ML20126H083
| ML20126H083 | |
| Person / Time | |
|---|---|
| Site: | Vallecitos Nuclear Center, Vallecitos |
| Issue date: | 02/20/1981 |
| From: | Rosalyn Jones, Welch J GENERAL ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML20126H081 | List: |
| References | |
| NUDOCS 8104030494 | |
| Download: ML20126H083 (48) | |
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1 CE 1983 Annudi Rdport?
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s Contents 1,
.S d '3x Financialhighlights) 125gManagement.;
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< t 4 Comments from the Chairman,
28i Financialreview i j f
I and Chairman-electi~
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- 33 (Report of managementj s
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J 6 iConsumer Products and Services y J 33 ? Report ofindependent1. ' '#&
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3 i g i Industrial Products and Components o N (certifiedpublicaccountants?
s, 112;; Power Sy' stems 1
' 34 L Financial etatoments k 4
115 (Technical Systems and Materials 3MSummary of significard accounting [
Q 118: NaturalResourcesi i
.. f policies ;
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,.s 20 ;internationaU i381 Notes to financialstatementsi
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- 221 Board of Directors 7 t44 f Segmentinformation l R2,
a 247GE people?
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?461 Ten-year summaryi 1
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'1 C:ver:Newluster for the familt
. Note: Unless otherwise indicated by the context, the Editor: Linn A. Weiss n larGeneralElectricsymbol,the '
terms "GE," " General Electric" and " Company" are L
. Associate Editors: Devere E. Logan: Edna tercini i V- %,
GE monogram,is sought through used on the basis of consolidation described on page -
- Financial Editor
- Sidney D. Spencer 1
....=m _....
4 ths wide diversity of growth busi.
37, Unless otherwise indicated by the context, the terms L Editorial Board: Frank P. Doyle, Vice President-Cori '4 nisses presentedin this Annual
" Utah" and " Utah Intemational" mean Utah Intema -
.- porate Employee Relations: Frederick N. Robinson,'
f Riport. Having maintained its L tional Inc., as well as all of its " affiliates" and "associ.
Manager, Corporate Editorial Programs; 4 earnings momentum through the = ated companies" as those terms are used on page 37,.
John L. Ingersoll, Manager, Corporate investor D U.S. recessionary period of Communications... 1 JJ....
N 1980, General Electric antici.
8EflER AL $ ELECT AIC,' $ and GE sre registered c x Art Direction: Jack HovWAssociates, Inc.
pitts a new surge of growth,-
.: trademarks of General Electric Company, e hnd e indlJ Cover Photo: Dan Kozeep...
.o withtherevivalof theU.S.and cate registered and unregL:*ered trade and service "
- Photographers: Nancy Alsop, Chris Anderson, L,... !)
world economies.
i marks of General Electric Company.-
- Stan Blanchard, Joseph B; Brignolo, Gary Calderwood,: ~
- 1.
- Tom Forderbar, Bob Gomel, Walter B. Halstead, Keith Jay,I The 1980 Annual Report is an issue of The General i
. Tony Kelly, Wayne Lennebacker. Russell Ley, Dave t.
Electric investor, published regularly to inform share -
' Monley, Lance Nelson, Vance Roth, Edward Schmidt, '
t[
owners and investors about activities of the Generr.'-
' John Wiesman.-
i
- Electric Company. Others may receive the investor of Q
W s
n request.- ~ '
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4 Printed in U.S.A.'
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- t-01981 General Elodtric Company,--
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.k 2 Annual Report 1980 q
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Fincnaici highlighta Percent (Dollar amounts in millions; per-share amounts in dollars) 1980 1979 increase For the year Sales of products and services to customers
$24,959
$22,461 11 %
f Otherincome 564 519 9
Total revenues 25,523 22,980 11 Net earnings applicable to common stock 1,514 1,409 7
j At year end Total capitalinvested
$10,447
$ 9,332 12%
Share owners' equity 8,200 7,362 11 Short and long-term borrowings 2,093 1,818 15 Per share Net earnings 6.65
$ 6.20 7%
Dividends declared 2.95 2.75 7
Share owners' equity-year end 36.00 32.31 11 Measurements Operating margin as a percentage of sales 9.0%
9.5%
Effective income tax rate 38.4 39.9 Earnings as a percentage of sales 6.1 6.3 Percent earned on average total capitalinvested 17.3 17.6 Percent earned on average share owners
- equity 19.5 20.2 Borrowings as a percentage of total capitalinvested 20.0 19.5 l
The General Electric investor 3
Commsnto frem the Chcirman
" Innovation and self-renewal:
cnd the Chairman elect these are themes that characterize General Electric as we enter a new era."
Thesignificanceof thesesalesandearn-ing s is not merely that they set new levels in a year when profits f or ind ustry generally de-clined. More importantly, they were achieved in a year when you r Company sharply in-creased investments in new plant and equip-n ent,newtechnology,newproductdevelop-ment and newbusinessventures.
U.S. business today finds itself challenged
,f-by agg ressive overseas competitors. National productivity has been declining and,in indus-try af ter ind ustry, product ieadership is moving to other nations. Companies that refuse to re-newthemselves,thatfalltocastoff theold and embrace new technologies, could well find themselves in serious decline in the 1980s.
We are determined that this shall not happen 19 General Electric.
Self-renewal. You r Company is engaged in a process of internal change that will transf orm the ways we de sig n, manuf actu re and distrib-N,, e ute our products and services in the 1980s. We b
are encouraging our people to probe con-stantly for new markets, new techniques and Thefoltst signing ot th ese commeds sig-newbusinessopportunities.
c, nals the approaching change of emutive This stress on innovation has been ga+her-leadership af GeneralElectrl.. Jn the re-ing momentum and is perhaps best illus?ated firementofReginaldH. Jones.';,ht)on by the change in our sources of earnings, as
/ -
Aprlf f,1981, John F. Welch,Jr., willbecome emphasizedinlastyear's AnnualReport. As g'
Chairman and Chief Executiva Officer of the 1970s began,80% of your Company's your Company. He will be the elgh th person e arnings came f rom its traditional bu sinesses h
fo hold that oft /ce sInce the founding of GE in the manuf acture of electrical and electronic 1,i.
In thenineteenth century.
equipment. These businesses temain healthy John f.Burlingame(middleleft)and andgrowing althoughtheynowprovideless Edward E. Hood, Jr., con tinue as Vice Chair-than half of our earnings.The majority of our men a nd Executive Officers with expan ded earnings are presently derived from growth responsibillfles forrealignedstaff and businessesinman-madematerials natural L
operaflons, resources, aerospace and transportation I
equipment, services and other new lines of Y 'vbz G eneral Electric's diversity and firiancial opportunity. And 42% of our earnings now
\\ d ?@
l strengths enabled it to turn in a solid perform-come f rom inte rnational activities, compared ance in 1980 despite adverse economic condi-withonly16%adecade ago.
tions in the U.S. and many foreign markets.
The status of our current businesses is de-Sales of $24.96 billion represented an 11 %
tailedinthe pagesof this AnnualReport,butto l
l increase over 1979. Earnings of $1.5 billion, or give our share owners a " feel" for the present
$6.65 per share, were 7% above 1979 levels.
mood of self-renewal at General Electric,let us 4 Annual Report 1980
1 commantonthsComp ny'srespons:tos2v -
En:rgy.Fromitsbeginnings,G ntrzlEl:ctric eralfundamentalchallengesof the 1980s.
hasbeenaproducerofenergy conversion '
equipment for electric utilities. But thatis now.
Electronics. There is wide ag reement that the j u st a modest proportion of our total lnvolve-new electronics will be the dominant techno-ment in the rapidly growing energy field.
logicalforce of the 1980s. And so we have Through Utah international's coal mines been engaged in a Companywide eff ortto ap-
' and Ladd Petroleum's oil and gas wells, as well ply the new mieroelectronics and the related as our nuclear fuel operations, we are sup-
' information-based technologies to every pos-pliersof basicfuel.Our equipmentpowers ma-sible product, service and process in GE..
chir ery in the mines and drilling fields, our The corporate commitmentis embodied in diesel-electric locomotives haulthe coal, and -
hundred-million-dollarinvestmentsinthecon. our gas tu rbines power the pipelinesJ b
struction and acquisition of new electronics And as the world strives to reduce its exces-laboratories and manuf acturing centers. We sive dependence on one energy source-pe-have established an industrial Electronics -
troleum-GE's research activities seek com-Group and an information and Communica-mercial breakthroughs in significant new -
p tions Systems Group. GE training programs energy technologies such as systems to con-are under way to bring the thinking of our man-vert coal into clean synthetic fuel gas, agers and technical people up to the state of.
Anotherprofitablefacetof theenergymar-the art in the new electronics, and we are vigor-ket is the redesign of our products to conserve ously recruiting more electronic engineers.
energy-fromenergy efficientlamps,appil '
The proposedpurchaseof CalmaCom-ances and motors to fuel-saving jet engines, pany, a leading producer of interactive graph-Icsequipment,andtheacquisitionofIntersil,a. -Innovation.PerhapsyourCompany'scom-maker of advanced microelectronic chips, are mitmenttobroad basedinnovationisbestex-consistent with ou r inte ntion to be at the lead.
pressed by lts rising investment in research Ingedgeofnewtechnology.
and development. Since 1977, we have in-Yourmanagementisdeterminedtobe creased GE-f unded R & D expenditures 85%
a leader in the electronics revolution.
to S760 million. Total R & D expenditures, with external f unding, reached $1.6 billion !n 1980.
Productivity. Afteradecadeof slowproduc-
. General Electric is not merelyin the electri-tivity growth, U.S. Industry is poised for a major cal business, or any other particular business, surge of investment in new equipment-the This Company has moved forward to a new so-called"re-industrializationof Amerip."
dim ension of ind u strial capability that inve::-
ForGEtheprocesshasalreadybegun.
tors are only beginning to recognize. We arein Your Company has invested almost $6 bil-the business of creating businesses to antici-tion over the past five years, including nearly pate and serve the needs of achanging world.
$2 billion in 1980, to upgrade its productive This is, atleastin scale, something rare. And capabilities. Interactive graphics for com-it can make a constructive contribution to a puter-assisted design, manuf acture and test; world that is striving desperately for acceler-robotics; programmable electronic controls; ated economic and social development.
energy-efficient drives: these are among the advanced technologies that are transforming our f actories into some of the most productive, quality-controlled ope rations in the world.
And what we develop for our own f actories we will then sell to our ind u strial customers-a John F. Welch,Jr.
prod uctivity-improvement market that is g row.
Chairman-elect ing wellover 20% per annum.With our own -
f actories as a worldwide laboratory for the de-
/
M velopmentof advancedmanufacturingsyr-Y tems,andacustomerbasethaturgentlyfe6 3 the need for productivity breakthroughs, GE ReginaldH. Jones, Chairman expects to be a lcader in equipping the auto.
and Chief ExecutiveOfficer matedfactoriesofthefuture.
February 20,1981 The General ElectricInvestor s
1 Consumer Earnings aro sustained during rec:ssionary pnriod Products cnd Services N
ag -
(in rnillions) 1980 1979 1978 1977 1976 J Revenues *
$5,714
$5,448 54.865
$4,215
$3,510 1
i Net earnings
- 407 401 377 323 261 4
4
- Includes net earnings of General Electnc Credit Corporation 115 90 77 6'1 57
)
s 3;
4 Consumer Products and Services Sector pany. It is the largest nonmanufacturing com-I revenues and earnings were slightly ahead pany in equipment financing and leasing, of 1979, despite operating in an environment handling leasing activities ranging from com-e characterized by a sharp decline in appliance puters to supertankers. Leasing is GECC's shipments and extremely volatile interest f astest-growing business. It pioneered PaulW.Vanorden rates. Earnings were led by the strong per-leveraged leasing and is a world leader in yo, e cejd" formance cf General Electric Credit Corpora-that business, with over $5.1 billion of indus-u "d
onsu n,,
ProductsandServicesSector tion (GECC), the Company's whol!y owned trial-and transportation-equipment lever-nonconsolidated finance affiliate. Sector re-aged leases in its portfolio.
l sults reflect effective management actions to GECC also is a leading lenderin home control costs, strong consumer acceptance products retailing, home equity financing and of new products, and an improved balance a wide array of commercial and industrial between product and services businesses.
equipment industries.
While sustaining earnings, the Sector con-tinued to fund programs for the development Major appliance businesses, serving retail of new products and services to meet con-and builder markets with a complete line of sumers' changing lifestyles and the evolving GE8 and Hotpoint8 kitchen and laundry needs of business customers. These pro-equipment, had lower earnings in 1980 on grams, designed for future growth, are main-about the same level of sales as in 1979. The ta!ning a strong emphasis on innovation, recession, credit restrictions and a weakness quality and productivity improvement.
In housing severely affected the U.S. major GECC earnings grew 28% in 1980. As for appliance industry, causing 11% lower unit the product businesses, sustained cost im-shipments, excluding microwave ovens.
provement actions and continued emphasis General Electric moderated the earnings im-on new and improved products enabled them pact with new productivity programs and to outperform the industry and limit their strong sales of innovative products. These earnings drop to 6%.
improvements position these businesses to in 1980, Sector operations accounted for remain a major contributor to Sector earn-22% of GE revenues and 27% of earnings.
Ings as the Company continues to respond to consumers' changing wants and needs.
General Electric Credit Corporation Industry unit sales of the microwave oven earned $115 million in 1980, up from $90 mil-were up 32% for the year. In this growing lion in 1979, and provided 28% of Sector business, GE has captured a leadership po-earnings. Growth in earning assets of more sition with product improvements and cus-than $1.0 billion as well as improved operat-tomer acceptance of the Spacemaker2 unit.
J ing efficiencies contributed to the excellent The positive momentum of the dishwasher l
results (see page 40 for condensed GECC line was enhanced by strong customer ac-financial statements).
ceptance of the top-of-the-line Model 1200.
With total assets of $9.3 billion, GECC ranks To serve customers better, G E placed in-as the largest U.S. diversified financial com-creased emphasis on product service. In-i 6 Annual Report 1980
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nome servtCe f o' more than 100 mehon GE t Ao-speed-compressor Weatnertron neat l.
and Hotpoint ma,or appuances is provided pump with a microprocessor control for auto-
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-g-4 through a net Aors of 135 f acto'y service 'o-matic ad;ustments in response to amb>ent
.."+-92 Cations and over 10.000 f rancn sed servicers temperature changes u
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.e-Air conditioning products affected by the Lighting operations had shght:y lo Aer earn-y:
recess:cn. reported :c Aer earn <ngs and ings on some Ahat higher sa es Strong per sa es A tnougn l ate-season sa es impro',ed formance tn most hnes dtd not comp:etely off-Snarp y 1n response to not Aeatner. ga ns set substantia! dec ines in marwets for photo-Aere not suthcient to offset the :mpact of flash lamps and !arrps for automote.e uses recess +on-drrven decane in demand and sus-The cont.nuing introduction of innovative ta red n gh :n'iation Ho Aeve' tne ma' wet for and energy-efficient products found exce'.
a-' cond tioning products is expected to im-iert reception in Dotn consume' and indus-p'o.e cunng tre 1980s ed by e ectric heat tnai mar *ets pur"ps Ahicn a'e today s most eff:cient GE re nforced its conve't to conserve r"e*od o' e ect'ic neat'ng and cocong treme ;n 1980 emphastz'ng the energy sav-In 1950 GE mt'oduced a re A Executr,e Il engs 'eaLZed by using Luca ox' oght,ng T* e Ger sa e
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NewMulti Vapor'lliamps,Illumi.
P9*gqNHgjp N a leading supplier of quartz tubing, rods, boules p
h ad CMMs W h seNMh MsW.
rtm at ein a fax a.
e-1 livarlighting at35%Iowerenergy q_
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'49 Housewares and audio operations increased costsbecause of theirimproved M
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sfficiency.The new metalhalide lamps combinehighlightoutput p
sales and maintained earnings in a highly Competit,ve. dustry that experienced signif.i-i In perwattwithwarmincandescent-likecolor.
cant cost pressures ir i.s80. Capitalizing on its
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mable AM/FM clock radios and ultra-slim port-l able cassette recorders featuring advanced electronics at affordable prices.
e Television receiver operations reported in-creased sales in 1980 with earntngs about g~ "g. p,
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Sales of television sets manufactured by y
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's.sxC;[Jc.J Theater, the Company's new projection TV General Electric increased for the fiftn year in
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a row. The Widescreen 3000 Home Television 5(-
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M, set, played a major role in the surge of i
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in projection TV. Sales of video cassette re-x,4 1
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'.S corders also are on the upswing. In 1980, GE E
formed joint ventures with three companies to f(
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( support the U.S. introduction of the VHD video J
disc system. The home video disc system is h..
. expected to be the next major product innova-ihl[,((SI @M ji i
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tion in consumer electronics.
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t in 1980 set new records in sales and earn-
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ings. General Electric operates three VHF television stations and three AM and five FM Purchaseandrenovationof this systems. New products included Remote radio stations. In cablevision, where GE op-hu s sfina cel y Enugy Managemd @M cond W h wates M sysms enxmpassMg M kan-k GECC's reatestatefinancialser.
dustrial Lucalox
- luminaires which uses ra-chised communities, customers were added vicesoperations.The formerapart-d'o signals to command the luminaires to at a 22% annual rate in 1980. GE ended the UntoY2Suniteondom$nSuy' d change wattage settings.
year with about 260,000 basic-service and The electronic Halarc2 metal halide lamp 122,000 premium service customers.
is targeted for introduction in 1981. It is the firtt of a family of long-life lamps ihat use The outlook: With a gradual economic upturn about one-third as much electricity to gener-forecast for 1981, and f avorable demograph-ato the same amount of light as the incandes-ice in the '60s, the Sector's product busi-cent bulbs they replace, nesses look forward to healthy markets and Additionally, several operations continue sustained growth resulting from product inno-to grow outside the lighting industry. General vation and emphasis on quality.
Electric is a major supplier of tungsten and The Sector also sees good opportunities to tungsten-carbide powder used in manuf actur-expand its business participation throughout ing cutting tools for metal fabrication, oil drill-the decade in the rapidly growing finance and ing and mining. And the Company has become services markets.
