of non-operating pension, and net EPS $0.64 includes discontinued operations. The total disc ops impact was a positive $3.7 billion, driven by the $3.4 billion gain from Synchrony and earnings from the businesses held in sale. As Jeff said we generated $16.4 billion of CFOA for the year that’s up 8%. Industrial CFOA was $12.1 billion down 1%, but up 3% when you exclude Alstom CFOA and taxes associated with the disposition of signaling. The GE tax rate was 5% bringing the total year rate to 14%. The tax rate in the quarter was driven by the appliances transaction moving into 2016 tax benefits associated with integrating our existing service business with Alstom’s business in Switzerland, higher tax benefits principally on the signaling gain we had in the quarter and legislation making the U.S. research credit permitted. The reported GE capital tax rate in the quarter of 39% reflects a tax benefit on a pre-tax loss. The tax rate for the vertical businesses was a negative 13%, reflecting reduced the income at EFS and international tax benefits that will diminish as…

So let me end by going through our operating framework. This is the framework I showed in December. We’ve no change but increasing our goals for disposition cash. I know a lot happened earlier in the year, but 2015 closes out where we thought it would. So let’s start with organic growth of 2% to 4%. We finished 2015 with $315 billion of backlog earlier outlined how we achieved those goals even in the face of a tougher oil and gas market. We’ve broad business and geographic diversity and service, which is 80% of our earnings should continue to grow by 3% to 5% in 2016. We had two months of Alstom in 2015 and so far so good, we think our synergies were achievable and with the appliances transaction we’re now looking at the ability to fund incremental restructuring. In addition this gives us upside to our disposition cash for the year. All of our goals for GE Capital remain on track, our dispositions are a year ahead of plan, capital dividends are the key to returning about $26 billion to you this year and we plan to file for SIFI de-designation later this quarter. We’re acting to get more out of this economy. We’re aggressively managing our cost structure to capitalize on deflation. We have a very strong balance sheet with substantial cash. We have the ability to finance our industrial products, which is a huge advantage. Our diversity in both regions and markets allows us to outperform single purpose competitors. We can move production to the lowest cost regions and capitalize on currency or excess capacity. We’ve all the elements to help ourselves in a tough economy. Buyback capacity, substantial restructuring funding and services growth and we’ve continued to invest. Our long-term commitments for R&D, globalization investments like Alstom have built a huge backlog. So just to recap some of our highlights for ‘16 double-digit EPS growth, returning $26 billion of cash, Alstom integration, digital execution, there is really a lot of value here in GE. So Matt now let me turn it back to you for some questions.

Thanks, Jeff. Operator please open up the lines for questions.

[Operator Instructions] Our first question is from Scott Davis with Barclays.

Hi, good morning guys.

Hey, Scott. Good morning.

One of the things that’s changed in the last couple of months is just the severe currency devaluations we’ve seen in some of the emerging markets out there, but your order book in EM seems to be pretty good, I mean are you pricing, can you just give us a sense of kind of current and past are you pricing contracts in U.S. dollars, are you pricing them in local currency or is there a mix, just a little color there?

Okay, maybe I’ll do a little bit on the geographic side Scott and then give you a sense. We had a very strong fourth quarter in the Middle East that was a lot driven by power, pricing actually was a pretty good on those transactions for the quarter. I’d say on balance the pricing we’ve experienced on power, rail, aviation usually those show in the pricing and the backlog and the order book. So I don’t think we’ve seen really any diminution of pricing in the emerging market orders. So you know guys our stuff is lumpy so there is big transactions, but I don’t -- we don’t see anything. Jeff would you want to add to that?

Just a couple of things, so what we do in China there has been very little albeit a little bit more lately the differences in exchange between the U.S. to China are pretty di minimus, a lot of our businesses that I gave you are dollar based and then obviously in oil and gas and energy management and a number of other businesses we do work in local currency. And so Brazil where we’re in Brazil and Europe in the euro we’ve had a little bit of a currency impact and that’s what you hear us reporting when we give you reported versus organic. On the orders front I don’t think we’ve seen that big of an impact, and when you look at orders in the quarter particularly in power, orders price has been very, very good, very strong particularly on the H turbine, largely because we’re selling out slots.

That makes sense. And then just moving to oil and gas how was $30 oil impact your 2016 outlook I guess what I mean is that you have I mean 2015 was pretty amazing with the cost out and you haven’t seen decremental margins at all in that business and is that sustainable and are there break points in oil prices where it’s just not sustainable any more to maintain that type of drop through?

