GE Annual Report 2000: Letter to Share Owners




			GE in the Press


			Chairman-Elect, Jeffrey Immelt




		"We write this in a year of transition to a new team, and we would like to use this occasion to reflect on what GE is today: why it works, the values and beliefs it is built upon and how they will serve to take us to the even better days that we know lie ahead for our Company."

To Our Customers, Share Owners and Employees

2000 was a memorable year for GE: It was a year of record-breaking business performance; a year that saw the proposal to acquire and integrate the businesses of Honeywell; and a year that began the transition to a new leadership team.


			Revenues rose 16% to $129.9 billion—a record.


			Net income rose 19% to a record $12.7 billion, with 15 of GE's top 20 businesses posting double-digit earnings increases.


			Earnings per share increased 19%.


			Cash generated from our operations was a record $15.4 billion—up 31%, or $3.6 billion from 1999.


			Ongoing operating margin—a key metric of business performance—rose to nearly 19%—this from a Company that struggled for 111 years to reach 10%.


			The Company made over 100 acquisitions for the fourth consecutive year and moved quickly to acquire Honeywell, whose businesses are a perfect complementary fit with our Aircraft Engines, Industrial Systems and Plastics businesses. Honeywell share owners approved the merger in January, and GE and Honeywell are working with regulatory agencies to close the transaction as early as possible in 2001. We expect the acquired Honeywell businesses to give us double-digit earnings-per-share accretion and, within two years, add one to two percentage points to GE's bottom-line growth rate.


			In 2000, GE continued its share repurchase program, raised the dividend 17% and split the stock 3 for 1.


			Our stock price was down 7% but outperformed the S&P 500, which was down 10%. This is not the kind of "outperformance" we've been proud to report in past years—particularly after posting the best operating results in the history of the Company. Still, share owners who have held our stock for five years, including 2000, have been rewarded with an average 34% total annual return on their investment. Those who have held it for a decade, 29%; two decades, a 23% total annual return.


			Substantial progress was made in 2000 in further diversifying GE's leadership. 26% of the Company's top 3,900 executives are now women and minorities, and over $30 billion of our 2000 revenues were generated by business operations led by female and minority operating managers.


			GE continued to be the world's most honored company—awarded for the fourth straight year Fortune's "Most Admired Company in America," as well as, for the third time, "The World's Most Respected Company," by the Financial Times.

We write this in a year of transition to a new team, and we would like to use this occasion to reflect on what GE is today: why it works, the values and beliefs it is built upon and how they will serve to take us to the even better days that we know lie ahead for our Company.

First, and most importantly, GE is a growth company, creating, in 2000 alone, the equivalent of an $18 billion, multi-business "company" with earnings of $2 billion. In 2000 the Company not only posted its highest revenues ever, but grew them at one of the highest rates in its history.

Second, through the rigorous pursuit of four big Company-wide initiatives—Globalization, Services, Six Sigma Quality and Digitization—we've changed not only where we work and what we sell, but how we work, think and touch our customers.

Globalization has transformed a heavily U.S.-based Company to one whose revenues are now 40% non-U.S. Even more importantly, it has changed us into a Company that searches the world, not just to sell or to source, but to find intellectual capital: the world's best talent and greatest ideas.

A Services focus has changed GE from a Company that in 1980 derived 85% of its revenues from the sale of products to one that today is based 70% on the sale of services. This extends our market potential and our ability to bring value to our customers.

Six Sigma has turned the Company's focus from inside to outside, changed the way we think and train our future leaders and moved us toward becoming a truly customer-focused organization.

As we said in our 1999 letter, Digitization is transforming everything we do, energizing every corner of the Company and making us faster, leaner and smarter even as we become bigger. In 2000, these words began to turn into numbers, as we sold over $7 billion of goods and services over the net and conducted over $6 billion in online auctions. Digitization efforts across the Company will generate over $1.5 billion in operating margin improvements in 2001.