8 Annual Report 1900
Industri:1 Continued growth for most major businesses Products and Components On millions) 1980 1979 1978 1977 1976
'}
Revenues 55.157 54.803 54.124
$3.698
$3.270
- i Net earnings 315 272 223 191 160 f,,
Industrial Products and Components Sector Transportation tystem s bu sinesses contin-(
boosted its earnings 16% during 19800n reve-ued to g row as quality suppliers of diesel-elec-nues 7% ahead of 1979. The improved earn-tric locomotives, motorized wheels for of f-ings were paced by operations serving trans-highway vehicles and transit propulsion equip-portation. contractor equipment and industrial ment as well as drilling drives. Earnings im-motor markets, with most major Sector busi-proved considerably on slightly higher sales.
nesses contributing to the growth. Sector op-Internationallocomotive orders increased Jam:s A. Baker erations include motors, industrial electronics, in 1980, and the largest contract for locomo-xs ut$v indu tr aj contractor equipment, transportation sys-tives in the Company's history was negotiated o
Products and Components tems, apparatus service, and supply services with NationalRailwaysof Mexico.Theten-year Srctor for electrical and related products.
agreement calls for delivery of 60to 100 loco-During the 1980s, industry's need f or new motives or their component sets each year, products and servicestoimprove productivity The locomotive line was expanded to in-and increase energy supplies will provide f a-clude the new B36-7 model which features vorable opportunities in markeis to which the f urther imorovements in f uel ef ficiency and Sector expectsio bring continued product pulling power. This 3,600-hp unit uses G E's leadership and innovation. The industrial elec-highly reliable and advanced railroad-type die-tronics field should be a particularly important sel engine. Although the U.S. locomotive mar-areaforSectorgrowth.
ket was relatively weak in 1980, over the next in 1980, Ind u strial Products and Compo-few years it is forecast to strengthen. Railroad nents Sectoraccountedfor19%of totalGE haulage is expected to increase as a result of revenuesand21%of theyear'searnings.
both the f uel efficiency advantage of railroads over trucks and increased coal transport.
Contractor equipment operations experi-High levels of mining produced brisk de-enced an excellent year, with increased sales mand for G eneral Electr ic motorized wheel and earrings. Strength in commercial con-drives used on haulage trucks. Also, extensive struction markets off set the depressed ievels oil-w ell drilling in 1980 stimulated a sharp in-of residential construction. Indu strial plant and crease in demand for the Comp any's drilling equipment spending remained strong, and in-drive systems.
ternational operations showed improvement overthe previousyear'slevel.
The motor businesses of GE produce alarge G eneral Electric manuf actu res a wide vari-assortment of motors for residential and in-ety of products associated with electrical con-dustrial applications. In 1980, they had some-trol, distribution and circuit protection. These what higher earning s on slightly lower sales.
G E product lines include low-voltage ctrcuit The industrial motor market was strong, re-bre akers, motor controls, wiring devices, pro-flecting industry's emphasis on prod uctivity grammable lighting control, and wire and ca-and custome rs' needs for energy-saving mo-ble. New products introduced by the Company tors. The market for high-efficiency ind ustrial in 1980 included a line of low-voltage switch-motors is g rowing at more than 60% per year, gear that provides increased operator saf ety The component motor market was weak as a andimproved reliability.
result of depressed appliance markets.
The General Electric Investor 9
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i cree ing newin:egratedeircuitsis Because of increased energy exploration microprocessor-based digital control. The hog a soNr$ tis nc arNy worldwide. sales of motors and generators f or s y stem prolongs motor lif e, and can reduce by I
accuveda"mateof Gerera Elec.
mining and oildrilhng were high. Also, exports uptoone half theamountof powernormally tnctnatesa soaleacingprocucer of smallercomponent motorsgrew dramati-consu:c.ed by the application of a constant-o'rmcroe ectromc prc <ucts cally during the year.
speed motor.
Among other new G E products offered was j
indu strial electronics operations had the Series Six f amily of programmable con-higher sales although earnings were down, trols, designed to increase prod uctivity and i
reflecting. in part, theimpact of newinvest-lowercosts.
ment prog rams oriented toward products for As part of G E's now thrusts in high technol-f actory automation.
ogy, two electronics-related acquisitions re-G eneral Electric continued its role as a lead-cently were announced. In February 1981, ing supplier of electrical and etectronic compo-G eneral Electric acquired lntersil, Inc.. a lead-nents and systems to powerind u stry world-ingsupplierof advancedintegratedcircuits wide. New technological developme nts and data acquisition and memory prod ucts, f or included a high-efficiency. static. adj ustable-
$235 million. Intersil will continue as a major speed drive system incorporating the latest su pplier to the merchant market as well as a 10 Annuat Report 1980
source of integ rated circuits for G E's diversi-
- GeneralElectricSupplyCompany,which fied productlines. Also,in December 1980, the reported improved stan f or the year.This Company ag reed to acquire Calma Company, national network of supply centers provides a subsidiary of United Telecommunications products of General Electric and other compa-Inc., for up to $170 million. Calma ls a supplier nies to customers in the contractor, industrial, j
of interactive graphic systems, which include commercialand utilitymarkets.
technologies used for computer-aided design
- Apparatusserviceshops,salesofwhich and manufacturing.
were up, although earnings were lower.
In addition, a $30 million investme nt in new With continued emphasis on expenditures electronics capability at Charlottesville, Va.,
aimed at iong e r-term gro'vth as w:ll as broad-was approved in 1980. Construction willin, ened service offerings, the service shop clude manuf actu ring space for industrial con-network was expanded to 197 locations IfnewGNeYes$ffpro area, trols and a new laboratory to help bolster G E's worldwide. The shops provide inspection, blo controls.Equippedwith role in the industrial elecironics revolution.
maintenance, repair and rebuilding services rnicroprocessors.the units guide for ind u strial equipment manuf actu red by NhYsn aNr$
Service and distribution businesses con-G eneral Electric and other companies. Ferty nd in an process control.
ducted bytheSectorinclude:
repair f acilities in this international network are concentrating on the f ast-growth electronics service market.
The outlook in the 1980s for markets served j
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E tor is f avorable3ased on the nation's need f or 4
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4 a y; The Sector has strengthened its competitive
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position by developing leading-edge products
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and services, and continues to expand its mar-lt keting presence abroad. While some opera-E
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ket conditions. Residential construction mar-1 g ('.
kets are forecast to improve, although com-g i
mercial and industrial construction markets V'
areexpectedtodeclinein1981.
- TheU.S.locomotivemarketisforecastto
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improve in the early 1980s. International mar-mg kets, primarily in developing countries with g
\\s transportation infrastNeture needs, should r
' y!
remain strong.
N'
- Continued high levels of mining and oil drilling are expected to sustain demand for motorized wheels, d rives and motors.
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- Emphasisonenergyconservationandpro-h
.If j.Q ductivity should stimulate demand for G E's 3
f f Ct g i electroniccomponentsandsystems.
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tools and sophisticated prod uction equipm ent is ex pected to produce sig nificant G E sales opportunities.
Locornotive repairand overhaulat
- Growthinworldwidemaintenanceandre-the Company's Hornell, N.Y., serv-f of$he E70
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latesin 19 countries.
The General Electric Investor 11
i P:wcr Earnings growth continues despite slow markets Syctems
- y -
(In millions) 1980 1979 1978 1977 1976 Revenues
$4.023
$3,564
$3,486
$3.218
$2,998 Net eamings 141 114 93 75 61
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General Elect,ic's Power Systems Sector, a level of new orders for these larger units to
)
3, world leader in serving markets for electrical be lower than in 1979. Notable progress, 4'4 generation and power delivery apparatus, in-though, was made in winning domestic in-creased its 1980 earnings by 24% on a 13%
dustrial cogeneration orders for smaller-size I
rise in revenues. Good earnings in steam steam turbine-generators.
)
J turbine-generator operations and the ex-The orders backlog for steam turbine-gen-panding installation and service engineering erators was $2.7 billion at year-end 1980, of Hrrman R. Hill business more than offset declines in gas which $1.3 billion is scheduled for shipment
$',Cl,t(cQsidentand turbine and power delivery operations.
after 1985. The comparable backlog for 1979 PowsrsystemsSector The improved Sector results reflected con-was $3.G billion, of which $2.0 billion was tinued emphasis on productivity gains, in-scheduled for shipment after 1984.
creased penetration of international markets, Mechanical drive turbines showed higher and expansion of equipment maintenance earnings on higher sales compared to 1979.
services. Selling price increases only par-General Electric foresees major long-term l
tially offset inflation-driven cost increases.
growth for this business in international ap-The Sector's strategy for earnings growth plications such as petrochemical plants and is based on strengthening its leadership in emerging energy technologies involving coal a broad range of energy technologies, and liquefaction and synthetic fuels.
diversifying into new energy technologies The Sector's marine propulsion business such as those related to synthetic fuels and consisted primarily of U.S. Navy projects.
advanced cogeneration.
Power Systems businesses contributed Gas turbine sales were higher but earnings 15% of total GE revenues in 1980 and 9%
were down, due principally to tighter margins of net earnings. Presently, high reserve caused by stiff foreign competition. GE gas margins of utilities and uncertain national en-turbines continued to maintain their world ergy policios continue to slow demand for leadership, being used for electric utility power generation and delivery equipment.
peaking and mid-range power, and for indus-The backi' g of unfilled orders was $11.0 triN applications such as natural-gas pipeline billion at the end of 1980, compared with pumping and powering offshore oil platforms.
$12.1 billion at the previous year end. The The Company's highly efficient STAGT decrease from the 1979 year-end backlog (steam and gas) combined-cycle turbine was attributable primarily to elimination of or-plants continued to be attractive offerings, ders for steam turbine-generators no longer particularly for foreign customers.
expected to go into production, and also to in 1980, the Sector delivered the first of a Sector sales that exceeded new orders.
line of large gas turbines to serve the interna-tional electric utility market. This advanced Steam turbine-generator earnings were 105-mw boavy-duty gas turbine, tlie largest well up from 1979 on approximately the such unit ever built by the Company, is now samelevelof sales.
part of a combined-cycle power system oper-As expected, the sluggish demand for ating near Kirchlengern, West Germany, large steam turbine-generators caused the General Electric announced in 1980 that it l
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c' Exportorders of GE steam tur-is participating in a $300 million coal gasifi-continuing losses for this business.
d IoSEr n)sfoYSpa n s Cation' Combined-Cycle demon &kation plant.
Nevertheless, the nuclear fuel f abrication castellon powerplant.a coal-fired Planned for completion in 1983, this 100-mw and services segments of the business are installationlocated on the facility is designed to convert coal to syn-profitable, and the nuclear fuel and services eastern Mediterranean coast.
thetic gas, then clean and burn it to provide needs of U.S. and foreign utilities offer ongo-economical electricity. GE also is supplying ing opportunities. Additionallarge orders for the gas and steam turbine-generators for this fuel were received in 1980, and Power Sys-electric power plant.
tems' installation and service engineering business, in cooperation with the nuclear Nuclear operations continued to incur a business, has expanded GE's nuclear modest loss. As stated in previous Annual services offerings.
Reports, Cr N making substantial expendi-The backlog of orders, including nuclear tures on engi teering and development in reactors, fuel assemblies and plant services, support of nuclear projects in the backlog.
totaled $5.5 billion at year-end 1980, of These expenditures, added to the effects of which $1.9 billion is scheduled for shipment deferments of shipments and cancellations after 1985. The comparable backlog for 1979 of nuclear orders, are expected to result in was $5.3 billion, of which $2.5 billion was The General Electric investor 13
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.g synthetic. fuels development at installation and ssrvice enginsaring busi-v kig t mper ture$teNeooled nesses reported record orders, sales and gasturbine which would beh1-h $.
earnings in 1980. This continued growth was stalledin advanced synfuels 4
achieved by expanded offerings of field engi-fants upe lurbine.
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.c neering and project management services in c.
ready by thelate 1980s.
major domestic and International _ markets.
s Highlights during 1980 included increased 4
participation in domestic nuclear and fossil y
ig piant installations as well as in maintenance and refueling; success in developing a market to upgrade older electrical and electronic equipment; and penetration of offshore
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p equipment maintenance opportunities.
Power delivery businesses, producing
..s transformers, power circuit breakers, switch-
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f' gear and meters, continued to be depressed,-
with inadeauate recovery of cost increases g]" g, problems of utility overcapacity, a slowdown resulting in lower earnings. To overcome f.
in residential construction, and inflationary w
costs which are not completely recoverable i
through price increases, these GE opera-tions are working to improve their margins by stressing productivity programs to reduce costs and improve officiency.
Utility load management, an attractive means of energy conservation, represents a growth opportunity, and the Company is po-sitioned to take advantage of this market. By year-end 1980,18 utilities had purchased GE's newest time of-use meter, and the Company continued the commercial introduc-tion of its Automatic Meter Reading and Con-Q trol (AMRACT) load management system.
To provide GE nuclearfield ent-scheduled for shipment after 1994. Some The outlook. Power Systems Sector earn-Es ontNngEvarSo fuel orders include rep ocessing, plaionium ings are sensitive to electrical load growth, s.
pects of reactortefueling and f abrication and waste disposal services. In To offset the relatively low load growth fore-rnaintenance.GBin 1980 bulita view of Current U.S. government policies, it is cast and achieve satisfactory results, the reactorserv s training centerin highly uncertain whether such services can Sector has embarked on major programs l
be provided.
to improve productivity and develop new In the U.S., cancellations of nuclear plants businesses.
have substantially outnumbered new orders General Electric intends to play a major during the last six years. General Electric's role in whatever forms of energy-related management believes that resumption of nu-equipment and services are required in the clear orders will depend not only on renewed 1980s and '90s.
i demand for electric generating equipment, Over the long term, significant growth op-but also on government action. Such action portunities are foreseen as the nation comes is needed to reform the nuclear licensing to grips with its imported-oil problem. GE is a process and resolve existing uncertainties leader in many energy technologies, and is regarding such issues as radioactive waste aggressively pursuing a wide range of ad-storage as well as nuclear export policy.
vanced energy development activities.
14 Annual Report 1980
Technical Most businasses grow; investments for future continua lyctems and d terials
{W,
"~ 4 (in millions) 1980 1979 1978 1977 1976 Revenues 57.128 56.061 54.745
$4.145
$3.688 Net earnings 373 356 278 248 202
'hI The high-technology businesses constituting 340, and initial orders were received for CT7
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the Technical Systems and M aterials Sector turboshaft engines to power the BellTextron
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had an 18% increase in revenu es during 1980.
214 ST helicopter. Production go-ahe ad was Earningswere5%aheadof the19791evelas announced on the Canadair Ltd. Challenger E e
strong perf ormances in aircraf t engines and e xecutive jet powered by CF34 turbof ans.
inf ormation and communications systems in military markets, prod uction continued on of f set weakntiss in markets for engineered the F404 turbof an engine for the U.S. Navy's ChristopherT.Kastner materials.
F/A-18, and Canada became the first non-U.S.
EncutivsVice President and During 1980, the Sector continued to make customer to select this new fighter aircraft.The la$s ector heavy investments in advanced technologies, F404 and F101 DFE advancedfighter engines i sand a including microelectronics and engineered completed unprecedented durability tests, materials, which are expected to be important Both the F101 DFE and a new model of the J79 f actors in G eneral Electric's f uture growth.
turbojetflewforthefirsttimein U.S. AirForce The Sector accounted f or 27% of Iotal G E F 16s.FlighttestingalsobeganontheU.S. Air revenues and 24%of earningsin1980.
ForceKC-10tankerpoweredbytheCF6 50, and the C FM 56 engine was selected f or a pro-Aircrafi engine businesses serving the highly gram aimed at re-engining KC-1351ankers.
competitive commercial, military, marine and Salesof aircraftenginederivativescontin-indu strial markets produced strong sales and ued on the upswing.The U.S. Navy received earaingsinereases.
its 30th Spruance Class destroyer powered by High fuel costs and intensified competition four LM2500 engines, while initial LM2500 de-among airlines stimulated demand for new air-liveries were made for the Aegis cruiser. In craf t with engines of improved ef ficiencies.
Industrial markets,larg e orders were received G E commercial engines f or this mark et in-f rom Mexico and lndia forthe LM2500 engine, clude the C F6-80, which was selected by several airlines to power their Boeing 767 and Aerospace operations increased their sales Airbus industrie A310 jetliners. Overall,75 and earnings in 1980. Technologies of this customers have now selected the CF6 or business, which principally involves U.S. gov-CFM56? for their Ngh-bypass-engine-ernment contracts, span the space sciences, poweredaircrah.
electronics and mieroelectronics, avionics, Seven airlines and the French Air Force computer software and control systems.
have placed orders to re-engine their DC-8 in1980,GEinstalleditsfirstsolid state, aircraf t with C FM56 engines jointly developed three-dimensional radar system in Belgium as bythe Company anu SNECMA,the French partof N ATO's air defense network,and con-engine manuf acturer. A smaller f an version of tinued work on units for the U.S. Air Force, U.S.
this engine, the CFM56-3, has been of f ered to MarineCorpsandtheUnited Kingdom.
power new and derivative twin-engine aircraf t.
In space technology, G E is the prime con-In 1980, significant milestones in small com-tractor for developing landsat D, a NASA mercial engines also were re ached.The CT7 earth-resourcessatellite,andDSCSill anad-tu rboprop engine was chosen to power its first vancad def ense coinmunications satellite.
commuter sizedaircraft,theSAAB-Fairchild in avionics. including aircraf t instruments I
i The General Electric Investor 15
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for the Boeing 767 and 757 aircraf t and the through new moves into the sof tware and serv-r%sto :s oo:wu estartre Navy F A 18;etfighter.
icessegmentof theindustry.Continuedin-n eae. v67 a-: Amsi-c stne terna! developments were complemented by 43ma se as information and communications systems externat acquisitions w hich provide entryinto operations continued the:r strong mcrease in new areas of systems design. advanced soft-sales and earnings during the year wa'e and services Genera! E!ectnc Inf ormation Services The G E mobne communication products Company (G EISCOpncreased its business business producea strong gains in both sa:es appocationsin anticipation of ongoing andearnings Demar,afortnisermpmentcon-changes in the computer industry and in cu s-tinued in both domestic and f oreign markets tomerneeds Itbroadeneditsmarketbyex-panding into manuf acturing resource p:anning Engineered materials increased sa'esin and by introducing an e:ectronic purchase or-1980 Attnoughearningsweredowndueto i
denngsystem unkingma;orretaverswithla ge inflation driven costincreases andlo Aervo!-
l suppuers ume in depressed consumer-related markets.
