Docstoc

General Electric Company - GE.com

Document Sample
General Electric Company - GE.com Powered By Docstoc
					         UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                                         WASHINGTON, D.C. 20549

                                                                  FORM 10-K
           (Mark One)
                Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
                                              For the fiscal year ended December 31, 2003
                                                                    or
                Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
                                    For the transition period from ___________to ___________

                                                                 _____________________________

                                                        Commission file number 1-35
                                                                 _____________________________


                                               General Electric Company
                                             (Exact name of registrant as specified in charter)

                       New York                                                                              14-0689340
(State or other jurisdiction of incorporation or organization)                                     (I.R.S. Employer Identification No.)

     3135 Easton Turnpike, Fairfield, CT                                    06828-0001                      203/373-2211
          (Address of principal executive offices)                            (Zip Code)                    (Telephone No.)



                                         Securities Registered Pursuant to Section 12(b) of the Act:

                                                                                                      Name of each exchange
                  Title of each class                                                                  on which registered

    Common stock, par value $0.06 per share                                                         New York Stock Exchange
                                                                                                     Boston Stock Exchange


          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes     No    .

          The aggregate market value of the outstanding common equity of the registrant as of the last business day of the registrant’s
most recently completed second fiscal quarter was $287.3 billion. Affiliates of the Company beneficially own, in the aggregate, less
than one-tenth of one percent of such shares. There were 10,078,668,998 shares of voting common stock with a par value of $0.06
outstanding at February 13, 2004.

                                           DOCUMENTS INCORPORATED BY REFERENCE

           The Annual Report to Shareowners for the fiscal year ended December 31, 2003 is incorporated by reference in Parts I, II
and III to the extent described therein. The definitive proxy statement relating to the registrant’s Annual Meeting of Shareowners, to
be held April 28, 2004, is incorporated by reference in Part III to the extent described therein.




                                                                             (1)
                                                                     Table of Contents
                                                                                                                                                                  Page
Part I

Item 1.       Business........................................................................................................................................       3
Item 2.       Properties ......................................................................................................................................     18
Item 3.       Legal Proceedings.........................................................................................................................            18
Item 4.       Submission of Matters to a Vote of Security Holders ..................................................................                                18

Part II

Item 5.       Market for the Registrant’s Common Equity and Related Stockholder Matters...........................                                                  19
Item 6.       Selected Financial Data ................................................................................................................              19
Item 7.       Management’s Discussion and Analysis of Financial Condition and Results of Operations .......                                                         19
Item 7A.      Quantitative and Qualitative Disclosures About Market Risk ......................................................                                     19
Item 8.       Financial Statements and Supplementary Data.............................................................................                              19
Item 9.       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .......                                                          20
Item 9A.      Controls and Procedures ...............................................................................................................               20

Part III

Item 10.      Directors and Executive Officers of the Registrant ......................................................................                             21
Item 11.      Executive Compensation ..............................................................................................................                 22
Item 12.      Security Ownership of Certain Beneficial Owners and Management ..........................................                                             22
Item 13.      Certain Relationships and Related Transactions...........................................................................                             22
Item 14.      Principal Accountant Fees and Services .......................................................................................                        22

Part IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ...........................................                                               23
         Signatures .....................................................................................................................................           29




                                                                                 (2)
                                                        Part I

Item 1. Business
General
          Unless otherwise indicated by the context, we use the terms “GE,” “GECS” and “GE Capital” on the basis
of consolidation described in note 1 to the consolidated financial statements on page 76 of the 2003 Annual Report
to Shareowners of General Electric Company (the Company). The financial section of such Annual Report to
Shareowners (pages 41 through 115 of that document) is described in Part IV Item 15(a)(1) and set forth in Exhibit
13 of this 10-K Report and is an integral part hereof. References in Parts I and II of this 10-K Report are to the page
numbers of the 2003 Annual Report to Shareowners. Also, unless otherwise indicated by the context, “General
Electric” means the parent company, General Electric Company.

          General Electric’s address is 1 River Road, Schenectady, NY 12345-6999; we also maintain executive
offices at 3135 Easton Turnpike, Fairfield, CT 06828-0001.

         GE is one of the largest and most diversified industrial corporations in the world. We have engaged in
developing, manufacturing and marketing a wide variety of products for the generation, transmission, distribution,
control and utilization of electricity since our incorporation in 1892. Over the years, we have developed or acquired
new technologies and services that have broadened considerably the scope of our activities.

         Our products include major appliances; lighting products; industrial automation products; medical
diagnostic imaging equipment; motors; electrical distribution and control equipment; locomotives; power generation
and delivery products; nuclear power support services and fuel assemblies; commercial and military aircraft jet
engines; chemicals for treatment of water and process systems; and engineered materials, such as plastics, silicones
and, through the fourth quarter of 2003, superabrasive industrial diamonds.

          Our services include product services; electrical product supply houses; electrical apparatus installation,
engineering, repair and rebuilding services; and through the third quarter of 2002, computer related information
services. Through our affiliate, the National Broadcasting Company, Inc., we deliver network television services,
operate television stations, and provide cable, Internet and multimedia programming and distribution services.
Through another affiliate, General Electric Capital Services, Inc., we offer a broad array of financial and other
services including consumer financing, commercial and industrial financing, real estate financing, asset management
and leasing, mortgage services, consumer savings and insurance services, and specialty insurance and reinsurance.

         In virtually all of our global business activities, we encounter aggressive and able competition. In many
instances, the competitive climate is characterized by changing technology that requires continuing research and
development, as well as customer commitments. With respect to manufacturing operations, we believe that, in
general, we are one of the leading firms in most of the major industries in which we participate. The NBC
Television Network is one of four major U.S. commercial broadcast television networks. It also competes with
syndicated broadcast television programming and cable and satellite television programming activities. The
businesses in which GECS engages are subject to competition from various types of financial institutions, including
commercial banks, thrifts, investment banks, broker-dealers, credit unions, leasing companies, consumer loan
companies, independent finance companies, finance companies associated with manufacturers, and insurance and
reinsurance companies.




                                                        (3)
         This document contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will” or words of similar meaning and include,
but are not limited to, statements about the expected future business and financial performance of GE. Forward-
looking statements are based on management’s current expectations and assumptions, which are inherently subject
to uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may
differ materially from these expectations and assumptions due to changes in global political, economic, business,
competitive, market, regulatory and other factors. We undertake no obligation to publicly update or review any
forward-looking information, whether as a result of new information, future developments or otherwise.

        Our consolidated international revenues increased to $60.8 billion in 2003, compared with $53.4 billion in
2002 and $51.9 billion in 2001.

Operating Segments
        Segment revenue and profit information is presented on page 48 of the 2003 Annual Report to
Shareowners. Additional financial data and commentary on recent financial results for operating segments are
provided on pages 49-55 of that report and in note 27 (pages 102 and 103) to the consolidated financial statements.

          Operating businesses that are reported as segments include Aircraft Engines, Commercial Finance,
Consumer Finance, Consumer Products, Equipment Management, Industrial Products and Systems, Insurance,
Medical Systems, NBC, Plastics, Power Systems, Specialty Materials and Transportation Systems. There is
appropriate elimination of the net earnings of GECS and the immaterial effect of transactions between segments to
arrive at total consolidated data. A summary description of each of our operating segments follows.

Aircraft Engines
         Aircraft Engines (8.0%, 8.4% and 9.0% of consolidated revenues in 2003, 2002 and 2001, respectively)
produces, sells and services jet engines, turboprop and turbo shaft engines, and related replacement parts for use in
military and commercial aircraft. Our military engines are used in a wide variety of aircraft that includes fighters,
bombers, tankers, helicopters and surveillance aircraft. The CFM56™, produced by CFM International, a company
jointly owned by GE and Snecma Moteurs of France, and GE’s CF6 and GE90® engines power aircraft in all
categories of large commercial aircraft: short/medium, intermediate and long-range. Applications for the CFM56™
engine include: Boeing’s 737-300/-400/-500 series, the next generation 737-600/-700/-800/-900 series, and the 737
business jet; Airbus’ A318, A319, A320, A321 and A340-200/-300 series; and military aircraft such as the KC-
135R, E/KE-3 and E-6. The CF6 family of engines powers intermediate and long-range aircraft such as Boeing’s
747, 767, DC-10 and MD-11 series, as well as Airbus’ A300, A310 and A330 series. The GE90® engine is used to
power Boeing’s 777 series twin-engine aircraft. The GP7000, designed and marketed in a joint venture with the Pratt
& Whitney division of United Technologies Corporation, is offered on Airbus’ A380.

          We produce jet engines, such as the CF34®, for executive aircraft and regional commuter aircraft,
including Bombardier’s Challenger 604 and CRJ200/700/900 series of aircraft and Embraer’s 170 and 190 series of
aircraft. A new version of the CF34®, the CF34-10A, is currently being developed to power China’s future ARJ21
regional aircraft. We also manufacture aircraft engine derivatives used for marine propulsion and industrial power
generation sources, the latter of which is also reported as part of the Power Systems segment. Maintenance,
component repair and overhaul services (MRO), including sales of replacement parts, are provided for many models




                                                       (4)
of engines, including engines manufactured by competitors, and represent a significant portion of this segment’s
profits. In December 2003, we completed the acquisition of the non-destructive testing (NDT) business of Agfa-
Gevaert. This business has been combined with Aircraft Engines NDT business to offer radiographic, ultrasonic,
eddy current and other inspection solutions that test the structure and tolerance of materials without damaging them.

           The worldwide competition in aircraft jet engines and MRO (including parts sales) is intense. Both U.S.
and export markets are important. Product development cycles are long and product quality and efficiency are
critical to success. Research and development expenditures, both customer-financed and internally funded, are
important in this segment. Focused intellectual property strategies and protection of key aircraft engine design,
manufacture, repair and product upgrade technologies are also important.

          Potential sales for any engine are limited by, among other things, its technological lifetime, which may vary
considerably depending upon the rate of advance in the state of the art, by the small number of potential customers
and by the limited number of relevant airframe applications. Aircraft engine orders tend to follow military and
commercial airline procurement cycles, although cycles for military and commercial engine procurement are
different. Procurements of military jet engines are affected by changes in global political and economic factors.

          In line with industry practice, airframe manufacturers support their sales of commercial jet aircraft from
time to time with long-term financing commitments to customers, and engine manufacturers are often asked to
participate in such financings. In making such commitments, it is our policy to establish a secured position in the
aircraft being financed. Under such airline financing programs, we had issued guarantees amounting to $0.4 billion
at year-end 2003, and had entered into commitments totaling $1.2 billion to provide financial assistance on future
sales of aircraft equipped with our engines. Our guarantees and commitments are secured by individual aircraft or
pools of aircraft engines related to the specific financing arrangement. When particular guarantees exceed the value
of the associated security, we consider credit risk of the customer and provide for estimated losses. At December 31,
2003, the total estimated fair value of aircraft securing these guarantees exceeded the guaranteed amounts, net of the
associated allowance for losses. See page 49 of the 2003 Annual Report to Shareowners for information about
orders and backlog.

        Aircraft Engines is headquartered in Evendale, Ohio and has operations in North America, Europe, Asia
and South America.

Commercial Finance
           Commercial Finance (14.1%, 13.4% and 12.5% of consolidated revenues in 2003, 2002, and 2001,
respectively) offers an array of financial services worldwide. With particular expertise in the mid-market segment,
we offer loans, leases, and other financial services to customers, including manufacturers, distributors and end-users
for a variety of equipment and major capital assets including industrial facilities and equipment, energy-related
facilities, commercial and residential real estate, vehicles, aircraft, and equipment used in construction,
manufacturing, data processing and office applications, electronics and telecommunications, and healthcare. We
acquired the commercial inventory financing business of Deutsche Financial Services and the structured finance
business of ABB in 2002 and most of the commercial lending business of Transamerica Finance Corporation in
January 2004.

          We operate in a highly competitive environment and are subject to competition from a variety of financial
institutions including commercial banks, investment banks, leasing companies, financing companies associated with




                                                       (5)
manufacturers, and independent finance companies. Industry participants compete on the basis of interest rates and
fees as well as deal structures and credit terms. Profitability is affected not only by broad economic conditions that
impact customer credit quality and the availability and cost of capital, but also by successful management of credit
risk, operating risk and market risks such as interest rate and currency exchange risk. Important factors to continued
success include maintaining strong risk management systems, customer and industry specific knowledge, diverse
portfolios, service and distribution channels, strong collateral and asset management knowledge, deal structuring
expertise and the reduction of costs through technology and productivity.

        Commercial Finance headquarters are in Stamford, Connecticut with offices throughout the United States
and in Canada, Latin America, Europe, and Asia Pacific. Our activities are conducted through the principal
businesses described below.

Real Estate

         Real Estate funds the direct acquisition, refinancing and renovation of real estate assets, and purchases
equity investments in real estate properties. Our loans generally are intermediate-term senior and subordinated fixed
and floating-rate and are secured by existing income-producing commercial properties. Our business also includes
the origination and term securitization within one year of low loan to value loans. We invest in and provide
restructuring financing for portfolios of real estate, mortgage loans, limited partnerships and tax-exempt bonds.
Additionally, we invest in equity positions in a diversified portfolio of real estate assets via direct real estate
ownership and joint venture interests. Property types include multi-family housing, self-storage facilities,
warehouses, parking facilities, retail centers, senior assisted living facilities and office properties.

Aviation Services

          Aviation Services is a global commercial aviation financial services business that offers a broad range of
financial products to airlines, aircraft operators, owners, lenders and investors. Financial products include leases,
aircraft purchasing and trading, loans, engine/spare parts financing, pilot training, fleet planning and financial
advisory services.

          Commercial aviation is an industry in which we have a significant ongoing interest. As has been widely
reported, this industry has been under pressure, but has undertaken steps to reduce unused capacity and align costs.
Consequently, during 2003, major United States and European airlines achieved moderate improvements in
operations including traffic, revenues and load factors. Aviation Services, which owned 1,239 commercial aircraft at
December 31, 2003, had 1,236 on lease despite pressure on the industry. Regional jets, with capacity for 50-90
passengers, have had a significant effect on the commercial aviation industry in recent years. These jets have
enabled airlines to replace less efficient equipment, both turboprop and older, narrow-bodied jets. At December 31,
2003, our fleet included 278 regional jets, diversifying total aircraft holdings. We believe that we continue to offer a
suitable range of equipment that is attractive to the industry.

Commercial Equipment Financing
         Commercial Equipment Financing finances manufacturing equipment, facilities, construction and office
equipment, corporate aircraft, franchises, trucks and trailers and a wide variety of other equipment. We also furnish
customers with direct-source tax-exempt finance programs, as well as lease and sale/leaseback offerings. Customers
include manufacturers, distributors, dealers, end-users, and municipalities. We also maintain an asset management
operation that redeploys off lease and repossessed equipment and other assets.




                                                        (6)
Corporate Financial Services
          Corporate Financial Services provides equity, revolving and term debt used by customers to finance
acquisitions, business expansion, refinancings, recapitalizations and other special situations. Customers are owners,
managers and buyers of both public and private companies, principally manufacturers, distributors, retailers and
diversified service providers. Our industry specialists concentrate on the retail, and media and communications
industries. We also provide senior debt, subordinated debt and bridge financing to buyout and private equity firms.

Structured Finance
         Structured Finance provides equity, debt and structured investments to its customers, primarily in the
global energy, telecommunications, industrial and transportation sectors. Financial services and products include
corporate finance, acquisition finance and project finance. Products include a variety of debt and equity instruments,
as well as structured transactions, including leases and partnerships.

Vendor Financial Services
          Vendor Financial Services provides financial services to equipment manufacturers and dealers/distributors
in a variety of industries including office equipment, industrial equipment, information technology equipment,
motor sports and marine equipment, recreational vehicles and telecommunications equipment. We offer distribution
financing programs, sales financing and trade payables services, including inventory financing, accounts receivable
financing, formula based lending, private label financing, rental finance, and warranty and collateral management
services.

Healthcare Financial Services
         Healthcare Financial Services is exclusively directed to the special needs of the global healthcare industry.
We bring a comprehensive set of financial products and services to that market, including financing for equipment,
information technology systems, real estate, acquisitions, recapitalizations, turnarounds, and working capital needs.
We also provide tax-exempt financing for non-profit hospitals, vendor financing programs for medical equipment
suppliers, and equity capital for medical real estate investments. We serve healthcare companies of all sizes across a
wide range of sectors. Customers include hospitals and health systems; physician practices; outpatient diagnostic
and treatment centers; skilled nursing and assisted living facilities; medical device manufacturers, life science
companies, and other suppliers of products and services to the healthcare sector.

Consumer Finance
          Consumer Finance (9.6%, 7.8% and 7.5% of consolidated revenues in 2003, 2002, and 2001, respectively)
is a leading provider of credit products and services to consumers, retailers and auto dealers in 38 countries. We
offer a broad range of financial products, including private-label credit cards, personal loans, bank cards, auto loans,
leases and inventory financing, residential mortgages, corporate travel and purchasing cards, debt consolidation,
home equity loans, and credit insurance. We acquired First National Bank and the retail sales finance unit of
Conseco Finance Corp. in 2003 as part of our continued global expansion.

         Our operations are subject to a variety of bank and consumer protection regulations, including data privacy.
Further, a number of countries have ceilings on rates chargeable to consumers in financial service transactions. We
are subject to competition from various types of financial institutions including commercial banks, leasing
companies, consumer loan companies, independent finance companies, manufacturers’ captive finance companies,




                                                        (7)
and insurance companies. Industry participants compete on the basis of price, servicing capability, promotional
marketing, risk management, and cross selling. The markets in which we operate are also subject to the risks of
declining retails sales, changes in interest and currency exchange rates, and increases in personal bankruptcy filings.

         Consumer Finance headquarters are in Stamford, Connecticut and our operations are located principally in
the United States, and in Europe, Asia, Latin and South America, Australia and New Zealand.

         Consumer Finance’s activities are conducted through the principal businesses described below.

Global Consumer Finance
          Global Consumer Finance is a leading provider of financial products and services to retailers, auto dealers,
and consumers outside of North America. We provide private-label credit cards and proprietary credit services to
retailers in Europe, Asia Pacific and, to a lesser extent, Latin and South America. We also provide a variety of
direct-to-consumer credit programs such as personal loans, bank cards, auto loans and leases, residential mortgages,
debt consolidation, home equity loans and the distribution of credit insurance. Our customers include retailers such
as Tesco, Coles Myer and Wal-Mart.

Card Services
        Card Services is a leading provider of sales financing services to North American retailers in a broad range
of consumer industries. Product offerings include customized private-label credit card solutions for retailers such as
JC Penney, ExxonMobil, Wal-Mart, Sam’s Club, Macy’s and Lowe’s. Product offerings also include personal loans,
home equity loans, business credit services, and corporate travel and purchasing cards.

Consumer Products
          Consumer Products (6.2%, 6.4% and 6.7% of consolidated revenues in 2003, 2002 and 2001, respectively)
manufactures and/or markets major appliances and a wide range of lighting products for global markets. Both
operations are leaders in technology and product innovation in their industries. Major appliances include
refrigerators, electric and gas cooking products, microwave ovens, freezers, dishwashers, clothes washers and
dryers, water-softening and filtering products, and room air conditioning equipment. These are sold under
Hotpoint®, GE®, Profile™, Monogram®, and SmartWater™ brands, as well as under private brands for retailers
and others. GE microwave ovens, gas and electric ranges, room air conditioners, water-softening and filtering
products, freezers and some refrigerators are sourced from suppliers, while investment in GE-owned facilities is
focused on refrigerators, dishwashers, electric ranges and home laundry equipment. A large portion of appliance
sales is for replacement of installed units. Such sales are affected through a variety of retail outlets. The other
principal channel consists of residential building contractors who install appliances in new dwellings. We also
manufacture approximately 6,000 various lamp products for commercial, industrial and consumer markets. Product
families include incandescent, Reveal®, halogen, high-intensity discharge, fluorescent, stage/studio,
miniature/sealed beam, projection, automotive and LEDs (light-emitting diodes). The business also manufactures
outdoor lighting fixtures and systems for commercial, industrial and sports lighting applications. GE has an
extensive U.S. product services network that provides repair services, extended service plans, warranty
administration and risk management services.

        Demand for appliances is influenced by economic trends, such as increases or decreases in consumer
disposable income, availability of credit and housing construction. Competition is very active in all products and




                                                        (8)
services and comes from a number of principal manufacturers and suppliers. An important factor is the degree of
product differentiation achieved through innovation and new product features. Other significant factors include
product quality and cost, brand recognition, customer responsiveness and appliance service capability.

        Consumer Products is headquartered in Louisville, Kentucky, and has operations in North America,
Europe, Asia and South America.

Equipment Management
         Equipment Management (3.5%, 3.6% and 3.9% of consolidated revenues in 2003, 2002 and 2001,
respectively) helps customers manage, finance and operate a wide variety of business equipment worldwide. We
provide rentals, leases, sales, asset management services and loans for portfolios of commercial and transportation
equipment, including tractors, trailers, auto fleets, railroad rolling stock, intermodal shipping containers and modular
space units.

         Our operations are conducted in highly competitive markets. Economic conditions, geographic location,
pricing and equipment availability are important factors in this business. Future success will depend upon the ability
to maintain a large and diverse customer portfolio, optimize asset mix, maximize asset utilization and effectively
manage credit risk. In addition, we seek to understand and deliver unique product and service offerings to our
customers in the most efficient and cost effective manner. In September 2003, we acquired the assets of CitiCapital
Fleet Services.

        Equipment Management headquarters are in Stamford, Connecticut with offices throughout North America,
Europe and Asia Pacific.

Industrial Products and Systems
         Industrial Products and Systems (6.3%, 5.6% and 5.3% of consolidated revenues in 2003, 2002 and 2001,
respectively) is composed of Industrial Systems and GE Supply. Products and services provided by each of the
businesses in this segment are sold primarily to industrial customers, including original equipment manufacturers,
industrial end users, utilities, electrical contractors, as well as to distributors. These businesses compete against a
variety of both U.S. and non-U.S. manufacturers and service providers.

          Markets for industrial products and services are diverse, global and highly price competitive. The aggregate
level of economic activity in markets for such products and services generally lag overall economic slowdowns as
well as subsequent recoveries. In the United States, industrial markets are undergoing significant structural changes
reflecting, among other factors, increased international competition and pressures to modernize productive capacity.
A description of products and services provided by Industrial Systems and GE Supply follows.

          Industrial Systems includes electric motors and related products and services for the appliance, commercial,
industrial, heating, air conditioning, automotive and utility markets; power delivery and control products such as
circuit breakers, transformers, electricity meters, relays, capacitors, uninterruptible power supplies for critical
processes, and arresters sold for installation in commercial, industrial and residential facilities; electrical and
electronic industrial automation products, including drive systems, for metal and paper processing, mining, utilities
and marine applications. Product services include engineering, management and technical expertise for power plants
and other large projects; maintenance, inspection, repair and rebuilding of electrical apparatus produced by GE and
others; and on-site engineering and upgrading of already installed products sold by GE and others. Other product




                                                        (9)
services include the integration of software with hardware (principally motors, drives and programmable controls)
into customized systems solutions for customers in the semiconductor, water treatment, pulp and paper, and
petroleum industries.

         In recent years, our business has expanded into measurement and sensing equipment and subsystems used
for sensing temperature, humidity, and pressure; and security equipment and systems, including card access systems,
video and sensor monitoring equipment and integrated facility monitoring systems. Through a 50-50 joint venture
(GE Fanuc Automation Corporation), which has two operating subsidiaries (one in North America and the other in
Europe), we offer a wide range of high-technology industrial automation systems and equipment, including
computer numerical controls and programmable logic controls.

       Industrial Systems is headquartered in Plainville, Connecticut and operates in North America, Europe,
South America and Asia.

         GE Supply is a full-line, international distributor of electrical products, aerospace parts, power generation
products and lighting equipment and supplies from GE and other leading manufacturers. We serve electrical
contractors, industrial and commercial users, engineer constructors, original equipment manufacturers, utilities and
the aerospace industry. GE Supply headquarters are in Shelton, Connecticut. Our operating units which include GE
Supply, GE Structured Services and GE Supply Logistics, have more than 150 branch offices and five distribution
Hubs throughout the U.S., Mexico, South America, Ireland, the Middle East and Southeast Asia.

Insurance
         Insurance (19.5%, 17.6% and 18.9% of consolidated revenues in 2003, 2002 and 2001, respectively) offers
a broad range of insurance and investment products that help consumers create and preserve personal wealth, protect
assets and enhance their life styles. For lenders and investors, it protects against the risks of default on low-down-
payment mortgages. For businesses, we provide reinsurance and primary commercial insurance products to
insurance companies, Fortune 100 companies, self-insurers and healthcare providers. Through December 2003, for
state and local governments and other public entities, we offered financial guarantees for a variety of debt securities.

         In November 2003, GE announced its intent for an initial public offering of a new company, Genworth
Financial, Inc. (Genworth), comprising most of our life and mortgage insurance businesses. GE plans to sell
approximately one-third of Genworth’s equity in the IPO, and we expect (subject to market conditions) to reduce
our ownership over the next three years as Genworth transitions to full independence. We commenced the IPO
process in January 2004 and expect to complete the IPO in the first half of the year, subject to market conditions and
receipt of various regulatory approvals.

        Insurance headquarters are in Richmond, Virginia with offices in the United States and in Canada, Europe,
Latin America, Australia and Asia Pacific.

         Our activities are conducted through the principal businesses described below.

GE Financial Assurance
         GE Financial Assurance provides a wide variety of insurance, protection and asset management products to
help consumers achieve financial security at every stage of life. Our strategy is to provide dependable products to
address consumer needs for wealth accumulation, retirement income, personal protection, and wealth transfer. We




                                                       (10)
distribute these products through a family of regulated insurance affiliates. Our principal product lines in North
America are annuities (deferred and immediate, fixed and variable); life insurance (universal, term, ordinary and
group); guaranteed investment contracts (including funding agreements); long-term care insurance; supplementary
accident and health insurance; and consumer club memberships. Principal European product lines and services are
payment protection insurance (designed to protect consumers’ loan repayment obligations) and personal investment
products. Product distribution in North America and Europe is accomplished primarily through four channels:
intermediaries (brokerage general agencies, banks and securities brokerage and financial planning firms); dedicated
sales forces and financial advisors; worksite distribution; and direct and affinity marketing. During 2003, (consistent
with GE’s announced intent to redirect capital to different lines of business) GE Financial Assurance sold its
Japanese life insurance business.

         Consolidation in the financial services industry will create fewer but larger competitors. We believe the
principal competitive factors in the sale of our products are product features, price, commission structure, marketing
and distribution arrangements, brand, reputation, financial strength ratings and service. We believe that we are well
positioned in the current competitive environment and will benefit from a number of significant demographic,
governmental and market trends, including an aging United States population with growing retirement income
needs, and an increasing life and lifestyle protection gap.

         Many of our activities are regulated by a variety of insurance and other regulators.

Mortgage Insurance
         Mortgage Insurance offers mortgage insurance products that facilitate homeownership by enabling
borrowers to buy homes with low-down-payment mortgages. These products also aid financial institutions in
managing their capital efficiently by reducing the capital required for low-down-payment mortgages. We also have
leading mortgage insurance operations in Canada, Australia and the U.K. and a growing presence in Continental
Europe.

          The mortgage insurance industry is sensitive to the interest rate environment and housing market
conditions. The mortgage insurance industry is intensely competitive as excess market capacity seeks to underwrite
business being generated from a consolidating customer base. In addition, considerable influence is exerted on the
industry by two government-sponsored enterprises, which buy the majority of the loans insured by mortgage
insurers.

          During 2003, General Electric Mortgage Insurance Corporation (GEMICO), requested that its financial
strength ratings be lowered from AAA/Aaa to AA/Aa2 positioning our United States business to operate at lower
capital levels. This change improves Mortgage Insurance’s capital efficiency and return on equity while retaining a
conservative risk-to-capital ratio.

GE Global Insurance Holding (Employers Reinsurance Corporation)
         Through our principal insurance and reinsurance company affiliates – Employers Reinsurance Corporation,
GE Reinsurance Corporation, the GE Frankona Group and the Medical Protective Corporation – we write
substantially all lines of reinsurance (where the insured party is another insurance company) and select lines of
direct property and casualty insurance (where the insured party is a non-insurance company or an individual).




                                                       (11)
          The reinsurance operations include the reinsurance of property and casualty risks written by more than
1,000 insurers around the world. Direct insurance operations are focused on niche lines of business, principally
medical malpractice coverage for physicians and dentists, medical professional liability for hospitals, errors and
omissions coverage for insurance agents and brokers, professional liability insurance for attorneys, excess indemnity
for self-insurers of medical benefits and excess workers’ compensation for self-insurers. The life reinsurance
affiliates are engaged in the reinsurance of life insurance products, including term, whole and universal life,
annuities, certain health-related coverages and the provision of financial reinsurance to life insurers. During 2003,
we announced our intent to scale back on life reinsurance operations to improve overall returns, we ceased writing
new life reinsurance business in the United States and sold our United States life reinsurance business–ERC Life
Reinsurance Corporation.

         In our opinion, we compete in the reinsurance marketplace principally on the basis of our expertise,
relationships, financial strength, price and creativity in developing customized solutions to customer needs. Within
the direct insurance marketplace, we believe we compete principally on the basis of our product offerings,
established relationships with customers and key distribution partners, price and ease of doing business.

         Employers Reinsurance Corporation is one of the largest competitors in its marketplace. Our property and
casualty reinsurance operations are ranked fifth in the world in terms of net premiums written and we compete with
the world’s largest reinsurers as well as dozens of smaller niche competitors. Our life reinsurance operations are
ranked in the top four life reinsurers in the world.