So again what I would say is that just on a macro comment, there is still lot of efficiency opportunities we have in our oil and gas business, both in the supply chain. And so I think what Jeff talked about earlier in terms of the ability to do incremental restructuring is still out there and then I would just again segment our business into kind of project based business where we’re still in execution mode and that’s probably 70% or 80% of our total revenues and then businesses like drilling and surface that are probably the most susceptible as oil pricing goes down to $30 we’re trying to stay ahead on the cost curve is going to be very difficult in the future and we just need to be flexible at a $30 environment the one we see today. But that’s a very small portion of our overall oil and gas business.

I would just add, I would just expand a little bit on what Jeff said. So if you think about the business long-term more contractual and project based stuff. Turbo machinery, downstream and subsea, that’s about 65% of our revenue in ‘16 and of those revenues more than 70% of those are in backlog. If you add the M&C business on top of that, which tend to be more flow in convertible. But it’s about roughly 50% exposure oil and gas and 50% to non-oil and gas, that’s 85% of revenue and when you add M&C you’ve got about little bit north of 65% of next year’s revenues in backlog. So to Jeff’s point the real short-term exposure today anyways we look at is service and drilling and they are very susceptible to volatility around what they see for convertible demand in any period of time. But it’s 15% of the revenue.

Again Jeff I'll come back and -- because of appliances guys we have kind of $2 billion plus of restructuring that wasn’t in our plan when we stood in front of you in December.

So I am going to follow on with that. So the way we think about it within the range of down 10% or 15%, everything else being we maybe at the lower end of the range we may be closer to down 15%, we came into the year we told you we had plans to take $400 million a cost out on top of the $600 million a cost out we delivered in ‘15 for a total $1 billion over the two years ‘15 and ‘16. We are now going after an incremental $400 million on top of that. So now we are trying to deliver $800 million of cost out to 2016 and appliances is an important part of our ability to do that. So we are going to invest more aggressively in 2016 in restructuring the oil and gas footprint that we even did in 2015. So that gives us Scott some ability to moderate potentially if revenues are even lower or the lower end of the range then we can moderate the impact on profitability.

Yeah, sounds like appliances was timed just right. So good luck, congrats guys. I’ll step off.

Thanks, Scott.

The next question is from Julian Mitchell with Credit Suisse.

Hi, thank you.

Hey, Julian. Good morning.

Good morning. Just a quick question firstly on Alstom, the core business as you say lost money on the EBIT line in Q4, you’ve talked about $200 million of core Alstom profit in 2016, how quickly do you think the business goes back to profits or is it sort of a second half turn around on the core Alstom business?

I think we expect it -- we are often running on the synergies as we speak, having said that most of those synergies and most of the improvement in the core operations is going to happen with will accelerate over the course of the year. I think we feel very good about the guidance we gave you in December around the outlook for Alstom in 2016 of $0.05 contribution that today feels very solid. Now I’d go back to what we said about 2015 on that call, we came in almost line item by line item virtually right on top of what we told you we’re a little better in tax than we estimated. But the other elements of the cost in the operations we talked about on that call is exactly where we came in and ended up Alstom in the fourth quarter ended up being essentially break even with tax or zero drag on EPS. So I think right now we are on course and the benefits and the improvement will accelerate as you would expect over the course of the year.

I would echo with what Jeff said Julian. Look as you guys can see this is a large complicated transaction to get it integrated. But when we look underlying in terms of customer response and geographic opportunities and things like that I think this is everything we thought it would be. So now we just got to get out there and execute.

Great thanks. And then just a quick follow-up on healthcare, the profits there were down I think about 9% in the second half of 2015, you’re guiding profits up in 2016. What is it that’s really swinging there sort of from the second half to the next 12 months.

Look I think Julian, when I think about healthcare in 2016, this should be low to mid-single digit organic revenue grower with margin enhancement, that’s what investors should expect in healthcare. I think when you look at the second half of last year we allowed the business to spend incrementally on NPI to make some changes in their IT business to invest more. So basically I think we allowed them to increase their spending in the second half. That should be opportunities when we look in the future. Better VCP, better NPIs and I expect healthcare to have a decent 2016.

We’re going to deliver a better product cost profile in 2016.

Great, thank you.

Next question comes from Andrew Kaplowitz with Citi.

Good morning, guys.

Hey, Andrew.