I G EISCO strengthened its position as a these businesses contnbuted a ma;o'sha'e to l
l 16 An%a Ae;>g t i E.s]
Sector earnings. General Electric high-per-proving costs and maintaining high quality, f ormance materials encompass engineered Emphasis on increased productivityin plastics siliconechemicals, tungsten-carbide metal-working industries continued to bring metale, Man-Madet diamonds. Borazcn 8 opportunitiesforthe Company'sline of tung-abrasives and electro-materials such as sten-carbide metals and Man-Made industrial laminates and rechargeable batteries.
diamonds for metal-cutting tools. Record oll-TheCompanycontinuedtobe aworld drilling ectivity stimulated strong demand for leader in supplying high-technology engi-Stratapt.ri8 diamonddrillblanks.
neered plastics. While slow auto sales af-f ected plastics volume, this was partially off set Medical systems businesses, supplying di-brtrong international demand and higher agnostic imaging and patie nt monitoring penetrationofnewmarkets.
equipment and services, had higher sales and Among significant f acility additions was a eamings in 1980. International operations are new phe nol plant at Mt. Vernon, Ind., that be-expected to be aided bythe acquisition of sig-gan opo ulion in tate 1980. Production of nificantportionsof theThorn-EMIMedical phenol, a key raw material required for several sales and service operations outside the U.S.
G E plastics, will help assure supply while im-This acquisition reinforces the Company's ability to market and support its high-technol-GE's new L'U-Angiodiagnostic w
ogy medical products in inte rnational markets.
Orders for General Electric's computed to-InNcIrcu$a o7ys temo the
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head and bodywitha highdegree mography (CT/T2) scanners increased mark-edly during the year, with significant contribu-t of easeandaccuracy. Another a
version helpsdiagnosecoronary lionsfrommanymajorWorld markets.
l arterydisease.
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scanner received an enthusiastic reception.
d A GE Microelectronics Center was author-ized in 1980 and is being constructed at Re-
.i searchTriangle Park,N.C.The$55 millionfa-cility will develop and produce advanced microelectronic compone nts for G E products, A
o sWghMMpany's A new phenolplant at Mt. Vernu,,
g capabilitiesincuGlomintegratedcircu ts, i
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s Ind..willhelp provide both GE's supply of vitalfeedstocksand timelvr:ustomerdeliveryof many The outlook f or the variety of markets served GE plastics.
.t by Technical Systems and Materials Sector is f avorable over the long term. While sales of p
engineered materials were aff ected by the short termdeclineinU.S.marketsduringthe year, some lmprovement is expected in 1981.
4 While the airline industryis undergoing fi-
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nancial dif ficulties, prospects f or new engine s,
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salesremaingoodbecauseof thoneedfor w
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The General Electric investor 17
Ncturci Record results from energy and mineral operations R3 sources 5
y-(in millions) 1980 1979 1978 1977 1976 Revenues
$1,374
$1.260
$1.032
$965
$1,003 Net earnings 224 208 180 196 181
- Jd.g. a General Electric's natural resources opera-quarter when employees protested a govem-
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tions, chiefly Utah internationalinc.,in 1980 ment-proposed tax on subsidized housing.
2 j T set records for both revenues and earnings.
Utah seeks expansion of its coking coal ac-Earnings were up 8% on 9% higher revenues.
tivities and is investigating the feasibility of h,
These operations provided 5% of total G E developing other mine sites near present op-
'q#. l ( y',
revenuesand15%of eamingsfor1980, erations. Utah-operated coking coal mines Eaming s imarovements were paced by oll now have a total annual production capacity, AleLander M. Wilson and natural gas, iron ore, copper, domestic includingpartners' shares.of about23million ga on esoard,,;c,,_
coal and ocean shipping operations-more metrictons.
e
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than of fsetting lower earnings for coking coal anduranium.
Olland naturalgas operations of Ladd Petro-C ontinued growth is expected in the 1980s leum, Utah's oll and g as af filiate, produced due to Utah's established position as a leading record revenues and earnings f ar the year.
Iow-coe.t producer of energy and mineral re-Higher prices for petroleum proc ucts was the sources, and oecause of vigorous ongoing primar y reason for improved results. Ladd's exploration and development programs.
activities are located in 16 states and three At year-end 1980, the sales backlog for min-Canadian provinces, and Ladd is a participant erals, including u ranium, was $6.8 billion, of in four foreign exploration joint ventures. D rill-which $5.7 billion was scheduled f or shipment ing and acquisition programs du ring 1980 ex-after1981. Allcontracts makingupthisback-panded its property and reserve positions.
log are payablein U.S. dollars.
Approximately 80% of 1980 natural re-Iron ore activities made a small contribution to sources revenues and 73% of net eamings eamings in 1980.The larg est operation is the originated f rom operations outside tne U.S.
Brazil-based Samarco,in which Utah owns For additionalinformation about certain of 49% of the voting stock and provides debt Utah's natu ral resources, see page 31.
guarantees.itoperatedatabreak evenlevel in1980comparedwith alossin1979.
Australian coking coal activities, although re-alizing somewhat lower earnings in 1980, con-Domestic coal mining operations also con-tinued to be Utah's major earnings source.
tributed to the 1980 eamings gain, principally Utah owns 89% of BMckwater Mine and 68% of due to increased steam coal shipments f rom f our other Utah-operated open-cut coking coal the Navajo and San Juan Mines located in the mines, including Norwich Park Mine which had FourCorners areaof New Mexico.
Its first f ull year of production in 1980. In addi-In 1980, Utah acquired the coallea ses at tion,thecompanyowns68%of thecompara-San Juan, where previously it had operated lively small u nderground H arrow C reek Mine.
under a mining contract, and it completed its A two-year iabor agreement r eached in July purchase from National Steel Corporation of 1980 between management and the mining coal reserves in Kentucky and West Virginia.
unions reflects an improved industrial climate at Utah's operations. Production, though, was Copper minin g operations at Island Copper interrupted for 10 weeks during the third Mine in British Columbia, Canada, reported rec-h 18 Annual Report 1980
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stockpiles by rail-mounted stack-earlyintheyear,andhigherpricesforoneof the ers reclaimersisted to shipping mine's by-products, gold.
In other activities, ocea n transportation oper-Iu o$exiconcEar$ IIc on ations,carriedoutin supportof Utah's product h
Texas, and in otherlocations.
Uranium mining operations are conducted in marketing, realized improved resultsin 1980.
Ladd Petroleumis stepping up ex-Wyoming by Pathfinder Mines Corporation, a Land d evelopment activities were le ss profita-in Ubu.
wholly owned nonconsolidated subsidiary, all blethanthe previousyear, o tsYB az s marcoiron ore pellets areloaded of whose common stockis held byindepen-aboard large bulk carriers.
dent trustees (see note 12 to financial state-The outlook f or Utah inte rnational's busi-me nts). Pathfind er's increased ioss during nessesis enhanced by expected long-te rm 1980 reflected sharply higher operating costs growth in world demand for its products. Rec-combined with tho low prices received as final ognizing this opportunity, Utah is intent upon deliveries were made under contracts signed expanding its current operations. Substantial in the early 1970s. In 1981, Pathfinder is ex-increases in 1980 exploration and develop-pected to begin making deliveries on higher-ment expenditu res reflect man agement's opti-priced sales contracts. Longer-term prospects mism aboutfuture marketprospects.
The General Electric investor 19
Int:rn:tionri U.S. export sales show strong rise; int!:rnational busin;ss increases Foreign multi-industry operations (in millions) 1980 1979 1978 1977 1976 Revenues
$3,234
$2,901
$2,767
$2,562
$2,334 Net earnings 68 65 76 71 75
).
Total intemational operations - all Sectors Revenues outside the U.S.
$9,597
$7,840
$7,014
$6,138
$5,567 Net earnings 639 526 486 415 445
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1 General Electric's total international busi-cult economic conditions in many of the ness from its six Gectors in 1980, which is countries served. These operations are the 4-summarized above, reported a 21% earnings direct responsibility of the International Sec-rise on a 22% increase in revenues. Interna-tot and consist primarily of affiliates produc-2 ti ceP esidentand tional operations accounted for 38% of GE ing varied lines of products for local and ex-SIctor Executive--International revenues and 42% of earnings.
port markets. They also include international sector Demand for a wide range of sophisticated construction operations.
products and services needed by the world's Canadian General Electric Company Ltd.,
economies is expected to continue to make largest of the multi-industry affiliates, re-internation$l business a major contributor to ported 1980 earnings significantly higher General Electric earnings.
than those of 1979 on modestly higher sales.
The Company's international business is improvements in electrical apparatus and composed of four broad categories of activi-construction products were partially offset ties: foreign multi-industry operations; U.S.
by declines in consumer operations.
exports of General Electric products and ser-Latin American affiliate earnings were vices; operations of nondiversified foreign af-ahead of 1979, primarily because of strong filiates including the foreign operations of consumer and industrial markets in Mexico Utah International; and technology licensing and Venezuela, revenues.
Elsewhere, operating profit of restructured i
A summary of international revenues ap-Italian operations improved. The Spanish af-pears below. Revenues from U.S. exports, filiate continued in a loss position,largely as operations of nondiversified foreign affiliates a result of depressed local economic condi-and technology licensing also are included in tions. Opercuons in Africa, the Middle East the amounts reported by the appropriate and Far East generally improved and contin-product Sectors elsewhere in this Report.
ued to provide significant assistance in " pull-ing through" more orders for U.S. exports.
International revenues International construction operations had increased sales in 1980 with earnings about (in millions) 1980 1979 the same as the prior year.
Foreign operations and licensing
$5,816 $5,068 Export sales to external customers by Gen-a fIate customers
$3,781 $2,772 eral Electric s domestic business operations, Affiliated companies 484 467 assisted by marketing and financial services
$y 65 $3,239 provided by the International Sector, were up 31.0 billion in 1980,36% more than in the Foreign multi-industry operations had previous year. This sharp increase was led generally good results in 1980 despite diffi-by high technology products including 20 Annual Report 1980
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Clockwisefromupperlett Brazil s aircraf t engines and gas turbines.
major foreign industrial countries and of s' ant a o str]ct ho As one of the nation's leading exporters, some of the newly industrializing nations are
" S it de General Electric had total exports of $4.3 bil-expected to strengthen in the latter half of the the lguaQu River. includes tur.
bines cesigned and built by Cana-lion in 1980, which exceeded its direct im-year. This should provide an advantageous IerSy ports by approximately $3.3 billion, thereby economic environment for General Electric "Kim-s h gh qua y ape, helping off set the unf avorable U.S. trade operations in those countries, and is ex-products are manuf actured using papermaung dnves, motors and balance.
pected to stimulate demand for GE's exports Eryobex cYs'e$e i at?o'n"9 The backlog of Company orders from unaf-from the U.S.
filiated customers for exports from the U.S.
GE operations expect to continue the,r i
plan, G E recent!y soid six gas tur.
bines to tne na tion ai utility. includ-again increased, from $4.6 billion in 1979 to growth by expanding from their strong bases units 7nNudad[ua1ez ' "
$5.1 billion for 1980.
into countries with high levels of GNP growth
~*
- principally he oil rich nations and several The outlook. Prospects for continued indt sfrializing countries. In addition, Interna-growth of General Electric s international tional Sector has made notable progress in business in 1981 are partly attributable to the strengthening its af filiates, by seisctively al-Company's wide geographic diversity. Af ter locating resources to emerging markets some slowdown in early 1981, economies of which offer maximum potential.
The General Electnc Investor 21
bocrd of Directors General Electric's Board of Directors con-centrating on specific areas of interest:
The Audit Committee, made up entirely of ducted 11 meetingsin1980 TheOctober meeting took place in Houston, Texas, wher e Directors f rom outside the Company, met four Board members also attended the 1980 share times.Itsreviewsincludedthoseof activitiesof owners'Information Meeting, both the Independent Public Accountants and Specific Board attention was directed to pro-the Corporato Audit Staff. At ajoint meeting posed programs relating to the Company's with the Finance and Operations Committeos, strategies for strengthening its electronics ca-the 1979 Annual Report and the 1980 Proxy pability-an increasingly important f actor in Statementwereapproved, today's competitive business environment.
. TheFinanceCommittee,meetingfour In May, the quarterly dividend was increased times, reviewed the Company's financial posi-by the Board, f rom 70 to 75 cents per share.
tion,itsinvestments,andtheoperationsof the The seven Committees of the Board, listed General Electric Credit Corporation, at lower right, are designed to help the f ull
. TheManagementDevelopmentandCom-Board keep pace with the growing scope and pensation Committee held ten meetings and t
complexity of its responsibilities by con-reviewed and approved changes in G E's 4
W q
yc John E. Lawrence WalterB.Wriston RalphLazarus GilbertH. scribner,Jr, Edmund W. Littlefield J. Paul Austin ReginaldH Jones JamesO.Boswellil CharlesD Dickey,Jr.
HenryL.Hillman John E. Lawrence, President, EdmundW.Littlefield Chair-James G.Boswellli, Chairman Henry H,Henley,Jr.. Chairman GertrudeG Michelson, senior James lawrence & Co.. Inc.,
manof the Executive Committee of the Board, Chief Executive of the Board, Chief Executive VicePresident ExternalAffairs, cottonmerchants, Boston, and Director,Utahinternational OfficerandDirector,J G.Bos-officerand Director,Cluett, R.H.Macy&Co.,Inc. retallers, Mass (1957) inc., San Francisco, Calif.
wellCompany farmingandre-Peabody &Co.,Inc. manufac.
NewYork,N Y.(1976) lamsmsses,Los Angeles, turingandretailingof apparel, LewisT,Preston,Chairmanof WsitarB Wriston,Chairmanof Calif A)
NewYorO Y(W72) the Board and Director, Citicorp J. Paul Austin,Chairmanof the theBoardandDirector.J P.
and Catibank, N. A., New York, Board and Director,The Coca.
Charles D. Dickey,Jr., Chair-SilasS.Cathcart,Chairmanof Morgan & Co.lncorporatedand PC/(1962)
Cola Company, Atlants,Ga.
manof ths, Board,ChietExecu-theBoardandDirector,lilinois MorganouarantyTrust Com-(1964) tive CGcer and Director, scott Toolworksinc., diversified pany,NewYork,N Y (1976) perCompany, Philadelphia, products, Chicago,lll. (1972) the oardand erec r Feder-Reginald H. Jones, Chairman George M. Low, President, 9g ated Department Stores,Inc.,
of the Board. Chief Emecutive samuel R. Pierce,Jr., Partner, Renssaluer PolytechnicInsti.
Cincmnati ohio (1962) officer ano Director. General Henry L,Hillman, President Battle, Fowler,Jaffin, Pierce and tute. Troy, N.Y. (1977)
ElectncCompany.Fairfield and Director,The Hillman Com-Kheel, law firm, New York, N Y.
GilbertH.Scribner,Jr. Chair.
RichardT Baker,Consultantto Conn.(1971) pany diversifiedoperationsand (1974) manof theBoardandDirector, Emsi& Whinney.pubhc ac-s entsBusburgVa.
senbner & Co.,realestate and g'7p countants, Cleveland. ohio.
Insurance, Chicago,ltl.(1962)
(1977) 22 AnnualReport1980
executive compensation and management.
stalus of the evolving national energy policy.
. TheNominatingCommitteemotthree The Technology and Science Committee times, it assessed candidates for Director-meumce, concentrating on those areas of ships and the memberships of other Board technological development promising the Committees.
most significant progress f or the Company.
+ TheOperationsCommitteemetfivetimes, The Boardis made up primarily of Directors Atone session, a joint meeting with the Tech-f rom outside G E.The 1980 Boatd members nology and Science Committee at the Com-are listed atlowerleftin order of their Board pany's Plastics Business Operations f acility in seniority,with the year in which they we re Mt. Vernon, Ind.,it conducted a business re-elected shown in parentheses. Besides Mr.
viewof the Engineered Materials Group,in-Jones, three other directors are not candi-cluding perspectives on the G roup's antici-dates for re-election. Messrs. Lawrence and pated financial performance through 1985.
Austin are retiring f rom the Board after 23 and
. ThePublicResponsibilitiesCommittee 16yearsof service,respectively.Mr. Pierce held two meetings and reviewed key public has tesigned to become U.S. Secretary of issues affecting the Company and the current Housing andUrbanDevelopment.
Henry H. Henley,Jr.
sitaas. Cathcart samuelR. Pierce Jr.
Gertrude G.Michelson LewisT.Preston 4
(
- qwv y
yr y
~
f.
p fk
[
George M. Low RichardT. Baker JohnF Rurhngame Edward E. Hood.Jr.
JohnF. Welch,Jr.
FinanceCommittes Nominating Committee Public Responsibilitics John F.Burlingame,Vice Committees EdmundW Uttlefield, Chair-charles D. Dickey.Jr., Chair-Committee Chairmanoithe Board,Execu.
Of the Board man. Reginaid H. Jones.Vice man. J. Paul Austin, Henry H.
Henry H. Henley,Jr., Chairman, tiveofficer and Director, Chairman, Charles D. Dickey, Henley,Jr.,Ralphlazarus, John F.Burhngame, Vice Charr-GeneralElectnccompany, Auditcommittee Jr.. Henry H. Henley.Jr.,oilbert EdmuridW.Uttlefield, George man,RichardT Baker.HenryL.
Fairfield. Conn.(1980)
RichardT. Baker, Chairman Hs ner,Jr., Walter B.
M. Low,GertrudeG. Micheleon Hillman, Rat Lazarus, EdwardE. Hood,Jr.,vice John E. Lawrence, George M.
Chairmanof theBoard,Execu.
Low,samuelR Pierce,Jr.,
operationsCommittee samuelR. Pierce Jr' tive officer andDirector, LewisT. Preston ManagementDevelopment HenryL.Hillman Mesterman, andCompensation JohnF.Wel + ! i,co Chair.
