GE 2002 Annual Report Download

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TABLE OF CONTENTS
4Letter to Stakeholders
11 L eadership Team
16 Breakthroughs
34 Our Businesses
39 Citizenship
40 Governance
43 Financial Section
CONSOLIDATED REVENUES
(In billions)
FINANCIAL HIGHLIGHTS
EARNINGS PER SHARE BEFORE
ACCOUNTING CHANGES
(In dollars)
GE/S&P CUMULATIVE DIVIDEND
GROWTH SINCE 1997
01 02009998
23
46
69
92
115
$138
01 02009998
0.26
0.52
0.78
1.04
1.30
$1.56
01 02009998
19
38
57
76
95
114%
S&P 500
GE

Table of contents

  • Page 1
    ... Stakeholders 11 Leadership Team 16 Breakthroughs 34 Our Businesses 39 Citizenship 40 Governance 43 Financial Section FINANCIAL HIGHLIGHTS CONSOLIDATED REVENUES (In billions) EARNINGS PER SHARE BEFORE ACCOUNTING CHANGES (In dollars) $1.56 1.30 1.04 0.78 0.52 0.26 GE/S&P CUMULATIVE DIVIDEND GROWTH...

  • Page 2
    ... for a living. Others design high-end cooktops; still others operate national TV networks. Not many, though, offer a full range of economy-fueling financial services on a global scale. Fewer still make jet engines. Or sophisticated medical scanners. Or multi-megawatt gas-fired power turbines. And...

  • Page 3
    ...BOYDA President and CEO, GE Interlogix HENRY HUBSCHMAN President and CEO, GE Commercial Aviation Services OMAR ISHRAK President and CEO, Ultrasound, GE Medical Systems GEORGE OLIVER Vice President, GE Betz Securing the world with new technology Keeping 1,100 aircraft leased and flying Bringing...

  • Page 4
    ...thin air Spotting the next must-see TV program DAN O'CONNOR President and CEO, GE Consumer Finance Europe LI HSI Regional Sales Manager, GE Aircraft Engines RUBEN BERUMEN President and CEO, GE Power Controls STEVE RAMSEY Vice President, Environmental Programs Going from zero to $700 million in...

  • Page 5
    GARY L. ROGERS Vice Chairman of the Board and Executive Officer ROBERT C. WRIGHT Vice Chairman of the Board and Executive Officer JEFFREY R. IMMELT Chairman of the Board and Chief Executive Officer DENNIS D. DAMMERMAN Vice Chairman of the Board and Executive Officer 4 GE 2002 ANNUAL REPORT

  • Page 6
    ... Nearly 70% of my net worth is in GE stock. I hold my stock options to term (10 years), a practice I adopted when I became chairman and which I will continue. At the same time, I have asked our board's Compensation Committee to explore best practices on linking my pay even more closely with investor...

  • Page 7
    ... on cash generation Great people in a culture of learning and accountability • A DIVERSE SET OF LEADING BUSINESSES • There is a job that belongs to you and your fellow investors, and not to me. That is setting a value on our future prospects in the form of a stock price. Last year, despite...

  • Page 8
    ... or risky financing, so we can give our investors a soft landing. With an installed base of turbines and a multi-year services backlog that both have grown tenfold, and investment in new platforms including Oil & Gas and Wind Energy, Power is positioned for long-term growth and high returns. Our...

  • Page 9
    ... where GE can boost growth and cash flow. Our financial services businesses consolidate portfolios when GE can improve funding cost, risk management and growth. Our investment screen is simple: we expect a 15% cash-on-cash return by year five, or we don't do the deal. 8 GE 2002 ANNUAL REPORT

  • Page 10
    ...% of whom are global and diverse. We continued our $1 billion investment in training, and our Welch Learning Center at Crotonville remains a vital part of the GE culture. As some companies stopped hiring, we increased on-campus recruiting and launched a Commercial Leadership Program aimed at growing...

