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Through the cycles, GE’s long-term financial goals are: revenue growth of twice the U.S. Gross Domestic Product (GDP); 10%-plus annual earnings growth; operating cash flow growth greater than earnings; and a return on total capital exceeding 20%.
Here is how GE performed in 2003:
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Revenues grew 1% to $134.2 billion. Excluding Power Systems and the expected impact of the decline in U.S. gas turbine shipments, revenue grew 6%, about twice GDP growth.
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Earnings before required accounting changes grew 3% to $15.6 billion, or $1.55 per share. Excluding Power Systems, earnings grew 17%.
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Cash flow from operating activities was $12.9 billion, up 28%, reflecting a $2.2 billion improvement from inventory, receivables and payables. Return on average total capital remained strong at 19.9%.
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The Board of Directors increased the dividend 5% for GE’s 28th consecutive annual increase. At year-end, GE’s yield was 2.5%, a 40% premium to the S&P 500. GE returned $8 billion to investors in 2003, primarily through dividends.
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GE remained one of only seven triple-A rated industrial companies. The Company continued to reduce “parent-supported debt” at GE Capital, with total reductions of more than $9 billion over 2002-03. Commercial paper as a percentage of total debt remained below 30%.
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Total return for GE shareholders (stock price appreciation assuming reinvested dividends) was 31% versus the S&P 500’s total return of 29%. At year-end, GE traded at a price/earnings ratio (P/E) of 20, a slight discount to the S&P 500.
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GE continued to earn the respect of the business world. For the sixth consecutive year, GE was named “The World’s Most Respected Company” in the Financial Times annual global survey of CEOs. GE was ranked first for governance and integrity.
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