Technologyandscience GeneralElectricCompany, Committee man. Jav i Ouawellli.sltas Committee Fairfield Conn.(1980)
Ralphlazarus, Chairman,J.
s Cete nortrude G. Micnol-GeorgeM Low, Chairman, JohnF. Welch,Jr., Chairman-Paul Austin,silass Cathcart, son,s6%ein Pierce,Jr.,
Edward E. Hood.Jr.,Vice Charr-electandDirector, General John E. Lawrence,Waller B.
LewisT Preston.GilbertH.
man,JamesG.Boswellli, Electnccompany,Fairfield.
Wnston scribner.Jr.
charles D. Dickey,Jr., Henry L.
conn. (1980)
Hillman,EdmundW Littlefield The General Elsctric investor 23
GE pocplo Com pa ny domestic employment, including increase of 10% was applied to the pensions of consolidated af filiates, averaged 285,000 dur-those who retired on or bef ore May 1,1979, ing1980,aboutthe sameas1979.
and smallerincreases were applicable to em.
An analysis of domestic G E and General ployees who retired af te r May 1,1979, and Electric Credit Corporation employment for before the February 1,1981, eff ective date.
the year ended September 30 demonstrates This marks the third pension increase for G E the Company's active support of U.S. progress retired employees in the last four years.
toward improved career opportunities for Medical care f or the Company's retirees was women and minorities. The number of women alsoenhancedwiththeintroductionof anew managers increased from 1,288 to 1,478-up prescription drug plan and improved medical 15%.The numberof minority managers in-insuranceprovisions.
crease d 8%, f rom 1,332 to 1,432. The total of women professionals went up f t om 4,690 fo G E's occupational safety and health record 5,349, an increase of 14%,while the number of and experience compare f avorably with those minority professionals climbed f rom 3,348 to f or companies in similar businesses. In 1980, 3,663-up 9%. More than 19,000 women and G eneral Electric continued to emphasize 9,000 minorities were promoted in 1980. Over-people-oriented safety programs and health-all, women account for 28% of General Electric hazardeducation.
employees,andminorities12%.
Co ntrib utio n s to philanthropic organizations Wag es and benefits for G E employees con-by the Company and the G eneral Electric tinue to provide a competitive total compensa-Foundation totaled $13 million. The G E Foun-tion package. In 1980, the new Dental Assis t-dation's annuai report will be available in Aprh ance Plan was introduced as an additional ben-upon request. Included in the Foundation's efit for employees and their dependents.
contributions were $ 1,050,000 for minority en-Adjustmentsin the pensions of retired em-gineering programs,amajorpartof aneffortto ployees were approved bythe Board of Direc-improvecareereducation.
tors. Ef fective February 1,1981, a maximum A Companywide surveyldentified 80 pro-grams in 48 G E plant communities where G E g.
\\
business operations are contributing to local s
%,h' ships.Theseeffortshelpedleadtosteady U'
minority engineering activities and scholar-yy
'l s
prog ress in the national ef fort, which in 1980 resulted in B.S. deg rees in engineering for 2,383 minority students-a 90% increase s
sincetheprogrambeganin1973.
[
Strengthening the technical work force of G eneral Electric is a key ongoing objective.
Efforts to recruit, retain and retrain the profes-i sional and managerial people needed for the e'
changingGEof the1980sareaggressively Atplantlocations such as the GE j
under way. During the year, the Company's
?
computercenterin Bridgeport.
T i
t'ew two-year Edison Engineering Program-tudeAtsIhYoppo'rtun$eIto designed to provide entry-leveltraining oppor-n careersin science and engineering.
tunities for engineers-saw its first graduates.
24 Annual Report 1980
Mcnagement Corporate Policy Board Corporate Staff Officers
-Noft eas Marking a caref ully planned succession gnald H he $oard an V &C m ny of executive leadership,the Board of Directors and Ct'ief Erecutive Medical Director Regional Relations 0"'C8' James J.Costello Kristian H. Christiansen in December named John F. Welch, J r., as J hn F. Welch,Jr.
VP & Comptroller VP-Southeastern Chairman, ef f ective April 1 ' 1981. He will Chairman-elect Regional Relations succeed Reginald H. Jones as Chairman and John F.Burlingame P Co p ra e v on nental William B. Frogue Chief Executive Officer on that date, when Mr.
ViceChairmanof the issues Project VP-Southwestem Regional Reladons B ard and Executive Frank P.Doyle Jones retires after 41 years of outstandingly e's ern Regional eff ective service with G eneral Electric.
ard E. Hood, Jr.
lat ons John F. Burlingame and Edward E. Hood, vice Chairman of the Relations Board and Executive Treasurer William C. Lester Jr., continue as Vice Chairmen of the Board E
Fred W.Garry g}gna ReIatiors and Executive Officers reporting to the thu M.Bueche C
hP Chairman-elect withrealignedandincreased Senior Vice President g ee ng Iver J. Petersen Corporate Technology VP-Central Regional responsibilities. Reporting io Mr. Burlingame MulonS Kello9 Relations DanielJ. Fink VP-Corporate are the International Sector, Power Systems Sector, Utah international inc., Corporate
$o'ra1UP ann ng and Consulting Services na c
Devel pment Raymond F. Letts Relations Planningand Development Statf,and Corporate Relations Staf f. Reporting to M r.
lln%',%KyrEsident eratEnhe"rvices Cecil S. semple
[stom Hood arethe ConsumerProducts and Corporate Production Theodore P.LeVino elations and Operating Services VP - Executive Services Sector, industrial Prod ucts and Components Sector, Technical Systems and se Eo*[Nc5 *j* dei't d
d Malone Materials Sector, Corporate Production and Corporate Relations VP-Trust investments Operabon Operating Services,and Corporate Walter A.Schlotterbeck
~
Senior Vice President Terence E.McClary,
Technoto9YStaff' General Counsel and VP-Corporate Financial Theseexecutivesheadtheteamof 141 Secretary Administration managers on this and the following two pages.
Thomas O.Thorsen John B. McKitterick
{j President
- or te integrationof theprogramsof thesesenior f;8"i Ns nan Leonard c. Maier. Jr.
managersisaldedbytwomanagement pnittips S. Peter groups: the Corporate Policy Board made up VP-Corporate Govemment Relations Operation r
of theChairman, Chairman-elect,Vice
@,landCo p'o $t.
$ hm Chairmen and the six Senior Vice Presidents search and Development i,
pictured at right; and the Corporate Executive g
?
Councilwhich includes these same ten T
g^ g 4
)
officers plus the six Executive Vice Presidents and Sector Executives pictured earlier in this yg
.. ~
Annual Report with their Sector reviews.
Walter A. schlotterbeck Arthur M' Bueche The 12other SeniorVice Presidents, pictured on pages 26 and 27 along with the 4
. e Presidentof GECC, provide managementfor groupsof GeneralElectricbusinesses.
A The continund availability of broadly none,i e. guri, experienced %adership for G eneral Electric in the f uture is being achieved through a diverse g
program of learning opportunities provided by Thornas o. Thorsen DanielJ Fink the Companyworldwide.
The General Electric investor 25
l l
Management-operations James A. Baker Robert R. Frederick Herman R. Hill Executive Vice President Executive Vice President Executive Vice President end S:ctor Executive and Sector Executive and Sector Executive industrial Products and Components Sector International Sector Power Systems Sector James P. Curley Ralph B.Glotzbach Willis E. Forsyth Roy H. Beaton John A.Urquhart SInior VP & Group VP-Industrial PrcrJucts VP & General Manager Senior VP & Group Senior VP & Group Exzcutive -Contreter and Components Latin American Operations Executive-Nuclear Executive-Power Equipment Group Customer and Industry William Longstreet Relations Operatic'n Rodger FJ' arm Energy Group Delivery Group General Manager A. Philip Sray Nicholas Boraskt VP & General Manager Kertis P. Kuhlman Andean C ountries VP & General Manager VP & General nAanager Distribution Equipment VP & General Manager Division Nuclear Power Systems Large Transformer Division General Electric Supply J. Richard Stonestfor Division Division James M. Mcdonald Company Division Chairman of the Board and Warren H. Bruggeman Donald C. Berkey VP & General Manager Donald E. Perry Chief Executive Officer VP & General Manager VP & General Manager AppIratus Disth.)ution VP & General Manager General Electric do Brasil Nuclear Products Energy Systems and Siira Division Industrial Sales Division S.A., Latin American Division Technology Division Donald K.Grierson Bruce O. Roberts Operations Henry E. Stone Robert T. Bruce S nior VP & Group VP & General Manager Paolo Fresco VP & Generai Manager VP & General Manager Executive-Industrial Apparatus Service VP & General Manager Nuclear Engineering Installation and Electronics Group Division Europe anci Africa Operations Division Service Engineering Division Erwin M. Koeritz Carl J. Schlemmer Edward C. Bavarla Bertram Wolfe VP & General Manager VP & General Manager VP & General Manager VP & General Manager Edward W. Springer Electronic Components Transportation Systems Middle East' Africa Nuclear Fuel and VP & General Manager Division Division Business Development Servics a Division Electric Utility Sales James R.Olin Division Division George B. Cox VP & General Manager George J. Stathekle Senior VP & Group industrial Electronica VP & General Manager Executive-Turbine Group Systrms Division Internaticnal Trading Robert H. Goldsmith Van W. Williams and Construction Operations VP & General Manager Srnior VP & Group Arthur V. Puccini Gas Turbine Divisior' Executive-Motor V P & General Manager Richard W. Kinnard Group Export Sales and George B. Farnsworth Trading Division VP & General Manager Large Steam Turbine-VP & General Manager Edward F. Roache Generator Division Componont Motor VP & General Manager George H. Schofield Division International Eugene J. Kovarik Construction Division VP & General Manager industrial and Marine VP & General Manager Vittorio Orsi Steam Turbine Division Industrial Motor Menaging Director Division SADE/SADELMI Constructior' Operations international Constmetion Division E-:
Frank D. Kittredge VP & General Manager 1
Far East Area Division 7
k Alton S. Cartwright Chairman of the Board &
Chief ExecutiveOfficer Canadian General Electric Company Limited (CGE) y -
i Jams: P Curley (a General Electric affiliate)
Wi!Ilam R.C. Blundell
((o President and Chief Executive Officer, Canadian Roy H. Beaton
^
- p Appliance Manufacturing Company Ltd. (a CGE y
7 W
affiliate) 4
?d Robert T. E.Gillespie Vice President p
yp Consumer and Construction 4-v Products Division, CGE Donald K. Onerson D. Forrest Rankine hg Vice President EE Geov B. Cox John AWuhad ac ery vis on GE
,y4 Van W Wilhams
)
26 Annual Report 1980 I
I
Christopher T. Kettner P ul W. V n Orden Alex nderM. Wilson Executive Vice President Executive Vice President Chairman of the Board and and Sector Executrve and Sector Executive Chief ExecutiveOfficer Technic:1 Systems and Materials Sector Consumer Products and Services Sector Utah Internationalinc.
D:n:Id S. Bates Brian H. Rowe Richard O. Donegan James R. Birle James T. Curry Srnior VP & Group Senior VP & Group Senior VP & Group VP & General Manager Financial VP Executive -Information Executive-Aircraft Executive-Majo-Air Conditioning Division Stephen K. Brlmhall and CommunicWm Engine Group Appliance Group Fred R.Wellner VP & Treasurer Systems Group James N. Krebs Robert E. Fowler, Jr.
General Manager Melvin H. Kenned Greg ryJ.Liemandt VP & General Manager VP & Ceneral Manager Television Division Vice President VP & General Manager Military Engine Operations Major Appliance William R.Webber Ronald K. Lamson Manufacturing Division President ControHer information Services Orville R. Bonner Division VP & General Manager Richard T.Gralton General Electric Video.Inc. Ralph J. Long Donild J. Meyers Marine and Industrial VP & General Manager Walter W Williams Senior VP & Manager VP & General Manager Engine Projects Division Major Appliance VP & Ger$eralMana er Mineral Exploration and Marketing Operatbns Housewares and Audio Development Division Mobile Communications William J.Crawford til Division VP & General Manager Philip J.Driect Division Donn K. Furgerson ChIrts R. Carson Military Engine VP & General John W. Stan er W & Manager S2nior VP & Group Projects Division Manager-Major President &
Marine Transportation Executive - Engineered Appliance Retail Chief ExecutiveOfficer Materials Group W. Georbe Krall Sales Division General Electric C edit Robert O.Wheaton General anager Alxtilr C.Gowan Aircraft Engine William L Grim Corporation (GECC)
VP & Manager-Business VP-Engineered Materials Manuf actunng Division VP & General Manager (an affiliate of General Development Major Appliance Electric)
Charles K. McArthur Technical Operation Frank E. Pickering Contract Sales Lawrence A. Bossidf Senior VP & Manager Glen H. Hiner VP & GeneralManager Division Executive VP & Chie Mining Division VP & General Manager Aircraft Engine Plastics Operations Engineering Division James F. West Operating Officer John T. Atkins VP & General Manager General Electric Credit VP & Manager-Westem Eugene F. Apple James E.Worsham Major Appliance Corporation Coat Operations General Manager VP & hwral Manager Marketing Division Norman P. B!ake Robert N. Hickman Specialty Plastics Division Commerciad%
Operations John C.Truscott VP & General VP & Mana er-Mining
's D.Rix Blanchard VP & General Manager Manager-GECC Technical Services Director Neil Burgess Managinhiectnc Plastics VP & General Manager (a rjp search and nd s r F nancing Boyd C. Paulson General B.V.
Airline Programs Division Engineering Division Division Vice President Ralph D. Ketchum Bernard P. Long Georgana.Tarleton W
VP &
ger-Mineral er iManager G nera na er Senior VP & Group VP & General Lexan Products Division Commercial Engine Executive-Lighting Manager-GECC Products Marketing Projec9 Svision Group Consumer Financing John H. Moore Thom:s H.Fitz eraid VP & Generall anager Louis V.Tomasetti Division Silicone Products Division Senior VP & Group Executive hukD al$anager r ou Corp ration n
Aerospace Group Lamp Components (a subsidiary of Utah)
R bertJ.Gerardi General Manager William A. Anders Division Metallurgical Division VP & GeneralMana er.
David O.Gifford or anager VP & General Manager Australasia Division Aircraft Equipment ivision
- 7 Lee L. Farnham international Lighting Timothy R. Winterer nt VP - DSCS Program Division VP & General Manager L
Henr Utah Development VP &y J. Singer Company (a subsidiary
@j' Thomas 1. Paganelli pf General Manager
?
VP & General Manager Electronic Systems Division Lamp Products of Utah) t a
Division Bruce T.Mitchell h"
Allan J. Rosenberg y
VP & General Manager Secretary a
~
Space Systems Division J. Gilbert Selwaf GeneralCounse Ladislaus W.Warzecha Donsid S. Bates VP & General Manager,
Re-entry Systems Division rq 1
Donald S. Bel! man VP & General Manager J
3 Advanced Microelectronics
. ' g) y Operations n
]
James E. Dykes
'g General Manager Microelectronics Center 3
I n a Manager m"
Medical Systems Division
<N m.
3 ic
\\;
hM 1 j
f q Bng.n H. Rows Ralph D. Ketchurn The General Electric Investor 27
Finan::ici review Int:rcst expansa and oth:r financial chargrs were.
$314 millicn in 1980, compared with $258 million in 1979 and $224 million in 1978. The 1980 increase from 1979 reflected higher worldwide interest rates as well as a somewhat greater level of borrowing by affiliates. Interest expense in 1979 was more than in 1978 principally due to higher rates.
Provision for income taxes was $958 million in 1980 This financial review supplements the detailed informa-($953 million and $894 million in 1979 and 1978, respec-I tion presented in the audited financial statements which tively). Note 6 to the financial statements provides details -
b: gin on page 34. In addition, reference should be made about income tax provisions and GE's effective tax rate.
y to tha ten year summary of historicalinformation on pages 46 and 47, which provides a longer term perspective.
Dividends declared were $2.95 per share in 1980, the fifth consecutive year in which the rate increased, and 74%
Sales and not earnings were up 11% and 7%, respec-more than in 1976. Earnings per share of $6.65 in 1980 tively, in 1980 from 1979. This performance, despite a were 61 % more than in 1976. Dc;ing the years shown period of adverse economic conditions in the United below, dividends have been eqdvalent to just under half of States as well as in a number of the world's industrialized the Company's earnings, with the remainder retained to economies, emphasizes the strength achieved through maintain the Company's productive capacity and support the diversity and changing mix of General Electric opera-future business growth.
tions. Information about industry and geographic seg-msnts is on pages 44 and 45.
Earnings per Share in some of the shorter-cycle businesses, particularly those relatad to consumer and residential construction markets, physical volume was lower in 1980 due to the
- D""d'ad*
domsstic economic slowdown. In other businesses. par-m
, n,,,,,,,,,,,o.m ticularly where order to-shipment cycles are longer, as well yo, as where exports from the U.S. are important,1980 physi-cal volume was higher. Overall, it is estimated that additional volume of shipments accounted for about one-fourth of the m
increased sales dollars in 1980. During 1979, higher volume w
had accounted for somewhat more than one-half of the 14%
increase in sales dollars from 1978.
Operating margin dollars, as shown H the Statement im im im im isso of Eamings on page 34, were higher in 1980 and 1979 than in each of the previous years. Details of operating Capital expenditures reached a record $1.9 billion in costs are shown in note 2 to the financial statements. Op-1980, up 54% from 1979 and more than two-and-a-half erating margin as a percent to sales has declined some-times greater than in 1976. Identification of needs for capi-what since the high in 1978. Despite continued emphasis
' tal expenditures and selective allocation of funds to prom-on productivity improvements, which tend to have longer-Ising growth businesses, as well as to productivity and tsrm impact, costs of compensation and benefits and pur-technologicalimprovements, are among the most impor-chased materials, supplies and services have been esca-tant aspects of the Company's strategic planning system.
lating more rapidly than the Company has been able to Expenditures for property, plant and equipment for each of recover the increases through selling prices. Also, the the Company's Sectors for the past five years are depicted Company has substantially increased expenditures in re-below.
csnt years to benefit future growth. Research and devel-opment expenditures from the Company's own funds were Capital Expenditures
$760 million in 1980. This was 19% more than in 1979, when expenditures were 23% more than in 1978.