          Maintaining strong financial strength ratings is an important factor in remaining competitive in both the
reinsurance and direct insurance markets in which we compete. During 2003, certain external credit rating agencies
announced the lowering of financial strength ratings with respect to GE Global Insurance Holding and subsidiaries,
citing poor recent operating performance as the principal factor. Rating agencies took similar actions to lower the
ratings of many insurers and reinsurers in recent years. Debt ratings for GE Global Insurance Holding affect $1.7
billion of outstanding debt. While these ratings were lowered in 2003, they remain investment grade. We do not
believe these actions will materially affect GE Global Insurance Holding liquidity or capital resources or the ability
to write future business.

Medical Systems
         Medical Systems (7.6%, 6.8% and 6.7% of consolidated revenues in 2003, 2002 and 2001, respectively)
includes magnetic resonance (MR) scanners, computed tomography (CT) scanners, Positron Emission Tomography
(PET) scanners, x-ray, patient monitoring, diagnostic cardiology, nuclear imaging, ultrasound, bone densitometry,
anesthesiology and oxygen therapy devices, neonatal and critical care technology and other diagnostic and therapy
equipment, and product services sold to hospitals and medical facilities worldwide. Product services include remote
diagnostic and repair services for medical equipment manufactured by GE and by others, as well as computerized
data management and customer productivity services. In 2003, we acquired Instrumentarium and entered into an
agreement to acquire Amersham plc, a world leader in diagnostic imaging agents and in life sciences.

        Medical Systems competes against a variety of U.S. and non-U.S. manufacturers and services operations.
Technological competence and innovation, excellence in design, high product performance, quality of services and
competitive pricing are among the key factors affecting competition for these products and services. Throughout the
world, we play a critical role in delivering new technology to improve patient outcomes and productivity tools to




                                                       (12)
help control healthcare costs. For information about orders and backlog, see page 53 of the Annual Report to
Shareowners.

         Medical Systems is headquartered in Waukesha, Wisconsin and operates in North America, Europe, Asia,
Australia and South America.

NBC

          NBC (5.1%, 5.4% and 4.6% of consolidated revenues in 2003, 2002 and 2001, respectively) is principally
engaged in the broadcast of network television services to affiliated television stations within the United States; the
production of live and recorded television programs; the operation, under licenses from the Federal Communications
Commission (FCC), of television broadcasting stations; the ownership of four cable/satellite networks around the
world, and investment and programming activities in multimedia, the Internet and cable television. The NBC
Television Network is one of four major U.S. commercial broadcast television networks and serves more than 230
affiliated stations within the United States. At December 31, 2003, we owned and/or operated 29 VHF and UHF
television stations including those located in Birmingham, AL; Los Angeles, CA; San Diego, CA; Hartford, CT;
Miami, FL; Chicago, IL; New York, NY; Raleigh-Durham, NC; Columbus, OH; Philadelphia, PA; Providence, RI;
Dallas, TX; and Washington, DC. Broadcasting operations, including the NBC Television Network, Telemundo and
owned stations are subject to FCC regulation. Our operations include investment and programming activities in
cable television, principally through CNBC, MSNBC, CNBC Europe, and CNBC Asia; equity investments in Arts
and Entertainment, The History Channel, ValueVision, Inc., and a non-voting interest in Paxson Communications
Corporation. In 2002 we acquired the cable network Bravo. Our strategic alliance with Dow Jones merged the
European and Asian business news services of Dow Jones with those of CNBC to form CNBC Europe and CNBC
Asia and, in addition, permits us to use Dow Jones editorial resources in the United States. In 2002, we acquired
Spanish language broadcaster, Telemundo. We have entered into long-term arrangements with Triple Crown
Productions that gives us exclusive American broadcast rights to the Kentucky Derby, the Preakness Stakes and the
Belmont Stakes through 2005; and the National Association For Stock Car Auto Racing (NASCAR) which in
conjunction with Turner Broadcasting System, Inc., gives us the exclusive television rights to 20 NASCAR races per
network per year through 2006. The business has entered into a long-term arrangement with the United States Golf
Association (USGA) that gives us exclusive national over-the-air broadcast rights to the USGA’s major golf
championships through the year 2005. We also have secured exclusive United States television rights to the 2004,
2006, 2008, 2010, 2012 Olympic Games.

        In 2003, GE entered into a definitive agreement to merge NBC and Vivendi Universal Entertainment. The
new company to be called NBC Universal, will be approximately 80% owned by GE and approximately 20% owned
by Vivendi Universal S.A., and/or its subsidiaries.

           NBC is headquartered in New York, New York.

Plastics
         Plastics (3.9%, 4.0% and 4.2% of consolidated revenues in 2003, 2002 and 2001, respectively) includes
high-performance plastics used by compounders, molders and major original equipment manufacturers for use in a
variety of applications, including fabrication of automotive parts, computer enclosures, compact disks and optical-
quality media, major appliance parts, telecommunications equipment and construction materials. Market
opportunities for many of these products are created by substituting resins for other materials, which can provide




                                                       (13)
customers with productivity through improved material performance at lower system costs. These materials are sold
to a diverse worldwide customer base, mainly manufacturers. Our business has a significant operating presence
around the world and participates in numerous manufacturing and distribution joint ventures.

         The Plastics business environment is characterized by technological innovation and heavy capital
investment. Being competitive requires emphasis on efficient manufacturing process implementation and significant
resources devoted to market and application development. Competitors include large, technology-driven suppliers of
the same, as well as other functionally equivalent, materials. The business is highly cyclical and is extremely
sensitive to variations in price and in the availability of raw materials, such as cumene, benzene and methanol.
Availability of manufacturing capacity from the business or its competitors and anticipation of new product or
material performance requirements are key factors affecting competition. Application development and associated
technology assistance create incremental market demand. In addition, product and manufacturing process patents
establish barriers to entry in many product lines.

       Plastics headquarters are in Pittsfield, Massachusetts and operates in North America, Asia, Europe and
South America.

Power Systems
          Power Systems (13.8%, 17.3% and 16.0% of consolidated revenues in 2003, 2002 and 2001) serves power
generation, industrial, government and other customers worldwide with products and services related to energy
production, distribution and management. In 2003, we made several acquisitions, including Jenbacher A.G. of
Austria. These acquisitions continue to improve our ability to serve our global customers and further add to the
portfolio of complete solutions for the energy industry. The acquisition of Jenbacher A.G. added reciprocating gas
engines to the portfolio. We offer wind turbines as part of our renewable energy portfolio, which also includes
hydropower and geothermal technology. The business also packages aircraft engine derivatives for use as industrial
power sources. This activity is also reported in the Aircraft Engines segment. Gas turbines and generators are used
principally in power plants for generation of electricity and for industrial cogeneration and mechanical drive
applications. Our Oil and Gas business offers advanced technology turbomachinery products and services for
production, LNG, transportation, storage, refineries, petrochemical and distribution systems. With the acquisition of
PII, the business acquired leading technology in total pipeline integrity solutions including analysis and pipeline
asset management. Steam turbines and generators are sold to the electric utility industry and to private industrial
customers for cogeneration applications. Nuclear reactors, fuel and support services for both new and installed
boiling water reactors are also a part of this segment. A complete portfolio of aftermarket services, including
equipment upgrades, contractual services agreements, repairs, equipment installation, monitoring and diagnostics,
asset management and performance optimization tools, remote performance testing and DLN tuning provides
customers total solutions to meet their needs. We continue to invest in advanced technology development that will
provide more value to our customers and more efficient solutions that comply with today’s strict environmental
regulations.

         Worldwide competition for power generation products and services is intense. Demand for most power
generation products and services is global and, as a result, is sensitive to the economic and political environment of
each country in which the business participates, and to regional load growth requirements and demand side
management. In addition, internationally, the influence of available fuels and related prices has a large impact on
demand. For information about orders and backlog, see page 53 of the Annual Report to Shareowners.




                                                       (14)
         Power Systems, headquartered in Atlanta, Georgia, operates in North America, Europe, South America and
Asia.

Specialty Materials
          Specialty Materials (2.3%, 1.8% and 1.4% of consolidated revenues in 2003, 2002 and 2001, respectively)
has a broad product offering, servicing diverse industries, including automotive, cosmetics, semiconductors, oil
drilling, petrochemical, consumer and telecommunications. We manufacture and sell high performance specialty
materials including silicones, polymer additives, high purity quartzware and industrial grade and until the sale of the
Superabrasives business in late 2003, gem quality diamonds. We also provide and sell engineered chemicals and
treatment services to water and process systems. Specialty materials products are used by compounders, molders and
major original equipment manufacturers in a variety of applications, including fabrication of automotive parts,
medical parts, electronics equipment, semi-conductor equipment and construction tools. Market opportunities for
many of these products are created by substituting specialty materials for other materials, providing customers with
productivity through improved material performance at lower system costs. Water treatment programs are sold to
process system facilities in industrial, commercial and institutional applications. The portfolio of products and
services are sold to a diverse worldwide customer base. We have a significant operating presence around the world
and participate in several manufacturing and distribution joint ventures. In July 2003, we completed the acquisition
of OSi Specialties, a leading, global supplier of silanes, specialty silicones and urethane additives. Also, in 2003, we
completed the divestiture of our Specialty Chemicals and Superabrasives units.

         Our business environment is characterized by technological innovation and heavy capital investment. Being
competitive requires emphasis on efficient manufacturing process implementation and significant resources devoted
to market and application development. Competitors include large, technology-driven suppliers of the same, and
other functionally equivalent materials.

        Specialty Materials is headquartered in Wilton, Connecticut and has operations in North America, Europe,
Asia and South America.

Transportation Systems
         Transportation Systems (1.9%, 1.8% and 1.9% of consolidated revenues in 2003, 2002 and 2001,
respectively) is one of the world’s leading suppliers to the railroad, transit, and mining industries, providing freight
and passenger locomotives, motorized drive systems for mining trucks and drills, diesel engines for marine and
stationary markets, electrical propulsion and control systems for rapid transit cars, railway signaling and
communications systems, value added services, and information technology solutions.

         Product services include maintenance and repair of locomotives, locomotive components, and
communications and logistics systems for locomotive and train control. GE locomotives currently operate in more
than 50 countries worldwide. Information about Transportation Systems orders and backlog is provided on page 54
of the 2003 Annual Report to Shareowners.

Transportation Systems headquarters are in Erie, Pennsylvania. Transportation Systems operates in North America,
Europe and South America.




                                                        (15)
All Other GECS
         All Other GECS (1.2%, 2.0% and 3.8% of consolidated revenues in 2003, 2002 and 2001, respectively)
includes activities and businesses that we do not measure within one of the four other financial services segments. A
description of All Other GECS principal businesses follows.

IT Solutions

          IT Solutions is a provider of a broad array of information technology services and products, including full
life cycle services that provide customers with cost-effective control and management of their information systems.
Services offered include remote network/server/security monitoring and management, client support covering asset
management, help desk and desk side support, as well as program management and professional services for the
security, network, server and storage environments. Products offered include desktop personal computers, client
server systems, UNIX systems, local and wide area network hardware, and software. IT Solutions serves
commercial, educational and governmental customers in the United States and Canada. During 2003, IT Solutions
sold its business units in Europe.

         Competition in information technology services and products is very active and comes from a number of
principal manufacturers and other distributors and resellers. Markets for services and products are highly price
competitive. Additionally, many information technology product manufacturers are bypassing traditional
information technology resellers in favor of direct manufacturer relationships with the ultimate end-users. IT
Solutions’ headquarters are in Erlanger, Kentucky.

GE Equity
          GE Equity manages equity investments in early-stage, early growth, pre-IPO companies. This portfolio
consists primarily of direct investments in convertible preferred and common stocks in both public and private
companies; we also participate in certain investment limited partnerships. The portfolio includes investments in the
technology and communications, media and entertainment, business services, financial services and healthcare
sectors. The portfolio is geographically diversified with investments located throughout the United States, as well as
in Europe, Asia and Latin America. We ceased making new investments in 2002 but continue to provide financial
support to companies in our portfolio which will be managed for maximum value over time, eventually liquidating.
Headquarters are in Stamford, Connecticut.

American Communications
          American Communications (Americom) engaged primarily as a satellite service supplier to a diverse array
of customers, including the broadcast and cable TV industries, as well as broadcast radio. It also supplied integrated
communications services for government and commercial customers. Americom also operated communications
satellites and maintained a supporting network of earth stations, central terminal offices, and telemetry, tracking and
control facilities. In 2001 we exchanged our satellite operations, comprising the stock of Americom and other
related assets and liabilities, for a combination of cash and 31% of the publicly-traded stock of SES Global, a
leading satellite company, in order to create the world’s largest satellite services provider. Our investment in SES
Global is accounted for on the equity method within Commercial Finance.




                                                       (16)
Geographic Data, Exports from the U.S. and Total International Operations
         Geographic data (based on the location of the Company operation supplying goods or services and
including exports from the U.S. to unaffiliated customers) are reported in note 27 to consolidated financial
statements on pages 102 and 103 of the 2003 Annual Report to Shareowners.

        Additional financial data about our exports from the U.S. and total international operations are provided on
pages 55-56 of the 2003 Annual Report to Shareowners.

Orders Backlog
          See pages 49, 53, 54 and 67 of the 2003 Annual Report to Shareowners for information about our backlog
of unfilled orders.

Research and Development
          Total expenditures for research and development were $2,656 million in 2003. Total expenditures had been
$2,631 million in 2002 and $2,349 million in 2001. Of these amounts, $2,103 million in 2003 was GE-funded
($2,215 million in 2002 and $1,980 million in 2001); and $553 million in 2003 was funded by customers ($416
million in 2002 and $369 million in 2001), principally the U.S. government. Aircraft Engines accounts for the
largest share of GE’s research and development expenditures from both GE and customer funds. Medical Systems
and Power Systems made other significant expenditures of GE and customer research and development funds.

        Approximately 13,800 person-years of scientist and engineering effort were devoted to research and
development activities in 2003, with about 90% of the time involved primarily in GE-funded activities.

Environmental Matters
           See pages 56-57 and 97 of the 2003 Annual Report to Shareowners for a discussion of environmental
matters.

Employee Relations
        At year-end 2003, General Electric Company and consolidated affiliates employed 305,000 persons, of
whom approximately 155,000 were employed in the United States. For further information about employees, see
page 66 of the 2003 Annual Report to Shareowners.

         Approximately 23,300 GE manufacturing and service employees in the United States are represented for
collective bargaining purposes by a total of approximately 150 different local collective bargaining groups. A
majority of such employees are represented by union locals that are affiliated with, and bargain in conjunction with,
the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers (IUE/CWA-AFL-CIO).
During 2003, General Electric Company negotiated four-year contracts with unions representing a substantial
majority of those United States employees who are represented by unions. Most of these contracts will terminate in
June 2007. NBC is party to approximately 120 labor agreements covering about 2,100 staff employees (and a large
number of freelance employees) in the United States. These agreements are with various labor unions, expire at
various dates and are generally for a term ranging from three to five years.




                                                      (17)
Executive Officers
        See Part III, Item 10 of this 10-K Report for information about Executive Officers of the Registrant.

Other
         Because of the diversity of our products and services, as well as the wide geographic dispersion of our
production facilities, we use numerous sources for the wide variety of raw materials needed for our operations. We
have not been adversely affected by the inability to obtain raw materials.

          We own, or hold licenses to use, numerous patents. New patents are continuously being obtained through
our research and development activities as existing patents expire. Patented inventions are used both within the
Company and licensed to others, but no operating segment is substantially dependent on any single patent or group
of related patents.

         Agencies of the U.S. Government constitute our largest single customer. An analysis of sales of goods and
services as a percentage of revenues follows:

                                                     % of Consolidated Revenues           % of GE Revenues
                                                      2003      2002     2001            2003    2002 2001

         Total sales to U.S. Government Agencies         2%        2%        2%           4%       4%           4%
         Aircraft Engines defense-related sales          2         2         2            3        3            3


         GE is a trademark and service mark of General Electric Company; NBC is a trademark and service mark of
National Broadcasting Company, Inc.; and MSNBC is a trademark and service mark of MSNBC Cable, LLC. GE90
and CF34 are trademarks of General Electric Company. CFM56 is a trademark of CFM International, a 50/50 joint
company between Snecma Moteurs of France and General Electric Company.

         Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports are available, without charge, on our website,
www.ge.com/en/company/investor/secfilings.htm, as soon as reasonably practicable after they are filed
electronically with the SEC. Copies are also available, without charge, from GE Corporate Investor
Communications, 3135 Easton Turnpike, Fairfield, CT 06828.

Item 2. Properties
         Manufacturing operations are carried out at approximately 188 manufacturing plants located in 36 states in
the United States and Puerto Rico and at 250 manufacturing plants located in 35 other countries.

Item 3. Legal Proceedings
        We are not involved in any material pending legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders
        Not applicable.




                                                     (18)
                                                      Part II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters
        With respect to “Market Information”, in the United States, GE common stock is listed on the New York
Stock Exchange (its principal market) and on the Boston Stock Exchange. GE common stock also is listed on The
Stock Exchange, London and on Euronext Paris. Trading, as reported on the New York Stock Exchange, Inc.,
Composite Transactions Tape, and dividend information follows:

                                                    Common stock market price            Dividends
         (In dollars)                                  High         Low                   declared

         2003
             Fourth quarter                            $31.30           $27.37              $.20
             Third quarter                              32.42            26.90               .19
             Second quarter                             31.66            25.50               .19
             First quarter                              28.00            21.30               .19

         2002
             Fourth quarter                            $27.98           $21.40              $.19
             Third quarter                              32.98            23.02               .18
             Second quarter                             37.80            27.42               .18
             First quarter                              41.84            34.49               .18


         As of December 31, 2003, there were about 670,000 shareowner accounts of record.

          The remaining information called for by this item relating to “Securities Authorized for Issuance under
Equity Compensation Plans” is reported in note 25 on pages 99-100 of the Annual Report to Shareowners for the
fiscal year ended December 31, 2003.

Item 6. Selected Financial Data

         Reported as data for revenues; net earnings; net earnings per share (basic and diluted); dividends declared;
dividends declared per share; long-term borrowings; and total assets appearing on page 66 of the 2003 Annual
Report to Shareowners for the fiscal year ended December 31, 2003.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
         Reported on pages 44-47 and 49-69 (and graphs on pages 44, 45, 47, 55, 56 and 61) of the Annual Report
to Shareowners for the fiscal year ended December 31, 2003.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
         Reported on page 60 of the Annual Report to Shareowners for the fiscal year ended December 31, 2003.

Item 8. Financial Statements and Supplementary Data
         See index under item 15.




                                                      (19)
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
         Not applicable.

Item 9A. Controls and Procedures
         Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our
disclosure controls and procedures and internal control over financial reporting and concluded that (i) our disclosure
controls and procedures were effective as of December 31, 2003 and (ii) no change in internal control over financial
reporting occurred during the quarter ended December 31, 2003 that has materially affected, or is reasonably likely
to materially affect, such internal control over financial reporting.




                                                      (20)
                                                      Part III

Item 10. Directors and Executive Officers of the Registrant
         Executive Officers of the Registrant (As of March 1, 2004)

                                                                                                   Date assumed
                                                                                                   Executive
Name                           Position                                                        Age Officer Position

Jeffrey R. Immelt             Chairman of the Board and Chief Executive Officer                 48    January 1997
Philip D. Ameen               Vice President and Comptroller                                    55    April 1994
Ferdinando Beccalli           President and Chief Executive Officer, GE Europe                  54    September 2003
Charlene T. Begley            Vice President, GE Transportation Systems                         37    January 2003
David L. Calhoun              Senior Vice President, GE Aircraft Engines                        46    June 1995
James P. Campbell             Senior Vice President, GE Consumer Products                       46    April 2001
William H. Cary               Vice President, Corporate Investor Relations                      44    March 2003
Kathryn A. Cassidy            Vice President and GE Treasurer                                   49    March 2003
William J. Conaty             Senior Vice President, Human Resources                            58    October 1993
Dennis D. Dammerman           Vice Chairman of the Board and Executive Officer                  58    March 1984
Brackett B. Denniston         Vice President and General Counsel                                56    February 2004
Scott C. Donnelly             Senior Vice President, Global Research                            42    August 2000
Shane Fitzsimons              Vice President, Financial Planning and Analysis                   36    February 2004
Michael D. Fraizer            Senior Vice President, GE Insurance and GE Financial              45    September 2002
Yoshiaki Fujimori             Senior Vice President, GE Asia                                    52    June 2001
Arthur H. Harper              Senior Vice President, GE Equipment Management                    48    September 2002
Benjamin W. Heineman, Jr.     Senior Vice President, Law and Public Affairs and Secretary       60    September 1987
Joseph M. Hogan               Senior Vice President, GE Medical Systems                         46    November 2000
Robert A. Jeffe               Senior Vice President, Corporate Business Development             53    December 2001
John Krenicki, Jr.            Senior Vice President, GE Plastics                                41    March 2000
Michael A. Neal               Senior Vice President, GE Commercial Finance                      50    September 2002
David R. Nissen               Senior Vice President, GE Consumer Finance                        52    September 2002
James A. Parke                Senior Vice President, and Chief Financial Officer,               58    September 2002
                              GE Capital
Ronald R. Pressman            Senior Vice President, Employers Reinsurance Corporation          45    September 2002
Gary M. Reiner                Senior Vice President, Chief Information Officer                  49    January 1991
John G. Rice                  Senior Vice President, GE Power Systems                           47    September 1997
Keith S. Sherin               Senior Vice President, Finance, and Chief Financial Officer       45    January 1999
Lloyd G. Trotter              Senior Vice President, GE Industrial Systems                      58    November 1992
William A. Woodburn           Senior Vice President, GE Specialty Materials                     53    June 2001
Robert C. Wright              Vice Chairman of the Board and Executive Officer                  60    July 2000


          All Executive Officers are elected by the Board of Directors for an initial term which continues until the
Board meeting immediately preceding the next annual statutory meeting of shareowners, and thereafter are elected
for one-year terms or until their successors have been elected. All Executive Officers have been executives of GE
for the last five years except Robert A. Jeffe. Mr. Jeffe was a managing director of Credit Suisse First Boston prior
to joining GE in 2001.




                                                       (21)
         The policies comprising GE’s code of conduct are set forth in the Company’s integrity manual, Integrity:
The Spirit and the Letter of Our Commitment. These policies satisfy the SEC’s requirements for a “code of ethics,”
and apply to all directors, officers and employees. The integrity manual is published on the integrity section of the
Company’s website at www.ge.com. The board will not permit any waiver of any ethics policy for any director or
executive officer.

         The remaining information called for by this item is incorporated by reference to “Election of Directors”
in the definitive proxy statement relating to the registrant’s Annual Meeting of Shareowners to be held
April 28, 2004.

Item 11. Executive Compensation
        Incorporated by reference to “Information Relating To Directors, Nominees and Executive Officers,”
“Contingent Long-Term Performance Incentive Awards,” “Summary Compensation Table,” “Stock Options and
Stock Appreciation Rights” and “Retirement Benefits” in the definitive proxy statement relating to the registrant’s
Annual Meeting of Shareowners to be held April 28, 2004.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         Incorporated by reference to “Information Relating to Directors, Nominees and Executive Officers” and
“Proposal to Add a Revenue Measurement to Executive Officer Performance Goals to Long-Term Performance
Awards” in the registrant’s definitive proxy statement relating to its Annual Meeting of Shareowners to be held
April 28, 2004.

Item 13. Certain Relationships and Related Transactions

         Incorporated by reference to “Information Relating to Directors, Nominees and Executive Officers” in the
registrant’s definitive proxy statement relating to its Annual Meeting of Shareowners to be held April 28, 2004.

Item 14. Principal Accountant Fees and Services
        Incorporated by reference to “Independent Auditor” in the registrant’s definitive proxy statement relating to
its Annual Meeting of Shareowners to be held April 28, 2004.




                                                       (22)
                                                     Part IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
         (a) 1. Financial statements applicable to General Electric Company and consolidated affiliates are
contained on the page(s) indicated in the GE Annual Report to Shareowners for the fiscal year ended December 31,
2003, a copy of which is attached as Exhibit 13.

                                                                                      Annual
                                                                                      Report
                                                                                      Page(s)


         Statement of earnings for the years ended December 31, 2003,
              2002 and 2001                                                             70
         Consolidated statement of changes in shareowners’ equity
              for the years ended December 31, 2003, 2002 and 2001                      70
         Statement of financial position at December 31, 2003 and 2002                  72
         Statement of cash flows for the years ended December 31, 2003,
              2002 and 2001                                                             74
         Independent Auditors’ Report                                                   43
         Other financial information:
              Notes to consolidated financial statements                              76-111
              Operating segment information                                           48-55
                                                                                     102-103
                                                                                     112-113
             Geographic segment information                                     55-56 and 102-103
             Operations by quarter (unaudited)                                         111


         (a) 2. The schedules listed in Reg. 210.5-04 have been omitted because they are not applicable or the
required information is shown in the consolidated financial statements or notes thereto.

         (a) 3. Exhibit Index

                 (3) The Certificate of Incorporation, as amended, and By-laws, as amended, of General Electric
         Company are incorporated by reference to Exhibit (3) of General Electric’s Current Report on Form 8-K
         dated April 27, 2000.

                  4(a) Amended and Restated General Electric Capital Corporation (GECC) Standard Global
         Multiple Series Indenture Provisions dated as of February 27, 1997 (Incorporated by reference to Exhibit
         4(a) to GECC’s Registration Statement on Form S-3, File No. 333-59707).

                  4(b) Third Amended and Restated Indenture dated as of February 27, 1997 between GECC and
         JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as successor trustee (Incorporated
         by reference to Exhibit 4(c) to GECC’s Registration Statement on Form S-3, File No. 333-59707).




                                                      (23)
         4(c) First Supplemental Indenture dated as of May 3, 1999, supplemental to Third Amended and
Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(dd) to GECC’s
Post-Effective Amendment No. 1 to Registration Statement on Form S-3, File No. 333-76479).

        4(d) Second Supplemental Indenture dated as of July 2, 2001, supplemental to Third Amended
and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4 (f) to
GECC’s Post-Effective Amendment No.1 to Registration Statement on Form S-3, File No. 333-40880).

        4(e) Third Supplemental Indenture dated as of November 22, 2002, supplemental to Third
Amended and Restated Indenture dated as of February 27, 1997 (Incorporated by reference to Exhibit 4(cc)
to GECC’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-3, File No.
333-100527).

          4(f) Senior Note Indenture dated as of January 1, 2003, between GE and The Bank of New York,
as trustee for the senior debt securities. (Incorporated by reference to Exhibit 4(a) to GE’s Current Report
on Form 8-K filed on January 29, 2003, File No. 1-35).

         4(g) Form of Global Medium-Term Note, Series A, Fixed Rate Registered Note (Incorporated by
reference to Exhibit 4(m) to GECC’s Registration Statement on Form S-3, File No. 333-100527).

         4(h) Form of Global Medium-Term Note, Series A, Floating Rate Registered Note (Incorporated
by reference to Exhibit 4(n) to the GECC’s Registration Statement on Form S-3, File No. 333-100527).

         4(i) Form of LIBOR Floating Rate Note (Incorporated by reference to Exhibit 4 of General
Electric’s Current Report on Form 8-K dated October 29, 2003).

         4(j) Agreement to furnish to the Securities and Exchange Commission upon request a copy of
instruments defining the rights of holders of certain long-term debt of the registrant and consolidated
subsidiaries.*

         (10) All of the following exhibits consist of Executive Compensation Plans or Arrangements:

                 (a) General Electric Incentive Compensation Plan, as amended effective July 1, 1991
         (Incorporated by reference to Exhibit 10(a) to General Electric Annual Report on Form 10-K
         (Commission file number 1-35) for the fiscal year ended December 31, 1991).

                   (b) General Electric Insurance Plan for Directors (Incorporated by reference to Exhibit
         10(i) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the
         fiscal year ended December 31, 1980).

                 (c) General Electric Financial Planning Program, as amended through September 1993
         (Incorporated by reference to Exhibit 10(h) to General Electric Annual Report on Form 10-K
         (Commission file number 1-35) for the fiscal year ended December 31, 1993).




                                             (24)
        (d) General Electric Supplemental Life Insurance Program, as amended February 8, 1991
(Incorporated by reference to Exhibit 10(i) to General Electric Annual Report on Form 10-K
(Commission file number 1-35) for the fiscal year ended December 31, 1990).

        (e) General Electric Directors’ Retirement and Optional Life Insurance Plan
(Incorporated by reference to Exhibit 10(l) to General Electric Annual Report on Form 10-K
(Commission file number 1-35) for the fiscal year ended December 31, 1986).

          (f) General Electric 1987 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(k) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1987).

          (g) General Electric 1991 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(n) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1990).

          (h) General Electric 1994 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(o) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1993).

        (i) General Electric Directors’ Charitable Gift Plan, as amended through December 2002
(Incorporated by reference to Exhibit 10(i) to General Electric Report on Form 10-K (Commission
file number 1-35) for the fiscal year ended December 31, 2002).

        (j) General Electric Leadership Life Insurance Program, effective January 1, 1994
(Incorporated by reference to Exhibit 10(r) to General Electric Annual Report on Form 10-K
(Commission file number 1-35) for the fiscal year ended December 31, 1993).

         (k) General Electric 1996 Stock Option Plan for Non-Employee Directors (Incorporated
by reference to Exhibit A to the General Electric Proxy Statement for its Annual Meeting of
Shareowners held on April 24, 1996).

