GE Industrial Systems saw a decrease in earnings on slightly lower revenues. Despite aggressive cost actions, including digitization efforts that helped drive $100 million of savings, we could not offset declines from weakness in multiple sectors of the economy, including telecommunications, machine tools and commercial construction.

Despite the weakening economy, we seized opportunities to accelerate our growth and fill product gaps. Several acquisitions brought new, innovative technologies to our business while broadening our offerings to global customers. Interlogix, Inc., expected to close during the first quarter of 2002, delivers products with leading-edge technology in the growing security arena, offering us an attractive new platform to enhance our growth. Sensing Solutions Group of Spirent plc manufactures products and subsystems for sensing temperature, humidity and pressure in multiple industries. The Lentronics line of advanced multiplexer offerings gives us high-speed fiberoptic communication products for energy-related and transportation applications. GE Fanuc Automation North America, Inc. acquired VMIC, a manufacturer of high-performance communications, data acquisition and control products for industrial automation.

These acquisitions demonstrate our continued commitment to global growth and expanding our product offerings to include innovative technology.

Six Sigma continued to drive significant benefits to our business, as well as improve processes and deliver substantial productivity benefits to customers. For example, we helped our utilities customer Ameren improve the billing processes for its largest industrial and commercial customers, resulting in significant savings while improving customer satisfaction. Because of this success, Ameren has trained its own Six Sigma Black Belts and initiated an additional five projects targeting continued improvements.

GE Digital Energy acquired Invertomatic Technology S.A., a Swiss-based company that develops, designs and manufactures advanced uninterruptible power supply (UPS) products. With this acquisition, we acquired an outstanding platform of technology, products and services complementary to GE Digital Energy's power quality offerings. This enables us to provide customers worldwide with a power quality solution that achieves the highest levels of long-term power availability and reliability.

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