- =
52 m a
General Electric derives income from a variety of op-
,i,g..
erating and nonoperating sources in addition to amounts realized from sales of products and services. These other
,%,,,n,,,,,,,,
,,,,,,,n,,,,,,,,,,
sources of Company income have been substantialin re-and co'rpoa.nu cant years, including steady increases in earnings from 3 - a consumereroducts our nonconsolidated finance affiliate, General Electric m ror..or muunouser,
,o, Credit Corporation. GECC's earnings rose 28% in 1980 to gg a po sri.m.
$115 million from the 1979 amount of $90 million, which 400 m corpmi.
J was 17% more than 1978 earnings. More detail of other income for 1978-1980 is included in note 4 to the financial im im to7s ie7e isso statements.
28 Annual Report 1980
in addition to programs almtd at improving productiv-pl: tion and amortization. Th3 most substantial r curring ity, exp:nditures have been made for increased capacity applications of funds occur in the form of increasing divi-or to provide adequate sources of key raw materials, such dends and expenditures for property, plant and equip-is p!astics feedstocks in the Technical Systems and Mate-
. ment. As illustrated in the chart, funds provided from oper T rills Szctor. Still other expenditures are aimed at com-
- ations have been more than adequate during the five-year plataly new resources for GE, such as the purc%se by.
period shown to cover those commitments. During 1980,-.
Utth International of coal properties in the Eastern United dividends and expenditures for new plant exceeded funds l
Statss. Several Sectors and the corporate Research and
. generated from operations by $279 million. This difference ;
D velopment Center are makMg substantialinvestments
. was m91 with amounts available from prior years.
' ori:nted to expanding and improving the Company's inte-gratzd capabilities in advanced electronics.
Comparison of Cash Flow from Operations with Cash used i{
Estimated property, plant and equipment expendi.
for Dividends and Property, Plant and Equipment -
"==
tures in future periods to complete projects already ap-53 "
m provsd aggregated $1.0 billion as of year-end 1980.
ggko'n Cash cnd marketable securities at year-end 1980 to-E h a0*f8Ea l
- talad $2.2 billion, some $375 million less than a year ear-g ~ ' '""***"""""**
~2*
lisr. Short term borrowings increased $222 million during i
1980 to a total of $1.1 billion at year end. As a result of L
g l
l l
l tom g
g g
g g
l thsso changes, a total of $597 million of the Company's e
e E
E E
nst liquid assets were utilized during 1980, primarily to.
fund current period and long-term growth programs. Net l,
-l l
liquid assets stood at $1.1 billion at December 31,1980.
,e7e
,en ie7e iere seeo The decrease in cash and marketables was concen-son-so
- "**""*"w m.
j trated in the U.S. and reflected significantly higher ex-se.ne7 penditures for additions to domostic-based property, plant
}
and equipment. The borrowings increase related mainly to The Statement of Changes in Financial Position on foreign affiliate operations where GE's general practice is page 36 presents further information about sources and e
I to utilize local financing for most funding needs.
applications of funds.
l Working capital, excluding net liquid assets men-tionsd above, increased $376 million and consisted princi-Maintaining a sound capital structure is a key element pally of higher customer receivables (up $548 million) and in meeting the Company's financial objective of achieving inventories (up $182 million), partially offset by ad1itions sustained earnings growth and a good return on invest-to accounts payable.for materials and services, and simi-ment. GE's financial planning involves considerable atten-
.j lar short-term amounts owed to others. The Company's tion to anticipating needs and maintaining a sound rela-
~
total working capital was $2.3 billion at year-end 1980.
tionship between share owners' equity and funds bor-With respect to receivables, double-digit interest rates, rowed from others, both long and short-term. As shown in continuing high inflation, an uncertain economy, and tight-the chart below, the ratio of equity to total capital has been sning in the availability of bank credit created an environ-increased from 73.5% at the end of 1976 to 80.0% at the.
l msnt which necessitated stronger than usual collecGon end of 1980.
cfforts in 1980. However, the overall condition of receiva-blas remains good. Inventory levels in the various product TotalCapitalinvested l
businesses were managed throughout the year in re-p.
sponse to actual and anticipated customer demand, and year-end balances were at levels consistent with the ne:ds of the business.
4 Equity Over the last five years, the Company's total working capital has increased by $704 million, led by additions totaling $1.3 billion of cash and marketables. Most of the a
lattsr increase came from internally generated f unds.
Since 1975, net liquid assets have increased by $915 mil-3 lion, after reducing long term borrowings by $239 million.
This strengthening of the Company's liquidity position has
'87e 1977 to7e 1978 isso bren accomplished by strong emphasis on improving the turnovsr of those elements of working capital, such as During recent years the Company has been able to customer receivables, which are closely associated with maintain and grow its business from internally generated
. growth in sales volume. This emphasis will continue.
funds. As profitable opportunities are developed, it is likely Significant amounts of funds are generated from that additional sources of funds will be needed. GE's strong Company operations, principally through net eamings and capital structure and credit ratings should ensure svallability non-cash charges against earnings for depreciation, de-of adequate financial resources for continued growth.
The General Electric investor 29
infi;ti:n in the U.S.cntinued r t a high 1:v;l during suppi; ment:ryint:rmati:n For tM ynr 1980, and most economists currently forecast double-digit Effect of Changing Prices ratis again in 1981. Your management has stressed
^4"8'*C 48)
^
fnIiaEo$
c7 sis r:pstedly the distortion that inflation has on the tradi-on mmon ;.,c.pi p r.shar, arnounis) repo ted tionil methods of financial reporting. This distortion af-Sales of products and services focts individuals, companies, and aggregate financial data to customers
$24,959 $24,959 $24,959 on which national policy decisions are based.
The chart below highlights this distortion by compar-Cost of goods scid 17,751 17,904 17,892 ing r: ported after-tax earnings with real after-tax Selling, general and crnings for all U.S. nonfinancial corporations for the administrative expense 4,258 4,258 4,258 years 1975 through 1980. Three inflation-related factors Depreciation, depletion and cccount for the difference between reported earnings and amortization 707 1,052 1,092 rni carnings: underdepreciation, reflecting the shortf all Operating costs 22,716 23,214 23,242 from writing off facilities using acquired rather than re-Operating margin 2,243 1,745 1,717 plac: ment costs; " phantom" profits which occur when Otherincome 564 564 564 low r than current costs of inventory output are charged Interest and other financial charges (314)
(314)
(314) cg: inst revcaues; and the loss by more than one-third in Earnings before income taxes 2,493 1,995 1,967 th3 g:neral purchasing power of a dollar since 1975.
Provision for income taxes (958)
(958)
(958)
Minority interest (21)
(8)
(8)
Reported and Real Profits of Net earnings
$ 1,514 $ 1,029 $ 1,001 U.S. Nonfinancial Corporations om on.
Earnings per share
$ 6.65 $ 4.52 $ 4.40 v
Mde W @
M 96
@M 4.P4 sus dpo e,ed;.-.
a uno.co.prec.iion Share owners' equity at Dec. 31
$ 8,200 $12,377 $12,913 -
',f gfd $Uo"#E '"'"""'"
(a)In dollars of average 1980 purchasing power k$bb ac.n.e.ontiaiian This table shows two different ways of attampting to
- 'i remove infiationary impacts from financial results as tradi-tionally reported. In both " adjusted for" columns, restate-so ments are made to (1) cost of goods sold for the current O'Ea'i n".Ni$
cost of replacing inventories, and (2) depreciation for the n
current cost of plant and equipment. The column headed 1975 1976 1977 1978 1979 1980 (Est.)
"generalinflati0n" uses only a broad index to Calculate the restatement, while the column headed " current costs" As reported, the aggregate after-tax earnings of all uses data more specifically applicable to GE.
U.S. nonfinancial corporations grew each year except for The restatements to cost of goods sold are relatively a smi.Il decrease in 1980. The average annual growth rate small for GE because extensive use of last-in, first-out as r: ported since 1975 was about 13%
inventory accounting already largely reflects current costs Hrwever, after adjustment for inflation, real earnings in in the traditional earnings statement. However, restate-1980 were lower than any other year during the period, and ments to depreciation, which allocates plant and equip-actu:lly have declined since 1975 at an average rate of about ment costs to expenses over time, are relatively large be-2*A per year.
cause of the high rate of inflation, particularly in the last These data indicate that corporations, just like individ-three years. This is because traditional reporting of depre-uals, are suffering from the pernicious effects of inflation. It ciation based on original cost does not adequately reflect is of vitalimportance to all Americans that intelligent and higher prices for replacement of productive capacity of forc3ful action be taken to begin the long and arduous task fixed assets which were purchased a number of years of r: moving the main controllable causes of inflation -
ago. Both of these methods of adjusting forinflation result growth of the public sector at the expense of the private in lower earnings than traditionally reported.
sector accompanied by burgeoning federal deficits and Significantly, because inflation adjustments are not al-nonproductive regulation.
Iowable for tax purposes, the "real" tax rate was about to points higher than in traditional statements.
Y;ur Company's financial results are not immune to Your management believes the " current cost" method the distorting effects of inflation. Financial data elsewhere is more representative of GE's results, but emphasizes l
In this Annual Report, including the audited financial state-the considerable subjectivity involved In the calculations.
I m nts, are presented using the traditional basis of finan-These types of adjusted data are likely to be more cial r: porting which does not fully identify the effects of usefulin reviewing trends over a period of time, rather inflition. The table at upper right presents information than in making comparisons of restatements for any one j
which supplements the traditional financial statements in period or in specific analyses of one period compared with order to gauge the effect of changing prices on results for another. GE's af ter-tax earnings on the traditional basis of 1980.
accounting have been higher each year from 1976 through 30 Annual Report 198c
1980. Since 1975, a recession y!ar like 1980, tha avsreg3 Antthir important h:dgxg: Inst inft:ti:n ov r the annual growth rate for eamings as reported was about long term is represented by the mineral resource assets of 16% Using the " current cost" method of removing the the Company. Neither traditional nor inflation-adjusted eft: cts of inflation, earnings were as depicted on the green methods of measuring financial results can adequately bars in the chart below. This shows a pattern similar to portray the value of unique, non-reproducible mineral re-earnings as reported on the traditional basis, with an aver-source assets. Some measure of the significance of these age ennual growth rate since 1975 of about 24%
assets is conveyed by statistical data of General Electric's wholly owned, consolidated affiliate, Utah international.
Coking coalis mined by a Utah affiliate, Utah Devel-After-T:x Earnings of General Electric opment Company (UDC). UDC mines and exports coking Adjusted for Current Costs coal from five mines under long term renewable Special m
Coal Mining Leases granted by the state of Queensland, smo s cun.new.,
Australia. At December 31,1980, UDC's share of present
- '"'"8' export entitlements under these leases amounted to 414.7 i.cx g
g a cun.ni w.i E
u E
E".'".'""
million metric tons of coking coal. Total proved reserve quantities of the leased areas exceed current export gE I
entitlements. Certain conditions exist under which export Em l ll entitlements may be increased. The degree to which additional reserves could be mined would depend on com-h mercial feasibility and obtaining additional export entitle-ments. Fourteen percent of the amount presently available
??S 1976 1977 1978 1979 1980 However, the purchasing power of a dollar in 1980 had Utah has steam coal reserves at several locations in diminished by more than one-third since 1975.To reflect the United States, in the West, Utah has steam coal re-this d terioration of the dollar's purchasing power, the blue serves at three principal locations: the Navajo Mine, held bars in the chart express current-cost earnings for the under long-term lease from the Navajo indian Tribe in New y:ars since 1975 in dollars of 1975 purchasing power.
Mexico; the Trapper Mine in Colorado; and the San Juan Even on this basis, the data indicate a real average annual Mine in New Mexico. For a number of years, Utah had growth rate in eamings since 1975 of about 14%
mined coal at the San Juan Mine on a contract basis but General Electric's real annual growth rate of 14% ln earn-acquired the coal leases in December 1980. Total proved Ings since 1975 contrasts with the trend in real earnings for and probable reserves at these locations aggregated the aggregate of all U.S. nonfinancial corporations. As 1,464 million tons at year-end 1980. Twenty fwo percent sh:wn cn page 30, aggregate earnings for all U.S. nonfinan-of these reserves are currently committed under long-term ci:I c:rporations declined during the 1975-1980 period at an S8 BC S ev: rage rate of about 2% per year.
g Dealing with inflation as it affects your Company re-West Virginia which contain 360 million tons of proved and quirss identifying the distorting effects of inflation, under-probable reserves, primarily steam coal. These reserves star ding them, recognizing them in business planning, are under development and commercial production Is ex-and managing assets and operations so as to overcome pected to begin on a limited basis during 1981.
the eficcts of inflation.
The Company is conducting an internal program titled Coal Year ended December 31 Effcctively Coping with Inflation. This program helps par-(Ouantities in mmions) 1980 1979 1978 ticipants to understand chronic high inflation, realize how it distorts financial data, and learn how to minimize the im.
Cokingcoal(UDC sharein m
ton pict. More than 3,000 key managers and professionals s
ed ( )
13.1 13.8 13.0 participated in this program through 1980.
Average price / metric ton (b)
$51.09
$48.39
$47.78 Effective asset management through differentiated Steam coal (tons)(c) c pital resource allocation is especially,mportant in Shipped (a) 10.5 8.8 7.1 i
coping with inflation. Investment in modern plant and Average price! ton
$ 7.82
$ 7.09
$ 6.03 equipment provides a direct eff ect on operations by im-(a) Quantities shipped about the same as 1978 80 production.
proving productivity in the face of escalating costs. The (b) Represents average prices published by an agency of the Australian government since July 1978 for Queensland Company's commitment to improving productivity is dem-onstrated by substantial increases in expenditures for new (c) bxcud sb Ju n ne pr orYo tftah acq'uiring the coal plant and equipment during recent years. In addition, stra-leases in December 1980.
ttgic emphasis is placert on those business opportunities GE's principal copper resource is the wholly owned having inflation-protection characteristics. As one exam-ple, Grneral Electric Credit Corporation owns over $5 bil-Island Copper Mine in British Columbia, Canada. Esti-lion of assetsleased to others. Many of these assets offer mated reserves at the end of 1980 contain approx-i significant potential gains on residual values after expira.
imately 183 million tons of ore with a grade of approx-Imately 0.48% copper. This mine also produces gold, tion of the leases.
TheGeneralElectricinvestor 31 l
silver, molybdtnum, cnd rhrnium cs by-products. Fiftun 1980 dollar purchising pow:r equivil:nt of $1468 to p:rc:nt of the copper ore reserves are presently commit-value the asset and calculate depreciation charges. Simi-ted under long-term sales contracts. These contracts call larly, the 1979 purchases of non-LIFO inventory sold in for sales based on London Metal Exchange prices.
1980 would be accounted for at their equivalent in terms of 1980 dollars, rather than in terms of the actual number of 11nd Copper Mine Year ended Decernber 31 dollars spent. Using this method, eamings for 1979 in (Quantities in thousands) 1980 1979 1978 share owners' equity at December 31,1979, was $11,845 Ora mimed (tons) 15,192 14,705 15,653 million.
Average percent recovery 85.2 %
87.5 %
86.6 %
" Adjusted for current costs" refers to information pre-
-sold a 110,305 110,309 111,672 pared using a third approach to inventory and property, Avzr:ge price per plant and equipment transactions. In this case, rather than pound of copper restating to dollars of the same general purchasing power,
- copper
$ 0.98
$ 0.93
$ 0.64 estimates of specific current costs of th9 assets are used.
-by products 0.65 0.43 0.20 Principal types of mformation used to adjust for changes in (a) Quantities sold about the same as 1978-80 production.
specific prices (current costs) are: for inventory costs, GE-generated Indices of price changes for specific goods and T chnical notes. The effect of changing prices on General services; and for propet ty, plant and equipment, externally Ele:tric as set forth on page 30 has been prepared in accor-generated indices of price changes for major classes of dance with Financial Accounting Standards Board (FASB) assets. Data for mineral resource assets have been ad-recluirements. Information in the following table presents justed by applying intemally generated indices to reflect additional data in accordance with FASR requirements, current costs. Adjustments for oil and gas properties are based on industry indices.
CarrInt cost information in average At December 31,1980, the ctgrent cost of inventory doll rs of 1980 purchasing power (a) was $5,701 million, and of property, plant and equipment
('n rndkons except per-8 hare arnounts)
Pur-Was $8,797 million ($5,251 million and $7,004 million, re-speCtiVely, at December 31,1979). In dollars of average Net owners' rket er earn-equity Earn-oM-price gain 1980 purchasing power, estimated current costs applica-sales ings (b) Dec. 31 (b) ings (b) dendo oec. 31 (loss)(c) ble to such assets increased during 1980, or during the 1980 $24,959 $1,001 $12,913 $4.40 $2.95 $59 $(198)
- part of the year the assets were held, by approximately 1979 2643 1,119 12,659 4.93 3.12 54 (237)
$1,356 million, which was $196 million less than the -
1978 24.819 1,092 12,508 4.79 3.16 57 (145)
$1,552 million increase which could be expected because 1977 23.817 1,001 12,095 4.40 2.86 66 (69) of general inflation. The comparable increase for 1979 in 1976 22,717 885 11,947 3.92 2.46 79 (23) dollars of average 1980 purchasing power was approxi.
1975 21,590 479 11,414 2.13 2.45 68 22 mately $1,261 million, v/hich was $373 million less than (a) Avtrage 1980 dollars, using the U.S. Consumer Price Index the $1,634 million increase which could be expected be-(1967 = 100): 1975-161.2; 1976-170.5; 1977-181.5; cause of generalinflation.
1978-195.4; 1979-217.4; and 1980-246.8.