          (l) General Electric 1995 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(t) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for
the fiscal year ended December 31, 1995).

          (m) General Electric 1996 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(v) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1996).

          (n) General Electric 1997 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(t) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for
the fiscal year ended December 31, 1997).




                                    (25)
        (o) General Electric 1990 Long Term Incentive Plan as restated and amended effective
August 1, 1997 (Incorporated by reference to Exhibit 10(u) to General Electric Annual Report on
Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1997).

        (p) General Electric Deferred Compensation Plan for Directors, as amended December
19, 1997 (Incorporated by reference to Exhibit 10(v) to General Electric Annual Report on Form
10-K (Commission file number 1-35) for the fiscal year ended December 31, 1997).

          (q) General Electric 1999 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(v) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1998).

          (r) General Electric 1999 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(v) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1999).

          (s) General Electric 2000 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(u) to General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 2000).

        (t) General Electric Supplementary Pension Plan, as amended effective July 1, 2000
(Incorporated by reference to Exhibit 10(v) to General Electric Annual Report on Form 10-K
(Commission file number 1-35) for the fiscal year ended December 31, 2000).

        (u) Form of GE Executive Life Insurance Agreement provided to GE officers, as revised
September 2000 (Incorporated by reference to Exhibit 10(w) to General Electric Annual Report on
Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 2000).

          (v) General Electric 2001 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(x) to General Electric Report on Form 10-K (Commission file number 1-35) for the
fiscal year ended December 31, 2001).

          (w) General Electric Non-Employee Director Fee Plan (Formerly the Deferred
Compensation Plan for Directors), as amended through January 2003. (Incorporated by reference
to Exhibit 10(w) to General Electric Report on Form 10-K (Commission file number 1-35) for the
fiscal year ended December 31, 2002).

          (x) General Electric 2003 Executive Deferred Salary Plan (Incorporated by reference to
Exhibit 10(x) to General Electric Report on Form 10-K (Commission file number 1-35) for the
fiscal year ended December 31, 2002).

        (y) Amendment No. 1 to General Electric 1990 Long Term Incentive Plan as restated and
amended effective August 1, 1997 (Incorporated by reference to Exhibit 10(y) to General Electric
Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,
2002).




                                    (26)
        (11) Statement re Computation of Per Share Earnings.**

        (12) Computation of Ratio of Earnings to Fixed Charges.*

         (13) GE’s 2003 Annual Report to Shareowners, certain sections of which have been incorporated
herein by reference.*

        (21) Subsidiaries of Registrant.*

          (23) Consent of independent auditors incorporated by reference in each Prospectus constituting
part of the Registration Statements on Form S-3 (Registration Nos. 33-50639, 33-39596, 33-39596-01, 33-
29024, 333-59671, 333-96571, 333-104526 and 333-110771), on Form S-4 (Registration No. 333-107556)
and on Form S-8 (Registration Nos. 333-01953, 333-42695, 333-74415, 333-83164, 333-98877, 333-
94101, 333-65781, 333-88233, 333-57734, 333-99671 and 333-102111).*

        (24) Power of Attorney.*

        31(a) Certification Pursuant Section 302 of the Sarbanes-Oxley Act of 2002.*

        31(b) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

        (32) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*

         99(a) Income Maintenance Agreement, dated March 28, 1991, between the registrant and General
Electric Capital Corporation (Incorporated by reference to Exhibit 28(a) to General Electric Annual Report
on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1990).

       99(b) Undertaking for Inclusion in Registration Statements on Form S-8 of General Electric
Company (Incorporated by reference to Exhibit 99(b) to General Electric Annual Report on Form 10-K
(Commission file number 1-35) for the fiscal year ended December 31, 1992).

         99(c) Letter, dated February 4, 1999, from Dennis D. Dammerman of General Electric Company
to Denis J. Nayden of General Electric Capital Corporation pursuant to which General Electric Company
agrees to provide additional equity to General Electric Capital Corporation in conjunction with certain
redemptions by General Electric Capital Corporation of shares of its Variable Cumulative Preferred Stock.
(Incorporated by reference to Exhibit 99 (g) to General Electric Capital Corporation’s Post-Effective
Amendment No. 1 to Registration Statement on Form S-3, File No. 333-59707).

*       Filed electronically herewith.

**       Information required to be presented in Exhibit 11 is now provided in note 8 to the 2003 Annual
Report to Shareowners in accordance with the provisions of FASB Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share.




                                            (27)
(b)   Reports on Form 8-K during the quarter ended December 31, 2003.

      A Form 8-K was filed on November 19, 2003, announcing the issuance of a press release
      concerning management’s intention to pursue an initial public offering of a new company named
      Genworth Financial, Inc. that will comprise most of the Company’s life and mortgage insurance
      operations. The Company also announced the issuance of a press release setting forth GE’s
      earnings outlook for the fourth quarter of 2003 and for 2004 and 2005.

      A Form 8-K was filed on October 29, 2003, concerning an Underwriting Agreement covering the
      issuance and sale of LIBOR Floating Rate Notes.

      A Form 8-K was filed on October 10, 2003, announcing the issuance of press releases concerning
      (i) the signing of a definitive agreement for the merger of NBC with Vivendi Universal
      Entertainment and (ii) setting forth GE’s third quarter 2003 earnings and (iii) relating to the
      Company entering into an agreement through which GE will acquire Amersham plc.




                                         (28)
                                                    Signatures
         Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly
caused this annual report on Form 10-K for the fiscal year ended December 31, 2003, to be signed on its behalf by
the undersigned, and in the capacities indicated, thereunto duly authorized in the Town of Fairfield and State of
Connecticut on the 1st day of March 2004.




                                               General Electric Company
                                                     (Registrant)




                                      By /s/ Keith S. Sherin
                                         Keith S. Sherin
                                         Senior Vice President, Finance, and
                                         Chief Financial Officer
                                         (Principal Financial Officer)




                                                      (29)
         Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.

                     Signer                                  Title                       Date



      /s/ Keith S. Sherin                    Principal Financial Officer            March 1, 2004
      Keith S. Sherin
      Senior Vice President, Finance,
      and Chief Financial Officer



      /s/ Philip D. Ameen                    Principal Accounting Officer           March 1, 2004
      Philip D. Ameen
      Vice President and Comptroller

      Jeffrey R. Immelt*                     Chairman of the Board of Directors
                                             (Principal Executive Officer)

      James I. Cash, Jr.*                    Director
      Dennis D. Dammerman*                   Director
      Ann M. Fudge*                          Director
      Claudio X. Gonzalez*                   Director
      Andrea Jung*                           Director
      Alan G. Lafley                         Director
      Kenneth G. Langone*                    Director
      Ralph S. Larsen*                       Director
      Rochelle B. Lazarus*                   Director
      Sam Nunn*                              Director
      Roger S. Penske                        Director
      Andrew C. Sigler*                      Director
      Robert J. Swieringa*                   Director
      Douglas A. Warner III*                 Director
      Robert C. Wright*                      Director

      A majority of the Board of Directors



*By /s/ Robert E. Healing
    Robert E. Healing
    Attorney-in-fact
    March 1, 2004




                                                     (30)
                                                                                Exhibit 4(j)



g                                               General Electric Company
                                                3135 Easton Turnpike
                                                Fairfield, CT 06828-0001




                                                March 1, 2004



    Securities and Exchange Commission
    450 Fifth Street, N.W.
    Washington, D.C. 20549

    Subject: General Electric Company Annual Report on Form 10-K for
             the fiscal year ended December 31, 2003 – File No. 1-35

    Dear Sirs:

            Neither General Electric Company (the “Company”) nor any of its consolidated
    subsidiaries has outstanding any instrument with respect to its long-term debt, other
    than those filed as an exhibit to the Company’s Annual Report on Form 10-K for the
    fiscal year ended December 31, 2003, under which the total amount of securities
    authorized exceeds 10% of the total assets of the registrant and its subsidiaries on a
    consolidated basis. In accordance with paragraph (b)(4)(iii) of Item 601 of Regulation
    S-K (17 CFR Sec. 229.601), the Company hereby agrees to furnish to the Securities
    and Exchange Commission, upon request, a copy of each instrument that defines the
    rights of holders of such long-term debt not filed or incorporated by reference as an
    exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended
    December 31, 2003.

                                        Very truly yours,

                                        GENERAL ELECTRIC COMPANY




                                        By: /s/ Kathryn A. Cassidy
                                            Kathryn A. Cassidy
                                            Vice President and GE Treasurer
                                                                                                              Exhibit 12

                                              General Electric Company
                                          Ratio of Earnings to Fixed Charges

(Dollars in millions)                                                       Years ended December 31
                                                                  1999       2000      2001     2002             2003

General Electric Company and consolidated affiliates
Earnings (a)                                                   $15,942    $18,873    $20,049    $ 19,217      $ 20,194
Plus: Interest and other financial charges
      included in expense                                        10,174     11,903     11,212        10,321    10,515
      One-third of rental expense (b)                               558        608        566           584       542

Adjusted “earnings”                                            $26,674    $31,384    $31,827    $ 30,122      $ 31,251

Fixed Charges:
      Interest and other financial charges                     $10,174    $11,903    $11,212    $ 10,321      $ 10,515
      Interest capitalized                                         123        124         98          53            48
      One-third of rental expense (b)                              558        608        566         584           542

Total fixed charges                                            $10,855    $12,635    $11,876    $ 10,958      $ 11,105

Ratio of earnings to fixed charges                                 2.46       2.48       2.68          2.75       2.81


(a)
      Earnings before income taxes, minority interest and cumulative effect of accounting changes.
(b)
      Considered to be representative of interest factor in rental expense.
                                                                                                                          Exhibit 13

                                                                                                               financial section




about these financial statements
Keeping our investors well informed about GE is vitally important to us. In 2001, we committed to increasing our transparency, which
led to the presentation of significantly more financial information and analysis in our annual report. We continue to be guided by that
commitment. We believe the 2003 financial statements will provide you with even more insight about our company.
   The pages that follow have been organized to walk you through our financial condition and results from top to bottom.


       financial table of contents
42     Management’s Discussion of                                   We begin with Management’s Discussion of Financial
       Financial Responsibility                                     Responsibility. Here our Chief Executive and Financial Officers
                                                                    discuss our unyielding commitment to rigorous oversight, con-
                                                                    trollership and visibility to investors.

43     Independent Auditors’ Report                                 Then we present our Independent Auditors’ Report, submitted
                                                                    by KPMG LLP. Here our auditors express their independent
                                                                    opinion on our consolidated financial statements.

44     Management’s Discussion and Analysis                         The next section is Management’s Discussion and Analysis. We
44       Operations                                                 begin the Operations section with an overview of our earnings
44         Overview of Our Earnings                                 from 2001 to 2003, which provides perspective on how the global
49         Segment Operations                                       economic environment has affected our businesses over the last
55         International Operations                                 three years. We then discuss various key operating results for GE
                                                                    industrial (GE) and financial services (GECS). Because of the
                                                                    fundamental differences in their businesses, reviewing certain
                                                                    information separately for GE and GECS offers a more meaning-
                                                                    ful analysis. This year’s discussion of our segment results includes
                                                                    expanded quantitative and qualitative disclosure about the fac-
                                                                    tors affecting segment revenues and profits, and the effects of
                                                                    recent acquisitions and significant transactions. Next is an
                                                                    overview of our operations from an international perspective.

 57       Financial Resources and Liquidity                         We then move to a discussion of our Financial Resources and
                                                                    Liquidity. Here we provide an overview of the major factors that
                                                                    affected our consolidated financial position. This section has been
                                                                    significantly expanded and reorganized to provide better insight
                                                                    into the liquidity and cash flow activities of GE and GECS.

 65       Selected Financial Data                                   Selected Financial Data provides five years of financial informa-
                                                                    tion for GE and GECS. This table includes commonly used met-
                                                                    rics that facilitate comparison with other companies.

 67       Critical Accounting Estimates                             Following that is our discussion of Critical Accounting Estimates
                                                                    used by management in preparing our financial statements. We
                                                                    discuss what these estimates are, why they are important, how they
                                                                    are developed and what could cause them to change.

 70    Audited Financial Statements                                 Finally, we present our Audited Financial Statements, including
                                                                    consolidating data for GE and GECS, and related notes.

114    Glossary                                                     For your convenience, we provide a Glossary of key terms used in
                                                                    our financial statements. We also continue to present our financial
                                                                    information electronically at www.ge.com/investor. This award-
                                                                    winning site is interactive and informative.




                                                                                                               ge 2003 annual ≥epo≥t       41
     management’s discussion of financial ≥esponsibility




     High quality financial reporting is an excellent measure of a com-       Visibility to Investors
     pany and its management. We demonstrate our commitment to               We are keenly aware of the importance of full and open presenta-
     high quality reporting by adopting appropriate accounting policies,     tion of our financial position and operating results. To facilitate
     devoting our full, unyielding commitment to ensuring that those         this, we maintain a Disclosure Committee, which includes senior
     policies are applied properly and consistently, and presenting our      executives with exceptional knowledge of our businesses and the
     results in a manner that is complete and clear. We welcome sug-         related needs of our investors. We ask this committee to evaluate
     gestions from those who use our reports.                                the fairness of our financial and non-financial disclosures, and to
                                                                             report their findings to us and to the Audit Committee. We further
     Rigorous Management Oversight
                                                                             ensure strong disclosure by holding more than 250 analyst and
     Members of our corporate leadership team review each of our             investor meetings every year, and by communicating any material
     businesses constantly, on matters that range from overall strategy      information covered in those meetings to the public. In testament
     and financial performance to staffing and compliance. Our busi-           to the effectiveness of our stringent disclosure policies, investors
     ness leaders constantly monitor real-time financial and operating        surveyed annually by Investor Relations magazine have given us
     systems, enabling us to identify potential opportunities and con-       19 awards in the last eight years, including Best Overall Investor
     cerns at an early stage, and positioning us to develop and execute      Relations Program by a mega-cap company for six of those years.
     rapid responses. Our Board of Directors oversees management’s           We are in regular contact with representatives of the major rating
     business conduct, and our Audit Committee, which consists               agencies, and our debt continues to receive their highest ratings.
     entirely of independent directors, oversees our system of controls      We welcome the strong oversight of our financial reporting activ-
     and procedures. We continually examine our governance practices         ities by our independent audit firm, KPMG LLP, who are engaged
     in an effort to enhance investor trust and improve the board’s over-    by and report directly to the Audit Committee. Their report for
     all effectiveness. Our Presiding Director, who conducts at least        2003 appears on page 43.
     three meetings per year with non-employee directors, has helped
     us to set more focused and effective meeting agendas. We changed        A Great Company
     compensation policies for our executives, including modifying           GE continues to earn the admiration of the business world. We
     CEO compensation to award equity grants only if key performance         were named “The World’s Most Respected Company” for the sixth
     metrics are met, thereby aligning leadership’s interests with the       consecutive year in the Financial Times annual CEO survey,
     long-term interests of GE investors.                                    ranking first for governance and integrity.
                                                                                Great companies are built on the foundation of reliable financial
     Dedication to Controllership
                                                                             information and compliance with the law. For GE, the financial
     We maintain a dynamic system of controls and procedures —               disclosures in this report are a vital part of that foundation. We
     including internal controls over financial reporting — designed to       present this information proudly, with the expectation that those
     ensure reliable financial record-keeping, transparent financial           who use it will understand our company, recognize our commit-
     reporting and disclosure, protection of physical and intellectual       ment to performance with integrity, and share our confidence in
     property, and efficient, effective use of resources. We recruit,         GE’s future.
     develop and retain a world-class financial team, including 520
     internal auditors who conduct thousands of financial, compliance
     and process improvement audits each year, in every geographic
     area, at every GE business. The Audit Committee oversees the
     scope and results of these reviews. Our global integrity policies—
     the “Spirit & Letter”— require compliance with law and policy,          Jeffrey R. Immelt
     and pertain to such vital issues as upholding financial integrity and
                                                                             Chairman of the Board and
     avoiding conflicts of interest. These integrity policies are available
                                                                             Chief Executive Officer
     in 27 languages, and we have provided them to every one of GE’s
     more than 300,000 global employees, holding each of these
     individuals — from our top management on down — personally
     accountable for compliance. Our integrity policies serve to reinforce
     key employee responsibilities around the world, and we inquire          Keith S. Sherin
     extensively about compliance. Our strong compliance culture             Senior Vice President, Finance, and
     reinforces these efforts by requiring employees to raise any            Chief Financial Officer
     compliance concerns and by prohibiting retribution for doing so.
     We hold our consultants, agents and independent contractors to          February 6, 2004
     the same integrity standards.




42   ge 2003 annual ≥epo≥t
                                                                                                 independent audito≥s’ ≥epo≥t




To Shareowners and Board of Directors of
General Electric Company
We have audited the accompanying statement of financial position         As discussed in note 1 to the consolidated financial statements, GE
of General Electric Company and consolidated affiliates (“GE”) as        in 2003 changed its methods of accounting for variable interest
of December 31, 2003 and 2002, and the related statements of            entities and asset retirement obligations, in 2002 changed its
earnings, changes in shareowners’ equity and cash flows for each         methods of accounting for goodwill and other intangible assets
of the years in the three-year period ended December 31, 2003.          and for stock-based compensation, and in 2001 changed its meth-
These consolidated financial statements are the responsibility of        ods of accounting for derivative instruments and hedging activities
GE management. Our responsibility is to express an opinion on           and impairment of certain beneficial interests in securitized assets.
these consolidated financial statements based on our audits.                 Our audits were made for the purpose of forming an opinion
    We conducted our audits in accordance with auditing stan-           on the consolidated financial statements taken as a whole. The
dards generally accepted in the United States of America. Those         accompanying consolidating information appearing on pages 71,
standards require that we plan and perform the audit to obtain          73 and 75 is presented for purposes of additional analysis of the
reasonable assurance about whether the financial statements are          consolidated financial statements rather than to present the
free of material misstatement. An audit includes examining, on a        financial position, results of operations and cash flows of the
test basis, evidence supporting the amounts and disclosures in          individual entities. The consolidating information has been sub-
the financial statements. An audit also includes assessing the           jected to the auditing procedures applied in the audits of the
accounting principles used and significant estimates made by             consolidated financial statements and, in our opinion, is fairly
management, as well as evaluating the overall financial statement        stated in all material respects in relation to the consolidated
presentation. We believe that our audits provide a reasonable           financial statements taken as a whole.
basis for our opinion.
    In our opinion, the aforementioned financial statements
appearing on pages 70, 72, 74, 48 and 76-1 1 3 present fairly, in all
material respects, the financial position of General Electric
Company and consolidated affiliates at December 31, 2003 and
2002, and the results of their operations and their cash flows for       KPMG LLP
each of the years in the three-year period ended December 31,           Stamford, Connecticut
2003, in conformity with accounting principles generally accept-
ed in the United States of America.                                     February 6, 2004




                                                                                                                   ge 2003 annual ≥epo≥t       43
     management’s discussion and analysis




     ope≥ations                                                            WE DECLARED $7.8 BILLION IN DIVIDENDS IN 2003.Per-share dividends
                                                                           of $0.77 were up 5% from 2002, following an 11% increase from
     Our consolidated financial statements combine the industrial
                                                                           the preceding year. We have rewarded our shareowners with 28
     manufacturing and product services businesses of General Electric
                                                                           consecutive years of dividend growth. Our dividend growth for
     Company (GE) and the financial services businesses of General
                                                                           the past five years has significantly outpaced dividend growth of
     Electric Capital Services, Inc. (GECS or financial services).
                                                                           companies in the Standard & Poor’s 500 stock index.
        We present Management’s Discussion of Operations in three
                                                                               Except as otherwise noted, the analysis in the remainder of
     parts: Overview of Our Earnings from 2001 through 2003,
                                                                           this section presents the results of GE (with GECS included on a
     Segment Operations and International Operations.
                                                                           one-line basis) and GECS. See the Segment Operations section on
        In the accompanying analysis of financial information, we some-
                                                                           page 49 for a more detailed discussion of the businesses within
     times refer to data derived from consolidated financial information
                                                                           GE and GECS.
     but not required by U.S. generally accepted accounting principles
     (GAAP) to be presented in financial statements. Certain of these
                                                                              GE/S&P CUMULATIVE DIVIDEND GROWTH SINCE 1998
     data are considered “non-GAAP financial measures” under the
     U.S. Securities and Exchange Commission (SEC) regulations;                 90%
     those rules require the supplemental explanation and reconciliation
                                                                                75
     provided on page 69.
                                                                                60
     ON JANUARY 1, 2004, WE SIMPLIFIED OUR ORGANIZATION. With 11 oper-
                                                                                45
     ating segments, we will achieve lower costs of operations in plat-
                                                                                30
     forms that will accommodate our future growth. The new segments
     most affected by this change follow:                                       15


     • Advanced Materials — plastics, silicones and quartz
                                                                               -15
     • Infrastructure — water, security, sensors and Fanuc                                      99     00   01    02    03
        Automation                                                                                GE    S&P 500

     • Transportation — aircraft engines and rail
     • Consumer and Industrial — appliances, lighting and                  Overview of Our Earnings from 2001 through 2003
        industrial                                                         The global economic environment must be considered when eval-
     • Commercial Finance — the combination of Commercial                  uating our 2001 to 2003 results. Important factors for us included
        Finance and the Fleet Services business that was previously        slow global economic growth, a mild U.S. recession that did not
        part of Equipment Management                                       cause significantly higher credit losses, lower global interest rates,
                                                                           distinct developments in three industries that are significant to us
     • Equipment and Other Services — the combination of
        Equipment Management and the former All Other                      (power generation, property and casualty insurance and commer-
        GECS segments                                                      cial aviation), and escalating raw material prices. As you will see
                                                                           in detail in the following pages, our diversification and risk man-
     Results for 2003 in this financial section are reported on the 13      agement strategies reduced the earnings effects of many of the
     business basis in effect in 2003.                                     significant developments of the last three years.
         During 2003, we entered into an agreement to acquire U.K.-            If, for comparison, we adjust 2001 results for the required
     based Amersham plc, a world leader in medical diagnostics and         accounting change to stop goodwill amortization, our earnings
     life sciences. We also entered into an agreement to merge NBC         would have increased modestly in percentage terms over this three-
     with Vivendi Universal Entertainment to create one of the world’s     year period. This modest increase results from a combination of
     premier media companies, NBC Universal.                               factors, both positive and negative.
         We announced in November 2003 our intent for an initial               First, consider two businesses whose results were noteworthy.
     public offering (IPO) of a new company, Genworth Financial, Inc.
     (Genworth), comprising most of our life and mortgage insurance        • Power Systems is significant to our consolidated results, at 16%
     businesses. We plan to sell approximately one-third of Genworth’s        and 21% of three-year revenues and earnings before account-
     equity in the IPO, and we expect (subject to market conditions) to       ing changes, respectively. Power Systems was significantly
     reduce our ownership over the next three years as Genworth tran-         affected by the unprecedented industry dynamics sometimes
     sitions to full independence. We commenced the IPO process in            referred to as the “U.S. power bubble,” a phenomenon
     January 2004 and expect to complete the IPO in the first half of          that dramatically increased demand for power generation
     the year, subject to market conditions and receipt of various reg-
     ulatory approvals.




44   ge 2003 annual ≥epo≥t
                                                                                                management’s discussion and analysis




   equipment, peaking during 2002. Power Systems continued           • Our transportation businesses — Aircraft Engines and
   shipping large numbers of gas turbine units in 2002, reaching        Transportation Systems — continued to invest in market-
   $0.09 per share growth in earnings — up 29% from 2001.               leading technology and services. While our commercial
   (Note that per-share results we present in this discussion are       aviation and rail customers were sometimes understandably
   on a diluted basis.) The subsequent 2003 decline in shipments        reluctant to buy new equipment in these markets, our
   was reflected in the $0.14 per share drop in 2003 earnings.           business model also succeeds by diversification. Product
   We foresaw the 2002 end of the “bubble” and took appropriate         services and the military engines business continued strong,
   action to cushion the downturn, right-sizing the business and        and overall these businesses grew 6%, or $0.01 per share,
   growing and investing in other lines of the power generation         in 2003, following a 3% decline in 2002.
   business such as product services and GE Wind. The result is
                                                                     • NBC and Medical Systems contributed strong performances
   a Power Systems business whose results are remarkable from
                                                                        in their distinct markets. NBC’s leadership in key demo-
   any perspective save its own extraordinary recent history.
                                                                        graphics yielded higher pricing on strong demand from
                                                                        advertisers. Medical Systems continued to invest in new
  CONSOLIDATED REVENUES
                                                                        products and sustained its product leadership position, with
  (In billions)
                                                                        strong double-digit growth in Healthcare IT and Ultrasound.
  $138                                                                  The successful acquisitions of Bravo and Instrumentarium
                                                                        also provided growth, and Telemundo improved to a
   115
                                                                        promising position entering 2004. Earnings from these
    92                                                                  segments increased $0.03 per share in 2003 following a
    69
                                                                        $0.02 per share increase in 2002.

    46
                                                                     • Plastics, Equipment Management, Consumer Products,
                                                                        Industrial Products and Systems and Specialty Materials
    23                                                                  are economically sensitive and consequently were affected
                                                                        adversely by the U.S. recession and by slow global growth
                    99     00      01   02   03                         in developed countries. Even in the difficult environments
                      GE    GECS                                        they face, these businesses continued to succeed in their
                                                                        primary role in GE, to generate cash. Higher capacity, in
                                                                        combination with declining or weak volume growth in many
• At Employers Reinsurance Corporation (ERC), we, like most             of these industries, resulted in fierce competitive price
   of the reinsurance industry, faced volatility throughout the
                                                                        pressures. Plastics was hit particularly hard because of
   period. We are now confident we have worked through our
                                                                        additional pressures from inflation in certain raw materials
   historical underwriting mistakes. But in 2002 we recognized
                                                                        such as benzene and natural gas. Earnings from this group of
   losses on our 1997-2001 business, increasing loss reserves by
                                                                        businesses as a whole declined by $0.07 per share over this
   $3.5 billion, resulting in a loss of $0.18 per share in 2002, a
                                                                        period with Plastics down $0.03 per share in 2003 and
   decline of $0.19 per share from 2001. In 2003, our turn-
                                                                        $0.02 per share in 2002. Acquisitions of new growth
   around efforts started to pay off. We realized benefits from
                                                                        platforms, such as security and water, offset some of the
   improved ERC operations and ERC earnings rebounded by
                                                                        weakness in these core product lines, and we continue to
   $0.23 per share to a profit of $0.05 per share.
                                                                        foresee dramatic growth in these platforms.
Most of our operations achieved operating results in line with
                                                                     Other factors that were important to our recent earnings perform-
expectations in the 2001 to 2003 economic environment.
                                                                     ance included reduced earnings from our principal postretirement
• Commercial and Consumer Finance at 22% and 33% of                  benefit plans (down $0.05 per share in 2003 following a decline of
   consolidated three-year revenues and earnings before account-     $0.07 per share in 2002) and unusual events in 2002 such as the
   ing changes, respectively, are large, profitable growth            gains on the sale of Global eXchange Services ($0.03 per share)
   businesses in which we continue to invest with confidence.         and the Bravo exchange net of restructuring ($0.03 per share), as
   In a challenging economic environment, these businesses grew      well as favorable tax settlements with the U.S. Internal Revenue
   earnings by $0.09 per share in 2003 and $0.06 per share in        Service (IRS) in 2002 ($0.04 per share).
   2002. Solid core growth, disciplined risk management and              Acquisitions affected our operations and contributed $5.4 bil-
   successful acquisitions have delivered these strong results.      lion, $7.2 billion and $3.5 billion, respectively, to each of the last
                                                                     three year’s consolidated revenues. Our consolidated net earnings
                                                                     in 2003, 2002 and 2001 included approximately $0.5 billion,




                                                                                                                 ge 2003 annual ≥epo≥t        45
     management’s discussion and analysis




     $0.6 billion and $0.2 billion, respectively, from acquired busi-          Considering current and expected asset allocations, as well as
     nesses. We integrate acquisitions as quickly as possible and only     historical and expected returns on various categories of assets in
     revenues and earnings during the first 12 months following the         which our plans are invested, we assumed that long-term returns
     quarter in which we complete the acquisition are attributed to        on our pension plan assets would be 8.5% in 2003 and 2002 and
     such businesses.                                                      9.5% in 2001. Reducing the assumed return by 100 basis points
                                                                           in 2002 increased annual pension costs by about $480 million
        Significant matters in our Statement of Earnings, pages 70
                                                                           pretax. Actual annual investment returns are extremely volatile.
     and 71, are explained below.
                                                                           Because this short-term market volatility occurs in context of the
     OPERATING MARGIN is sales of goods and services less the costs of     long-term nature of pension plans, U.S. accounting principles
     goods and services sold, as well as selling, general and adminis-     provide that differences between assumed and actual returns are
     trative expenses. GE operating margin was 15.9% of sales in           recognized over the average future service of employees. See notes
     2003, down from 19.1% in 2002 and 19.6% in 2001. The decrease         5 and 6 for additional information about funding status, compo-
     in 2003 was attributable to lower operating margins at Power          nents of earnings effects and actuarial assumptions of the plans. See
     Systems and Plastics. The decline in 2002 was attributable to         page 68 for discussion of pension assumptions.
     Plastics and the Lighting business in Consumer Products, and              We believe our postretirement benefit costs will increase in
     also reflected $0.6 billion of restructuring and other charges, par-   2004 for a number of reasons, including a further reduction in the
     tially offset by improvements in operating margins at Power           pension discount rate from 6.75% to 6.0%, additional amortization
     Systems and NBC. Restructuring and other charges included             of investment losses, plan benefit changes as a result of union nego-
     $0.4 billion for rationalizing certain operations and facilities of   tiations and continued increases in retiree healthcare costs. We
     GE’s worldwide industrial businesses.                                 continue to expect that our plan assets will earn 8.5%, on average,
         Sales of product services were $22.9 billion in 2003, a 10%       over the long term.
     increase over 2002. Increases in product services in 2003 and             We will not make any contributions to the GE Pension Plan in
     2002 were widespread, led by continued strong growth at Power         2004. To the best of our ability to forecast the next five years, we
     Systems, Medical Systems and Specialty Materials. Operating           do not anticipate making contributions to that Plan so long as
     margin from product services was approximately $5.3 billion,          expected investment returns are achieved. The present funding
     compared with $5.2 billion in 2002. The increase reflected             status provides assurance of benefits for our participants, but future
     improvements at Power Systems and Specialty Materials.                effects on operating results and funding depend on economic
                                                                           conditions and investment performance.
     TOTAL COST PRODUCTIVITY (sales in relation to costs, both on a con-
     stant dollar basis) for GE was negative 1.3% in 2003 on declining     GE INTEREST AND OTHER FINANCIAL CHARGES amounted to $0.9 bil-
     volume at Power Systems and Plastics. In 2002 variable cost pro-      lion, $0.6 billion and $0.8 billion in 2003, 2002 and 2001,
     ductivity improvements (led by Industrial Systems and Plastics)       respectively. Interest costs in 2003 were higher as a result of our
     and base cost productivity improvements at Plastics were more         issuing $5.0 billion of long-term bonds in the first quarter of the
     than offset by lower base cost productivity, primarily at Power       year and higher average short-term borrowings, partially offset by
     Systems, Industrial Systems and Specialty Materials.                  lower average interest rates. The decrease in 2002 was primarily
                                                                           the result of reduced interest on lower tax liabilities following the
     PRINCIPAL POSTRETIREMENT BENEFIT PLANS    contributed modestly to
                                                                           2002 settlements described on page 47.
     pre-tax earnings in 2003, compared with $0.8 billion and $1.5
     billion in 2002 and 2001, respectively. Benefit costs relating to
     these plans increased in 2003 primarily because of a reduction in
     the pension discount rate for the year from 7.25% to 6.75% (which
     increased the pension obligation), amortization of prior years’
     investment losses, plan benefit changes resulting from union
     negotiations and increases in retiree medical and drug costs.