Jeff so can you talk about your ability to grow margin for the company in ‘16. If you look at 4Q you had 110 basis points of gross margin improvement ex-Alstom despite the declining organic sales, your value gap and mix give you 100 basis points of that improvement. So given you higher margin services orders are growing faster than equipment and raw material costs are coming down, could you sustain the 100 basis points you saw in the quarter from mix and value gap as you move forward?

So great question. Our goal what we’ve told forces year-on-year we have a target to improve margins 50 basis points, that’s true as well in 2016. So the geography of where that improvements comes from I think it will be largely the same I think value gap will contribute a little bit less in 2016 to the margin expansion I think variable cost productivity or productivity general will or product cost if you will, will contribute more. And then corporate and SG&A will also contribute in 2016. So we’re still on the 50 basis points march at op profits and down through corporate costs or industrial margins. But the mix between what value gap contributes and what we get out of productivity was going to change a little bit.

I would also say guys last year was the first year of our IC plan where we call the AIP. More than the half of the businesses have gross margin targets they all have margin targets. This has been really a god driver of these results and we think we’ve set the bar appropriate in ‘16 to get the same kind of benefits.

And then I would say if you mentioned services growth were equivalent that’s important actually there is no question about it. We need a big service businesses PGS and aviation to grow and deliver with it because we have these product launches. So we’ve got the H turbine coming next year, we got a little over 100 LEAP engines launching next year and we got the 2.x and 3.x wind turbines going. So continuing the momentum and services is very, very important to the overall story.

Jeff if I could just follow-up on service for a second, your organic service orders slowed slightly in the quarter from 4Q versus 3Q but still good at 3% you guys are going at 3% to 5% service growth. Can you talk about the sustainability of your service business especially in power in the current environment and how much is digital really helping is that seems like robust growth there?

Yeah look I mean I would start again with the digital focus, which is growing 20% not just in power, but in other businesses but we also have very targeted programs in all of our businesses to go after the aged install base, Alstom brings unique capabilities to the power business. Aviation guys, we’re still seeing good revenue passenger miles. There is lots of opportunities for our aviation business to continue to grow. Healthcare is actually after several years of flat revenue and services is actually grown 3% or 4% the last few quarters. So we’re very programmatic in the service side. I think we see that continuing into next year with digital being the number one driver. And at the end of the day I think in an environment like this, this is the bolus for the company, is the installed base.

The only think I’ll add Jeff is the upgrade. So we think we’ll do at least 125 AGPs next year in every one of the businesses is really pushing on the upgrade.

Thanks, guys.

Great, thanks.

The next question is from Andrew Obin with Bank of America.

Hi, guy. Good morning.

Hey, Andrew. Good morning.

Just the question on restructuring. Now that you have this extra $0.20 from the appliances. I am sure you did have some restructuring built into your number before because you were expecting appliance sale in the middle of the year. But given that the gain brings restructuring and you have a lot more restructuring this year. Does that mean that there is more cushion to the numbers or does that mean that the core guidance is actually reflecting more macro headwinds?

Okay. So in our core plan we expected to drill about $1.7 billion pre-tax of restructuring in 2016. We will double that with appliances. And so we will do a lot heavier restructuring, first of all we’re going to try to accelerate a lot of what we were going to do in Alstom in ‘17 and ‘18 as much of that as we can actually we’re going to try to accelerate. We’re going to do more as I mentioned earlier in oil and gas and every one of the businesses we’re going to do more around the product service cost footprint of the company. So it does both things when we spend that incremental money there will be some amount of benefit in 2016, but maybe even more importantly it’s a great base to work from for 2017 and ‘18 and it will help us continue to deliver these margin improvements that you've seen.

I would add Andrew look. I’m going to say the same thing today that I said a year ago. Every one of our businesses has a very detailed incentive compensation plan that internally just like last year rolls out to more than we talked about externally. And that’s the way we’ve run the place and that’s why we continue to run the place. And I just -- I look at the ability to do incremental restructuring as a good opportunity for us to continue to deliver good results.

And just the follow-up question, are you guys seeing any signs of stabilization in China because that seems to be a big concern I apologize if I missed your remarks in the beginning.

Yeah I think for us that the first thing I’d say there is no one China, right. I don’t think macro anymore when I talk about China I think micro. I think about aviation, healthcare, power, mining that’s how I think everybody is got to start thinking about China. Now aviation remains super strong right. I think on the power side it’s going to become a gas more predominantly gas turbine market it’s been cyclical but I like how we’re positioned in the future in China there. And the third business is healthcare, healthcare has had a tough couple of years, I think the sense of our team is that we feel that stabilizing by tough I mean it’s gone from up 10% to 15% to maybe flat to down slightly right. So our team I think has seen some signs of stabilization there. That to me is the swing or let’s say on China, but aviation is super strong even today.