In presenting results of either of the supplementary (b) Current cost basis.
accounting methods for more than one year, real trends (c) On net monetary items.
are more evident when results for all years are expressed i
Proper use of supplementary information concerning in terms of the general purchasing power of the dollar for a j
the effect of changing prices requires an understanding of designated period. Results of such restatements are gen-l certain basic concepts and definitions.
erally called " constant dollar" presentations. In the six-
)
In the table on page 30, "as reported" refers to infor-year presentations shown at left, dollar results for earlier I
mation drawn directly from the financial statements and periods have been restated to their equivalent number of 4
notes on pages 34 to 45. This information is prepared constant dollars of 1980 general purchasing power (CPI-U using generally accepted accounting principles which ren.
basis).
der an accounting based on the number of actual dollars Because none of these restatements is allowable for involved in transactions, with no recognition given to the tax purposes under existing laws, income tax amounts are fact that the value of the dollar changes over time, the same as in the traditional statements (but expressed in i
"AdjustE i for general inflation" refers to informa-constant dollars).
tion prepared using a different approach to transact!ons All average annual growth rates in this Report use the involving inventory and property, plant and equipment as4 "least squares" method of calculation.
stts. Under this procedure, the number of dollars involved There are a number of other terms and concepts in transactions at different dates are all restated to equiva-which may be of interest in assessing the significance of isnt amounts in terms of the general purchasing power of the supplementary information shown. However, it is man-the dollar as it is measured by the Consumer Price Index agement's opinion that the basic concepts discussed for all Urban Consumers (cpi-U). For example, $1,000 above are the most significant for the reader to have in invested in a building in 1967 would be restated to its mind while reviewing this information.
32 Annual Report 1980 l
l
.---J
1 Report cf m:nzg:m:nt To the Share Owners of General Electric Company is composed solely of Directors from outside the Com-The financial statements of General Electric Company and pany, maintains an ongoing appraisal of the effectiveness consolidated affiliates are presented on pages 34 through of audits and the independence of the public accountants.
45 of this Annual Report.These statements have been The Committee meets periodica!!y with the public account.
prepared by management and are in conformity with gen-ants, management and internal auditors to review the crally accepted accounting principles appropriate in the work of each. The public accountants have free access to circumstances. The statements include amounts that are the Committee, without management present, to discuss based on our best estimates and judgments. Financialin-the results of their audit work and their opinions on the formation elsewhere in this Annual Report is consistent adequacy of internal financial controls and the quality of with that in the financial statements.
financial reporting. The Ccmmittee also reviews the Com-Generel Electric maintains a strong system of internal pany's accounting policies, internal accounting controls, fmancial comrols and procedures, supported by a staff of and the Annual Report and proxy material.
corporate auditors and supplemented by resident auditors The Company has long recognized !ts obligation to located around the world. This system is designed to pro-conduct its affairs in an ethical and socially responsible vide reasonable assurance, at a9propriate cost, that as-manner, its commitment to these objectives is reflected in sets are safeguarded and that transactions are executed key Company policy statements covering, among other in accordance with management's authorization and re-things, potentially conflicting outside business interests of corded and reported properly. The system is time-tested, Company employees, compliance with antitrust laws and innovative and responsive to change. Perhans the most proper conduct of domestic and international business important safeguard in this system is the fact that the practices. It is not always possible to ensure that all em-Company has long emphasized the selection, training and ployees fully understand the importance of complying with development of professional financial managers to imple-the specific intent and spirit of these policies. When devia-4 ment and oversee the proper application of its internal tions are detected or otherwise reported, the Company will controls and the reporting of management's stewardship continue to act in a responsible manner with respect to of corporate assets and maintenance of accounts in con-appropriate disclosure and reporting. Additionally, your formity with generally accepted a: counting principles.
management will continue efforts to create a strong com-The independent public accountants provide an ob-pliance environment for the ethical conduct of domestic jective, independent review as to management's dis-and international business activities.
charge of its responsibilities insof ar as they relate to the fairness of reported operating results and financial condi-f tion.They obtain and maintain an understanding of GE's accounting and financial controls, and conduct such tests Senior Vice President Chairman of the Board and related procedures as they deem necessary to arrive Finance and Chief Executive Officer at an opinion on the f airness of financial statements.
The Audit Committee of the Board of Directors,which February 20,1981 R:prrt of independent certified public accountants To Share Owners and Board of Directors of in our opinion, the aforementioned financial state-G:niral Electric Company ments present fairly the financial position of General We have examined the statement of financial position of Electric Company and consolidated affiliates at December General Electric Company and consolidated affiliates as 31,1980 and 1979, and the results of their operations and of December 31,1980 and 1979, and the related state-the changes in their financial position for each of the three ments of earnings, retained eamings and changes in fi-years in the period ended December 31,1980, in conform-nancial position for each of the three years in the period ity with generally accepted accounting principles applied ended December 31,1980. Our examinations were made on a consistent basis.
in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting rec-hfdWd ///ib48@
ords and sucl other auditing procedures as we considered Peat, Marwick, Mitchell & Co.
necessary in the circumstar'ces.
345 Park Avenue, New York, N.Y.10154 February 20,1981 The General Electric investor 33
l Stat m:ntcf ccrninga G;neral Flectric Company and consolidated affiliates For th) years ended December 31 (in millions) 1980 1979 1978 Sales Sales of products and services to customers (note 1)
$24,959
$22,461
$19,654 Operating Cost of goods sold 17,751 15,991 13,915 cos3 Selling, general and administrative expense 4,258 3,716 3,205 Depreciatioil, depletion and amortization 707 624 576 Operating costs (notes 2 ano 3) 22,/16 20.331 17,696 Operating margin 2,243 2,130 1,958 Otherincome (note 4) 564 519 419 Interest and other financial charges (note 5)
(314)
(258)
(224)
Earnings Earnings before income taxes and minority interest 2,493 2,391 2,153 Provision forincome taxes (note 6)
(958)
(953)
(894)
L Minorityinterest in earnings of consolidated affiliates (21)
(29)
(29)
Net earnings applicable to common stock
$ 1,514
$ 1,409
$ 1,230 i
Earnings per common share (in dollars) (note 7)
$6.65
$6.20
$5.39 Dividends declared per common share (in dollars)
$2.95
$2.75
$2.50 Operating margin as a percentage of sales 9.0%
9.5%
10.0%
Net earnings as a percentage of sales 6.1%
6.3%
6.3%
St:tement of retained earnings Gen:ral Electric Company and consolidated affiliates For ths years ended December 31 (in millions) 1980 1979 1978 l
Retined Balance January 1
$6,307
$5,522
$4,862 l
earnings Net earnings 1,514 1,409 1,230 l
Dividends declared on l
common stock (670)
(624)
(570)
Balance December 31
$7,151
$6,307
$5,522 The information on pages 33 and 37-451s an integral part of these statements.
34 Annual Report 1980
l Stctcmantcf fin naicipcciti:n Gintral Elletric Company and consolidated affiliates At DIctmber 31 (In millions) 1980 1979 Assets Cash (note 8)
$ 1,601
$ 1,904 Marketable securities (note 8) 600 672 Current receivables (note 9) 4,339 3,647 Inventories (note 10) 3,343 3,161 Current assets 9,883 9,384 Property, plant and equipment-net (note 11) 5,780 4,613 Investments (note 12) 1,820 1,691 Other assets (note 13) 1.028 956 Total assets
$18,511
$16,644 LI:bilities Short-term borrowings (note 14)
$ 1,093 871 and equity Accounts payable (note 15) 1,671 1,477 Progress collections and price adjustments accrued 2,084 1,957 Dividends payable 170 159 Taxes accrued 628 655 Other costs and expenses accrued (note 16) 1,946 1,753 Current liabilities 7,592 6,872 Long-term borrowings (note 17) 1,000 347 Other liabilities 1,565 1,311 Totalliabilities 10,157 9,130 Minority interest in equity of consolidated affiliates 154 152 Preferred stock ($1 par value; 2,000,000 shares authorized; none issued)
Common stock ($2,50 par value; 251,500,000 shares authorized; 231,463,949 shares issued 1980 and 1979) 579 579 Amounts received for stock in excess of par value 659 656 Retained earnings 7,151 6,307 8,389 7,542 Deduct common stock held in treasury (189)
(180)
To:al share owners' equity (notes 18,19, and 20) 8,200 7,362 Totalliabilities and equity
$18,511
$16,644 Commitments and contingent liabilities (note 21)
The information on pages 33 and 37-451s an integral part of this statei nt.
The General Electric Investor 35
St tsm:nt cf ch:ngco in fin:nci:1 paciti:n GImral Electric Company and consolidated affdates For the years ended December 31 (in milhons) 1980 1979 1978 Source of From operations funds Net earnings
$1,514
$1,409
$1,230 Depreciation, depletion and amortization 707 624 576 investment tax credit deferred-net 56 45 25 income tax timing differences 63 (37) 32 Earnings retained by nonconsolidated finance affiliates (22)
(17)
(16)
Minority interest in earnings of consolidated affiliates 21 29 29 2,339 2,053 1,876 Increase in long-term borrowings 122 50 96' Newlyissued common stock 3
Disposition of treasury shares 136 148 190 Increase in current payables other than short-term borrowings 498 786 570 Decrease in investments 24 Other - nel 143 101 150 Total source of funds 3,238 3,138 2,909 -
Application Additions to property, plant and equipment 1,948 1,262 1,055 of funds Dividends declared on common stock 670 624 570 increase in investments 129 281 Reduction in long-term borrowings 69 97 386 Purchase of treasury shares 145 156 196 increasein current receivables 692 358 306 increase in inventories 182 158 399 Total application of funds 3,835 2,936 2,912 Netchange Net change in cash, marketable securities and short term borrowings
$ (597)
$ 202 (3)
Anal sis of increase (decrease) in cash and marketable securities
$ (375)
$ 113
$ 185 nete ange Decrease (increase) in short-term borrowings (222) 89 (188) l Increase (decrease) in net liquid assets
$ (597)
$ 202 (3)l Tha information on pages 33 and 37 45 is an integral part of this statement.
i l
i J
36 Annual Report 1980 l
l I
Summ rycf cignifiscnt ortizrtion of prior s:rvica litbiliti s over a parlod of 20 years are being charged to operating expenses currently.
COCunling POllCles Investment tax credit The investment tax credit is recorded by the " deferral method" and is amortized as a reduction of the provision for taxes over the lives of the facilities to which the credit applies, rather than being " flowed through" to income in the year the asset is acquired.
Basis of consolidation Th3 financial statements consolidate the accounts of the gubstantia ly all manuf acturing inventories located in the p;rtnt General Electric Company and those of all major-U.S. are valued on a last-in first-out, or LIFO, basis. Manu-ity-own d and controlled companies ( ' affiliated compa-f acturing inventories outside the U.S. are generally valued nl:s, ), except finance companies whose operations are on a first-in first-out, or FiFO, basis. Valuations are based not similar to those of the consolidated group. All signifi-on the cost of material, direct labor and manufacturing I
cant itIms relating to transactions among the parent and overhead, ar d do not exceed net realizable values. Cer-cffilitt:d companies are el,rn,nated from the consolidated tain indirect manufacturing expenses are charged directly i i to operating costs during the period incurred, rather than Th n neonsolidated finance companies areincluded being inventoried.
in tha statement of financial position under investments Mining inventories, which include principally mined end are valued at equity plus advances. In addition, com-ore and coal, metal concentrates and mining supplies, are pinins in which GE and/or its consolidated affiliates own stated at the lower of average cost or market. The cost of 20% to 50% of the voting stock (" associated companies")
mining inventones includes both d,irect and indirect costs ara included under investments, valued at the appropriate consisting of labor, purchased supplies and services, and shara of equity plus advances. After-tax earnings of non-depreciation, depletion and amortization of property, plant consolidated finance companies and associated compa-nies tre included in the statement of earnings under other o r lant and equipment Manuf acturing plant and equipment includes the original l
nonconsolidated uranium mining company (see cost of land, buildings and equipment less depreciation, note 12) is also included under investments and is valued w
s N esmnatehosuonsM W wear anMs>
et lowzr of cost or equity, plus advances' lescence. An accelerated depreciation method, based principally on a sum-of-the-years digits formula, is used to e ompany and its consolidated affiliates record a record depreciation of the original cost of manufacturing transaction as a sale only when title to products passes to plant and equipment purchased and installed in the U.S.
th3 customer or when services are performed in accord-subsequent to 1960. Most manufacturing plant and cncs with contract terms, equipment located outside the U.S. is depreciated on a Vacati:n expense straight line basis. If manufacturing plant and equipment Most employees earn credits during the current year for is subject to abnormal economic conditions or obsoles-vacations to be taken in the following year. The expense cence, additional depreciation is provided. Expenditures for this liability is accrued during the year vacations are f r maintenance and repairs of manufacturing plant and earn:d rather than in the year vacations are taken.
equipment are charged to operations as incurred.
The cost of mining properties includes initial expendi-nv st nts of the General Electric Pension Trust, which tures and cost of major rebuilding projects which substan-funds the obligations of the General Electric Pension Plan' tially increase the usefullives of existing assets. The cost are c:rri:d at amortized cost plus programmed apprecia-of mining properties is depreciated, depleted or amortized tion in ths common stock portfolio. The funding program ver the usefullives of the related assets by use of unit-of-and Company cost determination for the Pension Plan use pr duction, straight-line or declining-balance methods.
6% as the estimated rate of future Trust income. Trust Mining exploration costs are expensea until it is deter-income includes recognition of appreciation in the com-mined that the development of a mineral deposit is likely to mon stock portfolio on a systematic basis which does not be economically feas,ble. After this determination is made, i
giva undue weight to short term market fluctuations. Pro-all costs related to further development are capitalized.
i gramm:d appreciation will not be recognized if average Amortization of such costs begins upon commencement carrying value exceeds average market value, calculated of production and is over ten years or 1% productive life of on a moving basis over a multiyear period.
the property, whichever is less.
Changes in prior service liabilities of the Plan are am-Oil and gas properties are accounted for b use of the ortiz d over 20 years. Net actuarial gains and losses are full-cost method.
amortized over 15 years.
Costs of a separate, supplementary pension plan, pri-marily affecting long service professional and managerial employ:es, are not funded. Current service costs and am-The General Electric Investor 37
N tco tafin:nsitict tzm:nta ciation of common stock wts not exc: did in any y:ar, Condensed information for the General Electric Pen-sion Trust appears below. Prior-year as well as current-year data are presented in accordance with new standards issued in 1980 by the Financial Accounting Standards Board (FASB).
General Electric Pension Trust
- 1. Sales Change in net assets at current value Approximately one-eighth of sales were to agencies of the (in millions) For the year 1980 1979 1978 U.S. government, which is the Company's largest single customer. The principal source of these sales was the Net assets at January 1
$4,968
$4,202
$3,734 Trchnical Systems and Materials segment of the Com-Company contributions 404 341 317
' piny's business.
Employee contributions 86 94 83 investment income 435 383 312 Pensions paid (254)
(225)
(201)
- 2. Operating costs Unrecognized portion of Optrating costs by major expense categories are shown below:
Mange in current value 779 173 (43)
(in mmions) 1980 1979 1978 Ned usets at December 31
$6.418
- $4,968
$4.202 Employee compensation, including benefits S 9,196
$ 8,286
$ 7,401 Net assets at current value Mittrials, supplies, ser-(in mmions) December 31 1980 1979 1978 vices and other costs 12,696 11,320 9,867 Depreciation, depletion U.S. government obligations and amortization 707 624 576 and guarantees S 44 -
$ 118
$ 93 Texts, except Social Corporate bonds and notes 727 496 340 Security and those on Real estate and mortgages 825 713 725 income 299 259 251 Common stocks and other incr:ase in inventories equity securities 4,181 3.193 2,726 during the year (182)
(158)
(399) 5,777 4,520 3,884
$22,716
$20,331
$17,696 Cash and short-term investments 553 371 240
~
Supplemental details are as follows:
ent va e of net assets
$6,4
$4,9 on mmions) 1980 1979 1978
$4,2 Carrying value of net M:intenance and repairs
$784
$775
$672 assets
$5,593
$4,922
$4,329 Company-funded research and development 760 640 521 The actuarial present value of accumulated plan ben-Social Security taxes 484 471 397 efits for the General Electric Pension Plan and the supple-Advartising 315 282 247 mentary pension plan together represent over 90% of ac-Min 2ral roya! ties and cumulated pension plan benefits for General Electric and export duties 80 82 79 its consolidated affiliates. These present values have Foreign currency translation gains, after recognizing re-been calculated using a 6% interest rate assumption as of lat:d income tax effects and minority interest share, were December 31 for each of the years in the table below. The
$40 million in 1980 and $12 million in 1979 and 1978.
table also sets forth the total of the current value of Pension Trust assets and the relevant accruals in the
- 3. P:nsions Company's accounts.
Tot:1 pension costs of General Electric and consolidated affiliates were $478 million in 1980, $413 million in 1979, General Electric Pension Plan and Supplementary Pension end $381 million in 1978. General Electric and its affiliates Plan hava a number of pension plans. The most significant of on millions) December 31 1980 1979 1978 th se plans is the General Electric Pension Plan (the Estimated actuarial present
" Plan"), in which substantially all employees in the U.S.
valueof accumulated ara participating. Approximately 80,800 persons were re.
plan benefits:
I c:iving benefits at year-end 1980 (75,700 and 72,100 at vested benefits
$6,027
$5,426
$4,732 Non vested benefits 415 382 331 year-end 1979 and 1978, respectively).
Total benefits
$6,442
$5.808
$5,063 Pension benefits under the Plan are funded through ths General Electric Pension Trust. Earnings of the Trust, Cu r ntva1ue f trust assets e,9, including the programmed recognition of common stock cppreciation, as a percentage of the carrying value of the For pension plans not included above, there was no portfolio, were 8.4% for 1980 and 1979, and 7.8% for significant difference between accumulated benefits and 1978. The limitation on recognition of programmed appre-the relevant fund assets plus accruals.
38 Annual Report 1980
i l
The foregoing amounts are based on nsw FASB stand-in tha effect of timing differ:nc:s result princip;lly from fluc-ards which differ from those used by the Company for tuations in foreign earnings and tax rates, and from recog-funding and cost determination purposes. Based on the nizing in the current year for tax payment purposes the ectuarial method used by the Company, and with assets at results of transactions in Australia recorded for financial-carrying value, unfunded and unamortized liabilities for reporting purposesin other years.-
ths two principal pension plans totaled $964 million,
_ investment credit amounted to $92 million in 1980, com-
$1,082 million and $882 million at year-end 1980-,1979 pared with $76 million in 1979 and $51 million in 1978. In 1980, $36 million were included in net eamings, compared and 1978, respectively.
with $31 million in 1979 and $26 million in 1978. At the end An increase in pensions of retired employees etfec-tive February 1,1981, will increase the actuarial present of 1980, the amount still deferred and to be included in net '
value of accumulated vested benefits by an estimated earnings in future years was $262 million.
