For 68 years, GE has built a financial services business characterized by strength and an increasingly global reach. But more to the point, we've worked to create diverse enterprises that produce consistent earnings regardless of external factors – even extreme ones.

2001 demonstrated the resilience of our business model. Notwithstanding the terrorist attack on the United States, the war in Afghanistan and a limping world economy, we turned in the strongest performance in our history. We delivered a record-breaking $5.6 billion in earnings – an 8% increase over 2000 – and would have achieved 15% earnings growth without the World Trade Center insurance losses.

Driving this growth was a formidable combination of enhanced customer-centricity, a record year of acquisitions and productivity, record core growth, intense Six Sigma rigor, expanded Digitization and innovative products.

Business development
Acquisitions have always been at the heart of GE Capital; we've completed more than 400 over the last decade. And the past year was no exception. We closed 27 acquisitions with $42 billion in assets. Our largest ever, Heller Financial, was joined in the closed column by igroup, FFCA, Mellon U.S. Leasing and SAFECO Credit – bringing total GE Capital Services assets to $425 billion.

Another key transaction was with SES, a leading satellite company. By merging SES with our GE Americom business, we've created the world's premier satellite services provider, with GE Capital remaining an important participant in this fast-growing industry. The arrangement also allows us to redeploy resources to drive future growth.

 We're continuously – and eagerly – on the lookout for new acquisition opportunities to maximize customer benefits and net income – and given the economic climate, those opportunities will be many, and in many countries.

People… technology… process
For us, acquisitions are far from the only driver of growth. In search of net income gains, we also look within. And with good reason: GE Capital's winning combination of people, technology and processes is working every day to solve customers' problems and to operate our businesses more efficiently.

In 2001, we demonstrated the power of this triad to make a difference in two key internal areas: productivity and core growth. Combining GE Capital's intellectual talent with Digitization – GE's ongoing technology initiative that's raising the efficiency of all our businesses – we continued to improve GE Capital Services' cost position, reducing operating and administrative costs to 27.2% of revenue for the year. This translated into over $1 billion in costs taken out of our business.

Another example is our expansion of GE's highly regarded Six Sigma quality processes beyond our own walls, delivering business benefits directly to our customers. Our At the Customer, For the Customer teams work with dozens of client companies on location. For example, we've improved customers' accounts payable and receivable processes, driven revenues for a major retailer by developing a real-time pre-approval process for its credit card, and helped a private-equity fund customer by sharing our expertise and formula for acquisition integration. The more than 500 projects we launched in 2001 are just a preview of how we'll apply Six Sigma to add new value to our customer relationships in 2002.

Risk management has always been a GE Capital fundamental – our aggressive asset-based risk management approach combines an extremely diverse portfolio and new digitization tools to help us weather almost any storm. Last year, for example, Smart Tools took our Company-wide risk operation to a new and unique level. These analytical models cover all aspects of the risk equation and have made our Company smarter about credit evaluation, asset management, account performance monitoring, and so on. Beyond the analytics, Smart Tools have embedded our historical economic knowledge so it can be leveraged consistently across all the businesses of GE Capital. Smart Tools have quickly become an important competitive advantage for our company.

Our most important assets
Of course, GE Capital is about more than numbers. It's about people. We never lose sight of the fact that our 91,000 associates – working in 45 countries around the world – are our most important asset.

2002 will be challenging, but we're optimistic about our prospects. We bring multiple levers – acquisitions, core growth and productivity – to power our performance. But the ability to deliver our consistent, excellent performance also depends on our central strategy of financial diversity. GE Capital has more than two dozen businesses in five huge global market segments: consumer services, mid-market financing, specialized financing, specialty insurance and equipment management. Tour these segments on the following pages:

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