46   ge 2003 annual ≥epo≥t
                                                                                                  management’s discussion and analysis




GECS INTEREST EXPENSE ON BORROWINGS was $9.9 billion in 2003               Because GE tax expense does not include taxes on GECS earn-
and 2002, compared with $10.6 billion in 2001. Changes over the        ings, the GE effective tax rate is best analyzed in relation to GE
three-year period reflected the effects of lower interest rates,        earnings excluding GECS. In 2003, 2002 and 2001, respectively,
partially offset by the effects of higher average borrowings of        GE’s pre-tax earnings excluding GECS were $10.7 billion, $14.3
$279.7 billion, $250.1 billion and $212.2 billion in 2003, 2002        billion and $12.7 billion. On this basis, GE’s effective tax rate was
and 2001, respectively, used to finance asset growth and acquisi-       26.7% in 2003 and 2002, and 32.9% in 2001. The 2003 GE rate
tions. The average composite effective interest rate was 3.5% in       was reduced by approximately 1.7 percentage points because cer-
2003, compared with 4.1% in 2002 and 5.1% in 2001. In 2003,            tain reductions in pre-tax earnings — specifically, lower earnings at
average assets of $521.6 billion were 15% higher than in 2002,         Power Systems and from our principal pension plans — affected
which in turn were 18% higher than in 2001. See page 60 for a          taxes at higher than our average rate. The 2003 GE rate was also
discussion of interest rate risk management.                           reduced by approximately 1.0 percentage point (after adjusting for
                                                                       the effect of the lower pre-tax income at Power Systems and our
   GECS BORROWINGS                                                     principal pension plans) from a tax benefit on the disposition of
   (In billions)                                                       shares of GE Superabrasives U.S., Inc., included in the line, “All
                                                                       other — net” in note 7. In 2002, GE entered into settlements with
   $300
                                                                       the IRS concerning certain export tax benefits. The effect of the
    250                                                                settlements, the tax portion of which is included on the line “Tax on
    200
                                                                       international activities including exports” in note 7, was a reduction
                                                                       of the GE tax rate of approximately 2.7 percentage points. Also in
    150
                                                                       2002, GE entered into a tax-advantaged transaction to exchange
    100                                                                certain assets for the cable network Bravo. The related reduction
                                                                       of approximately 1.0 percentage point in the GE effective tax rate is
     50
                                                                       reflected in the line, “All other — net” in note 7.
                                                                           GECS effective tax rate was 15.8% in 2003, negative 1.7% in
                     99     00      01         02   03
                                                                       2002 and 19.8% in 2001. The increase from 2002 to 2003
                      Senior notes
                                                                       reflected the absence of a current year counterpart to the 2002
                      Commercial paper
                      Committed credit lines                           pre-tax loss at ERC and the IRS settlements discussed below, as
                      Other                                            well as lower pre-tax losses at GE Equity, partially offset by an
                                                                       approximately three percentage point decrease due to the 2003
INCOME TAXES  on consolidated earnings before accounting changes       pre-tax loss and tax benefit on the disposition of shares of ERC
were 21.7%, compared with 19.9% in 2002 and 28.3% in 2001.             Life Reinsurance Corporation (ERC Life), included in the line “All
Our consolidated income tax rate increased in 2003 by 1.8 percent-     other — net” in note 7.
age points over 2002 because our savings from 2003 business                GECS 2002 effective tax rate reflected pre-tax losses at ERC and
dispositions were less than our 2002 savings from settlements with     GE Equity, the effects of lower taxed earnings from international
the IRS. Income tax rates were lower than what they otherwise          operations and favorable tax settlements with the IRS. Pre-tax
would have been in both 2003 and 2002 because of the increasing        losses of $2.9 billion at ERC and $0.6 billion at GE Equity reduced
share of earnings from lower taxed international operations. A         the effective tax rate of GECS by approximately 17 percentage points.
more detailed analysis of differences between the U.S. federal             During 2002, as a result of revised IRS regulations, GECS
statutory rate and the consolidated rate, as well as other informa-    reached a settlement with the IRS allowing the deduction of pre-
tion about our income tax provisions, is provided in note 7. The       viously realized losses associated with the prior disposition of
nature of business activities and associated income taxes differ for   Kidder Peabody. Also during 2002, we reached a settlement with
GE and for GECS, and a separate analysis of each is presented in       the IRS regarding the treatment of certain reserves for obliga-
the paragraphs that follow.                                            tions to policyholders on life insurance contracts in the GE
                                                                       Financial Assurance business. The benefits of these settlements,
                                                                       which reduced the GECS tax rate approximately four percentage
                                                                       points (excluding the ERC and GE Equity losses), are included in
                                                                       the line “All other — net” in note 7.




                                                                                                                   ge 2003 annual ≥epo≥t        47
     management’s discussion and analysis




     summa≥y of ope≥ating segments
                                                                                                              General Electric Company and consolidated affiliates

     For the years ended December 31 (In millions)                                                     2003         2002                  2001                2000        1999

     REVENUES
       Aircraft Engines                                                                         $÷10,703      $÷11,141             $÷11,389             $÷10,779     $÷10,730
       Commercial Finance                                                                         18,869        17,781               15,759               15,333       12,302
       Consumer Finance                                                                           12,845        10,266                9,508                9,320        7,562
       Consumer Products                                                                           8,282         8,456                8,435                8,717        8,525
       Equipment Management                                                                        4,707         4,766                4,904                5,501        5,309
       Industrial Products and Systems                                                             8,396         7,441                6,742                6,628        6,284
       Insurance                                                                                  26,194        23,296               23,890               24,766       19,433
       Medical Systems                                                                            10,198         8,955                8,409                7,275        6,171
       NBC                                                                                         6,871         7,149                5,769                6,797        5,790
       Plastics                                                                                    5,245         5,245                5,252                6,013        5,315
       Power Systems                                                                              18,462        22,926               20,211               14,861       10,099
       Specialty Materials                                                                         3,126         2,406                1,817                2,007        1,803
       Transportation Systems                                                                      2,543         2,314                2,355                2,263        2,358
       All Other GECS                                                                              1,664         2,590                4,795               11,789       11,663
       Corporate items and eliminations                                                           (3,918)       (2,522)              (2,819)              (1,664)      (1,194)
     CONSOLIDATED REVENUES                                                                      $134,187      $132,210             $126,416             $130,385     $112,150
     SEGMENT PROFIT
       Aircraft Engines                                                                         $÷÷2,148      $÷÷2,060             $÷÷2,147             $÷÷2,000     $÷÷1,739
       Commercial Finance                                                                          3,765         3,189                2,788                2,416        1,834
       Consumer Finance                                                                            2,161         1,799                1,602                1,295          848
       Consumer Products                                                                             557           495                  648                  879          971
       Equipment Management                                                                          172           313                  377                  484          416
       Industrial Products and Systems                                                               631           597                  626                  676          611
       Insurance                                                                                   2,102           (95)               1,879                2,201        2,142
       Medical Systems                                                                             1,701         1,546                1,498                1,321        1,107
       NBC                                                                                         1,998         1,658                1,408                1,609        1,427
       Plastics                                                                                      422           843                1,166                1,518        1,297
       Power Systems                                                                               4,076         6,255                4,860                2,523        1,537
       Specialty Materials                                                                           381           282                  267                  347          293
       Transportation Systems                                                                        460           402                  400                  436          437
       All Other GECS                                                                               (446)         (580)                (508)                (584)        (285))
         Total segment profit                                                                       20,128       18,764                19,158               17,121      14,374
     GECS goodwill amortization                                                                        —            —                   (552)                (620)       (512)
     GE corporate items and eliminations                                                             (741)         775                   532                  844         872
     GE interest and other financial charges                                                          (941)        (569)                 (817)                (811)       (810)
     GE provision for income taxes                                                                  (2,857)      (3,837)               (4,193)             (3,799)      (3,207)
     Earnings before accounting changes                                                            15,589       15,133                14,128               12,735      10,717
     Cumulative effect of accounting changes                                                          (587)      (1,015)                 (444)                  —           —
     CONSOLIDATED NET EARNINGS                                                                  $÷15,002      $÷14,118             $÷13,684             $÷12,735     $÷10,717

     The notes to consolidated financial statements on pages 76-113 are an integral part of this summary.




48   ge 2003 annual ≥epo≥t
                                                                                                 management’s discussion and analysis




Segment Operations                                                    including pricing for commercial engines, lower product services
REVENUES AND SEGMENT PROFIT FOR OPERATING SEGMENTS      are shown     volume from reduced customer flight hours, and higher labor
on page 48. As discussed in our 2002 Annual Report, effective         costs, partially offset by lower material costs and productivity.
January 1, 2003, we made changes to the way we report our seg-            See GE Corporate Items and Eliminations on page 55 for a
ments, including the use of business specific, market-based leverage   discussion of items not allocated to this segment.
in measuring performance of our financial services businesses.             In 2003, revenues from sales to the U.S. government were
Also, as a result of changes in the way we operated our industrial    $2.4 billion, compared with $2.2 billion and $1.9 billion in 2002
businesses during 2003, we disaggregated and reported Medical         and 2001, respectively.
Systems, Plastics, Specialty Materials and Transportation                 Aircraft Engines received orders of $10.4 billion in 2003,
Systems as separate segments. Prior year information has been         compared with $1 1.6 billion in 2002 as military orders decreased
reclassified to conform to the 2003 presentation. For additional       from $4.3 billion to $2.2 billion and commercial engines increased
information, including a description of the products and services     $0.6 billion to $2.3 billion. The $10.5 billion total backlog at year-
included in each segment, see pages 112 and 113.                      end 2003 comprised unfilled product orders of $7.9 billion (of
    Segment profit is determined based on internal performance         which 37% was scheduled for delivery in 2004) and product serv-
measures used by the Chief Executive Officer to assess the             ices orders of $2.6 billion scheduled for 2004 delivery. Comparable
performance of each business in a given period. In connection         December 31, 2002, total backlog was $11.4 billion.
with that assessment, the Chief Executive Officer may exclude
                                                                      COMMERCIAL FINANCE
matters such as charges for restructuring; rationalization and
                                                                      (In millions)                        2003           2002          2001
other similar expenses; certain gains/losses from dispositions;
                                                                      REVENUES
and litigation settlements or other charges, responsibility for
                                                                      Real Estate                      $÷2,386        $÷2,124       $÷1,886
which precedes the current management team.
                                                                      Commercial Equipment Financing     4,494          4,539         4,212
    Segment profit always excludes goodwill amortization, the
                                                                      Corporate Financial Services       2,467          2,350         1,758
effects of principal pension plans and accounting changes.            Structured Finance                 1,423          1,243         1,093
Segment profit excludes or includes interest and other financial        Aviation Services                  2,881          2,694         2,173
charges and segment income taxes according to how a particular        Vendor Financial Services          4,456          4,130         3,954
segment management is measured — excluded in determining              Healthcare Financial Services        735            665           372
operating profit for Aircraft Engines, Consumer Products,              Other Commercial Finance              27             36           311
Industrial Products and Systems, Medical Systems, NBC, Plastics,      Total revenues                   $18,869        $17,781       $15,759
Power Systems, Specialty Materials and Transportation Systems;        NET REVENUES
included in determining segment profit which we refer to as “seg-      Total revenues                   $18,869      ÷$17,781        $15,759
ment net earnings” for Commercial Finance, Consumer Finance,          Interest expense                   5,577         5,753          5,754
Equipment Management, Insurance and All Other GECS.                   Total net revenues               $13,292        $12,028       $10,005
                                                                      NET EARNINGS
AIRCRAFT ENGINES   revenues decreased 4% to $10.7 billion in 2003
                                                                      Real Estate                      $÷÷«834        $÷÷«650       $÷÷«528
reflecting lower volume ($0.5 billion), primarily related to com-
                                                                      Commercial Equipment Financing       817            719           640
mercial aircraft and industrial aero-derivative engines, partially
                                                                      Corporate Financial Services         675            599           384
offset by higher military spare parts volume. Despite the decrease    Structured Finance                   576            488           399
in revenues, operating profit rose 4% to $2.1 billion reflecting        Aviation Services                    506            454           497
the effects of productivity ($0.2 billion) largely from workforce     Vendor Financial Services            432            369           332
efficiency, and lower research and development spending upon           Healthcare Financial Services        153            122            37
completion of certain development programs, more than offsetting      Other Commercial Finance            (228)          (212)          (29)
the effect of decreased volume ($0.1 billion). Aircraft Engines       Total net earnings               $÷3,765        $÷3,189       $÷2,788
reported a 2% decrease in revenues in 2002 as commercial engine
pricing pressures and reduced commercial product services revenues,
combined with lower industrial units, were substantially offset by
increased military sales. Operating profit in 2002 was 4% lower
than in 2001, primarily as a result of lower pricing ($0.1 billion)




                                                                                                                  ge 2003 annual ≥epo≥t        49
     management’s discussion and analysis




     December 31 (In millions)                         2003          2002   CONSUMER FINANCE
     TOTAL ASSETS                                                           (In millions)                         2003           2002           2001

     Real Estate                                 $÷27,767       $÷29,522    REVENUES
     Commercial Equipment Financing                53,273         51,757    Global Consumer Finance          $÷8,502         $÷6,489         $5,561
     Corporate Financial Services                  29,646         26,897    Card Services                      4,343           3,777          3,947
     Structured Finance                            21,309         19,293
                                                                            Total revenues                   $12,845         $10,266         $9,508
     Aviation Services                             33,271         30,512
                                                                            NET REVENUES
     Vendor Financial Services                     24,855         25,518
     Healthcare Financial Services                  8,367          7,905    Total revenues                   $12,845         $10,266         $9,508
     Other Commercial Finance                       5,495          2,841    Interest expense                   2,696           2,143          2,179

     Total assets                                $203,983       $194,245    Total net revenues               $10,149         $÷8,123         $7,329
                                                                            NET EARNINGS
     Financing receivables — net                 $130,129       $128,277
                                                                            Global Consumer Finance          $÷1,478         $÷1,224         $1,034
                                                                            Card Services                        781             670            669
     Commercial Finance revenues and net earnings increased 6%              Other Consumer Finance               (98)            (95)          (101)
     and 18%, respectively, compared with 2002. The increase in rev-
                                                                            Total net earnings               $÷2,161         $÷1,799         $1,602
     enues resulted primarily from acquisitions across substantially all
     businesses ($0.9 billion), higher investment gains at Real Estate
     ($0.1 billion) and origination growth, partially offset by lower       December 31 (In millions)                            2003           2002
     securitization activity at Commercial Equipment Financing ($0.1        TOTAL ASSETS
     billion). The increase in net earnings resulted primarily from         Global Consumer Finance                        $÷87,387         $58,310
     origination growth, acquisitions across substantially all businesses   Card Services                                    19,143          18,655
     ($0.2 billion), higher investment gains at Real Estate as a result     Total assets                                   $106,530         $76,965
     of the sale of properties and our investments in Regency Centers       Financing receivables — net                    $÷90,693         $63,254
     and Prologis ($0.1 billion), lower credit losses ($0.1 billion)
     resulting from continued improvement in overall portfolio credit
                                                                            Consumer Finance revenues increased 25% in 2003, a result of
     quality as reflected by lower delinquencies and nonearning
                                                                            acquisitions ($1.1 billion), the net effects of the weaker U.S. dollar
     receivables, and growth in lower taxed earnings from international
                                                                            ($0.7 billion), origination growth as a result of continued global
     operations ($0.1 billion).
                                                                            expansion and the premium on the sale of The Home Depot private
         The most significant acquisitions affecting Commercial
                                                                            label credit card receivables ($0.1 billion). Net earnings increased
     Finance 2003 results were the commercial inventory financing
                                                                            20% in 2003 as a result of origination growth, growth in lower
     business of Deutsche Financial Services and the structured finance
                                                                            taxed earnings from international operations, the premium on the
     business of ABB, both of which were acquired during the fourth
                                                                            sale of The Home Depot private label credit card receivables
     quarter of 2002. These two acquisitions contributed $0.5 billion
                                                                            ($0.1 billion) and acquisitions. These increases were partially
     and $0.1 billion to 2003 revenues and net earnings, respectively.
                                                                            offset by lower securitization activity at Card Services ($0.2 billion)
         The 2002 increase in revenues of 13% principally reflected
                                                                            and lower earnings in Japan, principally as a result of increased
     acquisitions and increased originations across substantially all
                                                                            personal bankruptcies.
     businesses, partially offset by reduced market interest rates and
                                                                                The most significant acquisitions affecting Consumer Finance
     lower securitization activity at Corporate Financial Services and
                                                                            2003 results were First National Bank, which provides mortgage
     Commercial Equipment Financing. The 2002 net earnings
                                                                            and sales finance products in the United Kingdom, and the retail
     increase of 14% primarily reflected acquisitions ($0.4 billion)
                                                                            sales finance unit of Conseco Finance Corp., both of which were
     and origination growth, productivity across all businesses and
                                                                            acquired during the second quarter of 2003. These businesses
     growth in lower taxed earnings from international operations,
                                                                            contributed $0.7 billion and $0.1 billion to 2003 revenues and net
     partially offset by increased credit losses and lower securitization
                                                                            earnings, respectively.
     activity at Corporate Financial Services and Commercial
                                                                                Revenues increased in 2002 primarily as a result of acquisitions
     Equipment Financing.
                                                                            ($0.8 billion) and increased international originations, partially
         See All Other GECS on page 54 for a discussion of items not
                                                                            offset by lower securitization activity at Card Services ($0.4 billion).
     allocated to this segment.
                                                                            Net earnings increased 12% in 2002, as a result of origination
                                                                            growth, acquisitions ($0.1 billion), growth in lower taxed earnings
                                                                            from international operations and productivity benefits, partially
                                                                            offset by lower securitization activity at Card Services ($0.1 billion).
                                                                                See All Other GECS on page 54 for a discussion of items not
                                                                            allocated to this segment.




50   ge 2003 annual ≥epo≥t
                                                                                                   management’s discussion and analysis




CONSUMER PRODUCTS revenues decreased 2% to $8.3 billion in 2003,        INDUSTRIAL PRODUCTS AND SYSTEMS

reflecting lower selling prices ($0.2 billion) primarily of home         (In millions)                        2003           2002          2001

appliances and consumer lighting products. Operating profit rose         REVENUES
13% to $0.6 billion in 2003, as lower base costs ($0.1 billion), pri-   Industrial Systems                $5,517         $4,968        $4,440
marily achieved by combining the lighting and appliance business-       GE Supply                          2,879          2,473         2,302
es, and the mix of higher-margin appliances more than offset the        Total revenues                    $8,396         $7,441        $6,742
effects of lower product pricing ($0.2 billion). In 2002, Consumer      OPERATING PROFIT
Products revenues of $8.5 billion were flat compared with 2001           Industrial Systems                $÷«501         $÷«488        $÷«527
as 5% higher appliances revenues, reflecting success of new              GE Supply                            130            109            99
products, were offset by a 9% decline in revenues from lighting         Total operating profit             $÷«631         $÷«597        $÷«626
products. Operating profit decreased 24% in 2002 to $0.5 billion,
with adverse results in the lighting products business, particularly    Industrial Products and Systems reported revenues of $8.4 billion,
lower prices, higher base costs and higher charges resulting from       13% higher than in 2002, primarily as a result of $0.5 billion of
customer credit issues. Lower prices reduced 2002 operating             sales from recently acquired businesses that more than offset the
profit by $0.1 billion.                                                  effects of lower prices, while operating profit rose 6% to $0.6 billion
EQUIPMENT MANAGEMENT
                                                                        in 2003. Industrial Systems revenues rose $0.5 billion on higher
(In millions)                       2003           2002          2001
                                                                        volume ($0.3 billion). Operating profit was slightly higher as
                                                                        productivity ($0.1 billion), higher volume, primarily as a
REVENUES                         $4,707         $4,766        $4,904
                                                                        result of recently acquired businesses, and an investment gain were
NET REVENUES
                                                                        partially offset by $0.1 billion from lower prices. In 2002,
Total revenues                   $4,707         $4,766        $4,904
                                                                        Industrial Systems revenues rose 12% compared with 2001 on
Interest expense                    741            812           905
                                                                        higher volume ($0.6 billion), but operating profit declined 7%,
Total net revenues               $3,966         $3,954        $3,999
                                                                        reflecting the negative effects of lower selling prices ($0.1 billion).
NET EARNINGS                     $«««172        $÷«313      ÷÷$÷«377
                                                                        INSURANCE
                                                                        (In millions)                        2003           2002          2001
December 31 (In millions)                         2003           2002
                                                                        REVENUES
TOTAL ASSETS                                  $25,469        $25,222    GE Financial Assurance          $13,130         $12,317       $12,826
Equipment leased to others                    $12,482        $11,285    Mortgage Insurance                1,293           1,090         1,075
                                                                        GE Global Insurance
                                                                          Holding (ERC)                   11,600          9,432         9,453
Equipment Management revenues and net earnings decreased
                                                                        Other Insurance                      171            457           536
1% and 45%, respectively, in 2003 compared with 2002. The
                                                                        Total revenues                  $26,194         $23,296       $23,890
decrease in revenues resulted primarily from lower asset utilization
                                                                        NET EARNINGS
and lower prices ($0.2 billion), an effect of industry-wide excess
                                                                        GE Financial Assurance          $÷÷«918         $÷÷«934       $÷1,088
equipment capacity reflective of current economic conditions in
                                                                        Mortgage Insurance                  564             538           500
the road and rail transportation sector. Also contributing to the
                                                                        GE Global Insurance
decrease were $0.1 billion lower gains on asset sales related to our     Holding (ERC)                       481         (1,794)           78
continuing strategy to optimize fleet mix, age and size. These           Other Insurance                      139            227           213
decreases were substantially offset by the net effects of the weaker    Total net earnings              $÷2,102         $÷÷÷(95)      $÷1,879
U.S. dollar ($0.3 billion) and the results of acquisitions. The
decrease in net earnings resulted primarily from lower asset uti-
                                                                        Insurance revenues increased $2.9 billion (12%) in 2003 on
lization, lower price and lower gains on asset sales.
                                                                        increased premium revenues ($2.2 billion), a gain of $0.6 billion
    Equipment Management experienced business-wide declining
                                                                        on sale of GE Edison Life Insurance Company (Edison Life) by
utilization rates throughout 2002, resulting in both lower revenues
                                                                        GE Financial Assurance, higher investment income ($0.4 billion)
and lower earnings. Equipment Management realized productivity
                                                                        and the net effects of the weaker U.S. dollar ($0.7 billion). The
benefits in 2002, partially offsetting lower utilization rate’s effect
                                                                        premium revenue increase reflected continued favorable pricing
on earnings.
                                                                        at ERC ($0.5 billion), net volume growth in certain ERC and GE
    See All Other GECS on page 54 for a discussion of items not
                                                                        Financial Assurance businesses ($0.8 billion), absence of prior
allocated to this segment.
                                                                        year loss adjustments ($0.4 billion), adjustment of current year




                                                                                                                    ge 2003 annual ≥epo≥t        51
     management’s discussion and analysis




     premium accruals to actual ($0.3 billion) and lower levels of ceded            claims volumes exceeded our revised loss expectations.
     premiums resulting from a decline in prior year ERC loss events                Accordingly, we increased our loss reserves to the newly-
     ($0.1 billion). Partial revenue offsets resulted from absence of               indicated ultimate levels in 2003, recording adverse
     revenues following the sale of Edison Life ($0.7 billion) and a                development of $0.9 billion pretax. We are confident we
     $0.2 billion loss on the disposition of Financial Guaranty Insurance           have worked through our historical underwriting mistakes.
     Company (FGIC) at the end of 2003. Revenues decreased 2% in
                                                                                 Throughout 2003, ERC has remained disciplined in rejecting
     2002, principally the result of ongoing planned run-off of acquired
                                                                                 risks that either fail to meet the established standards of price or
     policies at Toho and lower realized investment gains.
                                                                                 terms and conditions, or that involve risks for which sufficient
         Net earnings increased $2.2 billion in 2003, primarily from
                                                                                 historical data do not exist to permit us to make a satisfactory
     the substantial improvement in current operating results at ERC
                                                                                 evaluation. For risks that pass our criteria, we have sought to
     ($2.3 billion) reflecting improved underwriting, lower adverse
                                                                                 retain and even judiciously expand our business. On the other
     development (discussed below) and generally favorable industry
                                                                                 hand, we have curtailed or exited business in particular property
     conditions during the year. Net earnings also benefited from the
                                                                                 and casualty business channels when expected returns do not
     gain on the sale of Edison Life ($0.3 billion). These increases
                                                                                 appear to justify the risks.
     were partially offset by the absence of a current year counterpart
                                                                                     ERC’s improved operating performance is illustrated by its
     to the favorable tax settlement with the IRS in 2002 ($0.2 billion)
                                                                                 “combined ratio”— the sum of claims-related losses incurred plus
     and the loss on the sale of FGIC ($0.1 billion after tax).
                                                                                 related underwriting expenses in relation to earned premiums. A
         Net earnings decreased $2.0 billion in 2002, primarily the
                                                                                 combined ratio of less than 100% reflects an underwriting profit,
     result of adverse development at ERC. Also in 2002, investment
                                                                                 that is, profit before investment income, another significant rev-
     gains decreased, an effect partially offset by core premium growth
                                                                                 enue source for most insurance entities. ERC’s 2003 combined
     including higher premium pricing at ERC, and benefit from the
                                                                                 ratio was 106%, but, in an early indication of the effectiveness of
     favorable tax settlement with the IRS at GE Financial Assurance.
                                                                                 our revised underwriting standards, the combined ratio excluding
         As described on page 68 under the caption “Insurance liabilities
                                                                                 prior-year loss events was 93%.
     and reserves,” insurance loss provisions are adjusted up or down
                                                                                     Our Mortgage Insurance business had favorable development
     based on the best available estimates. Reported claims activity at
                                                                                 throughout the three years ended December 31, 2003, primarily
     ERC related to prior year loss events, particularly for liability-related
                                                                                 reflecting continued strength in certain real estate markets and
     exposures underwritten in 1997 through 2001, has performed much
                                                                                 the success of our loss containment initiatives in that business.
     worse than we anticipated.
                                                                                     See All Other GECS on page 54 for a discussion of items not
     • In the fourth quarter of 2002, considering the continued                  allocated to this segment and the discussion on page 44 of our
        acceleration in reported claims activity, we concluded that our          planned Genworth offering.
        best estimate of ultimate pre-tax losses was $2.5 billion higher
                                                                                 MEDICAL SYSTEMS revenues increased 14% to $10.2 billion in 2003
        in the range of reasonably possible loss scenarios than we had
                                                                                 reflecting $0.5 billion of sales from recently acquired businesses,
        previously estimated. The more significant 2002 adverse
                                                                                 primarily Instrumentarium, and other volume growth ($0.7 bil-
        development was in hospital medical malpractice, product
                                                                                 lion) that more than offset lower prices ($0.4 billion). Operating
        liability and professional liability ($0.3 billion each) and
                                                                                 profit of $1.7 billion rose 10% as productivity ($0.3 billion) and
        umbrella liability, workers compensation, individual liability
                                                                                 higher volume ($0.2 billion) more than offset the $0.4 billion
        and asbestos ($0.2 billion each). With amounts recognized in
                                                                                 effects of lower prices. Medical Systems revenues increased 6% to
        the first three quarters of 2002, our total 2002 pre-tax charge
                                                                                 $9.0 billion in 2002, on higher equipment and product services
        for adverse development at ERC amounted to $3.5 billion.
                                                                                 volume, partially offset by lower prices ($0.4 billion) and weak
     • In 2003, we continued to monitor our reported claims                      market conditions in Latin America and Japan. Operating profit
        activity compared with our revised expected loss levels. In a            rose 3% to $1.5 billion in 2002 as productivity ($0.2 billion) and
        majority of our lines of business, reported claims activity in           increased volume ($0.2 billion) were partially offset by a $0.4 bil-
        2003 was reasonably close to expected amounts. In a few                  lion effect of lower pricing.
        lines — principally medical malpractice, product liability and
        certain director and officer related coverage — reported