- $196 million.
Effect of timing differences on U.S.'
- 4. Oth:r income federalincome taxes on mmons) 1980 1979 1978 on mitiions)
. Nit earnings of GE Credit Corporation
$115
$ 90
$ 77 Tax over book depreciation
$ 48
$ 23. $ 26 incom3 kom:
Un:listributed earnings of affiliates Mirkrtable securities and bank and associated companies.
29 (2) 8 dIposits 229 229 140 Margin on installment sales 1
(10)
(10)
Customer financing 72 70 49 Provision for warranties (46)
'(36)
(31)
Royalty and technical agreements 52 50 44 Other-net (18)
(6)
(6)
Associated companies and non-
$ 14
$L31). g consolidated uranium mining affiliate 22 11 34 The cumulative net effect of timing differences has re-n 21 20 19 sulted in a deferred-tax asset which is shown under other Dividinds 13 11 10 assets.
Oth rsundryitems 40 38 46
$564
$519
$419 Reconcillation from statutory to effective income tax rates 1980 1979 1978
- 5. Intsrest and other financial charges U.S. federal statutory rate 46.0 % 46.0% - 48.0 %
Interest capitalized on major property, plant and equip-Reduction in taxes resulting from:
ment projects in 1980 was $21 million.
Varying tax rates of consolidated affiliates (including DISC).
(4.7)
(3.3)
(3.4)
- 6. Provision forincome taxes inclusion of earnings of the Credit Corporation in before tax on mnons) 1980 1979 1978 income on en after-tax basis (2.1)
(1.7)-
(1.7)
U.S.federaiincome taxes:
Investment credit (1.5)
(1.3)
(1.2)
Estimated amount payable
$574
$599
$590 Income tax at capital gains rate (0.1)
(0.6)
EffIctof timingdifferences 14 (31)
(13)
Other-net 0.8 0.2
_0,d Inytstment credit deferred-net 56 -
45 25 Effective tax rate 38.4 %
39.9 % 4_L5%
644 613 602 Forrignincome taxes:
Based on the location of the component furnishing goods -
Estimated amount payable 238 323 221 or services, domestic income before taxes was $1,854 Effectof timingdifferences 39 (6) 45 million in 1980 ($1,706 million in 1979 and $1,592 million 277 31T 266 in 1978). The corresponding amounts for foreign based Othir(principally state and local operations were $639 million, $685 million and $561 mil-incoms taxes) 37 23 26 lion in each of the last three years, respectively. Provision
$958
$953
$894 forincome taxes is determined on the basis of the jurisdic-tion imposing the tax liability. Therefore, U.S. and foreign All Gtneral Electric consolidated U.S. federal income tax taxes shown at the lef t do not compare directly with these returns have been closed through 1972, segregations.
Provision has been roade for federal income taxes to be paid on that portion of the undistributed eamings of affiliates
- 7. Earnings per common share end associated companies expected to be remitted to the Earnings per share are based on the average number of par:nt company. Undistributed earnings intended to be rein-shares outstanding. Any dilution which would result from vest:d indefinitely in affiliates and associated companies to-the potential exercise or conversion of such items as stock taled $1,111 million at the end of 1980, $944 million at the options or convertible debt outstanding is insignificant end of 1979, and $815 million at the end of 1978.
(less than 1% in 1980,1979 and 1978).
Chinges in estimated foreign income taxes payabl6 and The General Electric investor ' 39
l 4
- 8. Cash End mark;tibl3 cccuriti s
- 12. Inv;stm;nts D: posits restricted as to usage and withdrawal or used as on mmons) December 3r 1980.
1979 partial compensation for short-term borrowing arrange-Nonconsolidated finance affiliates
$ 938
$ 824' ke ble se u i s (none of which are equity securi- :-
' " N ate "9
a 188 157'
' tits) are carried at the lower of amortized cost or market.
Miscellaneous investments (at cost):
valus. Carrying value was substantially the same as mar-Govemment and govemment-kct value at year-end 1980 and 1979, guaranteed securities 187.
233 Other 136' 148"
- 9. Current receivables 323 381 On mnons) December st 1980 1979 Marketable equity securities 44
- 44 Customers' accounts and notes
$ 3,816
$3,254 Associated companies 342 301 Associated companies 25 36 Less allowance for losses.
(15)
- (16) i Nonconsolidated affiliates 17 7
$1.820
$1,691 -
. Othat '
584 439 Condensed consolidated financial statements for the 4,442 3,736 principal nonconsolidated finance affiliate, General Less allowance forlosses (103)
(89)
Electric Credit Corporation (GECC), follow. During the -
$ 4.339
$3.647
- normal course of business, GECC has transactions with c the parent General Electric Company and certain of its 10, inventories consolidated affiliates, and GECC results are included in -
General Electric's consolidated U.S. federal income tax Un mmons) December 31 1980 1979 Raw materials and work in process
$ 2,082
$1,943 return. However, virtually all products financed by GECC Finished goods 961 966 are manuf actured by companies other than General Unbilled shipments 300.
'252 Electric. More detailed information is available in GECC's
$ 3,343
$3,161 1980 Annual Report, copies of which may be obtained by -
writing to: General Electric Credit Corporation, P.O. Aox About 84% of totalinventories are valued using the LIFO 8300, Stamford, Connecticut 06904.-
method of inventory accounting.
If the FIFO method of inventory accounting had been General Electric Credit Corporation ustd to value allinventories, they would have been Financialposition
$2.240 million higher than reported at December 31, on moon,3 o,c m3,,3, 193o.
t979 1980 ($1,950 million higher at year-end 1979)'
Cash and marketable securities
$ 531
- $ 374 Receivables:
- 11. Property, plant and equipment Time sales and loans 8,159 7.480 i
on meons) 1980 1979' Deferredincome (1,380)-
(1,124)
~
Major classes at December 31:
6,779 6,356 Manufacturing plant and equipment Investment in leases 1,643 1,207.-
Land and improvements
$ 139
$ 125 Sundry receivables 197 141; Buildings, structures and 2,098
. Allowance forlosses (249)
(231)
Total receivables 8.619 7,704 related equipment -
2,329 Machinery and equipment 6,197 5,314 Net receivables 8,370 7,473 -
Leasehold costs and manufac.
Other assets 443 321' tunng plant under construction 453 372 Totalassets
$9,344
$8,168 Mineral property, plant and i
equipment 1,917 1,456 Notes payable-4
$11.035
$9,365 Due within one year.
$4,425
$3,921 l
Cost at January 1
$ 9,365
$8,328 Long term -senior 1,984 1,743 Additions 1,948 1,262
-subordinated 400 325.
Dispositions (278)
(225)
Other liabilities
'707 631 Cost at December 31
$11.035
$9,365 Totalliabilities 7,516
-6,620 Deferred income taxes 876 718 Accumulated depreciation, depletion L and tmortization Deferred investment tax credit 21 13 Balance at January 1
$ 4,752
$4,305
. Capital stock 12-12 658 566 i
Current year provision 707 624 Additional paid-in capital Dispositions (214)
(188)
Retained earnings 261 239 Othsr changes 10 11 Equity 931 817 Balance at December 31
$ 5,255
$4,752 Totalliabilities, deferred tax Pr::perty, plant and equipment less l
depr clation, depletion and cm rtization at December 31
$ 5,780
$4,613 40 ' Annual Report 1980 l-(
Gener;l Electric Credit Corporation
- 13. Other c:s:ts Current and retained earnin'Jd on mwons) December 31 1980 1979 On m@ons) For the year 1960 1979 1978 Long term receivables
$340
$307 Eimed income
$1,389
$1,102
$ 813 Deferred charges 198 145 Expensis:
Real estate development projects 132 81 Int:r:st and discount 719 528 337 Recoverable engineering costs on Operating and govemment contracts 113 121 cdministrative 451 396 315 Customer financing 103 107 Provision forlosses Licenses and other intangibles-net 75 52
-receivables 75 69 50 Deferred income taxes 21 98
-other assets 3
(2) 8 Other 46 45 Provision forincome taxes 26 21 20
$1,028
$956 1,274 1,012 736 Net amings 115 90 77 Licenses and other intangibles acquired after October Less dividends (93)
(72)
(62) 1970 are being amortized over appropriate periods of R;tained eamings at time.
January 1 239 221 206 R;t:In:d earnings at
- 14. Short-term borrowings Decimber 31
$ 261
$ 239
$ 221 The average balance of short-term borrowings, excluding Inv:stment in the nonconsolidated uranium mining af.
the current portion of long-term borrowings, was $822 mil-filiat; consists of investment in a wholly owned affiliate lion during 1980 (calculated by averaging all month-end
(:stiblished in the course of obtaining a U.S. Department balances for the year) compared with an average balance of Justic3 Business Advisory Clearance Procedure Letter of $705 million in 1979. The maximum balance included in in connection with the 1976 Utah merger) to which all of these calculations was $962 million and $727 million at the th th:n existing uranium business of Utah has been end of October 1980 and March 1979, respectively. The transferred. All common stock of this affiliate has been average effective interest rate for the year 1980 was 18.9%,
plac;d in a voting trust controlled by independent voting and for 1979 was 17.6%. These average rates represent trust:es. Prior to the year 2000, General Electric and its total short-term interest incurred divided by the average iffiliates may not withdraw the common stock from the balance outstanding. A summary of short-term borrowings voting trust except for sale to unaffiliated third parties, and the applicable interest rates is shown below.
Dir:ctors and officers of the affiliate may not be directors, offic:rs, or employees of General Electric, Utah or of any Short-term borrowings of th:ir affiliates. Uranium may not be sold by this affiliate, on muons) oecember 31 1980 1979 in any st te or form, to, or at the direction of, General Aver g Aver g Electric or its affiliates.
Amount Dec 31 Amount Dec 31 All outstanding shares of preferred stock of the ura-Parent notes with trust nium affiliate are retained by Utah as an affiliate of departments
$353 15.05 %
$290 12.62%
Gen:ral Electric. Payment of cumulative quarterly divi-Consolidated affiliate d;nds out of legally available funds on this preferred stock bank borrowings 539 30.83 389 27.10 is mindatory in amounts equal to 85% of the affiliate's net Other, including current cftzr-t"x income for the previous quarter (without taking how"ks "
201 192 cccount of any deduction for exploration expense as de-
$1,og3
$s73 fin:d). Utah, as holder of the preferred stock, must make loans with up to ten-year maturities when requested by the Parent borrowings are from U.S. sources. Borrowings of affiliata, although the aggregate amount of such loans consolidated affiliated companies are primarily from for-nnd not at any time exceed preferred dividend payments eign sources. Other borrowings include amounts from for th)immediately preceding two calendar years.
nonconsolidated affiliatts of $95 million in 1980 ($65 mil-Th3 estimated realizable value of miscellaneous lion in 1979).
inv:stm:nts was $287 million at December 31,1980 Although the total unused credit available to the Com-($350 million at December 31,1979).
pany through banks and commercial credit markets is not Marketable equity securities are valued at the lower readily quantifiable, informal credit lines in excess of $1 of cost or market. Aggregate market value of marketable billion had been extended by approximately 100 U.S.
equity sicurities was $242 million and $181 million at banks at year end.
year-Ind 1980 and 1979, respectively. At December 31, 1980, gross unrealized gains on marketable equity securi-ti s w;re $198 million.
Investments in nonconsolidated affiliates and associ-ct d companies included advances of $180 million at De-cember 31,1980 ($123 million at December 31,1979).
The General Electric Investor 41
l
- 15. Accounts pryabla
, Utah Intirnation11inc. not:s VM b nks were subjzct to N
p on mmons) o.c.mber at isso -
1ero.
average interest rates at year end 1980 and 1979 of.
Trad2 accounts '
' $1,402 :
i $1,259 11.3% and 7.9%, respectively,'
. i,
. Collected for the account of others.
203 172:
Borrowings of General Electric Overseas Capital Nonconsolidated affiliates 66 -
46i
. Corporation are unconditionally guaranteed by General *
. $1,671
$1,477 -
Electric as to payment of principal, pr6mium'if any, and; interest. This Corporation primarily assists in financing -
capital requirements of foreign companie's in which '
16? Other costs and ' expenses accrued -
- General Electric has an equity interest, as well as financk D.Tha balances at year-end 1980 and 1979 included com.
Ing certain customer purchases.'
Borrowings include 4%% Guaranteed Debentures '
pensation and benefit costs accrued of $703 million and -
' $641 million, respectively, due in 1987, which are convertible into General Electric,
common stock at $80.75 a share, and 5%% Sterling / Dollar l
'17, Long-term borrowings Guaranteed Loan Stock due in 1993 in the amount of E3.6 :
million ($9 million)iconvertible into GE common stock at ?
on moon.)
sinwns fune.
$73.50 a share. During 1980 and 1979, General Electric ;
' N*n$rli 187o. d ;. Propag 1 Overseas Capital Corporation 4%% Guaranteed Bonds-
.1eso having a face value and a reacquired cost of $2 million -
GI"
'F ctricCornpany:
' 1972-90 were retired in accordance with sinking fund provisions.
S N
$ 62. $ 69 1991 o e ongdermWowMgswerelarge@yfodgn 5.30% Debentures.
70 80 11992 - 1973 91" and real estate development affiliates with various interest -
7%% Debentures.
135 149 l1996 - 1977-95 rates and maturities and included amounts due to noncon-.,
8%% Debentures '
288L 295 2004' 1985-03 solidated affiliates of $7 million in 1980 and 1979.
Utah Internationalinc.:
Notes with banks 37
'5 1993 ' 1981 93 Long-term borrowing maturities during the next five ;
8% G;aranteed Sinking -
years, including the portion classified as current, are :
Fund Debentures 15 17 1987 1977-87
$91 million in 1981, $130 million in 1982, $62 million in i 7.6% Notes 28-32 1988= 1974-88 1983, $42 million in 1984 and $68 million in 1985. These.
L Other 32 25
~ amounts are after deducting reacquired debentures held,
Gintral Electric Overseas in treasury for sinking fund requirements.
C pitalCorporation:
4%% Bonds -
23 24.1985 1976 84 4%% Debentures.
50 50 1987
'None 5%% Sterling /
Dollar Guaranteed l
Loan Stock 9
- 8. 1993 None l
Other 34 37 All other
'217 156
$1,000
$947-l, The amounts shown above are after deduction of the face -
valua of securities held in treasury as shown below.
Faso value of long-term borrowings in treasury on mmone) December 31 1980 1979 Gintral Electric Cornpany:
5.30% Debentures -
$50
$50 l
7%% Debentures 35 29 8%% Debentures 12 5
l.
Gintral Electric Overseas Capital Corporation:
4%% Bonds 6
7 I
i 1
l L
.j
- 42. AnnualReport1980 f
9
.e-.
- 18. Common ctock 1980 1979 1980 1979 additicn, retained earnings have been increased by $10 million ($5 million reduction at D9cember 31,1979), which on milhons)
(Tnousanosof shares)
Common stockissued represents the change in equity in associated companies Bilance January 1 and since acquisition, Dic:mber 31
$ 579
$ 579 231.464 231,464 Amounts received for
- 20. Stock option information stockincxcess of per Stock option plans, appreciation rights and performance l
$alYncsJanuary1
$ 656
$ 658 units are described in the Cornpany's current Proxy State-1 Gain /(loss) on ment. A summary of stock option transactions during the disposition last two years is shown below:
of tr:asury stock 3
(2)
Balanco December 31
$ 659
$ 656 Stock options Average per share Common stock held in share sub ct Ot M et j
treasury Balines January 1
$180
$ 172 3,625 3,428 Balance at January 1, Purchtses 145 156 2,684 3,155 1979 4,088,853
$51.37 $47.13 Options granted 1,023,122 46.25 46.25 r
ee savings Options exercised (98,145) 40.63 50.14 plans (99)
(124) (1,879) (2,492)
Employee stock Options surrendered on exer-own rshipplan (16)
(11)
(296)
(213) ciseof appreciation rights (68,834) 40.52 49.17 incintive compensa-Options terminated (186,068) 50.77 i
tion plans (7)
(8)
(158)
(152)
Balance at December 31, Stock options and 1979 4,758,928 50.67 50.63
( )
()
(
)
(
)
Options granted 98,100 61.50 61.50 j
Cony s n of verseas Options exercised (273,193) 44.13 56.16 j
Cepital Corporation 1
(2)
Options surrendered on exer.
loan stock cise of appreciation rights (123,350) 41.93 54.92 I
Balanc3 December 31
$189
$ 180 3,699 3.625 Options terminated (157,163) 51.02 I
At D:cember 31,1980, and December 31,1979, respec.
Balance at December 31, 1980 4,303,322 51.56 61.25 tively,227,765,000 and 227,839,000 common shares j
w:re outstanding. Common stock held in treasury at De-c:mb:r 31,1980, included 1,921,706 shares for the de.
The number of shares available for granting additional op-f rr:d compensation provisions of incentive compensation tions at the end of 1980 was 1,862,756 (1,831,456 at the plans (1,785,656 shares at December 31,1979). These end of 1979).
shires are carried at narket value at the time of allotment, which amounted to $9t, million and $88 million at Decem.
- 21. Commitments and contingent liabilities b:r 31,1980 and 1979, respectively. The liability is re.
Lease commitments and contingent liabilities, consisting cord:d under otherliabilities.
of guarantees, pending litigation, taxes and other claims, Other common stock in treasury, which is carried at in the opinion of management, are not considered to be cost, aggregated 1,777,382 and 1,839,762 shares at De.
materialin relation to the Company's financial position.
c:mb:r 31,1980 and 1979, respectively. These shares are h Id for future corporate requirements, including distri-butions under employee savings plans, incentive compen-sition awards and possible conversion of General Electric Overseas Capital Corporation convertible indebtedness.
Th3 maximum number of shares required for conversions was 736,079 at December 31,1980 (737,725 at Decem-b:r 31,1979). Corporate requirements of shares for bene-fit plins and conversions may be met either from unissued sh r:s or from shares in treasury.
During 1978, the balance in common stock issued did not change, amounts received for common stock in ex-c ss of par value decreased by $10 million, and the bal-ancs of common stock held in treasury increased by $6 million.
