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Fellow investor,
Today GE released its 2020 Annual Report, which includes our Chairman and CEO Larry Culp’s Annual Letter to Shareholders and our 2020 10-K.
In his letter, Larry reflects on the challenges the world faced in 2020 and how our employees continued to execute. As Larry states, “together with our customers, the GE team kept power flowing, hospitals operating, and planes flying.”
He also describes GE’s leading positions to capture opportunities in our end markets, including the energy transition, precision health, and the future of flight. “This is why GE exists—to rise to the challenge of building a world that works,” Larry says. “GE’s people did that in remarkable fashion in 2020, building on long-standing strengths and developing new skills. As a result, we are starting the year with real momentum.”
In 2020, we continued our journey with lean—an operating philosophy that emphasizes customer focus and continuous improvement—both within and beyond manufacturing. In that spirit, we’re reducing our own cycle time in our financial reporting, filing today’s report 12 days earlier than last year. We continue to enhance and simplify our disclosures to provide clearer and more concise messaging, also reducing the length of the 10-K as compared to 2019 while maintaining the most meaningful information. I’ve highlighted some of these enhancements at the bottom of this newsletter.
Today we also separately published GE’s 2020 Diversity Annual Report, our first in many years. Larry and GE Chief Diversity Officer Mike Barber, the report’s co-authors, noted that “this is the beginning of a journey to improve the depth and breadth of our diversity data.” We’re committed to continuously improving here too, and today’s report marks our commitment to transparency, accountability, and community in this area.
Join us next week as Larry appears at the Barclays and Citi Industrial Conferences on February 16 and 17, 2021. You can find the webcast details on our investor website. And as a reminder, GE will hold an Investor Call to provide more detail on our 2021 company outlook, including by segment, on March 10, 2021.
As always, I welcome your feedback. Thanks for your continued interest in GE, and please take care.
Best,
Steve
Select key 2020 10-K disclosures include:
- As we shared in our fourth-quarter earnings report, as part of our efforts to align financial statements with how we operate the company, we voluntarily elected to implement several financial reporting changes and recast all periods presented in our 10-K accordingly. These include:
- Changed presentation of GE Industrial restructuring program cost (pp. 21-22): To drive increased visibility and accountability for restructuring expense in GE's businesses, this will now be included in segment profit and adjusted EPS, except for significant, higher-cost programs that continue to be recorded within Corporate Items and Eliminations. This change better aligns restructuring expense with cash spend at the segments, driving accountability in both managing costs and benefits.
- Classification of Statement of Financial Position (current and non-current) and revised working capital definition (pp.58-59, 76-77): To drive increased transparency to operational drivers for near- and long-term cash needs and enhanced linkage to Free Cash Flow metrics.
- Presentation of research and development (R&D) expenses as a separate part of costs and expenses in consolidated Statement of Earnings (Loss) (pp. 23, 56-57): Provides increased transparency to R&D spend and trends as part of GE's total investment in innovation.
- Ceased reporting GE Capital as an equity method investment in the GE Industrial column of financial statements (pp. 58-59): The GE Industrial column now contains only the earnings and cash flows of GE Industrial. This change has no impact on the GE Capital or Consolidated columns. All commercial transactions between GE Industrial and GE Capital continue to be reported on arms-length terms and are eliminated upon consolidation.
- Enhanced human capital disclosure | Including management priorities designed to support business strategy and improve organizational effectiveness (p.4)
- Simplified Management Discussion & Analysis | Focus on free cash flow by segment; also highlighted restructuring costs by segment (pp. 10-20, 28-30)
For important information concerning our forward-looking statements, please click here.
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