  • Page 11
    ... a train is working. We have a set of information technology services that can increase asset utilization by two percentage points. This represents a substantial potential savings for the industry and approximately $350 million in revenues for our Transportation business. Services by definition keep...

  • Page 12
    ... Human Resources MIKE NEAL President and CEO, GE Commercial Finance KEITH SHERIN Senior Vice President, Finance, and Chief Financial Officer CHARLENE BEGLEY President and CEO, GE Transportation Systems (bottom) SCOTT DONNELLY Senior Vice President, Global Research LLOYD TROTTER President and CEO...

  • Page 13
    ...and CEO, GE Specialty Materials MIKE FRAIZER President and CEO, GE Insurance BILL CARY Vice President, Financial Planning and Analysis GARY REINER Senior Vice President and Chief Information Officer BETH COMSTOCK Vice President, Corporate Communications JOHN KRENICKI President and CEO, GE Plastics...

  • Page 14
    ... local company with global strength and limitless growth opportunity. RESOURCE REALLOCATION We are allocating capital to new businesses that will increase growth with high returns. We like global markets where we can build technical leadership, interface directly with customers and develop multiple...

  • Page 15
    ...We aim to grow it 15% annually and, by 2005, have a $4 billion global business leader. At the same time, we have businesses that cannot generate the long-term earnings growth or returns our investors expect. In 2002, we sold GE Global eXchange Services for a gain of nearly $500 million. This was not...

  • Page 16
    ...more investor meetings, and much fuller SEC-required reports. We reorganized GE Capital and gave greater clarity to our financial services businesses. Despite all the good work done by the New York Stock Exchange and Sarbanes-Oxley, there are no sets of laws or rules that can stop a bad culture. All...

  • Page 17
    ... Edison searches for materials for practical filaments for light bulbs, begins quest for insulating materials for electrical wires. 2002 Medical Systems revenues: $9.0 billion NBC BROADCASTING GE organizes its radio and other communications resources into the independent Radio Corporation...

  • Page 18
    ... of GE Silicones materials. MRI Global Research and Medical Systems develop high field magnetic resonance imaging. 2002 MR revenues: $1.3 billion Equipment Management RAILROAD CARS GE acquires railcar services firm NACC and begins expansion of equipment leasing business. 2002 Silicones revenues...

  • Page 19
    ...most powerful jet engine ever flown. As early as April 2004, 350 passengers will be able to travel non-stop from New York to Hong Kong, or Seattle to Singapore, on a 115B-powered Boeing 777-300ER. GE Aircraft Engines is developing eight new engine models, including the 115B. 18 GE 2002 ANNUAL REPORT

  • Page 20
    127,900 POUNDS OF THRUST. TWO WINGS. A SUDDENLY SMALLER WORLD. GE 2002 ANNUAL REPORT 19

  • Page 21

  • Page 22
    ... speed and precision. GE-programmed tablets enable hospitals to put information at the doctor's fingertips. And GE services and financing help healthcare administrators manage costs and focus on patients. For global spending on healthcare of $4 trillion a year, GE offers a powerful prescription.

  • Page 23
    CHINA. 5 5 by 2005. Shanghai is one of GE's key manufacturing and technology bases in China, and will be home to GE's third Global Research Center, opening in 2003. GE plans to generate $5 billion in revenues and $5 billion in sourcing in China by 2005.

  • Page 24

  • Page 25
    ...GE Consumer Finance. THIS IS A MODEL TRAIN. A model for the industry. GE Transportation Systems' new Evolution Series locomotives meet 2005 United States environmental emissions regulations two years ahead of schedule, cutting emissions 40% and improving fuel efficiency. 24 GE 2002 ANNUAL REPORT

  • Page 26
    GE 2002 ANNUAL REPORT 25

  • Page 27
    MADE IN GREENVILLE. Could power South Carolina.

  • Page 28
    Lots of South Carolina. GE Power Systems' new H System can produce 480 megawatts, enough to power more than half a million Palmetto State homes. The H System is designed to achieve 60% thermal efficiency - the power generation equivalent of the four-minute mile.