52   ge 2003 annual ≥epo≥t
                                                                                                   management’s discussion and analysis




    See GE Corporate Items and Eliminations on page 55 for a             POWER SYSTEMS    revenues fell 19% to $18.5 billion as growth in the
discussion of items not allocated to this segment.                       energy services and wind businesses was more than offset by
    Orders received by Medical Systems in 2003 were $10.5 billion,       lower volume ($4.7 billion) reflecting the continued effects of the
compared with $9.4 billion in 2002. The $4.6 billion total backlog       decline in sales of large gas turbines (208 in 2003 compared with
at year-end 2003 comprised unfilled product orders of $2.8 billion        362 in 2002) and industrial aero-derivative products, partially
(of which 95% was scheduled for delivery in 2004) and product            offset by the net effects of the weaker U.S. dollar ($0.7 billion).
services orders of $1.8 billion scheduled for 2004 delivery.             Operating profit dropped 35% to $4.1 billion in 2003, principally
Comparable December 31, 2002, total backlog was $4.0 billion.            reflecting the combined effects of lower volume ($1.3 billion),
    During 2003, we entered into an agreement to acquire U.K.-           lower productivity ($0.7 billion) and lower prices ($0.4 billion).
based Amersham plc, a world leader in medical diagnostics and            Customer contract termination fees, net of associated costs, were
life sciences.                                                           $0.6 billion in 2003 and $0.9 billion in 2002, reflecting the
                                                                         decline in demand for new power generation equipment that
NBC  revenues decreased 4% to $6.9 billion in 2003 following a
                                                                         began in 2002, with such fees primarily occurring in that year
24% increase to $7.1 billion in 2002. Operating profit rose 21% to
                                                                         and the first half of 2003. Power Systems revenues increased 13%
$2.0 billion in 2003, following an 18% increase in the prior year.
                                                                         to $22.9 billion in 2002 on higher volume ($2.3 billion) and price
Results were affected by several events during the three-year period.
                                                                         ($0.2 billion). Operating profit rose 29% to $6.3 billion in 2002
Improved pricing and higher syndication and network sales
                                                                         on higher volume ($0.6 billion), and productivity ($0.6 billion)
increased revenues by $0.2 billion in 2002 and higher prices and
                                                                         which included the $0.9 billion positive effect of customer contract
network sales increased revenues $0.5 billion in 2003, but were
                                                                         termination fees, net of associated costs. Results in 2002 also
partially offset in 2003 by advertising reductions because of cov-
                                                                         included restructuring and other charges of $0.2 billion as Power
erage of the Iraq war ($0.1 billion). The Salt Lake City Olympic
                                                                         Systems adjusted its cost structure.
Games and final year of NBA coverage contributed $0.7 billion
                                                                             Power Systems orders were $15.4 billion in 2003, compared
and $0.3 billion, respectively, to 2002 revenues, but the NBA
                                                                         with $13.3 billion in 2002, reflecting strong demand for wind tur-
contract resulted in a loss that exceeded profit from the Olympics.
                                                                         bines, oil and gas turbomachinery, and services. The $12.3 billion
We acquired Telemundo and Bravo in 2002; together they added
                                                                         total backlog at year-end 2003 comprised unfilled product orders
$0.7 billion and $0.3 billion of advertising revenues in 2003 and
                                                                         of $7.8 billion (of which 70% was scheduled for delivery in 2004)
2002, respectively, and $0.1 billion operating profit in 2003. The
                                                                         and product services orders of $4.5 billion scheduled for 2004
2002 exchange of certain assets for Bravo resulted in $0.6 billion
                                                                         delivery. Comparable December 31, 2002, total backlog was
of gain, $0.2 billion of which was attributed to NBC’s segment
                                                                         $16.1 billion.
results, an amount equal to $0.2 billion of other charges for impair-
ments in 2002. The remainder was included in GE Corporate                SPECIALTY MATERIALS reported a 30% increase in revenues, to $3.1
Items and Eliminations as discussed on page 55.                          billion in 2003, on higher volume ($0.5 billion) primarily from
   During 2003, we entered into an agreement to merge NBC                acquisitions. Recently acquired businesses, the largest of which
with Vivendi Universal Entertainment to create one of the world’s        were Betz-Dearborn, Osmonics and OSi, contributed $0.6 billion
premier media companies, NBC Universal.                                  of sales in 2003. Operating profit rose 35% to $0.4 billion on
                                                                         higher volume from acquisitions, the effect of dispositions and
PLASTICS revenues in 2003 were flat at $5.2 billion as lower volume
                                                                         productivity, partially offset by price declines and higher material
($0.3 billion) offset the effects of the weaker U.S. dollar ($0.2 bil-
                                                                         costs. Specialty Materials revenues increased 32% to $2.4 billion
lion) and price increases. Operating profit of $0.4 billion was 50%
                                                                         in 2002 on higher volume ($0.6 billion), reflecting the contribu-
lower than in 2002 reflecting higher material costs ($0.2 billion),
                                                                         tions of acquisitions, partially offset by lower selling prices ($0.1
primarily benzene, and lower productivity ($0.2 billion). Plastics
                                                                         billion). Operating profit at Specialty Materials rose 6% to $0.3
revenues of $5.2 billion in 2002 were relatively unchanged from
                                                                         billion in 2002, reflecting higher volume ($0.1 billion) and lower
2001 levels, as weakness in pricing ($0.5 billion) offset increased
                                                                         material costs, partially offset by lower pricing ($0.1 billion) and
volume ($0.4 billion). Operating profit declined 28% in 2002 to
                                                                         higher base costs.
$0.8 billion as productivity was not sufficient to offset the effects
of lower prices ($0.5 billion) and increased raw material costs.
    See GE Corporate Items and Eliminations on page 55 for a
discussion of items not allocated to this segment.




                                                                                                                    ge 2003 annual ≥epo≥t        53
     management’s discussion and analysis




     TRANSPORTATION SYSTEMS revenues of $2.5 billion increased 10%             increased losses on investments, including losses in the
     compared with 2002 on higher volume ($0.2 billion), primarily             telecommunications and software industries, and lower
     locomotive sales and growth in the global signaling business.             gains. GE Equity ceased making new investments in 2002,
     Operating profit rose 14% to $0.5 billion in 2003 on the higher            but continues to provide financial support to companies
     volume, partially offset by reduced pricing. In 2002, Transportation      in its portfolio which will be managed for maximum value
     Systems revenues of $2.3 billion were 2% lower and operating              over time, eventually liquidating.
     profit of $0.4 billion was about the same as in 2001, as product        • Americom — On November 9, 2001, we exchanged our satellite
     services revenues, strong variable cost productivity and lower mate-      operations, comprising the stock of Americom and other
     rial costs offset the effects of lower volume and pricing pressures.      related assets and liabilities, for a combination of cash and
         Transportation Systems received orders of $2.9 billion in 2003,       31% of the publicly-traded stock of SES Global, a leading
     compared with $2.8 billion in 2002. The $2.4 billion total backlog        satellite company, in order to create the world’s largest
     at year-end 2003 comprised unfilled product orders of $1.3 billion         satellite services provider. The transaction resulted in a gain
     (of which 69% was scheduled for delivery in 2004) and product             of $1.2 billion ($0.6 billion after tax), representing the
     services orders of $1.1 billion scheduled for 2004 delivery.              difference between the carrying value of the 69% investment
     Comparable December 31, 2002, total backlog was $2.1 billion.             in Americom and the amount of cash plus the market value
                                                                               of SES Global shares received at the closing date. No gain was
     ALL OTHER GECS                                                            recorded on the 31% interest in Americom that was indirectly
     (In millions)                       2003           2002         2001
                                                                               retained by us. Our investment in SES Global is accounted
     REVENUES                                                                  for on the equity method in Commercial Finance.
     IT Solutions                     $÷«496         $1,992       $2,301
                                                                            • Not allocated — Certain amounts are not included in other
     GE Equity                          (169)          (384)        (126)
                                                                               financial services operating segments or businesses because
     Americom                             —              —         1,698
                                                                               they are excluded from the measurement of their operating
     Not allocated                        —              —          (436)
     Other — All Other GECS            1,337            982        1,358       performance for internal purposes. In 2001, after-tax
                                                                               charges of $0.7 billion primarily related to asset impairments
     Total revenues                   $1,664         $2,590       $4,795
                                                                               and product line exits, including: other-than-temporary
     NET EARNINGS
                                                                               impairments of investments totaling $0.3 billion, the largest
     IT Solutions                     $÷÷(45)        $÷÷(46)      $÷÷«13
     GE Equity                          (176))         (375))       (264)
                                                                               of which were held by GE Financial Assurance, GE Equity
     Americom                             —              —           901       and ERC; charges of $0.1 billion related to loss events
     Not allocated                        —              —          (656)      and the exit of certain insurance and financing product lines
     Other — All Other GECS             (225)          (159)        (502)      at ERC, primarily non-standard automobile and higher
     Total net earnings               $÷(446)        $÷(580)      $÷(508)      limit industrial property insurance coverages; charges of
                                                                               $0.1 billion related to the exit of certain financing product
     All Other GECS includes our activities and businesses that we do          lines at Consumer Finance; and costs related to restructuring
     not measure within one of the other financial services segments.           totaling $0.1 billion, consisting of involuntary termination
         In addition to comments on All Other GECS elsewhere in this           benefits, facilities exit costs, and asset impairments.
     report, the following comments relate to the table above:              • Other — All Other GECS includes GECS corporate expenses,
                                                                               liquidating businesses and other non-segment aligned opera-
     • IT Solutions — Revenues decreased by 75% in 2003 primarily              tions. In 2003, the most significant of these activities were the
          as a result of geographic market exits in Europe. Net losses         consolidation of certain entities in our financial statements
          remained flat in 2003 compared with 2002, largely because of          as a result of our July 1, 2003, adoption of Financial
          tax benefits recorded in 2002 associated with, and offsetting         Accounting Standards Board (FASB) Interpretation No.
          losses generated by, certain European operations that we sold.       (FIN) 46, Consolidation of Variable Interest Entities (see
     • GE Equity — GE Equity manages equity investments in                     note 29); Auto Financial Services; the U.S. Auto and Home
          early-stage, early-growth, pre-IPO companies. GE Equity              business, which was sold in the third quarter of 2003; and a
          revenues include income, gains and losses on such invest-            tax benefit related to the sale of ERC Life. In 2002 and 2001,
          ments. Revenue and loss performance reflected the overall             the most significant of these activities were Auto Financial
          improvement in equity markets and lower level of losses              Services and the U.S. Auto and Home business.
          in 2003. Operating performance during 2002 reflected




54   ge 2003 annual ≥epo≥t
                                                                                                             management’s discussion and analysis




GE CORPORATE ITEMS AND ELIMINATIONS                                     things, more opportunities for lower cost outsourcing, expansion
(In millions)                       2003          2002          2001    of industrial and financial services activities through purchases
REVENUES
                                                                        of companies or assets at reduced prices and lower U.S. debt
Eliminations                     $(3,918)      $(2,522)      $(2,819)   financing costs.
OPERATING PROFIT
                                                                            Estimated results of international activities include the results
Principal pension plans          $«1,040       $«1,556       $«2,095    of our operations located outside the United States plus all U.S.
Eliminations                        (717)         (817)         (769)   exports. We classify certain GECS operations that cannot mean-
Underabsorbed corporate overhead    (582)         (367)         (334)   ingfully be associated with specific geographic areas as “Other
Not allocated                       (228)          115          (545)   international” for this purpose.
Other                               (254)          288            85
Total                            $÷«(741)      $÷÷775        $÷÷532     2003 CONSOLIDATED INTERNATIONAL REVENUES BY REGION
                                                                        (Including exports from the U.S.)

GE Corporate Items and Eliminations include the effects of
eliminating transactions between operating segments; cost                                            9% Other
reductions from our principal pension plans; liquidating busi-
                                                                                          13%
nesses; underabsorbed corporate overhead; certain non-allocated                           Americas
amounts described below; a variety of sundry items; and, before
                                                                                                                               54%
2002, goodwill amortization. Corporate overhead is allocated to                                                                Europe
GE operating segments based on a ratio of segment net cost of
operations, excluding direct materials, to total company cost of                                   24%
operations. This caption also includes internal allocated costs for                                Pacific
                                                                                                   Basin
segment funds on deposit.
    Not allocated — Certain amounts are not included in GE oper-
ating segments because they are excluded from the measurement of
                                                                            International revenues rose 14% to $60.8 billion in 2003
their operating performance for internal purposes. In 2003 and
                                                                        compared with $53.4 billion and $51.9 billion in 2002 and 2001,
2002, these comprised charges of $0.2 billion and $0.1 billion,
                                                                        respectively. International revenues as a percentage of consolidated
respectively, for settlement of litigation, restructuring and other
                                                                        revenues were 45% in 2003, compared with 40% and 41% in 2002
charges at Medical Systems; in 2002, a portion of NBC’s gain from
                                                                        and 2001, respectively. The effects of exchange rates on reported
the Bravo exchange; in 2002, a total of $0.1 billion for restructur-
                                                                        results were to increase revenues by $3.8 billion and $0.4 billion in
ing and other charges at Aircraft Engines and Plastics; and in 2001,
                                                                        2003 and 2002, respectively, and increase earnings by $0.1 billion
a total of $0.5 billion of goodwill amortization.
                                                                        in 2003 and decrease earnings by $0.1 billion in 2002.
    Other includes a $0.5 billion gain from the sale of 90% of
Global eXchange Services in 2002.                                       CONSOLIDATED INTERNATIONAL REVENUES
                                                                        (In millions)                                2003          2002      2001
International Operations
                                                                        Europe                                   $30,505      $24,813     $24,381
Our international activities span all global regions and primarily      Pacific Basin                              13,119       12,026      11,447
encompass manufacturing for local and export markets, import            Americas                                   5,854        5,165       5,507
and sale of products produced in other regions, leasing of aircraft,    Other international                        4,608        3,911       3,456
sourcing for our plants domiciled in other global regions and pro-                                                54,086        45,915     44,791
vision of financial services within these regional economies. Thus,      Exports from the U.S. to
when countries or regions experience currency and/or economic             external customers                        6,719        7,481      7,149
stress, we often have increased exposure to certain risks, but also     Total                                    $60,805      $53,396     $51,940
often have new profit opportunities. Potential increased risks
include, among other things, higher receivables delinquencies           GE international revenues were $33.0 billion, $29.0 billion and
and bad debts, delays or cancellation of sales and orders princi-       $28.3 billion in 2003, 2002 and 2001, respectively. The $4.0 bil-
pally related to power and aircraft equipment, higher local cur-        lion increase in GE international revenues related to increased
rency financing costs and a slowdown in established financial             operations outside the U.S., partially offset by lower U.S. exports.
services activities. New profit opportunities include, among other




                                                                                                                            ge 2003 annual ≥epo≥t   55
     management’s discussion and analysis




         GE revenues in Europe rose 25%, led by Power Systems, Medical           Total assets of international operations were $258.9 billion in
     Systems and Industrial Products and Systems, reflecting the net          2003 (40% of consolidated assets), an increase of $29.9 billion,
     effects of the weaker U.S. dollar and volume growth. GE revenues        or 13%, over 2002. GECS international assets grew 12% from
     in the Pacific Basin increased 14% as most businesses reported           $207.5 billion at the end of 2002 to $231.9 billion at the end of
     improved results. Industrial Products and Systems and Power             2003. GECS assets increased 31% in Europe as a result of acqui-
     Systems were the primary contributors to a 16% increase in rev-         sitions ($14.8 billion), primarily at Consumer Finance and
     enues in the Americas and Power Systems more than accounted for         Commercial Finance, the net effects of the weaker U.S. dollar
     the 10% decrease in U.S. exports. The increase in 2002 related to       ($11.7 billion) and growth at Consumer Finance and Insurance.
     both an increase in operations outside the U.S. and higher U.S.         GECS assets increased 13% in the Americas as a result of growth
     exports. Revenue increases in Europe were led by Medical Systems        at Commercial Finance and Insurance.
     and Industrial Systems in 2002. Growth in Specialty Materials rev-          Financial results of our international activities reported in U.S.
     enues across all geographic areas was partially offset by lower sales   dollars are affected by currency exchange. We use a number of
     in all areas by Aircraft Engines. Increases in U.S. export sales in     techniques to manage the effects of currency exchange, including
     2002 were primarily in Plastics and Power Systems, partially offset     selective borrowings in local currencies and selective hedging of
     by lower exports by Medical Systems and Transportation Systems.         significant cross-currency transactions. Such principal currencies
                                                                             are the British pound sterling, the euro, the Japanese yen and the
     2003 TOTAL ASSETS OF INTERNATIONAL OPERATIONS                           Canadian dollar.

                                                                             Environmental Matters
                                                                             Our operations, like operations of other companies engaged in
                          15% Other
                                                                             similar businesses, involve the use, disposal and cleanup of sub-
                    8%                                                       stances regulated under environmental protection laws.
                    Americas
                                                                                 We have developed environmental, health and safety manage-
                                                    60%                      ment systems that are implemented at all of our facilities and track
                                                    Europe
                                                                             our performance. Since 1996, we have reduced employee injuries
                        17%                                                  by over 70% as well as reducing air and wastewater exceedances
                        Pacific
                        Basin                                                and emissions at our facilities. We also actively participate in various
                                                                             programs that recognize facilities with health and safety programs
                                                                             that exceed legal requirements, including the United States
                                                                             Occupational Safety and Health Administration’s Voluntary
         GECS international revenues were $27.8 billion, $24.4 billion       Protection Program (VPP) as well as a similar government pro-
     and $23.6 billion in 2003, 2002 and 2001, respectively. The             gram in Mexico. Participation in these programs requires govern-
     $3.4 billion increase related to a 21% increase in Europe in 2003       ment audits to verify our comprehensive health and safety
     as a result of the growth in premiums and price increases at            management systems. We are a leading participant in the U.S. VPP
     Insurance ($2.1 billion), acquisitions ($1.0 billion) and the net       program with 82 sites, and have an additional 25 sites participating
     effects of the weaker U.S. dollar ($0.7 billion), primarily at          in the Mexico program. We have a Global Star program designed
     Consumer Finance and Commercial Finance, partially offset by            to recognize sites with world-class health and safety programs in
     geographic market exits at IT Solutions ($1.3 billion).                 those countries without government VPP programs. The 44
         International operating profit was $8.8 billion in 2003, an          Global Star sites have passed a rigorous evaluation conducted by
     increase of 35% over 2002, which was 7% higher than in 2001.            GE internal health and safety experts. We also have 79 sites
     Operating profit in 2003 rose 89% to $4.0 billion in Europe, pri-        accredited by outside auditors under the ISO 14000 Standard for
     marily as a result of lower adverse development at Insurance            Environmental Management Systems.
     ($1.1 billion). Operating profit also rose 30% to $1.5 billion in
     the Americas and was relatively unchanged in the Pacific Basin
     ($2.4 billion) and “Other international” ($0.9 billion).




56   ge 2003 annual ≥epo≥t
                                                                                                    management’s discussion and analysis




    Over the last two years we spent a total of about $0.1 billion for   Overview of Financial Position
projects related to the environment. These amounts exclude expen-        Major changes in our financial position resulted from the
ditures for remediation actions, which are principally expensed          following:
and are discussed below. Capital expenditures for environmental
purposes have included pollution control devices — such as waste-        • During 2003, we completed our acquisitions of First National
                                                                            Bank, Allbank and the retail sales finance business of Conseco.
water treatment plants, groundwater monitoring devices, air
                                                                            At the acquisition date, these transactions resulted in an
strippers or separators, and incinerators — at new and existing
                                                                            increase in total assets of approximately $13.2 billion of which
facilities constructed or upgraded in the normal course of business.
                                                                            $1 1.6 billion was financing receivables before allowance for
Consistent with policies stressing environmental responsibility,
                                                                            losses, and an increase in total liabilities of approximately
we expect our capital expenditures other than for remediation
                                                                            $5.0 billion, $4.0 billion of which was debt.
projects to total about $0.1 billion over the next two years for new
or expanded programs to build facilities or modify manufacturing         • During 2003, we sold our Tokyo-based Edison Life and
processes to minimize waste and reduce emissions.                           U.S. Auto and Home businesses to American International
    We also are involved in a sizable number of remediation                 Group, Inc., our FGIC business to a group of investors led by
actions to clean up hazardous wastes as required by federal and             The PMI Group, Inc. and our ERC Life business to Scottish
state laws. Such statutes require that responsible parties fund             Re Group Limited. These sales resulted in a reduction in
remediation actions regardless of fault, legality of original disposal      assets at the disposition date of $24.9 billion, comprising
or ownership of a disposal site. Expenditures for site remediation          primarily $18.8 billion of investment securities. Liabilities
actions amounted to $0.1 billion in each of the last two years. We          were reduced by approximately $21.4 billion, relating primarily
presently expect that such remediation actions will require average         to $19.9 billion of insurance liabilities and reserves.
annual expenditures in the range of $0.1 billion to $0.2 billion         • In 2003, Medical Systems acquired Instrumentarium at a
over the next two years.                                                    total cost of $2.4 billion.
    The U.S. Environmental Protection Agency (EPA) ruled in
                                                                         • We adopted FIN 46 on July 1, 2003, and consequently
February 2002 that approximately 150,000 pounds of polychlo-
                                                                            consolidated certain entities in our financial statements for
rinated biphenyls (PCBs) must be dredged from a 40-mile stretch
                                                                            the first time. New balance sheet captions, “Consolidated,
of the upper Hudson River in New York State. We have submitted
                                                                            liquidating securitization entities,” included $36.3 billion of
what is known as a “Good Faith Offer” under the Superfund law
                                                                            assets and $35.8 billion of liabilities at transition. Also,
and began negotiations with the EPA to undertake the design and
                                                                            investment securities and other GECS receivables included
engineering of the remedy. Our Statement of Financial Position
                                                                            an additional $14.1 billion and $1.0 billion, respectively, at
as of December 31, 2003 and 2002, included liabilities for the
                                                                            transition for investment securities related to guaranteed
estimated costs of this remediation.
                                                                            investment contracts (GICs) issued by Trinity, a group of
                                                                            sponsored special purpose entities. The related GIC liabilities
financial ≥esou≥ces and liquidity                                            of $14.7 billion consolidated at transition are displayed in the
This discussion of financial resources and liquidity addresses the           caption, “Insurance liabilities, reserves and annuity benefits.”
Statement of Financial Position (pages 72-73), Statement of
Changes in Shareowners’ Equity (page 70) and the Statement of            Statement of Financial Position (pages 72-73)
Cash Flows (pages 74-75).                                                Because GE and GECS share certain significant elements of their
   Only a small portion of GECS business is directly related to          Statements of Financial Position — property, plant and equip-
other GE operations. The fundamental differences between GE              ment, and borrowings, for example — the following discussion
and GECS are reflected in the measurements commonly used by               addresses significant captions in the “consolidated” statement.
investors, rating agencies and financial analysts. These differ-          Within the following discussions, however, we distinguish
ences will become clearer in the discussion that follows with            between GE and GECS activities in order to permit meaningful
respect to the more significant items in the financial statements.         analysis of each individual statement.




                                                                                                                   ge 2003 annual ≥epo≥t       57
     management’s discussion and analysis




     INVESTMENT SECURITIES for each of the past two years comprised         end of 2003, compared with $6.3 billion at the end of 2002.
     mainly investment-grade debt securities held by Insurance in           Turnover of customer receivables from sales of goods and services
     support of obligations to annuitants and policyholders.                was 10.4 in 2003, compared with 10.9 in 2002. Excluding Power
     Investment securities were $120.7 billion at the end of 2003,          Systems, turnover improved from 12.6 in 2002 to 13.3 in 2003.
     compared with $116.9 billion at the end of 2002. The increase of       Other current receivables are primarily amounts that did not
     $3.8 billion was primarily the result of $14.4 billion of investment   originate from sales of GE goods or services, such as advances to
     securities held by Trinity. The increase was also attributed to the    suppliers in connection with large contracts. See note 10.
     investment of premiums received, reinvestment of investment
                                                                            INVENTORIES  for GE were $8.6 billion at December 31, 2003, down
     income and the performance of the equity and debt markets, net
                                                                            $0.4 billion from the end of 2002. GE inventory turnover was 7.4
     of impairments and losses ($5.7 billion). These were partially off-
                                                                            in 2003, a decrease from 7.7 in 2002, as a result of declining sales
     set by the sales of Edison Life, U.S. Auto and Home, FGIC and
                                                                            at Power Systems. Excluding Power Systems, turnover was 7.7 and
     ERC Life businesses ($18.6 billion).
                                                                            7.6 in 2003 and 2002, respectively. See note 11.
         We regularly review investment securities for impairment
     based on criteria that include the extent to which carrying value      FINANCING RECEIVABLES   is our largest category of assets and repre-
     exceeds market value, the duration of that market decline, our         sents one of our primary sources of revenues. The portfolio of
     ability to hold to recovery and the financial strength and specific      financing receivables, before allowance for losses, increased to
     prospects for the issuer of the security. Of securities with unreal-   $232.3 billion at December 31, 2003, from $203.6 billion at the
     ized losses at December 31, 2003, approximately $0.1 billion of        end of 2002, as discussed in the following paragraphs. The related
     portfolio value is at risk of being charged to earnings in the next    allowance for losses at the end of 2003 amounted to $6.3 billion
     12 months. Impairment losses recognized in 2003 and 2002 were          compared with $5.5 billion at December 31, 2002, representing
     $0.5 billion and $0.8 billion, respectively.                           our best estimate of probable losses inherent in the portfolio.
         Gross unrealized gains and losses were $4.7 billion and $1.2           A discussion of the quality of certain elements of the financing
     billion, respectively, at December 31, 2003, compared with $4.4        receivables portfolio follows. For purposes of that discussion,
     billion and $2.5 billion, respectively, at December 31, 2002,          “delinquent” receivables are those that are 30 days or more past
     reflecting broad market improvement in 2003. We estimate                due; “nonearning” receivables are those that are 90 days or more
     that available gains, net of hedging positions and estimated           past due (or for which collection has otherwise become doubtful);
     impairment of insurance intangible assets, could be as much as         and “reduced-earning” receivables are commercial receivables
     $2.1 billion at December 31, 2003. Market value used in deter-         whose terms have been restructured to a below-market yield.
     mining unrealized gains and losses is defined by relevant                   Commercial Finance financing receivables, before allowance
     accounting standards and should not be viewed as a forecast of         for losses, totaled $132.3 billion at December 31, 2003, compared
     future gains or losses. See note 9.                                    with $130.9 billion at December 31, 2002, and consisted of loans
                                                                            and leases to the equipment, commercial and industrial, real estate
     WORKING CAPITAL,   representing GE cash invested in inventories
                                                                            and commercial aircraft industries. This portfolio of receivables
     and receivables from customers, less trade payables and progress
                                                                            increased primarily from origination growth ($16.4 billion), the
     collections, increased to $5.3 billion at the end of 2003 from $3.8
                                                                            net effects of international receivables translated into the weaker
     billion at the end of 2002. Working capital balances are signifi-
                                                                            U.S. dollar ($5.2 billion) and acquisitions ($4.3 billion), partially
     cantly affected by progress collections, primarily from Power
                                                                            offset by securitizations and sales ($24.6 billion). Related non-
     Systems customers, as shown below:
                                                                            earning and reduced-earning receivables were $1.7 billion (1.3%
                                                                            of outstanding receivables) at December 31, 2003, compared
     December 31 (In millions)                         2003          2002
                                                                            with $2.2 billion (1.7% of outstanding receivables) at year-end
     Working capital                                $5,282       $÷3,821    2002, the result of improving economic conditions and collection
     Less progress collections                      (4,381)       (6,603)
                                                                            results. Commercial Finance financing receivables are generally
     Working capital, excluding                                             backed by assets and there is a broad spread of geographic and
       progress collections                         $9,663       $10,424
                                                                            credit risk in the portfolio.

     We expect Power Systems progress collections to continue to decline
     in 2004. We discuss current receivables and inventories, two impor-
     tant elements of working capital, in the following paragraphs.