Thank you very much.

Great, thanks.

The next question is from Joe Ritchie with Goldman Sachs.

Hey, Joe. Good morning.

Good morning, guys. And so maybe following up on Andrew’s question slightly differently I guess as you go into 2016 and then take a look back into 2015. Industrial EBIT grew very low single-digit this past year and as we head into 2016 there are a lot of headwinds whether it’s orders down, mix is becoming a bigger headwind and then you’ve clearly oil and gas pressures are intensifying. And so what I’m trying to understand is how much of the incremental improvement in industrial segment EBIT is going to be driven by the restructuring actions that you’re taking?

Well. Let me go back and try to help you with that in terms of what 2015 was. So in the fourth quarter our restructuring efforts delivered a little over $220 million of benefits. And those are restructuring have started in ‘14 and some of them were executed in 2015 et cetera. And for the year that was about $1 billion of value if you will against margins. In 2016 will roll forward and based on what we did in ‘15 and the benefits realizing in 2016 and the incremental spend in 2016. I mean everything else being equal we would expect that more and more to flow to industrial EBIT in 2015. And yes it’s part and parcel about remaking the competitiveness of this company around products and service cost and it’s critically important and our track record I think over the last couple of years of these businesses delivering back to margin improvements based on the restructuring spend I think it’s been on balance very good.

Yeah no that’s fair and it has been good and it clearly should help provide a tailwind for 2017 and 2018. Maybe one follow-up question Jeff just a reminder on $35 billion in the composition of the $35 billion dividend from the asset sales and leverage and has that changed at all just given the asset prices have come down a little bit at the start of this year?

No, so key thing is team have done an absolutely remarkable job executing against this plan, as you know Jeff mentioned I’ll just reiterate a little bit just to give base line everybody $157 billion of signings, $104 billion of asset closings in 2015. In 2016 we’ll sign something on order of magnitude of another $50 billion in deals we’d expect more than half of that to happen hopefully here in the first half of the year and we’ll close, we’ll get wire transfers for about another $100 billion of closings in 2016. And so far we’re tracking slightly better on a price of intangible book what we presented in April of next year and we think everything else being equal as we sit here today with $50 billion of signings to go all which are in process that we’re going to end up at or maybe incrementally slightly better on the price to tangible book when we get through the end of this process hopefully at the end of 2016.

Okay, thanks guys. I’ll get back in the queue.

Great, thanks.

The next question is from Steven Winoker with Bernstein.

Yes thanks and good morning.

Hey, Steve.

Hey. So you covered a lot of ground, but one of the things on page four, the simplification of SG&A cost being flat in the fourth quarter just maybe run us through the dynamics there in terms of it coming down off of the prior savings you’ve been seeing in quarter-after-quarter there?

Sure so we had $224 million of SG&A structural cost out in the quarter that was down 7% year-over-year for the year we’re down about $800 million or about 6%. And the reason you see it is not contributing to the margin performance is because that $224 million came out at about the same rate as volume came down in the quarter. So it’s not that we didn’t get cost out we absolutely did it’s not that we lost any momentum. $224 million is about the middle of what we’ve been each of the last four quarters actually probably closer to last eight quarters, it’s just the volume was down and so it didn’t contribute. We expect -- I think we said in December we expect to improve SG&A to sales in 2016 and so you should expect it to show up on that line is contributing to the margin expansion in 2016. As it did for 30 basis points this year.

Okay, sounds good. And then if I just want to clarify in the pricing again when you point to the 3.8% in power and you talked about the HA turbine driving a lot of that you guys are -- how are you thinking about like-for-like pricing versus mix is that HA is all like-for-like pricing if not driving the mix?

Yeah that’s all like-for-like.

Okay all right and then just…

Go ahead I'm sorry.

No, go ahead.

I was just going to say I think what the team has done in this HA launch is pretty remarkable so all the growth in the heavy duty gas market is this class of turbine. The gigawatts get added over the next couple of years 75% of that’s going to come from this class of turbine. They’ve gone from no share to a very high level of share and this is about $300 million of price in the quarter on the H and it’s effectively we’re selling slots out. So it’s been a terrific story.

Okay, I’ll pass it on. Thanks guys.

Thanks Steve.

The next question is from Jeffrey Sprague with Vertical Research Partners.

Hey, Jeff.

