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GE Capital Services had a strong and successful 2000, during which we intensified our focus on the customer, enhanced productivity across our organization and moved decisively to transform our company with digitization. There were many highlights for GE Capital, but what really characterized 2000 for us is the most important letter in GE: e. We made dramatic progress embedding e in how we serve customers and operate at every level. For example, at GE Capital headquarters in Stamford, Conn., we created an e-Boardroom, with benefits both symbolic and real. By wiring the room to our major business centers around the world with laptops, screens and online collaboration tools, we now hold management meetings and deal reviews in real time without incurring lost time and expense on travel. More to the point, transactions benefiting our customers get done faster while we demonstrate we're determined to thrive in the e-World. But before we describe our 2000 story, let's do the numbers. GE Capital net income grew 17% in 2000, another record year in two decades of double-digit earnings increases. Assets exceeded the $370 billion mark and our businesses combined to deliver $5.2 billion in net income. In all, a terrific year for our global financial services companies. GE Capital continued to expand with strategic acquisitions and joint ventures, notably in the United States, Europe and Japan, along with cost-effective use of advanced technology, as evidenced in our business centers in India. In fact, 5,000 GE Capital associates are now employed in India, using Six Sigma processes to offer customers "24x7" service. Our fastest-growing market continues to be Japan, where we're growing platforms through alliances in addition to strategic acquisitions. We finalized joint venture agreements with Nissen for consumer finance across Japan and with Fukugin Leasing Company for equipment leasing. GE Financial Assurance added more Toho policies, transferring assets of $22 billion and increasing insurance policyholders by 1.6 million. In the United States, we acquired Bank of America's fleet leasing portfolio, Travelers' long term care insurance operation and the private-label credit card business from JCPenney, all of which will contribute to our continued core growth in the years ahead. In Europe, GE Capital acquired one of Britain's largest public real estate companies, MEPC, and took it private through an innovative joint venture with the Hermes Group. We also acquired PK AirFinance, a subsidiary of France's Credit Lyonnais that provides and arranges aircraft-backed debt to airlines, lessors and financial institutions. Acquisitions and joint ventures were only one component of growth for us. Through innovative new products and strong execution, GE Capital achieved top-line growth with such new and existing customers as ExxonMobil, The Home Depot, Nortel Networks and NCR. In 2000, core growth overall accounted for a 13% increase of our net income, an improvement from 8% in 1999. Intensified efforts behind retention/penetration and cross-selling complementary products and services were at the heart of this success. As part of GE Capital's execution focus, we also addressed a few thorny issues in 2000. Our TIP/Modular Space business underwent rationalization that saw a renewed focus on profitable branches and increased strength in Europe, with a 10% increase in sales and strong growth in income. At IT Solutions, a strategic reduction in headcount and a refined focus on higher-end technology services maximized effectiveness and better served customers. ERC moved to solidify its position by sharpening its underwriting discipline as the industry cycle turned upward. With unattractive market conditions in the U.S. auto sector, we stopped writing new leases and loans in our domestic auto finance company, while still remaining strong in this business in Europe and Asia. The board of directors of Montgomery Ward Inc. decided on an orderly liquidation of that retail business, which was owned by GE Capital. The decision had no material effect on GE Capital's ability to meet our performance targets. And, finally, we located and acted on an attractive exit opportunity with the sale of our mortgage origination business. As always, the diversity of our financial services businesses remained central to GE Capital as we continue to provide consistently strong results to our parent. One of our biggest stories for 2000 was the powerful start we made implementing GE's e-Buy, e-Make, e-Sell strategy. With e-Buy, e-Make, and e-Sell, we are eliminating the middle of every operation in our company—middlemen, data handling, paperwork of any kind—with the goal of providing self-service capabilities instead. For e-Buy, we now aggregate purchasing across GE Capital with e-Auctions. The initial results are very promising: a 25% decrease in the cost of U.S. office supplies, telecommunications down 29% in Japan and European temporary services down 10%. e-Make is expediting deal-making for us and for our commercial customers, helping us manage business reporting processes and assets without one sheet of paper. Overall cycle time is down by 20% and customers see savings in several deal-related items, including legal costs, which can amount to over $1 million per deal. E-Make also cuts operating costs. The savings in just one business segment, private-label credit cards, are enormous when you realize that an application on paper from a new customer costs $4 while an Internet application costs just $2.79. Using the Web and digitized information to handle service calls means a $2.82 savings on every one of tens of millions of inquiries. The potential of e-Sell is illustrated by one of our high-profile 2000 initiatives, GESmallBusiness.com. In just a few short months, visitors to the site are up 150% and over a billion dollars of leads have been generated—a vivid example of what the e-Sell opportunity represents to us and to our customers. E-Business and Six Sigma Quality go hand-in-glove, driving greater speed, efficiency and profitability across our businesses. GE Capital Aviation Services reduced Polar Air's fulfillment time from 225 hours to 84, while U.K. retailer Arcadia Group Plc, a Global Consumer Finance client, saw an 8% increase in recruited private-label credit card accounts and a full-minute reduction of cycle time for in-store card applications. TIP/Modular Space and Penske Truck Leasing were able to enhance customer relationships and dramatically increase productivity—all using Six Sigma and digitization. In the end, of course, there is no e-Business, there's only business. GE Capital's continued success in 2000 had two primary elements: first, an unflagging dedication to exceeding customers' needs; and, second, the relentless effort of thousands of associates operating in more than 46 countries around the world. It is a great pleasure to offer our thanks to customers for working with us and to express our gratitude to GE Capital associates for a job extremely well done. www.gecapital.com |
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