  • Page 29
    ... in costs as well. GE Betz, part of GE Specialty Materials, competes in a $35 billion industrial water market growing 8% a year. It's a doorway to another place-a safer world. GE Industrial Systems is transforming itself into a major provider of advanced security technology, such as the GE Ion...

  • Page 30
    ... este encabezamiento. Translation: Nearly 40 million Americans can read this headline. NBC's Telemundo, acquired in 2002, serves the fastest-growing segment of the U.S. population with Spanish-language entertainment, news and sports, including news anchor María Celeste Arraras's top-rated program...

  • Page 31

  • Page 32
    ... the wind. GE Wind Energy is using the talents of GE Global Research and the advanced technologies of Industrial Systems, Power Systems and Transportation Systems to develop the most energy-efficient turbines in the wind industry. GE Wind is a global leader in the most commercially feasible form of...

  • Page 33
    ... the space to imagine and the focus to deliver. RIDHA WIRAKUSUMAH President, GE Consumer Finance Asia Lending to consumers on the world's most populous continent RICK WOLFERT President and CEO, GE Healthcare Financial Services Bringing financial health to healthcare 32 GE 2002 ANNUAL REPORT

  • Page 34
    ...General Counsel, NBC KATHY MARINELLO President and CEO, GE Fleet Services REINALDO GARCIA President and CEO, GE Medical Systems International ANJU TALWAR Chief Executive Officer, Global Process Solutions Shaping communications and entertainment law Driving a 1.2 million-vehicle leasing business...

  • Page 35
    ... healthcare, manufacturing, communications, construction, energy, aviation, infrastructure and equipment. In 2002, Commercial Finance used its 3,500-person sales force, a diverse portfolio and rigorous risk management to produce double-digit asset and earnings growth despite the difficult business...

  • Page 36
    ...100 million customers spread throughout 35 countries, Consumer Finance is diverse in terms of both geography and services. This diversity, combined with stringent risk management practices, has helped Consumer Finance generate earnings growth five years in a row while maintaining the high quality of...

  • Page 37
    ... systems, families in their homes with award-winning wireless alert systems, and companies' employees and assets with state-of-the-art access controls and surveillance systems. Industrial Systems is also exploring the use of advanced technologies in new fields such as healthcare and elder care...

  • Page 38
    ... and efficiency. With the combination of technology and service offerings, Medical Systems continues to grow as a total solutions provider to the healthcare industry. www.gemedical.com Plastics PRESIDENT AND CEO: 2002 REVENUES: John Krenicki, Jr. $5.2 billion NBC CHAIRMAN AND CEO: 2002 REVENUES...

  • Page 39
    ...on long-term growth through technological leadership. Power Systems continues to invest aggressively in new turbine technology. In addition to launching three new turbine models in 2002, Power Systems also began test operations of its next-generation H System, which, when it goes into commercial use...

  • Page 40
    ..., Cincinnati, Mexico City, Budapest, Shanghai and many other areas. The GE Fund, the company's philanthropic foundation, works to improve access and achievement for students by advancing new ways of teaching and learning across the education continuum. GE Elfun, the global employee/retiree volunteer...

  • Page 41
    ..., customers, suppliers, GE communities, government officials and the public at large. In 2002, our Board of Directors made changes in corporate governance designed to strengthen its oversight of management and to serve the long-term interests of share owners, employees and other stakeholders. Some...

  • Page 42
    ..., The Procter & Gamble Company, personal and household products, Cincinnati, Ohio. Director since 2002. ANN M. FUDGE 1, 4 Chairman of the Board and Chief Executive Officer, Kimberly-Clark de Mexico, S.A. de C.V., Mexico City, and Director, Kimberly-Clark Corporation, consumer and paper products...

  • Page 43
    ... GE's businesses each year without the presence of corporate management so that directors can have direct exchanges with operating leadership. MEETINGS The GE board held 13 meetings in 2002. In December, the board voted to increase GE 's quarterly dividend for the 27th consecutive year. The Audit...