Good morning, how are you?

How are you?

Great. Hey just back to kind of the whole restructuring dynamic and kind of understanding the bridge into 2016. So I think your guide for ‘16 roughly implies about $19 billion in segment op if we use the December construct. So just building off $18 billion in 2015 with $1 billion in restructuring savings and Alstom of $600 million is that how we should be thinking about it so you have a kind of core erosion elsewhere in the portfolio of $400 million to $500 million?

I don’t think so, Jeff.

I don’t have that reconciliation in front of me. We’ll get back to you on that, but here is how we thought about the bridge is when we go from ‘15 to ‘16 we’ll get incremental restructuring savings, as a V we earned $1 billion of restructuring savings in ‘15, we think we’ll be better there in ‘16. But it won’t be $1 billion better than it was in 2015. We’ll get margin expansion and organic growth of 2% to 4% and the only decrement if you will as you describe it is we are overcoming the launch cost and the launch margins associated with the LEAP and the H, the wind turbines et cetera, et cetera. So we will grow our profit next year. I don’t have the bridge exactly in front of me at the moment.

But Segment-by-segment power is up ex-Alstom.

Right.

Renewable is up ex-Alstom, aviation up, healthcare up, transportation I think we said down slightly, energy management up. So segment-by-segment Jeff I think attracts the positive operating profit growth for next year.

Okay. Roughly $19 billion is a good place to be though on the segment side?

Yeah.

Yeah, $19 billion -- it’s roughly 19 billion.

Okay, great.

Little better than $19 billion. Yeah.

And then just back to kind of the macro can you give us a little bit of sense on how much of your backlog is in Middle Eastern areas or kind of areas where you’ve got really resource pressures on government budgets and the like?

I think the -- let me just. I don’t have a regional split on backlog, now obviously our power business, obviously from power generation perspective has got a big backlog associated with the Middle East, our oil and gas business as a backlog that’s associated with West Africa, Brazil and the Middle East. We have a big backlog in aviation associated with it. Emirates, Qatar Airlines, et cetera. I don’t think in the case of power or aviation that we have concerns about our Middle East backlog in any way...

Yeah, I was going to reflect on that to a certain extent I think Jeff we’ve always talked about the resource rich regions being more or less $30 billion or something like that for the company. But in the fourth quarter we had a record orders quarter in Saudi Arabia. Our business in Latin America has -- because again demand for electricity has grown 8% last year, good aviation backlogs things like that. So I think the diversification of the mix of businesses we have is still pretty positive even in regions like Saudi Arabia.

Right. And then maybe just one last one. The order price index info was helpful, I wonder if you could share what us kind of the price impact on revenues in the quarter?

Yeah. So in revenues in the quarter we had price of about $150 million, about $100 million of that came from power aviation was strong as well and then as you would expect healthcare had negative price of roughly $100 million. Most everybody had modest positive price.

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

Thank you. Good morning, everyone.

Hey, Deane.

Hey. Just had a couple of clean up questions here, just to go back to the appliances deal, we’ve gotten a lot of questions about this that the deal you struck with higher, significantly more favorable than Electrolux gain of $0.20 versus $0.06. How do the deal all come together, I know they are now directly comparable. But just give us a sense on how it played out?

Again Deane I think we were we follow the process for Electrolux until December 7th. So that kind of ran its course, that gave us the ability to kind of look to see what other outcomes would be important for the business. There was a tremendous -- after December 7th, there was a tremendous amount of interest in the business. I think which we have to keep in mind is that the EBITDA of the business is better over the -- while we were in the process. The multiples in the industry improved while we’re in the process. And I think what we always knew was true about the appliance business is that it had a favorable position in the North American market that was valued by people on the outside and that’s what we saw in the 30 days kind of post for December 7th. I would add Deane we wanted to move quickly because the business have been for sale for two years and it’s just there was a real reason for us to kind of get this transaction and we’re pleased with the way it turned out.

Yeah congratulations on that. And just a last question from me, I know you’re out of the quarterly guidance business, but given the expectations of the higher restructuring and they won’t be time with gains. What is the first quarter dynamics look like with regard to gains in restructuring?

So today we think we’re going to have about $700 million of restructuring in the first quarter. We’ll have some very modest gains in the first quarter. So we’ll have naked restructuring in the quarter of between $600 million and $700 million pre-tax in the quarter. And do you want me to give full first quarter. So here is when I’d say is when you look at the profile for the year when we talked about gas turbines and power systems. I mentioned the back that a lot of our volumes was in the second half of the year. The first quarter in power business we’re going to be down significantly on gas turbines. Last year we had the tail-end of Algeria and we have some Egyptian shipments in first quarter. So even though we’re going to be up on shipments year-over-year for the total year for power systems the first quarter is going to be light on gas turbines year-over-year.