     CURRENT RECEIVABLES for GE were $11.0 billion at the end of 2003
     and 2002, and included $6.7 billion due from customers at the




58   ge 2003 annual ≥epo≥t
                                                                                                   management’s discussion and analysis




    Consumer Finance financing receivables, before allowance for          PROPERTY, PLANT AND EQUIPMENT (including equipment leased to
losses, primarily card receivables, installment loans, auto loans        others) was $53.4 billion at December 31, 2003, up $4.3 billion
and leases, and residential mortgages, were $94.7 billion at             from 2002, primarily reflecting acquisitions of commercial aircraft
December 31, 2003, compared with $66.0 billion at December               at Commercial Finance and vehicles at Equipment Management.
31, 2002. This portfolio of receivables increased as a result of         GE property, plant and equipment consists of investments for its
acquisitions ($13.9 billion), the net effects of international receiv-   own productive use, whereas the largest element for GECS is
ables translated into the weaker U.S. dollar ($8.6 billion) and          equipment provided to third parties on operating leases. Details by
origination growth, partially offset by the sale of The Home Depot       category of investment are presented in note 15.
private label credit card receivables. Acquisitions are a key to our         GE expenditures for plant and equipment during 2003
growth strategy as we expand our global market presence.                 totaled $2.2 billion, compared with $2.4 billion in 2002. Total
Nonearning consumer receivables at December 31, 2003, were               expenditures for the past five years were $12.5 billion, of which
$2.5 billion (2.6% of outstanding receivables), compared with            37% was investment for growth through new capacity and prod-
$1.6 billion (2.4% of outstanding receivables) at year-end 2002.         uct development; 35% was investment in productivity through
This increase is the result of adverse credit performance in Japan       new equipment and process improvements; and 28% was invest-
and growth in our secured financing business, a business that             ment for other purposes such as improvement of research and
tends to experience relatively higher delinquencies but relatively       development facilities and safety and environmental protection.
lower losses than the rest of our consumer portfolio.                        GECS additions to property, plant and equipment (including
    Financing receivables in Other, principally Equipment                equipment leased to others) were $7.6 billion and $11.7 billion
Management, amounted to $5.3 billion and $6.6 billion at                 during 2003 and 2002, respectively, primarily reflecting addi-
December 31, 2003 and 2002, respectively, before allowance for           tions of commercial aircraft at Commercial Finance and vehicles
losses. Nonearning receivables of $0.1 billion, 1.3% and 1.2% of         at Equipment Management.
outstanding receivables at December 31, 2003 and 2002, respec-
                                                                         INTANGIBLE ASSETS were $55.0 billion at year-end 2003,
tively, were about the same as at the end of 2002.
                                                                         up from $46.2 billion at year-end 2002. GE intangibles increased
    Delinquency rates on managed Consumer Finance financing
                                                                         to $30.2 billion from $23.1 billion at the end of 2002, principally
receivables at December 31, 2003, were 5.57%; at year-end 2002
                                                                         as a result of goodwill and other intangibles related to acquisitions
were 5.58%; and at year-end 2001 were 5.34%. Delinquency rates
                                                                         by Medical Systems, NBC and Specialty Materials. GECS intangibles
remained stable from 2002 to 2003, as a change in portfolio mix
                                                                         increased $1.7 billion to $24.8 billion, reflecting goodwill and
related to the growth in our secured financing business was offset
                                                                         other intangibles associated with acquisitions, and the net effects
by improved collection results. Increased 2002 delinquency rates
                                                                         of the weaker U.S. dollar, partially offset by the disposition of
reflected our secured financing business acquired in 2001 and
                                                                         Edison Life. See note 16.
volume growth in that business in 2002. When delinquent, these
loans have relatively lower losses than the rest of our consumer         ASSETS IN CONSOLIDATED, LIQUIDATING SECURITIZATION ENTITIES were
portfolio. Delinquency rates on managed Commercial Finance               $26.5 billion at December 31, 2003, as a result of our adoption of
equipment loans and leases were 1.34%, 1.71% and 2.16% at year-          FIN 46 on July 1, 2003. At transition we consolidated $36.3 billion
end 2003, 2002 and 2001, respectively. The decline at December           of assets, but because we have stopped transferring assets to these
31, 2003, primarily reflected improved economic conditions and            entities, balances decreased reflecting repayments. See note 29.
collection results. The decline at December 31, 2002, primarily
                                                                         ALL OTHER ASSETS  totaled $97.1 billion at year-end 2003, an increase
reflected a higher concentration of Vendor Financial Services
                                                                         of $3.9 billion. This increase resulted principally from investment
receivables coupled with improved collection results at
                                                                         of funds received as collateral on securities loaned from the GE
Commercial Equipment Financing. See notes 12 and 13.
                                                                         Financial Assurance investment securities portfolio, increases in
OTHER GECS RECEIVABLES totaled $11.9 billion at December 31, 2003,       separate accounts (investments controlled by policyholders)
and $13.0 billion at December 31, 2002, and consist primarily of         resulting from the net effects of exchange rates and broad market
nonfinancing customer receivables, accrued investment income,             improvements in 2003 and an increase in the prepaid pension
amounts due from GE (generally related to certain material pro-          asset. These increases were partially offset by the sale of The Home
curement programs), amounts due under operating leases,                  Depot private label credit card receivables, decreases in associated
receivables due on sale of securities and various sundry items.          companies and the disposition of Edison Life. See note 17.
Balances at December 31, 2003 and 2002, include securitized,
managed GE trade receivables of $2.7 billion and $2.4 billion,
respectively.




                                                                                                                    ge 2003 annual ≥epo≥t        59
     management’s discussion and analysis




     CONSOLIDATED BORROWINGS     were $304.9 billion at December 31,         risks, including prohibitions on derivatives trading, derivatives
     2003, compared with $279.4 billion at the end of 2002.                  market-making or other speculative activities. Following is an
        GE total borrowings were $10.9 billion at year-end 2003              analysis of the potential effects of changes in currency exchange
     ($2.5 billion short term, $8.4 billion long term), an increase of       and interest rates using so-called “shock” tests that model effects
     $1.1 billion from year end 2002. GE total debt at the end of 2003       of shifts in rates. These are not forecasts.
     equaled 12.0% of total capital, down from 13.1% at the end of 2002.
        GECS total borrowings were $295.5 billion at December 31,
                                                                             • If, on January 1, 2004, interest rates had increased
                                                                                100 basis points across the yield curve (a “parallel shift” in
     2003, of which $133.0 billion is due in 2004 and $162.5 billion is
                                                                                that curve) and that increase remained in place for 2004,
     due in subsequent years. Comparable amounts at the end of 2002
                                                                                we estimate, based on our year-end 2003 portfolio and
     were $270.9 billion in total, $130.1 billion due within one year
                                                                                holding everything else constant, that our 2004 GE and
     and $140.8 billion due thereafter. A large portion of GECS bor-
                                                                                GECS net earnings would decline pro-forma by $0.1 billion
     rowings ($80.6 billion and $84.2 billion at the end of 2003 and
                                                                                and $0.2 billion, respectively.
     2002, respectively) was issued in active commercial paper mar-
     kets that we believe will continue to be a reliable source of short-    • If, on January 1, 2004, currency exchange rates were to
     term financing. The average remaining terms and interest rates of           decline by 10% against the U.S. dollar and that decline
     GE Capital commercial paper were 50 days and 1.48% at the end              remained in place for 2004, we estimate, based on
     of 2003, compared with 47 days and 1.95% at the end of 2002.               our year-end 2003 portfolio and holding everything else
     The GE Capital ratio of debt to equity was 6.20 to 1 at the end of         constant, that the effect on our 2004 GE and GECS net
     2003 and 6.58 to 1 at the end of 2002. See note 18.                        earnings would be insignificant.
                                                                             Statement of Changes in Shareowners’ Equity (page 70)
     LIABILITIES IN CONSOLIDATED, LIQUIDATING SECURITIZATION ENTITIES
     were $25.7 billion at December 31, 2003, as a result of our adop-       Shareowners’ equity increased $15.5 billion, $8.9 billion and $4.3
     tion of FIN 46 on July 1, 2003. At transition we consolidated           billion in 2003, 2002 and 2001, respectively. The increases were
     $35.8 billion of liabilities, but because we have stopped transfer-     largely attributable to net earnings of $15.0 billion, $14.1 billion and
     ring assets to these entities, balances decreased reflecting repay-      $13.7 billion, partially offset by dividends declared of $7.8 billion,
     ments. See note 29.                                                     $7.3 billion and $6.6 billion in 2003, 2002 and 2001, respectively.
                                                                             Currency translation adjustments increased equity by $5.1 billion
     INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS of $136.3          in 2003, compared with an increase of $1.0 billion in 2002 and a
     billion at December 31, 2003, were $0.4 billion higher than in          reduction of $0.6 billion in 2001. Changes in the currency transla-
     2002. The increase is primarily attributable to the additional lia-     tion adjustment reflect the effects of changes in currency exchange
     bilities associated with the consolidation of Trinity upon our          rates on our net investment in non-U.S. subsidiaries that have
     2003 adoption of FIN 46 ($14.1 billion), the net effects of the         functional currencies other than the U.S. dollar. In 2003 and
     weaker U.S. dollar and growth in separate accounts, deferred            2002, the euro and, to a lesser extent, Asian currencies strengthened
     annuities and adverse development ($6.2 billion), partially offset      against the dollar. In 2001, Asian currencies weakened versus
     by the sale of Edison Life, U.S. Auto and Home, ERC Life and            the dollar, while the euro was relatively unchanged. Accumulated
     FGIC businesses ($19.7 billion). See note 19.                           currency translation adjustments affect net earnings only when all
     EXCHANGE RATE AND INTEREST RATE RISKS     are managed with a vari-      or a portion of an affiliate is disposed of or substantially liquidated.
     ety of straightforward techniques, including match funding and
     selective use of derivatives. We use derivatives to mitigate or elim-
     inate certain financial and market risks because we conduct busi-
     ness in diverse markets around the world and local funding is not
     always efficient. In addition, we use derivatives to adjust the debt
     we are issuing to match the fixed or floating nature of the assets
     we are acquiring. We apply strict policies to manage each of these




60   ge 2003 annual ≥epo≥t
                                                                                                      management’s discussion and analysis




Overview of Our Cash Flow from 2001 through 2003 (pages 74-75)                CFOA also included cash dividends from GECS, totaling $3.4
GE cash from operating activities (CFOA) is a useful measure of           billion in 2003 and $2.0 billion in 2002 and 2001. These divi-
performance for our non-financial businesses. Our GE Statement             dends represented distribution of a portion of GECS retained
of Cash Flows on page 74 shows CFOA in the required format.               earnings, and are distinct from cash from operating activities
While that display is of some use in analyzing how various assets         within the financial services businesses, which decreased in 2003
and liabilities affected our year-end cash positions, we believe it is    by $0.1 billion to $21.4 billion. Financial services cash is not nec-
also useful to supplement that display and to examine in a broader        essarily freely available for alternative uses. For example, cash
context the business activities that provide and require cash. This       generated by our Insurance businesses is restricted by various
overview provides that perspective.                                       insurance regulations (see note 23). Further, any reinvestment in
    CFOA in 2003 totaled $12.9 billion, an increase of $2.8 billion       financing receivables is shown in cash used for investing, not
from the previous year’s $10.1 billion. Power Systems experience          operating activities. Therefore maintaining or growing
over this period, which was significantly affected by the 2002 peak        Commercial and Consumer Finance assets requires that we invest
of the U.S. power bubble, can obscure significant ongoing trends.          much of the cash they generate from operating activities in their
For example, one major factor that affects CFOA comparisons is            earning assets. Also, we are increasing the equity of our financial
the effect of progress collections in Power Systems. Excluding            services businesses as discussed on page 63. The amount we show
these effects, CFOA was $15.2 billion in 2003, the same as 2002           in CFOA is the total dividend, including the normal dividend as
and up from $13.8 billion in 2001, including effects of receivable        well as any special dividends.
monetization programs in both years.
    Generally, factors that affect our earnings — for example, pricing,     GE CUMULATIVE CASH FLOWS SINCE 1998
                                                                            (In billions)
volume, costs and productivity — affect CFOA similarly. However,
while management of working capital, including timing of collec-             $72
tions and payments and levels of inventory, affects operating
                                                                              60
results only indirectly, the effect of these programs on CFOA can
be significant. Excluding progress collections, working capital                48
improvements contributed $2.2 billion and $0.1 billion to CFOA
                                                                              36
in 2003 and 2002, respectively, as we applied our inventory and
other working capital management tools broadly.                               24
    The most significant source of cash in CFOA is customer-
                                                                              12
related activities, the largest of which is collecting cash following
a product or services sale. Excluding Power Systems, GE cash
                                                                                               99      00       01       02      03
collections from customer-related activities were about $52.5 billion
                                                                                                 Cash flows from operating activities
in 2003, an increase of about $2.4 billion from 2002. This
                                                                                                 Dividends paid
increase is consistent with the change in comparable GE operating                                Shares repurchased
segment revenues, including increases at Medical Systems,
Specialty Materials and Transportation Systems, partially offset
                                                                              Based on past performance and current expectations, in com-
by decreases at Aircraft Engines, Consumer Products and NBC.
                                                                          bination with the financial flexibility that comes with a strong
Including Power Systems, cash from customer-related activities
                                                                          balance sheet and the highest credit ratings, we believe we are in
was about $68.4 billion and $67.5 billion in 2003 and 2002,
                                                                          a sound position to grow dividends and continue making selective
respectively. Analyses of operating segment revenues on page 49
                                                                          investments for long-term growth. With the financial flexibility
is the best way of understanding their customer-related CFOA.
                                                                          that comes with excellent credit ratings, we believe that GE and
    The most significant operating use of cash is to pay our suppliers
                                                                          GECS should be well positioned to meet the global needs of its
and employees for the wide range of material and services neces-
                                                                          customers for capital and to continue providing our shareowners
sary in a diversified global organization. Excluding payments by
                                                                          with good returns.
Power Systems, GE cash paid to suppliers and employees was
about $41.5 billion in 2003, an increase of about $1.7 billion from
2002. Including Power Systems, cash paid to suppliers and
employees was about $56.2 billion and $57.1 billion in 2003 and
2002, respectively.




                                                                                                                               ge 2003 annual ≥epo≥t   61
     management’s discussion and analysis




     Cash Requirements
     Achieving optimal returns on cash used often involves making                                         Other matters that provide additional context for considering our
     long-term commitments. SEC regulations require that we present                                       liquidity position are discussed below.
     our contractual obligations, and we have done so in the table that
                                                                                                          WE USE OFF-BALANCE SHEET ARRANGEMENTS in the ordinary course of
     follows. However, our future cash flow prospects cannot reasonably
                                                                                                          business to improve shareowner returns. Beyond improving
     be assessed based on such obligations — the most significant factor
                                                                                                          returns, these securitization transactions serve as funding sources
     affecting our future cash flows is our ability to earn and collect
                                                                                                          for a variety of diversified lending and securities transactions.
     cash from customers. Future cash outflows, whether they are con-
                                                                                                          Our securitization transactions are similar to those used by many
     tractual obligations or not, will vary based on our future needs.
                                                                                                          financial institutions. In a typical transaction, assets are sold by
     While some such outflows are completely fixed (for example,
                                                                                                          the transferor to a special purpose entity, which purchases the
     commitments to repay principal and interest on fixed-rate bor-
                                                                                                          assets with cash raised through issuance of beneficial interests
     rowings) most depend on future events (for example, supply
                                                                                                          (usually debt instruments) to third party investors. Investors in
     agreements to purchase commodity raw materials at quantities to
                                                                                                          the beneficial interests usually have recourse to the assets in the
     be determined in the future at then-market prices). Many purchase
                                                                                                          special purpose entities (SPEs) and often benefit from credit
     obligations are linked to cash-generating revenue contracts (for
                                                                                                          enhancements supporting the assets (such as overcollateraliza-
     example, payments to subcontractors under long-term contracts).
                                                                                                          tion). The SPE may also hold derivatives, such as interest rate
     Further, normal operations involve significant expenditures that
                                                                                                          swaps, in order to match the interest rate characteristics of the
     are not based on “commitments,” for example, expenditures for
                                                                                                          assets with those of the beneficial interests. An example is an
     income taxes or for payroll.
                                                                                                          interest rate swap converting fixed rate assets to variable rate to
         As defined by reporting regulations, our consolidated contrac-
                                                                                                          match floating rate debt instruments issued by the SPE.
     tual obligations as of December 31, 2003, follow:
                                                                                                              Historically, we have used both sponsored and third-party
                                                        Payments due by period                            entities to execute securitization transactions in the commercial
                                                                                             2009 and     paper and term markets. With our adoption of FIN 46 on July 1,
     (In millions)                      Total         2004     2005-2006     2007-2008       thereafter
                                                                                                          2003, consolidating $36.3 billion of assets and $35.8 billion of
     Borrowings                                                                                           liabilities in certain sponsored entities, we stopped executing new
       (note 18)                $304,921 $134,917              $76,893        $31,379       $61,732       securitization transactions with those entities. We continue to
     Operating lease                                                                                      engage in securitization transactions with third party conduits
       obligations                                                                                        and through public market term securitizations.
       (note 4)                      7,118          1,327         2,007          1,465          2,319
                                                                                                              Assets held by SPEs include: receivables secured by equipment,
     Purchase
                                                                                                          commercial real estate and other assets; credit card receivables;
       obligations (a)(b)          62,000         41,000         11,000          5,000          5,000
                                                                                                          and trade receivables. Examples of these assets include loans and
     Insurance
       liabilities                                                                                        leases on manufacturing and transportation equipment, loans on
       (note 19) (c)               52,000         10,000          9,000          7,000        26,000      commercial property, commercial loans, and balances of high
     Other liabilities (d)         58,000         15,000          3,000          2,000        38,000      credit quality accounts from sales of a broad range of products and
                                                                                                          services to a diversified customer base. In certain transactions, the
     (a)   Includes all take-or-pay arrangements, capital expenditures, contractual commitments to        credit quality of assets transferred is enhanced by providing credit
           purchase equipment that will be classified as equipment leased to others, software
           acquisition/license commitments, contractual minimum programming commitments and               support. Off-balance sheet assets securitized totaled $26.8 billion
           contractually required cash payments for acquisitions. We estimated ordinary course of         and $54.9 billion at December 31, 2003 and 2002, respectively.
           business purchase orders and other commitments using Six Sigma statistical sampling
           techniques.                                                                                    This comparison is significantly affected by the consolidation of a
     (b)   Excludes funding commitments entered into in the ordinary course of business by our            majority of our sponsored and supported securitization entities.
           financial services businesses. Further information on these commitments is provided in              In order to provide comparative information about our overall
           note 30. Also excludes commitments of $14.3 billion to acquire businesses settleable in
           stock or cash at our option during 2004.                                                       securitization activities, the disclosures that follow describe all
     (c)   Includes guaranteed investment contracts, structured settlements and single premium            entities used for securitization, including those that were recently
           immediate annuities based on scheduled payouts, as well as those contracts with readily        consolidated under FIN 46.
           determinable cash flows such as liabilities associated with the run-off of universal life,
           term life, long-term care, whole life and other life insurance contracts as well as workers’       We provide financial support related to assets held by certain
           compensation tabular indemnity loan and long-term liability claims.                            SPEs through liquidity agreements, credit support, and guarantee
     (d)   Because their future cash outflows are uncertain, the following non-current liabilities are
                                                                                                          and reimbursement contracts. Net 2004 credit and liquidity
           excluded from the table above: deferred taxes, derivatives, deferred revenue and other
           sundry items. Refer to notes 21 and 28 for further information on these items.                 support amounted to $21.5 billion at January 1, 2004, down from
                                                                                                          $27.5 billion a year earlier. Of the total, $18.4 billion relates to
                                                                                                          assets and debt that were consolidated under FIN 46. The $21.5




62   ge 2003 annual ≥epo≥t
                                                                                                    management’s discussion and analysis




billion includes credit support, in which we provide recourse for a       Qualitative measures include:
maximum of $14.1 billion of credit losses in SPEs. Of this amount,
$8.6 billion related to assets that were consolidated under FIN 46.
                                                                          • Franchise strength, including competitive advantage and
                                                                             market conditions and position,
Potential credit losses are provided for in our financial statements.
Based on management’s best estimate of probable losses inherent           • Strength of management, including experience, corporate
in the portfolio of assets that remain off-balance sheet, our financial       governance and strategic thinking, and
statements included $0.1 billion representing fair value of recourse      • Financial reporting quality, including clarity, completeness and
obligations at year-end 2003. See note 29.                                   transparency of all financial performance communications.
    We periodically enter into guarantees and other similar               GE Capital’s ratings are supported contractually by a GE com-
arrangements as part of transactions in the ordinary course of            mitment to maintain the ratio of earnings to fixed charges at a
business. These are described further in note 30.                         specified level.
    We have extensive experience in evaluating economic, liquidity            Before 2003, GE Capital maintained a capital structure that
and credit risk. In view of this experience, the high quality of          included about $8 of debt for each $1 of equity — a “leverage ratio”
assets in these entities, the historically robust quality of commercial   of 8:1. For purposes of measuring segment profit, each of our
paper markets, and the historical reliability of controls applied to      financial services businesses was also assigned debt and interest
both asset servicing and to activities in the credit markets, we          costs on the basis of that consolidated 8:1 leverage ratio. As of
believe that, under any reasonable future economic developments,          January 1, 2003, we extended a business-specific, market-based
the likelihood is remote that any financial support arrangements           leverage to the performance measurement of each of our financial
could have an adverse economic effect on our financial position or         services businesses. As a result, at January 1, 2003, debt of $12.5
results of operations.                                                    billion previously allocated to the segments was allocated to the All
Debt Instruments, Guarantees and Covenants                                Other GECS segment. We refer to this as “parent supported debt.”
                                                                              During 2003, a total of $4.6 billion of such debt was eliminated,
The major debt rating agencies routinely evaluate the debt of GE,
                                                                          reducing the total to $7.9 billion at year end. This reduction was
GECS and GE Capital, the major borrowing affiliate of GECS.
                                                                          the result of the following:
These agencies have given the highest debt ratings to GE and GE
Capital (long-term rating AAA/Aaa; short-term rating A-1+/P-1).           • The decision of the GECS Board of Directors to reduce
One of our strategic objectives is to maintain these ratings as they         GECS dividend payments to GE to 10% of operating earnings
serve to lower our cost of funds and to facilitate our access to a           ($1.7 billion),
variety of lenders. We manage our businesses in a fashion that is
                                                                          • Strategic dispositions of Edison Life and U.S. Auto and
consistent with maintaining our Triple-A ratings.                            Home assets and FGIC ($1.7 billion),
   GE, GECS and GE Capital have distinct business characteristics
that the major debt rating agencies evaluate both quantitatively and      • Rationalization of other insurance related activities including
                                                                             disposition of certain originated mortgages ($0.7 billion), and
qualitatively.
   Quantitative measures include:                                         • The continuing strategy to optimize fleet mix, age and size at
                                                                             Equipment Management ($0.5 billion).
• Earnings and profitability, including earnings quality,
   revenue growth, the breadth and diversity of sources of                We plan to continue to reduce debt relative to our equity in finan-
   income and return on assets,                                           cial services businesses. As such, we remain on track to eliminate
                                                                          parent supported debt by the end of 2005. Proceeds from further
• Asset quality, including delinquency and write-off ratios
                                                                          strategic dispositions, including Genworth, will continue to be
   and reserve coverage,
                                                                          evaluated when and if they are received, but we anticipate using
• Funding and liquidity, including cash generated from                    at least some of those proceeds to reduce financial services debt.
   operating activities, leverage ratios such as debt to capital,             During 2003, the financial services business declared special
   market access, back-up liquidity from banks and other                  dividends to GE of $2.7 billion which related to the strategic dispo-
   sources, composition of total debt and interest coverage, and          sitions in the Insurance segment ($1.7 billion) and more efficient
• Capital adequacy, including required capital and tangible               capital management programs ($1.0 billion).
   leverage ratios.                                                           GE Capital issued $51.1 billion of long-term debt in the U.S. and
                                                                          13 international markets in 2003 with maturities ranging from two
                                                                          years to 37 years bearing fixed and floating interest rates. This debt
                                                                          was issued to both institutional investors and retail investors.




                                                                                                                     ge 2003 annual ≥epo≥t        63
     management’s discussion and analysis




         These funds were used primarily for maturing long-term debt,       The following three conditions relate to securitization SPEs and
     acquisitions and asset growth, with the remainder used to reduce       apply to entities that were consolidated upon adoption of FIN 46
     the amount of commercial paper outstanding. GE Capital antici-         on July 1, 2003, that are reported in the captions, “Consolidated,
     pates issuing approximately $50 billion to $60 billion of long-        liquidating securitization entities”:
     term debt using both U.S. and international institutional and
     retail markets during 2004. The ultimate amount of debt
                                                                            • If the short-term credit rating of GE Capital or certain con-
                                                                               solidated SPEs discussed further in note 29 were to fall
     issuances will depend on the growth in assets, acquisition activity,
                                                                               below A-1/P-1, GE Capital would be required to provide sub-
     availability of markets and movements in interest rates.
                                                                               stitute liquidity for those entities or provide funds to retire
         Following is the debt composition of GECS:
                                                                               the outstanding commercial paper. The maximum net
     December 31                                           2003      2002      amount that GE Capital would be required to provide in the
     Senior notes                                           55%       52%
                                                                               event of such a downgrade is determined by contract, and
     Commercial paper                                       27        31       amounted to $19.9 billion at January 1, 2004. Amounts
     Current portion of long-term debt                      13        13       related to non-consolidated SPEs were $2.1 billion.
     Other — bank and other retail deposits                  5         4
                                                                            • If the long-term credit rating of GE Capital were to fall below
     Total                                                 100%      100%      AA/Aa2, GE Capital would be required to provide substitute
                                                                               credit support or liquidate the consolidated SPEs. The maxi-
     We target a ratio for commercial paper of 25% to 35% of out-              mum amount that GE Capital would be required to substitute
     standing debt based on the anticipated composition of our assets          in the event of such a downgrade is determined by contract,
     and the liquidity profile of our debt. GE Capital is the most widely       and amounted to $1.4 billion at December 31, 2003.
     held name in global commercial paper markets.                          • For certain transactions, if the long-term credit rating of GE
        We believe that alternative sources of liquidity are sufficient to      Capital were to fall below A/A2 or BBB+/Baa1 or its short-
     permit an orderly transition from commercial paper in the unlikely        term credit rating were to fall below A-2/P-2, GE Capital
     event of impaired access to those markets. Funding sources on             could be required to provide substitute credit support or
     which we would rely would depend on the nature of such a hypo-            fund the undrawn commitment. GE Capital could be
     thetical event, but include $57.2 billion of contractually committed      required to provide up to $3.2 billion in the event of such a
     lending agreements with 85 highly-rated global banks and invest-          downgrade based on terms in effect at December 31, 2003.
     ment banks, an increase of $3.1 billion since December 31, 2002.
     See note 18.                                                           The following condition relates to the Trinity SPEs, which are
        Beyond contractually committed lending agreements, other            reported in the captions, “Investment securities” and “Insurance
     sources of liquidity include medium and long-term funding,             liabilities, reserves and annuity benefits”:
     monetization, asset securitization, cash receipts from our lending     • If the long-term credit rating of GE Capital were to fall
     and leasing activities, short-term secured funding on global              below AA-/Aa3 or its short-term credit rating were to fall
     assets, and potential asset sales.                                        below A-1+/P-1, GE Capital could be required to provide up
     PRINCIPAL DEBT CONDITIONS      are described below.                       to $1.2 billion to the Trinity SPEs and could be required to
                                                                               repay up to $4.1 billion of the Trinity’s guaranteed investment
     The following two conditions relate to GE and GECS:                       contracts based on terms in effect at December 31, 2003.
     • If the long-term credit rating of either GE or GECS under            In our history, we have never violated any of the above conditions
         certain swap, forward and option contracts falls below             either at GE or at GECS. We believe that under any reasonable
         A-/A3, certain remedies are required as discussed in note 28.      future economic developments, the likelihood that any such
     • If GE Capital’s ratio of earnings to fixed charges, which was         arrangements could have a significant effect on our operations,
         1.84:1 at the end of 2003, were to deteriorate to 1.10:1 or,       cash flows or financial position is remote.
         upon redemption of certain preferred stock, its ratio of debt
         to equity, which was 6.20:1 at the end of 2003, were to
         exceed 8:1, GE has committed to contribute capital to GE
         Capital. GE also has guaranteed subordinated debt of GECS
         and GE Capital with a face amount of $1.0 billion at
         December 31, 2003 and 2002.




