GE 2009 Annual Report Download - page 4

Unprecedented Actions in Unprecedented Times
As we navigated these uncharted waters, we had four goals: keep GE safe and secure;
execute and position our infrastructure businesses to perform through the cycle; create
financial flexibility; and protect our franchise and brand. We responded to these events as
I hope you expected, though sometimes of necessity with more speed than we would
have liked. In all of this, I had a lot of help, and never have I been more grateful for it.
I trusted in the perseverance of our employees, the dedication of our managers and the
wisdom of our Board.
KEEP GE SAFE AND SECURE. Over the last 18 months, we cut employment by 10%, raised
equity and cut our dividend — difficult decisions for which I take full responsibility. We
fortified GE Capital in the face of rising losses. While our “Triple-A” bond rating was cut, we
remained at a strong and stable “Double-A.” Despite our large financial services exposure,
GE weathered the crisis without participation in the Troubled Asset Relief Program (TARP).
Our GE Capital team has stabilized that business. We reduced our reliance on
commercial paper and decreased dependence on long-term debt. We are funded into
2011. GE benefitted from government lending programs, like most others in the financial
services industry. We issued a portion of our debt under the FDIC’s Temporary Loan
Guarantee Program, for which we have paid a $2.3 billion fee. We lowered our leverage
and increased our Tier I common ratio to a level comparable with banks.
We trimmed Capital Finance ending net investment by more than $50 billion and
focused our resources on segments that continue to deliver high returns. We are
managing the continued risk from commercial real estate and are well prepared for the
potential for further volatility in this market.
A number of our finance company competitors disappeared during this crisis. We
extended $150 billion of credit, with a significant portion of it going to small and
medium-sized businesses. GE Capital Finance earned $11 billion in 2008 – 09 and never
had an unprofitable quarter during this period.
EXECUTE AND POSITION OUR INFRASTRUCTURE BUSINESSES TO PERFORM
THROUGH THE CYCLE. We executed in our industrial business and
outperformed through the crisis. The profit of S&P “industrial” companies
declined 16% in 2009. We outperformed many competitors in the
industrial businesses, earning $14.7 billion of industrial segment profit
(excluding media), a 1% increase from the previous year. We reduced
our costs by $6 billion, so we could overcome the impact
of reduced demand. Our industrial margins grew to 16.2%, up
60 basis points from the previous year. We sought out pockets of
growth wherever we could find them. We deepened our position
in fast-growing markets in Australia, Brazil, China and India. We grew
our product services and helped make our customers more productive.
CREATE FINANCIAL FLEXIBILITY. We improved our financial strength and
flexibility. We increased GE shareowners’ equity by $13 billion during
2009. We generated close to $17 billion of industrial cash flow, helped
by significantly reducing working capital. Announced dispositions are expected to add
another $10 billion of cash within the next year. We ended the year with $72 billion of cash.
PROTECT OUR FRANCHISE AND BRAND. We protected the GE brand and our long-term
franchise. We increased our research and development (R&D) funding by 7%, and
positioned the Company to seize new opportunities through investments. We announced
an exciting new initiative, healthymagination,
SM and continued to successfully drive our
signature ecomagination
SM effort. Through the crisis, GE remained the world’s fourth
most valuable brand.
As we navigated these uncharted
waters, we had four goals:
keep GE safe and secure; execute
and position our infrastructure
businesses to perform through
the cycle; create financial flexibility;
and protect our franchise and
brand. We responded to these
events as I hope you expected …
2 GE 2009 ANNUAL REPORT