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

Hey, Shannon.

Good morning. Hey Jeff maybe a little more on the core margin expansion in the power business the 140 basis points, I mean you’ve talked about positive value gap and mix. What -- maybe a little more color there what’s really driving that?

Yeah a big part of it is the strength in their service businesses, TGS was very strong in the quarter that was important. We also shipped fewer gas turbines year-over-year in the quarter from a mix perspective that certainly helped them expand margins in the quarter the 140 basis points. So the value gap was really strong.

I mean just some context here guys. Our organic growth for the total company in the fourth quarter of ‘14 was up 9% organic growth for power was up 20% or something in the fourth quarter of last year. And that was a lot of the Algerian shipments that we had that were product shipments in ‘14. So kind of to Jeff’s point we had let’s say much more difficult comps from a revenue standpoint, but much easier comps from a margin standpoint when you compare fourth quarter of ‘15 to fourth quarter of ‘14.

Okay. Yeah that makes a lot of sense. And then just on corporate cost I mean got some benefits there in the quarter I know it’s an initiative you’re working on. I mean are we kind of at a reasonable run rate now or is there a lot more to go there in ‘16?

No we’re going to be down in ‘16. So we finished the year with $2.1 billion of corporate operating cost. We gave you a range of $2.0 billion to $2.2 billion. We’re running the place to the bottom of that range. And no we’re not close to the end of what we’re doing around corporate.

The next question is from Nigel Coe with Morgan Stanley.

Nigel.

Thanks, good morning guys. Again a little delay [ph] here so I’ll keep this brief. So just on back on the restructuring obviously a huge number for this year, Jeff. Should we -- you’ve got $0.08 in the next year 2017 for Alstom restructuring. Should we assume that the bulk of that $0.08 comes into this year?

We I don’t think it will be the bulk of it. We’re going to try and move as much of the restructuring into ‘16 as we can. All of that restructuring you don’t just write a check and then get the benefits it’s actually all kinds of execution around it. So we’re going to try to execute as much of the restructuring list actions if you will that we’re planned there is a 17 actions we’re going to try to do as many of those in ‘16 on top of what we already planned as possible.

Okay, that’s helpful.

I’ll add Nigel with this about of restructuring this year; we’re going to get some benefits yet this year. The book when we’re going to come in ‘17 but we’ll still get some restructuring actual benefits in ‘16 just based on the quality of projects we’ve got.

Okay, that’s helpful. And then just quickly on the -- you gave a little bit color on 1Q and obviously 4Q is noisy with some of the project delays and Alstom accountings I am just thinking on 1Q do you still see the scope for some backlog push out into the back half of the year and to what extent that we still have some of these accounting issues on Alstom in 1Q?

We are going to continue -- we are not done purchase accounting. So we from an accounting perspective we’ve own the company for two months. So we’ve done a significant amount of work getting the initial purchase accounting done, but we are not complete yet. And that really I’m hopeful that will be done with all of that in the first half of this year. And I think in terms of how our volumes lays out I mean we’re a little more back end loaded this year maybe than we were last year just away the order book wants to play out. But I would say to a certain extent guys things like just the change in PTC probably pushed some wind turbines from ‘15 to ‘16, that’s unforecastable, but it’s generally a positive. So again I think by and large we feel pretty good about how our backlog lays out and the integrity of the backlog. Again we are not [indiscernible] about the oil and gas market and kind of -- we need to be fast on our feet as it pertains to how that business rolls out the rest of the year.

Great, thank you, Jeff. Couple of quick announcements before we wrap up. The replay of today’s webcast will be available this afternoon on our investor website. We are going to host healthcare investor meeting in New York City on March 11th and our first quarter 2016 earnings webcast will be on April 22nd. Jeff?

Yeah, Matt thanks. Again thanks again guys I think it was given the first time we closed Alstom. This was more complicated than we like again that will get better as time goes on. So it took us a long time to work through it. But I think if you stand back and look at ‘16 we’ve got a lot of self help in place with restructuring, big backlog, our share repurchase and we feel good about double-digit earnings growth, about returning a lot of cash back to investors and about really continuing to drive our strategy into the future. So we feel great about the company and we look forward to having more conversations. Great Matt, thanks.