64   ge 2003 annual ≥epo≥t
                                                                                                    management’s discussion and analysis




COMMERCIAL AVIATION  is an industry in which we have a significant        exposure related to these airlines amounted to $4.3 billion,
ongoing interest. As has been widely reported, this industry has         including loans, leases, investment securities and commitments.
been under pressure, but has undertaken steps to reduce unused           Various Boeing, Airbus and Bombardier aircraft secure substan-
capacity and align costs. Consequently, during 2003, major U.S.          tially all of these financial exposures. Included in this exposure is
and European airlines achieved moderate improvements in oper-            a $0.7 billion debtor-in-possession financing commitment to Air
ations, including traffic, revenues and load factors. Our cus-            Canada. Another major airline customer, US Airways Group, par-
tomers that had been operating at losses generally reduced those         ent of US Airways, filed for reorganization in bankruptcy in 2002
losses in 2003, and their year end cash positions were improved.         but emerged from bankruptcy on March 31, 2003. At December
    At December 31, 2003, we had the following positions related         31, 2003, our total exposure related to US Airways amounted to
to our global commercial aviation business, principally in our           $2.5 billion, including leases, loans, investment securities and
Commercial Finance segment:                                              commitments. Atlas Air Worldwide Holdings Inc. (Atlas Air) filed
                                                                         for reorganization in bankruptcy in January 2004. At December
• 1,239 commercial aircraft, of which 1,236 were on lease,               31, 2003, our total exposure to Atlas Air was $1.0 billion of oper-
• $29.0 billion of loans and leases,                                     ating leases, secured loans and investment securities. Our finan-
• $2.3 billion of investment securities including $0.4 billion in        cial statements include provisions for probable losses based on
   our insurance businesses and $0.2 billion in the Trinity SPEs,        our best estimates of such losses.
                                                                             Commercial Finance tests the recoverability of its commercial
• $1.2 billion of funding commitments,
                                                                         aircraft operating lease portfolio as described on page 67, and recog-
• $13.5 billion (list price) of multiple-year orders for various         nized impairment losses of $0.2 billion in each of the last two years.
   Boeing, Airbus and other aircraft. We had 104 aircraft
   ($4.5 billion) scheduled for delivery in 2004, of which
                                                                         selected financial data
   101 were under agreement to commence operations with
   commercial airline customers.                                         Information summarized on the following page is divided into three
                                                                         sections: upper portion — consolidated data; middle portion —
Regional jets, with capacity for 50-90 passengers, have had a sig-       GE data that reflect various conventional measurements for such
nificant effect on the commercial aviation industry in recent years.      enterprises; and lower portion — GECS data that reflect key infor-
These jets have enabled airlines to replace less efficient equipment,     mation pertinent to financial services businesses.
both turboprop and older, narrow-bodied jets. At December 31,
2003, our fleet included 278 regional jets, diversifying our total        GE’S TOTAL RESEARCH AND DEVELOPMENT expenditures were $2.7 bil-

aircraft holdings. Two of our businesses have capitalized on the         lion in 2003, compared with $2.6 billion and $2.3 billion in 2002
trend toward regional jets; Aircraft Engines through engine sales        and 2001, respectively. In 2003, expenditures from GE’s own
and servicing and Commercial Finance through leases. We believe          funds were $2.1 billion compared with $2.2 billion in 2002.
that we continue to offer a suitable range of equipment that is          Expenditures funded by customers (mainly the U.S. government)
attractive to the industry.                                              were $0.6 billion in 2003, compared with $0.4 billion in 2002.
     Aircraft Engines sales of new equipment often include long-         The decrease in company funded expenditures was attributed to
term customer financing commitments. Under these commitments,             commercial introduction of major development programs,
it is our policy to establish a secured position in the aircraft being   including the H System gas turbine at Power Systems and U.S.
financed. At year-end 2003, guarantees of $0.4 billion were in            Federal Aviation Administration certification of the GE90-115B
place. Further, we had committed $1.2 billion to provide financial        jet engine at Aircraft Engines. Product technology efforts in 2003
assistance on future aircraft sales (see note 30). Our guarantees        included continuing development work on the next generation of
and commitments are secured by individual aircraft or pools of           gas turbines, further advances in state-of-the-art diagnostic imaging
aircraft engines related to the specific financing arrangement.            technologies, developing reduced emissions and more fuel-efficient
When particular guarantees exceed the value of the associated            locomotives, improving the performance and efficiency of wind
security, we consider credit risk of the associated customer and         energy turbines and continuing development of more fuel-efficient,
provide for estimated losses. At December 31, 2003, the total esti-      cost-effective aircraft engine designs. Services technologies include
mated fair value of aircraft securing these guarantees exceeded the      further advances in diagnostic applications, including remote diag-
guaranteed amounts, net of the associated allowance for losses.          nostic capabilities related to repair and maintenance of medical
     UAL Corp. and Air Canada, the parent companies of two of            equipment, aircraft engines, power generation equipment and
our major airline customers, are experiencing significant financial        locomotives. Information technology advances in the healthcare
difficulties and both filed for reorganization in bankruptcy. UAL          field are helping our customers integrate their various devices and
Corp. filed for bankruptcy protection in 2002 and Air Canada              critical systems. Process technologies provided improved product
filed in Canada on April 1, 2003. At December 31, 2003, our total         quality and performance and increased capacity for manufacturing
                                                                         engineered materials.




                                                                                                                     ge 2003 annual ≥epo≥t        65
     management’s discussion and analysis




     selected financial data
     (Dollar amounts in millions; per-share amounts in dollars)                                             2003                   2002                 2001                   2000             1999

     GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
           Revenues                                                                                  $134,187               $132,210             $126,416             $130,385            $112,150
           Earnings before accounting changes                                                          15,589                 15,133               14,128               12,735              10,717
           Cumulative effect of accounting changes                                                       (587)                (1,015)                (444)                  —                   —
           Net earnings                                                                                15,002                 14,118               13,684               12,735              10,717
           Dividends declared                                                                           7,759                  7,266                6,555                5,647               4,786
           Return on average shareowners’ equity excluding the
             effect of accounting changes                                                                   22.1%                 25.8%                27.1%                   27.5%            26.8%
           Per share
             Earnings before accounting changes — diluted                                           $««««««1.55            $««««««1.51          $««««««1.41          $««««««1.27          $««««««1.07
             Cumulative effect of accounting changes — diluted                                            (0.06)                 (0.10)               (0.04)                  —                    —
             Earnings — diluted                                                                            1.49                   1.41                 1.37                 1.27                 1.07
             Earnings before accounting changes — basic                                                    1.56                   1.52                 1.42                 1.29                 1.09
             Cumulative effect of accounting changes — basic                                              (0.06)                 (0.10)               (0.04)                  —                    —
             Earnings — basic                                                                              1.50                   1.42                 1.38                 1.29                 1.09
             Dividends declared                                                                            0.77                   0.73                 0.66                 0.57              0.48wd
             Stock price range                                                                   32.42–21.30            41.84–21.40          52.90–28.25          60.50–41.67          53.17–31.42
             Year-end closing stock price                                                                30.98                  24.35                40.08                47.94                51.58
           Total assets                                                                              647,483                575,244              495,023              437,006              405,200
           Long-term borrowings                                                                      170,004                140,632                79,806               82,132               71,427
           Shares outstanding — average (in thousands)                                            10,018,587              9,947,113            9,932,245            9,897,110            9,833,478
           Shareowner accounts — average                                                             670,000                655,000              625,000              597,000              549,000
     GE DATA
           Short-term borrowings                                                                     $««««2,555             $««««8,786           $««««1,722           $«««««««940         $««««2,245
           Long-term borrowings                                                                           8,388                    970                  787                   841                722
           Minority interest                                                                              1,079                  1,028                  948                   968                823
           Shareowners’ equity                                                                          79,180                 63,706               54,824               50,492              42,557
             Total capital invested                                                                  $««91,202              $««74,490            $««58,281            $««53,241           $««46,347
           Return on average total capital invested
            excluding effect of accounting changes                                                          19.9%                 24.5%                27.0%                   27.4%            25.8%
           Borrowings as a percentage of total capital invested                                             12.0%                 13.1%                 4.3%                    3.3%             6.4%
           Working capital(a)                                                                        $««««5,282             $««««3,821           $«««(2,398)          $«««««««799         $««««3,922
           Additions to property, plant and equipment                                                     2,158                  2,386                2,876                2,536               2,036
           Employees at year end
            United States                                                                              122,000                125,000              125,000             131,000             124,000
             Other countries                                                                            96,000                 94,000               94,000               92,000              86,000
             Total employees                                                                           218,000                219,000              219,000             223,000             210,000
     GECS DATA
           Revenues                                                                                  $««64,279              $««58,699            $««58,856            $««66,709           $««56,269
           Earnings before accounting changes                                                            7,754                  4,626                5,586                5,192               4,443
           Cumulative effect of accounting changes                                                         (339)               (1,015)                 (169)                  —                  —
           Net earnings                                                                                  7,415                  3,611                5,417                 5,192              4,443
           Shareowner’s equity                                                                          45,308                 36,929               28,590               23,022              20,321
           Minority interest                                                                             4,701                  4,445                4,267                 3,968              4,391
           Total borrowings                                                                           295,528                270,962              239,935              205,371             200,025
           Ratio of debt to equity at GE Capital                                                         6.20:1                 6.58:1               7.31:1               7.53:1             8.44:1
           Total assets                                                                              $554,526               $489,828             $425,484             $370,636            $345,018
           Insurance premiums written                                                                   18,602                 16,999               15,843               16,461              13,624
           Employees at year end
             United States                                                                              33,000                 36,000               33,000               37,000              43,000 (b)
           Other countries                                                                              54,000                 60,000               58,000               53,000              57,000
             Total employees                                                                            87,000                 96,000               91,000               90,000            100,000

     Transactions between GE and GECS have been eliminated from the consolidated information.
     (a)   Working capital is defined as the sum of receivables from the sales of goods and services, plus inventories, less trade accounts payable and progress collections.
     (b)   Excludes employees of Montgomery Ward in 1999.




66   ge 2003 annual ≥epo≥t
                                                                                                     management’s discussion and analysis




GE’S TOTAL BACKLOG of firm unfilled orders at the end of 2003 was            our knowledge of the installed base of equipment and the close
$31.2 billion, a decrease of 12% from year-end 2002, reflecting             interaction with our customers that comes with supplying critical
softening demand for new equipment in the power generation                 services and parts over extended periods. Carrying amounts for
business at Power Systems and at Aircraft Engines, partially off-          product services agreements in progress at December 31, 2003 and
set by higher backlog at Medical Systems. Of the total backlog,            2002, were $3.2 billion and $2.9 billion, respectively, and are
$21.2 billion related to products, of which 63% was scheduled for          included in the line, “Contract costs and estimated earnings” in note
delivery in 2004. Product services orders, included in this reported       17. Adjustments to earnings resulting from revisions to estimates on
backlog for only the succeeding 12 months, were $10.0 billion at           product services agreements have been insignificant for each of the
the end of 2003. Orders constituting this backlog may be canceled          years in the three-year period ended December 31, 2003.
or deferred by customers, subject in certain cases to penalties. See
                                                                           ASSET IMPAIRMENT assessment involves various estimates and
Segment Operations beginning on page 49 for further information.
                                                                           assumptions as follows:

                                                                           INVESTMENTS   We regularly review investment securities for
c≥itical accounting estimates
                                                                           impairment based on criteria that include the extent to which the
Accounting estimates and assumptions discussed in this section             investment’s carrying value exceeds its related market value, the
are those that we consider to be the most critical to an under-            duration of the market decline, our ability to hold to recovery and
standing of our financial statements because they inherently                the financial strength and specific prospects of the issuer of the
involve significant judgments and uncertainties. For all of these           security. We perform comprehensive market research and analysis
estimates, we caution that future events rarely develop exactly as         and monitor market conditions to identify potential impairments.
forecast, and the best estimates routinely require adjustment.             Further information about actual and potential impairment losses
LOSSES ON FINANCING RECEIVABLES      are recognized when they are          is provided on page 58 and in note 9.
incurred. Our best estimate of such probable losses requires con-          LONG-LIVED ASSETS We review long-lived assets for impairment
sideration of historical loss experience, adjusted for current con-        whenever events or changes in circumstances indicate that the
ditions, and judgments about the probable effects of relevant              related carrying amounts may not be recoverable. Determining
observable data, including present economic conditions such as             whether an impairment has occurred typically requires various
delinquency rates, financial health of specific customers and mar-           estimates and assumptions, including determining which cash
ket sectors, collateral values, and the present and expected future        flows are directly related to the potentially impaired asset, the
levels of interest rates. Our lending and leasing experience and           useful life over which cash flows will occur, their amount, and the
the extensive data we accumulate and analyze facilitate estimates          asset’s residual value, if any. In turn, measurement of an impair-
that have been reliable over time. Our actual loss experience was          ment loss requires a determination of fair value, which is based
in line with expectations for 2003, 2002 and 2001. While losses            on the best information available. We use internal discounted
depend to a large degree on future economic conditions, we do              cash flow estimates, quoted market prices when available and
not anticipate significant adverse credit development in 2004.              independent appraisals as appropriate to determine fair value.
Further information is provided in the financing receivables sec-           We derive the required cash flow estimates from our historical
tion on page 58, and in notes 1, 12, 13 and, for special purpose           experience and our internal business plans and apply an appro-
entities, in note 29.                                                      priate discount rate.
REVENUE RECOGNITION ON LONG-TERM AGREEMENTS to provide product
                                                                               Commercial aircraft are a significant concentration of assets
services (product services agreements) requires estimates of profits        in our Commercial Finance business, and are particularly subject
over the multiple-year terms of such agreements, considering               to market fluctuations. Therefore we test recoverability of each
factors such as the frequency and extent of future monitoring,             aircraft in our operating lease portfolio at least annually.
maintenance and overhaul events; the amount of personnel, spare            Additionally we perform quarterly evaluations in circumstances
parts and other resources required to perform the services; and            such as when aircraft are re-leased, current lease terms have
future cost changes. We routinely review estimates under product           changed or a specific lessee’s credit standing changes. Future
services agreements and regularly revise them to adjust for                rentals and residual values are based on historical experience and
changes in outlook. Revisions that affect a product services agree-        information received routinely from independent appraisers.
ment’s total estimated profitability will also result in an immediate       Estimated cash flows from future leases are reduced for expected
adjustment of earnings. We provide for probable losses. We also            downtime between leases and for estimated technical costs
regularly assess customer credit risk inherent in the carrying             required to prepare aircraft to be redeployed. Fair value used to
amounts of contract costs and estimated earnings. We gain insight          measure impairment is based on current market values from
into future utilization and cost trends, as well as credit risk, through   independent appraisers.




                                                                                                                      ge 2003 annual ≥epo≥t        67
     management’s discussion and analysis




     GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS We test goodwill             We continually evaluate the potential for changes in loss esti-
     for impairment annually and whenever events or circumstances             mates with the support of qualified reserving actuaries and use the
     make it more likely than not that an impairment may have occurred,       results of these evaluations both to adjust recorded reserves and to
     such as a significant adverse change in the business climate or a         proactively modify underwriting criteria and product offerings.
     decision to sell or dispose of a reporting unit. Determining whether     For actuarial analysis purposes, reported and paid claims activity is
     an impairment has occurred requires valuation of the respective          segregated into several hundred reserving segments, each having
     reporting unit, which we estimate using a discounted cash flow            differing historical settlement trends. A variety of actuarial method-
     methodology. When available and as appropriate, we use compar-           ologies are then applied to the underlying data for each of these
     ative market multiples to corroborate discounted cash flow results.       reserving segments in arriving at an estimated range of “reasonably
     In applying this methodology, we rely on a number of factors,            possible” loss scenarios. Factors such as line of business, length of
     including actual operating results, future business plans, economic      historical settlement pattern, recent changes in underwriting stan-
     projections and market data.                                             dards and unusual trends in reported claims activity will generally
         If this analysis indicates goodwill is impaired, measuring its       affect which actuarial methodologies are given more weight for
     impairment requires a fair value estimate of each identified tan-         purposes of determining the “best estimate” of ultimate losses in a
     gible and intangible asset. In this case we supplement the cash          particular reserving segment. As discussed in the insurance section
     flow approach discussed above with independent appraisals, as             on page 51 and in note 19, reported claims activity at ERC related
     appropriate.                                                             to prior year loss events, particularly for liability-related exposures
         We test other identified intangible assets with defined useful         underwritten in 1997 through 2001, has performed much worse
     lives and subject to amortization by comparing the carrying              than we anticipated. This trend was considered in the actuarial
     amount to the sum of undiscounted cash flows expected to be               reserve study completed in the fourth quarter of 2002, resulting in
     generated by the asset. We test intangible assets with indefinite         a significant increase in recorded reserves. Following these actions,
     lives annually for impairment using a fair value methodology             we have continued to monitor reported claims volumes relative to
     such as discounted cash flows.                                            our revised expected loss levels. While for the majority of our lines
                                                                              of business, reported claims activity in 2003 was reasonably close
        Further information is provided on page 59 and in notes 1, 9,
                                                                              to expected amounts, for certain lines of business the reported
     15 and 16.
                                                                              claims volumes exceeded our revised loss expectations. In response
     INSURANCE LIABILITIES AND RESERVES differ for short and long-dura-       to this new data, we further increased our loss reserves in 2003.
     tion insurance contracts. Short-duration contracts such as proper-       ERC continues its comprehensive efforts to apply more rigorous
     ty and casualty policies are accounted for based on actuarial            underwriting standards that began in 2002. Actuarial reserve
     estimates of losses inherent in that period’s claims, including loss-    studies and recorded reserves continue to be updated accordingly.
     es for which claims have not yet been reported. Short-duration
                                                                              PENSION ASSUMPTIONS Pension benefit obligations and the related
     contract loss estimates rely on actuarial observations of ultimate
                                                                              effects on operations are calculated using actuarial models.
     loss experience for similar historical events. Measurement of long-
                                                                              Two critical assumptions — discount rate and expected return on
     duration insurance liabilities (such as guaranteed renewable term,
                                                                              assets — are important elements of plan expense and asset/liability
     whole life and long-term care insurance policies) also is based on
                                                                              measurement. We evaluate these critical assumptions at least
     approved actuarial methods that include assumptions about
                                                                              annually. Other assumptions involving demographic factors such
     expenses, mortality, morbidity, lapse rates and future yield on
                                                                              as retirement age, mortality and turnover are evaluated periodi-
     related investments. Historical insurance industry experience
                                                                              cally and are updated to reflect our experience. Actual results in
     indicates that a greater degree of inherent variability exists in
                                                                              any given year will often differ from actuarial assumptions
     assessing the ultimate amount of losses under short-duration
                                                                              because of economic and other factors.
     property and casualty contracts than exists for long-duration mor-
                                                                                  The discount rate enables us to state expected future cash flows
     tality exposures. This inherent variability is particularly significant
                                                                              at a present value on the measurement date. We have little latitude
     for liability-related exposures, including latent claims issues (such
                                                                              in selecting this rate; it is the yield on high-quality fixed income
     as asbestos and environmental related coverage disputes), because
                                                                              investments at the measurement date. A lower discount rate
     of the extended period of time — often many years — that tran-
                                                                              increases the present value of benefit obligations and increases pen-
     spires between when a given claim event occurs and the ultimate
                                                                              sion expense. To reflect market interest rate conditions, we reduced
     full settlement of such claim. This situation is then further exacer-
                                                                              our discount rate at December 31, 2003, from 6.75% to 6.0%.
     bated for reinsurance entities (as opposed to primary insurers) due
     to coverage often being provided on an “excess-of-loss” basis and
     the resulting lags in receiving current claims data.




68   ge 2003 annual ≥epo≥t
                                                                                                     management’s discussion and analysis




   To determine the expected long-term rate of return on pension        Financial Measures that Supplement GAAP
plan assets, we consider the current and expected asset allocations,    We sometimes refer to data derived from consolidated financial
as well as historical and expected returns on various categories of     information but not required by GAAP to be presented in financial
plan assets. We assumed that long-term returns on our pension           statements. Certain of these data are considered “non-GAAP
plans were 8.5% in 2003 and 2002 and 9.5% in 2001.                      financial measures” under SEC regulations. Specifically, we have
   Sensitivity to changes in key assumptions follows:                   referred to:

• Discount rate — A 75 basis point reduction in discount rate           • 2003 revenue and earnings growth excluding the operations
    would increase pension expense in 2004 by $0.3 billion.                  of Power Systems,
•   Expected return on assets — A 50 basis point increase in the        • GE CFOA excluding progress collections for the three years
    expected return on assets of our principal plans would                   ended December 31, 2003, and
    decrease pension expense in 2004 by $0.2 billion.
                                                                        • GE earnings before income taxes and accounting changes
Further information on our principal postretirement benefit                   and the corresponding effective tax rate for the three years
plans is provided on page 46 and in notes 5 and 6.                           ended December 31, 2003.
OTHER LOSS CONTINGENCIES      are recorded as liabilities when it is    We believe trends in the Power Systems segment may be so sig-
probable that a liability has been incurred and the amount of the       nificant as to obscure patterns and trends of our businesses in
loss is reasonably estimable. Disclosure is required when there is      total. For this reason, we believe that investors may find it useful
a reasonable possibility that the ultimate loss will exceed the         to see the measures noted above.
recorded provision. Contingent liabilities are often resolved over
                                                                        REVENUES EXCLUDING POWER SYSTEMS
long time periods. Estimating probable losses requires analysis of
                                                                                                                                    Percentage
multiple forecasts that often depend on judgments about poten-          (In billions)                        2003          2002        change
tial actions by third parties such as regulators.
                                                                        Revenues as reported               $134.2       $132.2
CERTAIN SIGNIFICANT ACCOUNTING POLICIES     do not involve the same     Less Power Systems                   18.5         22.9
level of measurement uncertainties as those discussed above, but        Revenues excluding
are nevertheless important to an understanding of the financial            Power Systems                    $115.7       $109.3               6%
statements. Policies related to revenue recognition, financial instru-
ments and business combinations require difficult judgments on           EARNINGS BEFORE ACCOUNTING CHANGES EXCLUDING POWER SYSTEMS
complex matters that are often subject to multiple sources of                                                                       Percentage
                                                                        (In billions)                        2003          2002        change
authoritative guidance. Certain of these matters are among topics
currently under reexamination by accounting standard setters and        Earnings before accounting
regulators; based on their tentative conclusions, significant changes      changes as reported               $15.6        $15.1
to GAAP, and therefore to certain of our accounting policies, are       Less Power Systems at 35%
                                                                          tax rate                            2.6          4.0
possible in the future. Also see note 1, Summary of Significant
Accounting Policies, which discusses accounting policies that we        Earnings before accounting
                                                                          changes excluding
have selected from acceptable alternatives.
                                                                          Power Systems                     $13.0        $11.1              17%


other information                                                       GE CFOA EXCLUDING PROGRESS COLLECTIONS

New Accounting Standards                                                (In billions)                        2003          2002          2001

In December 2003, the FASB modified FIN 46, Consolidation of             GE CFOA excluding progress
Variable Interest Entities with FIN 46R, which amended FIN 46             collections                       $15.2        $15.2         $13.8
and deferred its application in certain cases. Our adoption of FIN      Progress collections                 (2.3)        (5.1)          3.4

46 on July 1, 2003, was unchanged by FIN 46R. However, on               GE CFOA as reported                 $12.9        $10.1         $17.2
January 1, 2004, we will adopt FIN 46R, adding approximately
$2.5 billion to our total assets and liabilities. No cumulative or      GE TAX RATE EXCLUDING GECS EARNINGS
significant future effect on our earnings or equity will result from     (In millions)                        2003          2002          2001

this change.                                                            GE earnings before income taxes
                                                                          and accounting changes          $18,446      $18,970      $18,321
                                                                        Less GECS earnings                  7,754        4,626        5,586
                                                                        Total                             $10,692      $14,344      $12,735
                                                                        Provision for income taxes        $÷2,857      $÷3,837      $÷4,193
                                                                        Effective tax rate                   26.7%        26.7%         32.9%




                                                                                                                     ge 2003 annual ≥epo≥t        69
     statement of ea≥nings




                                                                                                                General Electric Company and consolidated affiliates
     For the years ended December 31 (In millions; per-share amounts in dollars)                                      2003                2002                2001

     REVENUES
       Sales of goods                                                                                           $÷49,963           $÷55,096            $÷52,677
       Sales of services                                                                                          22,391              21,138              18,722
       Other income (note 2)                                                                                           602              1,013                 234
       Earnings of GECS before accounting changes                                                                       —                   —                  —
       GECS revenues from services (note 3)                                                                       60,536              54,963              54,783
       Consolidated, liquidating securitization entities (note 29)                                                     695                  —                  —
          Total revenues                                                                                         134,187             132,210             126,416


     COSTS AND EXPENSES (note 4)
       Cost of goods sold                                                                                         37,189              38,833              35,678
       Cost of services sold                                                                                      14,017              14,023              13,419
       Interest and other financial charges                                                                        10,432              10,216              11,062
       Insurance losses and policyholder and annuity benefits                                                      16,369              17,608              15,062
       Provision for losses on financing receivables (note 13)                                                       3,752               3,084               2,481
       Other costs and expenses                                                                                   31,727              29,229              28,665
       Minority interest in net earnings of consolidated affiliates                                                     290                326                 348
       Consolidated, liquidating securitization entities (note 29)                                                     507                  —                  —
          Total costs and expenses                                                                               114,283             113,319             106,715


     EARNINGS BEFORE INCOME TAXES AND ACCOUNTING CHANGES                                                          19,904              18,891              19,701
     Provision for income taxes (note 7)                                                                           (4,315)             (3,758)             (5,573)
     EARNINGS BEFORE ACCOUNTING CHANGES                                                                           15,589              15,133              14,128
     Cumulative effect of accounting changes (note 1)                                                                 (587)            (1,015)               (444)
     NET EARNINGS                                                                                               $÷15,002           $««14,118           $÷13,684
     PER-SHARE AMOUNTS (note 8)
       Per-share amounts before accounting changes
        Diluted earnings per share                                                                              $÷÷÷1.55           $÷÷÷1.51            $÷÷÷1.41
        Basic earnings per share                                                                                $÷÷÷1.56           $÷÷÷1.52            $««««««1.42
       Per-share amounts after accounting changes
        Diluted earnings per share                                                                              $÷÷÷1.49           $÷÷÷1.41            $÷÷÷1.37
        Basic earnings per share                                                                                $÷÷÷1.50           $÷÷÷1.42            $÷÷÷1.38
     DIVIDENDS DECLARED PER SHARE                                                                               $÷÷÷0.77           $÷÷÷0.73            $÷÷÷0.66



     consolidated statement of changes in sha≥eowne≥s’ equity

     (In millions)                                                                                                    2003                2002                2001

     CHANGES IN SHAREOWNERS’ EQUITY (note 24)
     Balance at January 1                                                                                       $««63,706          $««54,824           $««50,492
     Dividends and other transactions with shareowners                                                             (5,520)             (6,382)             (7,529)
     Changes other than transactions with shareowners
      Increase attributable to net earnings                                                                       15,002              14,118              13,684
      Investment securities — net                                                                                      549              1,303                (306)
      Currency translation adjustments — net                                                                        5,123               1,000                (562)
      Derivatives qualifying as hedges — net                                                                           320             (1,157)               (955)
          Total changes other than transactions with shareowners                                                  20,994              15,264              11,861
     Balance at December 31                                                                                     $««79,180          $««63,706           $««54,824

     The notes to consolidated financial statements on pages 76 –113 are an integral part of these statements.




70   ge 2003 annual ≥epo≥t
                          GE                                                             GECS
      2003                  2002                 2001                 2003                  2002                  2001



$47,767               $51,957               $49,057             $««2,228               $««3,296              $««3,627
 22,675                 21,360               18,961                      —                    —                     —
      645                 1,106                   433                    —                    —                     —
   7,754                  4,626                5,586                     —                    —                     —
        —                      —                   —              61,356                 55,403               55,229
        —                      —                   —                   695                    —                     —
 78,841                 79,049               74,037               64,279                 58,699               58,856



 35,102                 35,951               32,419                 2,119                 3,039                 3,266
 14,301                 14,245               13,658                      —                    —                     —
      941                   569                   817               9,869                 9,935               10,598
        —                      —                   —              16,369                 17,608               15,062
        —                      —                   —                3,752                 3,084                 2,481
   9,870                  9,131                8,637              22,342                 20,343               20,320
      181                   183                   185                  109                   143                  163
        —                      —                   —                   507                    —                     —
 60,395                 60,079               55,716               55,067                 54,152               51,890


 18,446                 18,970               18,321                 9,212                 4,547                 6,966
  (2,857)                (3,837)              (4,193)              (1,458)                    79               (1,380)
 15,589                 15,133               14,128                 7,754                 4,626                 5,586
     (587)               (1,015)                 (444)                (339)              (1,015)                  (169)
$15,002               $14,118               $13,684             $««7,415               $««3,611              $÷5,417

In the consolidating data on this page, “GE” means the basis of consolidation as described in note 1 to the consoli-
dated financial statements; “GECS” means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the “General Electric Company and
consolidated affiliates” columns on page 70.




                                                                                                                          ge 2003 annual ≥epo≥t   71
     statement of financial position




                                                                                                                                         General Electric Company and consolidated affiliates
     At December 31 (In millions)                                                                                                                                  2003                 2002

     ASSETS
     Cash and equivalents                                                                                                                                   $÷12,664              $÷÷8,910
     Investment securities (note 9)                                                                                                                           120,724              116,862
     Current receivables (note 10)                                                                                                                             10,732                10,681
     Inventories (note 11)                                                                                                                                       8,752                9,247
     Financing receivables (investments in time sales, loans and financing leases) —
       net (notes 12 and 13)                                                                                                                                  226,029              198,060
     Insurance receivables — net (note 14)                                                                                                                     27,053                31,585
     Other GECS receivables                                                                                                                                      9,545               11,432
     Property, plant and equipment (including equipment leased to others) —
       net (note 15)                                                                                                                                           53,382                49,073
     Investment in GECS                                                                                                                                               —                   —
     Intangible assets — net (note 16)                                                                                                                         55,025                46,180
     Consolidated, liquidating securitization entities (note 29)                                                                                               26,463                     —
     All other assets (note 17)                                                                                                                                97,114                93,214
     TOTAL ASSETS                                                                                                                                           $647,483              $575,244


     LIABILITIES AND EQUITY
     Short-term borrowings (note 18)                                                                                                                        $134,917              $138,775
     Accounts payable, principally trade accounts                                                                                                              19,824                18,874
     Progress collections and price adjustments accrued                                                                                                          4,433                6,706
     Dividends payable                                                                                                                                           2,013                1,895
     All other current costs and expenses accrued                                                                                                              15,343                15,577
     Long-term borrowings (note 18)                                                                                                                           170,004              140,632
     Insurance liabilities, reserves and annuity benefits (note 19)                                                                                            136,264              135,853
     Consolidated, liquidating securitization entities (note 29)                                                                                               25,721                     —
     All other liabilities (note 20)                                                                                                                           41,357                35,236
     Deferred income taxes (note 21)                                                                                                                           12,647                12,517
       Total liabilities                                                                                                                                      562,523              506,065
     Minority interest in equity of consolidated affiliates (note 22)                                                                                             5,780                5,473
     Common stock (10,063,120,000 and 9,969,894,000 shares outstanding
       at year-end 2003 and 2002, respectively)                                                                                                                     669                  669
     Accumulated gains/(losses) — net
       Investment securities                                                                                                                                     1,620                1,071
       Currency translation adjustments                                                                                                                          2,987                (2,136)
       Derivatives qualifying as hedges                                                                                                                         (1,792)               (2,112)
     Other capital                                                                                                                                             17,497                17,288
     Retained earnings                                                                                                                                         82,796                75,553
     Less common stock held in treasury                                                                                                                        (24,597)             (26,627)
       Total shareowners’ equity (notes 24 and 25)                                                                                                             79,180                63,706
     TOTAL LIABILITIES AND EQUITY                                                                                                                           $647,483              $575,244

     The sum of accumulated gains/(losses) on investment securities, currency translation adjustments, and derivatives qualifying as hedges constitutes “Accumulated nonowner changes other
     than earnings,” as shown in note 24, and was $2,815 million and $(3,177) million at year-end 2003 and 2002, respectively.
     The notes to consolidated financial statements on pages 76 –113 are an integral part of this statement.