- 19. R;trined earnings R:tiined earnings at year-end 1980 included approxi-mat;fy $251 million ($246 million at December 31,1979) r: pres ntiry the excess of earnings of nonconsolidated cffilist:s ove dividends received since their formation. In The General Electric Investor 43
l l
Indu tryC gm:ntinf rm ti:n Revenues (Inmilhons)
Fortheyears endedDecember31 Totairevenues Intersegment sales externalsales andotherincome 1980 1979 1978 1980 1979 1978 1980 1979 1978 Consumerproductsandservices
$ 5,599 $ 5,358 $ 4,788
$ 201 $ 199 $ 188
$ 5,398 $ 5,159 $ 4,600 115 90 77 i Netearningsof GE CreditCorp.
115 90 77 Totalcons iterproducts and services 5,714 5,448 4,865 201 199 188 5,513 5,249 4,677 lndustrialproductsandcomponents 5,157 4,803 4,124 565 508 468 4,592 4,295 3,656 PowIrsystems 4,023 3,564 3,486 175 210 174 3,848 3,354 3,312 Technicalsystemsandmaterials 7,128 6,061 4,7d' 5 258 255 190 6,870 5,806 4,555 Naturalresources 1,374 1,260 1,032 1,374 1,260 1,032 For11gnmulti-industryoperations 3,234 2,901 2,767 75 64 55 3,159 2,837 2,712 Corporateltemsandeliminations (1,107) (1,057)
(946)
(1,274) (1,236) (1,075) 167 179 129 Total
$25,523 $22,980 $20 073
$25,523 $22,980 $20,073 Operatingprofit Notearnings Fortheyearsendedoecember31 FortheyearsendsJDecember31 1980 1979 1978 1980 1979 1978 Consumerproductsandservices
$ 558 $ 568 $ 574
$ 292 $ 311 $ 300 nit earningsof GE CreditCorp.
115 90 77 115 90 77 Totilconsumer products and services 673 658 651 407 401 377 lndustrialproductsandcomponents 568 485 426 315 272 223 Powirsystems 194 174 196 141 114 93 TIchnicalsystemsandmaterials 774 672 545 373 356 278 Nituralresources 404 431 372 224 208 180 Foreignmulti-industryoperations 285 241 245 68 65 76 Totalsegmentoperating profit 2,898 2,661 2,435 IntIrest and other financial charges (314)
(258)
(224)
Corporateltemsandeliminations (91)
(12)
(58)
(14)
(7) 3 Total
$ 2,493 $ 2,391 $ 2,153
$ 1,514 $ 1,409 $ 1,230 Assets Property,plantandequipment At December 31 FortheyearsendedDecember31 Depreciahon.depletionand Additions amortization 1980 1979 1978 1980 1979 1978 1980 1979 1978 Consumerproductsandservices
$ 2,325 $ 2,157 $ 2,018
$ 238 $ 208 $ 169
$ 133 $ 115 $ 104 investmentinGECreditCorp.
931 817 677 Totalconsumer products and services 3,256 2,974 2,695 238 208 169 133 115 104 lndustrialproductsandcomponents 2,595 2,329 2,125 224 176 166 109 106 91 l
Powersystems 2,289 2,135 2,105 129 101 84 91 84 79 l.
T;chnicalsystemsandmaterials 4,475 3,422 2,683 693 444 289 200 163 150 !
N1turairesources 2,109 1,679 1,489 446 201 212 94 83 77 /
Forlignmulti industryoperations 2.564 2,259 2,100 161 109 119 66 61 64 !
Corporateitemsandeliminations
, 1,223 1,846 1,839 57 23 16 14 12 11 Total
$18,511 $16,644 $15,036
$ 1,948 $ 1,262 $ 1,055
$ 707 $ 624 $ 576' Consumer Products and Services consists of major appliances, General Electric Credit Corporation, a wholly owned noncon-tir conditioning equipment, lighting products, housewares and solidated finance affiliate, engages primarily in consumer, com-cudio products, television receivers, and broadcasting and ca-mercial and industrial financing, principally in the U.S. It also blIvision services, it also includes service operations for major participates, to a lesser degree, in life insurance and fire and l
Eppliances, air conditioners, TV receivers, and housewares and casualty insurance activities. Products of companies other than cudio products.
GC constitute virtually all products financed by GECC.
i 44 AnnualReport1980 l
j
l Industrial Products and Components includ:s compon1nts Foreign Multi-Industry Operations consists principilly of for-j
( ppliancs controls, small motors and electronic components);
eign affiliates which manufacture products primarily f:r sab in industrial capital equipment (construction, automation and trans-their respective home markets.
I portation); maintenance, inspection, repair and rebuildinn of
{
cl ctric, clIctronic and mechanical apparatus; and a network of Not earnings for industry segments include allocation of corpo-supply houses offering products of General Electric and other rate interest income, expense and other financial charges to par-manuf:cturers.
ent company components based on change in individual compo-nent everage nonfixed investment. Interest and other financial Power Systems Includes steam turbine generators, gas tur-charges of affiliated companies recognize that such companies binis, nuclear power reactors and nuclear fuel assemblies, generally service their own debt.
transform:rs, switchgear, meters, and installation and mainte-General corporate expenses are allocated principally on the
{
ninco engineering services.
basis of cost of operations, with certain exceptions and reduc-l tions which recognize the varying degrees to which affiliated 1
i Technical Systems and Materials consists of jet engines for air-companies maintain their own corporate structures.
craf t, industrial and marine applications; electronic and other in addition, provision for income taxes ($958 million in 1980, high-tIchnology products and services primarily for aerospace
$953 million in 1979, and $894 million in 1978)is allocated based
. cpplicItions and defense; materials (engineered plastics, sili-on the total corporate effective tax rate, except for GECC and conis, industrial cutting materials, laminated and insulating ma-Natural Resources, whose income taxes are calculated (Irlais, and batteries); medical and communications equipment; separately.
End tim 3 sharing, computing, and remote data processing.
Minority interest ($21 million in 1980 and $29 million in both 1979 and 1978) is allocated to operating components having Netw.. Jesources includes the mining of coking coal (princi-responsibility for investments in consolidated affiliates.
pilly in Australia), uranium, steam coal, iron and copper. In addi-in general, it is GE's policy to price internal sales as nearly I
tion, it includes oil and natural gas production, ocean shipping as practicable to equivalent commercial selling prices.
(prim:rily in support of mining operations) and land acquisition 1
(nd dav:fopment.
Cccgraph:'c segment information Revenues (Inmilliona)
Fortheyearsended December 31 Total revenues intersogment sales Extemalsalesandotherincome 1980 1979 1978 1980 1979 1978 1980 1979 1978 Unitid States
$20,750 $18,859 $16,443
$ 484 $ 467 $ 362
$20,266 $18,392 $16,081 Far Erstincluding Australia 1,277 1,183 1,109 355 280 242 92E -
903 867 Oth:rareasoftheworld 4,459 3,814 3,270 124 129 145 4,335 3,685 3.125 Eliminationofintracompany transictions (963)
(876)
(749)
(963)
(876)
(749)
$_2,,980 $20,073 Total
$25,523 $22,980 $20,073
$25,523 2
NetEarnings Assets FortheyearsendedDecember31 AtDecember31 1980 1979 1978 1980 1979 1978 United States
$ 1,175 $ 1,120 $ 961
$13,732 $12,693 $11,410 Ftr Eistincluding Australia 169 174 170 1,090 842 889 Othircritsoftheworld 181 120 104 3,808 3,207 2,827 Eliminationofintracompany transactions (11)
(5)
(5)
(119)
(98)
(90)
Total
$ 1,514 $ 1,409 $ 1,230
$18,511 $16,644 $15,036 Geogr:phic segment information (includ:ng allocation of in-U.S. revenues also include royalty and licensing income from coma taxis and minority interest in eamings of consolidated affil-unaffiliated foreign sources.
latIs) is bised on the location of the operation fumishing goods Revenues, net earnings and assets associated with foreign or sirvic s, included in United States revenues were export operations are shown in the tabulations above. At December 31, salIs to unaffiliated customers of $3,781 million in 1980, $2,772 1980, foreign operation liabilities, minority interest in equity and million in 1979, and $2,571 million in 1978. Of such sales, $2,089 GE interest in equity were $2,562 million, $141 million and million in 1980 ($1,581 million in 1979 and $1,662 million in
$2,195 million, respectively. On a comparable basis, the 1978) wire to customers in Europe, Africa and the Middle East; amounts were $2,101 million, $139 million and $1,809 million, End $926 million in 1980 ($741 million in 1979 and $498 million in respectively, at December 31,1979; and $1,910 million, $150 1978) wire to customers in the Far East including Australia.
million and $1,656 million, respectively, at December 31,1978.
The General Electric investor 45
T n>yTr cumm:ry (:)-
Selected financialdata (Douar amounts in millions; per share amounts in dollars) 1980 1979 1978 1977 1976 Summary of operations Sales of products and services to customers
$24,959
$22,461
$19,654
$17,519
$15,697 Cost of goods sold 17,751 15,991 13,915 12,288 11,048 Selling, general and administrative expense 4,258 3,716 3,205 3,011 2,635 Depreciation, depletion and amortization 707 624 576 522 486 Operating costs 22,716 20,331 17,696 15,821 14,169 Operating margin 2,243 2,130 1,958 1,698 1,528 Other income 564 519 419 390 274 Interest and other financial charges.
(314)
(258)
(224)
(199)
(175)
Eamings before income taxes and minority interest 2,493 2,391 2,153 1,889 1,627 Provision for income taxes (958)
(953)
(894)
(773)
(668)
Minority interest (21)
(29)
(29)
(28)
(28)
Net earnings
$ 1,514
$ 1,409 8 1,230
$ 1.088 931 Earnings per common share (b)
$ 6.65
$ 6.20
$ 5.39
$ 4.79
$ 4.12 Dividends declared per common share (c)
$ 2.95
$ 2.75
$ 2.50
$ 2.10
$ 1.70 Earnings as a percentage of sales 6.1%
6.3%
6.3%
6.2%
5.9%
Earned on average share owners' equity 19.5 %
20.2%
19.6 %
19.4 %
18.9 %
Dividends-General Electric 670 624 570 477 333 Dividends-Utah international lnc. (d) 28 Shares outstanding-average (in thousands) (e) 227,541 227,173 227,985 227,154 225,791 Share owner accounts-average 524,000 540,000 552,000 553,000 566,000 Market price range per share (c)(f) 63-44 551-45 578-431 571-471 59146 Price! earnings ratio range (c) 9-7 9-7 11-8 12 10 14 11 Current assets
$ 9,883
$ 9,384
$ 8,755
$ 7,865
$ 6,685 Current liabilities 7,592 6,872 6,175 5,417 4,605 Working capital
$ 2,291
$ 2,512
$ 2,580
$ 2,448
$ 2,080 Short term bonowings
$ 1,093 871 960 772 611 Long-term borrowings 1,000 947 994 1,284 1,322 Minority interest in equity of consolidated affiliates 154 152 151 132 119 Share owners' equity 8,200 7,362 6,587 5,943 5,253 Total capitalinvested
$10,447
$ 9,332
$ 8,692
$ 8,131
$ 7,305 Etrned on average total capital invested 17.3 %
17.6 %
16.3 %
15.8%
15.1 % '
Shire owners' equity per common share-year end (b)
$ 36.00
$ 32.31
$ 28.88
$ 26.05
$ 23.18 '
I Total assets
$18,511
$16,644
$15,036
$13,697
$12,050 i Property, plant and equipment additions
$ 1,948
$ 1,262
$ 1,055 823 740 Employees-average worldwide 402,000 405,000 401,000 384,000 380,000 (2) Unless specifically noted, all years are adjusted to include Utah inter. (e) includes General Electrlc outstanding average shares or year-end nationalInc., which became a wholly owned affiliate of General Elec-shares as appropriate, plus, in 1976 and prior years. outstanding tric on December 20.1976, through the exchange of 41,002,034 shares previously reported by Utah multiplied by 1.3. Adjustments shares of General Electric common stock for all of the outstanding have been made for the two-for one Utah stock split effected in the shares of Utah.
form of stock dividends in 1973.
(b) Computed using outstanding shares as described in note (e).
(f) Represents high and low market prices as reported on New York (c) For General Electric common stock as reported in the years shown.
Stock Exchange through January 23,1976, and as reported on the 1
(d) Reflects transactions prior to merger date.
Consolidated Tape thereafter.
46 Annual Report 1980 I
I
1 Otherinform; tion I
Quarterly dividend and stock market information 1975 1974 1973 1972 1971 Dividends common stock i
declared market price range j
1980 1979 1980 1979 j
$14,105
$13,918
$11,945
$10,474
$9,557 First quarter 70e 65e
$57%-$44
$50% $45%
Second quarter 75 70 52 44 %
51 %- 46 %
10,210 10,092 8,445 7,381 6,809 Third quarter 75 70 58 %- 51 %
55 % 49 %
2,238 2,240 2,058 1,872 1,686 Fourth quarter 75 70 63 - 51 %
52 %- 45 470 415 372 344 290 The New York Stock Exchange is the principal market on which GE 12,918 12,747 10,875 9,597 8,785 common stock is traded and, as of December 8,1980, there were approx-1,187 1,171 1,070 877 772 imately 512,282 share owners of record.
174 207 203 207 177 Operations by quarter for 1980 and 1979 (187)
(197)
(143)
(121)
(102)
(Dollar amountain mimons:
First Second Third Fourth 1,174 1,181 1,130 963 847 per. snare amounts in doiiarsi auarter quarter cuarter quarter (460)
(458)
(457)
(385)
(333) 1980:
(26)
(18)
(12) 15)
(4) Sales of products and 688 705 661 573
$ 510 services to customers
$5,881
$6,197
$5,963
$6,918 i
Operating margin 527 556 513 647
$ 3.07
$ 3.16
$ 2.97
$ 2.57
$ 2.30 Net eamings 342 403 358 411
$ 1.60
$ 1.60
$ 1.50
$ 1.40
$ 1.38 Net eamings per 4.9%
5.1%
5.5%
5.5%
5.3%
common share 1.50 1.77 1.58 1.80 f,[ejof roductsand 15.7%
17.8%
18.4 %
17.5%
17.2%
services to customers
$5,082
$5,642
$5,609
$6,128 293 291 273 255
$ 250 Operating margin 470 598 511 551 33 24 14 13 11 Net eamings 303 382 341 383 224,262 222,921 222,631 222,503 221,591 Net eamings per e mm nshare 1.33 1.69 1.50 1.68 582,000 566,000 543,000 542,000 529,000 521-321 65-30 751-55 73 581 661-461 Dividend Reinvoetment Plan 17-10 19-9 24-17 25-20 26-18 GE share owners whose Company stock is registered in their own names and whose addresses of record are in the United States or its territories or possessions are eligible to participate in the GE Dividend Reinvest-
$ 5,750
$ 5,334
$ 4,597
$ 4,057
$3,700 ment Plan. For information on the plan, write to: Share Owner Records, 4,163 4,032 3,588 2,921 2,894 General Electric Company, P.O. Box 206, Schenectady, N.Y.12301.
$ 1,587
$ 1,302
$ 1,009
$ 1,136
$ 806 Form 10-K and other supplementalinformation 667 656 676 453
$ 582 The financialinformation in this Report, in the opinion of management, 1,239 1,403 1,166 1,191 1,016 substantially conforms with or exceeds the information required in the 105 86 63 54 50 "10-K Report" submitted to the Securities and Exchinage Commission.
4,617 4,172 3,774 3,420 3,106 Certain supplemental information, considered nonsubstantive, is in-luded in that rep rt, however, and copies will be availab!e without
$ 6,628
$ 6,317
$ 5,679
$ 5,118
$4,754 charge, on or about May 1, from: Investor Relations, General Electric 12.5%
13.4%
13.7 %
12.7%
12.3%
Company, Fairfield, Connecticut 06431,
$ 20.49
$ 18.65
$ 16.94
$ 15.35
$13.96 Copies of the General Electric Pension Plan, the Summary Annual Reports for GE employee benefit plans subject to the Employee Retire-ment income Security Act of 1974, and other GE employee benefit plan
$10,741
$10,220
$ 9,089
$ 8,051
$7,472 documents and information are available by writing to investor Relations 588 813 735 501
$ 711 and specifying the information desired.
380,000 409,000 392,000 373,000 366,000 Transfer Agents General Electric Company The First National Bank of Boston SecuritiesTransfer Operation Shareholder Services Division 570 Lexington Avenue P.O. Box 644 New York, New York 10022 Boston, Massachusetts 02102 The General Electric investor 47
l GENERALOrtternic INVESTOR AnnualReport issue General Electric Cornpany Fairfield, Connecticut 06431 Rosearch G E R &D expanded in 1980: Continuing to "factoryof thefuture."Theyearsawthefirst base its sales and earnings growth in targe part testsof acomputer designedinjectionmold on in novative technologie s, G e ne ral Electric for plastic parts, and a developmental G E ro-Development spent a record $1,598 million on research and bot showed its ability to assemble scores of development activities in 1980. This included differenttypes of electric motors. Newtech-e an increase of 19% f rom 1979 to $760 million in niques-some using lasers-were tested for expendituresof theCompany'sownfunds.
machining tough materials at higher speeds The balance of $838 million was done under thaneverbefore.
contract. primarily for the U.S. government.
In ene rgy, the Company's R&D efforts focus At the corporate Research and Develop-on clean methods for converting coat into elec-ment Cente r, scientists are playing a key role tricity, and on ways to reduce energy con-in the " electronics revolution," producing sumption.Examplesof thelatterincludenew sm alle r,f aster microcircuits for eve rything f uel-conserving turbof an aircraf t engines; en-f rom " intelligent" home appliances tojam-re-e rgy-officie nt lamps; ac adj u stable-speed sistant military communications systems.
drives; and energy-saving appliances.
During 1980, they tested an advanced ultra-R& D activities pictured below include a sonic cardiac scanner that can provide moving unique research f acility (lef t) to study gasified picturesof thehumanheartviasoundwaves.
coal-f ueled power generation, and studies us-L Higher manuf acturing productivity will result ing interactive graphics to boost productivity f rom computer and robot technologies in the bycomputer aideddesign,
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