72   ge 2003 annual ≥epo≥t
               GE                                        GECS
        2003                2002                 2003                  2002



$««÷1,670            $««÷1,079           $÷11,273               $÷÷7,918
        380                 332            120,344                116,530
   10,973               10,973                     —                     —
     8,555                9,039                   197                   208


          —                   —            226,029                198,060
          —                   —              27,053                 31,585
          —                   —              11,901                 12,984


   14,566               13,743               38,816                 35,330
   45,308               36,929                     —                     —
   30,204               23,049               24,821                 23,131
          —                   —              26,463                      —
   30,448               30,167               67,629                 64,082
$142,104             $125,311            $554,526               $489,828



$÷÷2,555             $÷÷8,786            $132,988               $130,126
     8,753                8,095              13,440                 12,608
     4,433                6,706                    —                     —
     2,013                1,895                    —                     —
   15,343               15,577                     —                     —
     8,388                  970            162,540                140,836
          —                   —            136,264                135,853
          —                   —              25,721                      —
   18,449               16,621               22,828                 18,441
     1,911                1,927              10,736                 10,590
   61,845               60,577             504,517                448,454
     1,079                1,028                4,701                 4,445


        669                 669                      1                     1


     1,620                1,071                1,823                 1,191
     2,987               (2,136)               2,639                   (782)
    (1,792)              (2,112)              (1,727)               (2,076)
   17,497               17,288               12,268                 12,271
   82,796               75,553               30,304                 26,324
   (24,597)            (26,627)                    —                     —
   79,180               63,706               45,308                 36,929
$142,104             $125,311            $554,526               $489,828

In the consolidating data on this page, “GE” means the basis of consol-
idation as described in note 1 to the consolidated financial statements;
“GECS” means General Electric Capital Services, Inc. and all of its affiliates
and associated companies. Transactions between GE and GECS have been
eliminated from the “General Electric Company and consolidated affiliates”
columns on page 72.




                                                                                ge 2003 annual ≥epo≥t   73
     statement of cash flows




                                                                                                              General Electric Company and consolidated affiliates
     For the years ended December 31 (In millions)                                                                  2003                2002                2001

     CASH FLOWS — OPERATING ACTIVITIES
     Net earnings                                                                                             $«15,002            $«14,118            $«13,684
     Adjustments to reconcile net earnings to cash provided
      from operating activities
        Cumulative effect of accounting changes                                                                      587              1,015                 444
        Depreciation and amortization of property, plant and equipment                                            6,956               6,511               5,873
        Amortization of goodwill                                                                                      —                   —               1,252
        Earnings (before accounting changes) retained by GECS                                                         —                   —                  —
        Deferred income taxes                                                                                     1,127               2,414               1,426
        Decrease (increase) in GE current receivables                                                                534               (409)                197
        Decrease (increase) in inventories                                                                           874                 (87)              (485)
        Increase (decrease) in accounts payable                                                                      802                227               4,676
        Increase (decrease) in GE progress collections                                                           (2,268)             (5,062)              3,446
        Increase in insurance liabilities and reserves                                                            1,679               9,454               8,194
        Provision for losses on financing receivables                                                              3,752               3,084               2,481
        All other operating activities                                                                            1,244              (1,264)             (8,296)
     CASH FROM OPERATING ACTIVITIES                                                                             30,289              30,001              32,892


     CASH FLOWS — INVESTING ACTIVITIES
     Additions to property, plant and equipment                                                                  (9,767)            (14,056)           (16,394)
     Dispositions of property, plant and equipment                                                                4,945               6,357               7,591
     Net increase in GECS financing receivables                                                                  (14,273)            (18,082)           (13,837)
     Payments for principal businesses purchased                                                                (14,407)            (21,570)           (12,429)
     Investment in GECS                                                                                               —                   —                  —
     All other investing activities                                                                             10,599              (15,111)             (5,742)
     CASH USED FOR INVESTING ACTIVITIES                                                                         (22,903)            (62,462)           (40,811)


     CASH FLOWS — FINANCING ACTIVITIES
     Net increase (decrease) in borrowings (maturities of 90 days or less)                                      (11,107)            (17,347)            20,482
     Newly issued debt (maturities longer than 90 days)                                                         67,545              95,008              32,071
     Repayments and other reductions (maturities longer than 90 days)                                           (43,155)            (40,454)           (37,001)
     Net dispositions (purchases) of GE shares for treasury                                                          726               (985)             (2,435)
     Dividends paid to shareowners                                                                               (7,643)             (7,157)             (6,358)
     All other financing activities                                                                               (9,998)              3,873               2,047
     CASH FROM (USED FOR) FINANCING ACTIVITIES                                                                   (3,632)            32,938                8,806


     INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR                                                      3,754                 477                 887
     Cash and equivalents at beginning of year                                                                    8,910               8,433               7,546
     Cash and equivalents at end of year                                                                      $«12,664            $÷«8,910            $÷«8,433
     SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
     Cash paid during the year for interest                                                                   $(10,561)           $««(9,654)          $(11,125)
     Cash recovered (paid) during the year for income taxes                                                      (1,539)               (948)             (1,487)

     The notes to consolidated financial statements on pages 76 –113 are an integral part of this statement.




74   ge 2003 annual ≥epo≥t
                          GE                                                            GECS
      2003                  2002                 2001                 2003                  2002                  2001



$15,002                $14,118              $13,684            $«««7,415              $«««3,611             $«««5,417



      587                 1,015                   444                  339                1,015                   169
   2,277                  2,199                1,919                4,679                 4,312                 3,954
        —                      —                  545                    —                     —                  707
  (4,319)                (2,661)              (3,625)                    —                     —                    —
      389                 1,005                   564                  738                1,409                   862
      585                  (486)                  207                    —                     —                    —
      909                  (149)                 (881)                  (35)                   62                 396
      676                   708                   364                  666                  (880)               4,804
  (2,268)                (5,062)               3,446                     —                     —                    —
        —                      —                   —                1,679                 9,454                 8,194
        —                      —                   —                3,752                 3,084                 2,481
     (913)                 (590)                  530               2,215                   (556)              (8,688)
 12,925                 10,097               17,197               21,448                 21,511               18,296



  (2,158)                (2,386)              (2,876)              (7,609)              (11,670)             (13,518)
        —                      —                   —                4,945                 6,357                 7,591
        —                      —                   —             (14,273)               (18,082)             (13,837)
  (3,870)                (8,952)              (1,436)            (10,537)               (12,618)             (10,993)
        —                (6,300)              (3,043)                    —                     —                    —
      236                   203                1,508                9,788               (15,234)               (7,741)
  (5,792)              (17,435)               (5,847)            (17,686)               (51,247)             (38,498)



  (6,704)                 7,924                   327              (4,035)              (34,687)              23,634
   7,356                       66              1,303              59,939                 96,044               30,752
     (277)               (1,229)                 (950)           (42,878)               (39,225)             (36,051)
      726                  (985)              (2,435)                    —                     —                    —
  (7,643)                (7,157)              (6,358)              (3,435)               (1,965)               (1,961)
        —                      —                   —               (9,998)               10,173                 5,090
  (6,542)                (1,381)              (8,113)                 (407)              30,340               21,464


      591                (8,719)               3,237                3,355                    604                1,262
   1,079                  9,798                6,561                7,918                 7,314                 6,052
$÷1,670               $÷1,079               $÷9,798            $«11,273               $«««7,918             $«««7,314


$««««(248)            $««««(155)            $««««(358)         $(10,313)              $÷(9,499)             $(10,767)
  (2,685)                (2,331)              (1,616)               1,146                 1,383                   129

In the consolidating data on this page, “GE” means the basis of consolidation as described in note 1 to the consoli-
dated financial statements; “GECS” means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the “General Electric Company and
consolidated affiliates” columns on page 74.




                                                                                                                          ge 2003 annual ≥epo≥t   75
     notes to consolidated financial statements




     NOTE 1                                                                     Sales of goods in the Consumer Products, Industrial Systems,
     summa≥y of significant accounting policies                              IT Solutions, Plastics, Specialty Materials and Supply businesses
                                                                            typically do not include multiple product and/or service elements,
     Consolidation
                                                                            in contrast with sales in certain of the businesses referred to
     Our financial statements consolidate all of our affiliates — companies   below. Consumer lighting products and computer hardware and
     that we control and in which we hold a majority voting interest. In    software are often sold with a right of return. Accumulated expe-
     2003, as we describe on page 79, we added certain non-affiliates        rience is used to estimate and provide for such returns when we
     that we do not control to our consolidated financial statements         record the sale.
     because of new accounting requirements that require consolidation          Sales of goods in the Aircraft Engines, Medical Systems, Power
     of entities based on holding qualifying residual interests.            Systems, Transportation Systems and certain Industrial Systems
         Associated companies are companies that we do not control          businesses sometimes include multiple components and some-
     but over which we have significant influence, most often because         times include services such as installation. In such contracts,
     we hold a shareholder voting position of 20% to 50%. Results of        amounts assigned to each component are based on that compo-
     associated companies are presented on a “one-line” basis.              nent’s objectively determined fair value, such as the sales price for
                                                                            the component when it is sold separately or competitor prices for
     Financial statement presentation
                                                                            similar components. Sales are recognized individually for deliv-
     We have reclassified certain prior-year amounts to conform to
                                                                            ered components only if undelivered components are not essential
     this year’s presentation.
                                                                            to functionality of delivered components, fair values of delivered
         Financial data and related measurements are presented in the
                                                                            components have been objectively determined, and the delivered
     following categories:
                                                                            components have value to the customer on a standalone basis.
     •   GE This represents the adding together of all affiliates            However, when undelivered components are inconsequential or
         other than General Electric Capital Services, Inc. (GECS),         perfunctory and not essential to the functionality of the delivered
         whose operations are presented on a one-line basis.                components (like certain training commitments), we recognize
                                                                            sales on the total contract and make provision for the cost of the
     •   GECS This affiliate owns all of the common stock of
                                                                            incomplete elements.
         General Electric Capital Corporation (GE Capital) and
                                                                                We record sales of product services and certain power genera-
         GE Global Insurance Holding Corporation (GE Global
                                                                            tion equipment in accordance with contracts. For long-term product
         Insurance Holding), the parent of Employers Reinsurance
                                                                            services agreements, we use estimated contract profit rates to
         Corporation (ERC). GE Capital, GE Global Insurance Holding
                                                                            record sales as work is performed. For certain power generation
         and their respective affiliates are consolidated in the GECS
                                                                            equipment, we use estimated contract profit rates to record sales
         columns and constitute its business.
                                                                            as major components are completed and delivered to customers.
     •   CONSOLIDATED This represents the adding together of
                                                                            Estimates are subject to revisions; revisions that affect an agree-
         GE and GECS.                                                       ment’s total estimated profitability result in an immediate adjust-
     Effects of transactions between related companies are eliminated.      ment of earnings. We provide for probable losses. We expense costs
     Transactions between GE and GECS are immaterial and consist            to acquire or originate sales agreements as incurred.
     primarily of GECS services for material procurement and trade              Sales by NBC are recorded when advertisements are broadcast,
     receivables management, aircraft engines and medical equipment         with provision made for any shortfalls from viewer commitments
     manufactured by GE that are leased by GECS to others, buildings        (“make goods”) based on specific contracts and independent viewer
     and equipment leased by GE from GECS, and GE investments in            census information.
     GECS commercial paper.
                                                                            GECS revenues from services (earned income)
        Preparing financial statements in conformity with generally
                                                                            We use the interest method to recognize income on all loans.
     accepted accounting principles requires us to make estimates and
                                                                            Interest on time sales and loans includes origination, commit-
     assumptions that affect reported amounts and related disclosures.
                                                                            ment and other non-refundable fees related to funding (recorded
     Actual results could differ from those estimates.
                                                                            in earned income on the interest method). Nonearning loans are
     Sales of goods and services                                            loans on which we have stopped accruing interest at the earlier of
     We record sales of goods when a firm sales agreement is in place,       the time at which collection of an account becomes doubtful or
     delivery has occurred and collectibility of the fixed or deter-         the account becomes 90 days past due. We recognize interest
     minable sales price is reasonably assured. If customer acceptance      income on nonearning loans either as cash is collected or on a
     of products is not assured, sales are recorded only upon formal        cost-recovery basis as conditions warrant. We resume accruing
     customer acceptance.                                                   interest on nonearning, non-restructured Commercial Finance
                                                                            loans only when (a) payments are brought current according to




76   ge 2003 annual ≥epo≥t
                                                                                             notes to consolidated financial statements




the loan’s original terms and (b) future payments are reasonably         fication by portfolio and, when applicable, geography; collateral
assured. When we agree to restructured terms with the borrower,          type; credit class or program type; size of the loan balance; and
we resume accruing interest only when reasonably assured that            delinquency. In certain commercial loan and lease portfolios, we
we will recover full contractual payments, and pass underwriting         review all loans based on a number of monitored risk factors
reviews equivalent to those to which we subject new loans. We            other than size, including collateral value, financial performance
resume accruing interest on nonearning Consumer Finance loans            of the borrower, aging and bankruptcy. We stratify portfolios in
only upon receipt of the third consecutive minimum monthly               which we believe that it is informative to differentiate between
payment or the equivalent. Specific limits restrict the number of         small and large balance loans depending on geography and port-
times any particular type of delinquent loan may be categorized          folio. For loans deemed individually impaired, we determine
as non-delinquent and interest accrual resumed.                          allowances using the present values of expected future cash flows.
   We record financing lease income on the interest method to             If repossession is expected to be a source of repayment, we esti-
produce a level yield on funds not yet recovered. Estimated              mate the fair value of that collateral using independent appraisals
unguaranteed residual values of leased assets are based primarily        when necessary.
on periodic independent appraisals of the values of leased assets            Delinquencies are the clearest indication of a developing loss,
remaining at expiration of the lease terms. Significant assumptions       and we monitor delinquency rates closely in all of our portfolios.
we use in estimating residual values include estimated net cash          Experience is not available with new products; therefore, while we
flows over the remaining lease term, results of future remarketing,       are developing that experience, we set loss allowances based on
and future component part and scrap metal prices, discounted at          our experience with the most closely analogous products in our
an appropriate rate.                                                     portfolio. When we repossess collateral in satisfaction of a com-
   We recognize operating lease income on a straight-line basis          mercial loan, we write the receivable down against the allowance
over the terms of underlying leases.                                     for losses. We transfer the asset to “Other assets” and carry it at the
   Fees include commitment fees related to loans that we do not          lower of cost or estimated fair value less costs to sell.
expect to fund and line-of-credit fees. We record these fees in earned
                                                                         Cash and equivalents
income on a straight-line basis over the period to which they relate.
We record syndication fees in earned income at the time related          Debt securities with original maturities of three months or less
services are performed unless significant contingencies exist.            are included in cash equivalents unless designated as available for
   See below and page 78 for a discussion of income from invest-         sale and classified as investment securities.
ment and insurance activities.
                                                                         Investment securities
Depreciation and amortization                                            We report investments in debt and marketable equity securities,
The cost of GE manufacturing plant and equipment is depreciated          and equity securities at our insurance affiliates, at fair value based
over its estimated economic life. U.S. assets are depreciated using      on quoted market prices or, if quoted prices are not available, dis-
an accelerated method based on a sum-of-the-years digits formula;        counted expected cash flows using market rates commensurate
non-U.S. assets are depreciated on a straight-line basis.                with credit quality and maturity of the investment. Substantially
    The cost of GECS equipment leased to others on operating             all investment securities are designated as available for sale with
leases is amortized on a straight-line basis to estimated residual       unrealized gains and losses included in shareowners’ equity, net
value over the lease term or over the estimated economic life of the     of applicable taxes and other adjustments. We regularly review
equipment. See note 15.                                                  investment securities for impairment based on criteria that include
                                                                         the extent to which the investment’s carrying value exceeds its
Losses on financing receivables                                           related market value, the duration of the market decline, our
Our allowance for losses on financing receivables represents our          ability to hold to recovery and the financial strength and specific
best estimate of probable losses inherent in the portfolio. Our          prospects of the issuer of the security. Unrealized losses that are
method of calculating estimated losses depends on the size, type         other than temporary are recognized in earnings. Realized gains
and risk characteristics of the related receivables.                     and losses are accounted for on the specific identification method.
    Our consumer loan portfolio consists of homogeneous card
                                                                         Inventories
receivables, installment loans, auto loans and leases and residen-
tial mortgages. The allowance for losses on these receivables is         All inventories are stated at the lower of cost or realizable values.
based on ongoing statistical analyses of our historical experience       Cost for substantially all of GE’s U.S. inventories is determined on
adjusted for the effects of economic cycles.                             a last-in, first-out (LIFO) basis. Cost of other GE inventories is
    Our allowance for losses on our commercial and equipment             determined on a first-in, first-out (FIFO) basis. GECS inventories
loan and lease portfolios is based on relevant observable data that      consist of finished products held for sale. Cost is determined on a
include, but are not limited to, historical experience; loan strati-     FIFO basis.




                                                                                                                      ge 2003 annual ≥epo≥t        77
     notes to consolidated financial statements




     Intangible assets                                                           against the policyholder’s account, mostly for mortality,
     As of January 1, 2002, goodwill is no longer amortized but is tested        contract initiation, administration and surrender. Investment
     for impairment using a fair value approach, at the “reporting unit”         contracts are contracts that have neither significant mortality
     level. A reporting unit is the operating segment, or a business one         nor significant morbidity risk, including annuities payable
     level below that operating segment (the “component” level) if dis-          for a determined period; for these contracts, we recognize
     crete financial information is prepared and regularly reviewed by            revenues on the associated investments and amounts credited
     management at the component level. We recognize an impairment               to policyholder accounts are charged to expense.
     charge for any amount by which the carrying amount of a reporting
                                                                              LIABILITIES FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES
     unit’s goodwill exceeds its fair value. We use discounted cash flows
                                                                              represent our best estimate of the ultimate obligations for reported
     to establish fair values. When available and as appropriate, we use
                                                                              claims plus those IBNR and the related estimated claim settle-
     comparative market multiples to corroborate discounted cash
                                                                              ment expenses for all claims incurred through December 31 of
     flow results. When a business within a reporting unit is disposed
                                                                              each year. Specific reserves — also referred to as case reserves —
     of, goodwill is allocated to the gain or loss on disposition using the
                                                                              are established for reported claims using case-basis evaluations of
     relative fair value methodology.
                                                                              the underlying claim data and are updated as further information
         We amortize the cost of other intangibles over their estimated
                                                                              becomes known. IBNR reserves are determined using generally
     useful lives unless such lives are deemed indefinite. Amortizable
                                                                              accepted actuarial reserving methods that take into account his-
     intangible assets are tested for impairment based on undiscounted
                                                                              torical loss experience data and, as appropriate, certain qualitative
     cash flows and, if impaired, written down to fair value based on
                                                                              factors. IBNR reserves are adjusted to take into account certain
     either discounted cash flows or appraised values. Intangible assets
                                                                              additional factors that can be expected to affect the liability for
     with indefinite lives are tested annually for impairment and written
                                                                              claims over time, such as changes in the volume and mix of busi-
     down to fair value as required.
                                                                              ness written, revisions to contract terms and conditions, changes
         Before January 1, 2002, we amortized goodwill over its estimat-
                                                                              in legal precedents or developed case law, trends in healthcare
     ed period of benefit on a straight-line basis; we amortized other
                                                                              and medical costs, and general inflation levels. Settlement of
     intangible assets on appropriate bases over their estimated lives. No
                                                                              complex claims routinely involves threatened or pending litigation
     amortization period exceeded 40 years. When an intangible asset’s
                                                                              to resolve disputes as to coverage, interpretation of contract terms
     carrying value exceeded associated expected operating cash flows,
                                                                              and conditions or fair compensation for damages suffered. These
     we considered it to be impaired and wrote it down to fair value,
                                                                              disputes are settled through negotiation, arbitration or actual
     which we determined based on either discounted future cash flows
                                                                              litigation. Recorded reserves incorporate our best estimate of the
     or appraised values.
                                                                              effect that ultimate resolution of such disputes have on both
     GECS insurance accounting policies                                       claims payments and related settlement expenses. Liabilities for
                                                                              unpaid claims and claims adjustment expenses are continually
     Accounting policies for GECS insurance businesses follow.
                                                                              reviewed and adjusted; such adjustments are included in current
     PREMIUM INCOME.     We report insurance premiums as earned income        operations and accounted for as changes in estimates.
     as follows:
                                                                              DEFERRED ACQUISITION COSTS.    Costs that vary with and are directly
     • For short-duration insurance contracts (including property             related to the acquisition of new and renewal insurance and invest-
        and casualty, accident and health, and financial guaranty              ment contracts are deferred and amortized as follows:
        insurance), we report premiums as earned income, generally
        on a pro-rata basis, over the terms of the related agreements.        • Short-duration contracts — Acquisition costs consist of
                                                                                 commissions, brokerage expenses and premium taxes and
        For retrospectively rated reinsurance contracts, we record
                                                                                 are amortized ratably over the contract periods in which
        premium adjustments based on estimated losses and loss
                                                                                 the related premiums are earned.
        expenses, taking into consideration both case and incurred-
        but-not-reported (IBNR) reserves.                                     • Long-duration contracts — Acquisition costs consist of
                                                                                 first-year commissions in excess of recurring renewal
     • For traditional long-duration insurance contracts (including
                                                                                 commissions, certain variable sales expenses and certain
        term and whole life contracts and annuities payable for the
                                                                                 support costs such as underwriting and policy issue expenses.
        life of the annuitant), we report premiums as earned income
                                                                                 For traditional long-duration insurance contracts, we amortize
        when due.
                                                                                 these costs over the respective contract periods in proportion
     • For investment contracts and universal life contracts, we                 to either anticipated premium income, or, in the case of
        report premiums received as liabilities, not as revenues.
                                                                                 limited-payment contracts, estimated benefit payments.
        Universal life contracts are long-duration insurance
                                                                                 For investment contracts and universal life contracts,
        contracts with terms that are not fixed and guaranteed;
                                                                                 amortization of these costs is based on estimated gross
        for these contracts, we recognize revenues for assessments
                                                                                 profits and is adjusted as those estimates are revised.




78   ge 2003 annual ≥epo≥t
                                                                                                       notes to consolidated financial statements




We review deferred acquisition costs periodically for recoverability          Statement of Financial Accounting Standards (SFAS) 143,
considering anticipated investment income.                                Accounting for Asset Retirement Obligations, became effective for
                                                                          us on January 1, 2003. Under SFAS 143, obligations associated
PRESENT VALUE OF FUTURE PROFITS.      The actuarially determined
                                                                          with the retirement of long-lived assets are recorded when there is
present value of anticipated net cash flows to be realized from
                                                                          a legal obligation to incur such costs. This amount is accounted for
insurance, annuity and investment contracts in force at the date of
                                                                          like an additional element of cost, and, like other cost elements, is
acquisition of life insurance policies is recorded as the present
                                                                          depreciated over the corresponding asset’s useful life. SFAS 143
value of future profits and is amortized over the respective policy
                                                                          primarily affects our accounting for costs associated with the
terms in a manner similar to deferred acquisition costs. We adjust
                                                                          future retirement of facilities used for storage and production of
unamortized balances to reflect experience and impairment, if any.
                                                                          nuclear fuel. On January 1, 2003, we recorded a one-time, non-
Accounting changes                                                        cash transition charge of $330 million ($215 million after tax, or
We adopted Financial Accounting Standards Board (FASB)                    $0.02 per share) which is reported in the caption “Cumulative
Interpretation No. (FIN) 46, Consolidation of Variable Interest           effect of accounting changes.”
Entities, on July 1, 2003, and consolidated certain entities in our           In 2002, we adopted SFAS 142, Goodwill and Other Intangible
financial statements for the first time. New balance sheet cap-             Assets, under which goodwill is no longer amortized but is tested
tions, “Consolidated, liquidating securitization entities,” included      for impairment using a fair value methodology. Using the required
$36.3 billion of assets and $35.8 billion of liabilities at transition    reporting unit basis, we tested all of our goodwill for impairment
related to entities involved in securitization arrangements. Given        as of January 1, 2002, and recorded a non-cash charge of $1.204
their unique nature and the fact that their activities have been          billion ($1.015 billion after tax, or $0.10 per share). Substantially
discontinued, they are classified in separate financial statement           all of the charge related to the GECS IT Solutions business and the
captions. Further information about these entities is provided in         GECS U.S. Auto and Home business. Factors contributing to the
note 29. In addition, $14.1 billion and $1.0 billion were added to        impairment charge were the difficult economic environment in the
“Investment securities” and “Other GECS receivables,” respectively,       information technology sector and heightened price competition
at transition for investment securities related to guaranteed invest-     in the auto insurance industry. No impairment charge had been
ment contracts (GICs) issued by Trinity, a group of sponsored             required under our previous goodwill impairment policy, which
special purpose entities. The related GIC liabilities of $14.7 billion,   was based on undiscounted cash flows.
consolidated at transition, are displayed in “Insurance liabilities,          Also in 2002, we adopted the stock option expense provisions
reserves and annuity benefits.” As issuance of GICs by these entities      of SFAS 123, Accounting for Stock-Based Compensation. A com-
is likely to continue in the future, we have displayed these invest-      parison of reported and pro-forma net earnings, including effects
ment securities in financial statement captions consistent with like       of expensing stock options, follows.
items of our Insurance businesses. Our consolidation of these             (In millions; per-share amounts in dollars)        2003               2002                2001
entities resulted in a $372 million after-tax accounting charge
                                                                          Net earnings, as reported                     $15,002            $14,118            $13,684
($0.04 per share) to net earnings and is reported in the caption
                                                                          Earnings per share,
“Cumulative effect of accounting changes.” This charge resulted             as reported
from several factors. For entities consolidated based on carrying             Diluted                                       1.49                1.41                1.37
amounts, the effect of changes in interest rates resulted in transi-          Basic                                         1.50                1.42                1.38
tion losses on interest rate swaps that did not qualify for hedge         Stock option expense
accounting before transition. Losses also arose from the FIN 46             included in net earnings                           81                 27                 —
requirement to record carrying amounts of assets in certain secu-         Total stock option
ritization entities as if those entities had always been consolidated,      expense (a)                                      315                330                 296
                                                                          PRO-FORMA EFFECTS
requiring us to eliminate certain previously recognized gains.
                                                                          Net earnings, on
For certain other entities that we were required to consolidate at
                                                                            pro-forma basis                              14,768             13,815                13,388
their July 1, 2003, fair values, we recognized a loss on consolida-
                                                                          Earnings per share, on
tion because their liabilities, including the fair value of interest        pro-forma basis
rate swaps, exceeded independently appraised fair values of the               Diluted                                       1.47                1.38                1.33
related assets.                                                               Basic                                         1.47                1.39                1.35

                                                                          (a)   As if we had applied SFAS 123 to expense stock options in all periods. Includes
                                                                                amounts we actually recognized in 2003 and 2002 earnings.




                                                                                                                                      ge 2003 annual ≥epo≥t                79
     notes to consolidated financial statements




         In 2001, we adopted SFAS 133, Accounting for Derivative                 For insurance businesses, the effects of reinsurance on premiums
     Instruments and Hedging Activities, as amended. Under SFAS                  written and premiums earned were as follows:
     133, all derivative instruments are recognized in the balance sheet
                                                                                 (In millions)                      2003          2002          2001
     at their fair values. Further information about derivatives and
     hedging is provided in note 28. The cumulative transition effect            PREMIUMS WRITTEN

     of adopting this accounting change at January 1, 2001, was a                Direct                         $11,640       $11,659       $««9,958
                                                                                 Assumed                          9,616         9,409          9,603
     $324 million ($0.03 per share) reduction of net earnings and
                                                                                 Ceded                           (2,654)       (4,069)        (3,718)
     $827 million reduction in equity.
                                                                                 Total                          $18,602       $16,999       $15,843
         Also in 2001, we adopted Emerging Issues Task Force (EITF)
                                                                                 PREMIUMS EARNED
     Issue 99-20. Under this consensus, impairment of certain retained
                                                                                 Direct                         $11,433       $10,922       $««9,912
     interests in securitized assets must be recognized when (a) the asset’s
                                                                                 Assumed                          9,964         9,569          9,471
     fair value is below its carrying value, and (b) it is probable that there
                                                                                 Ceded                           (2,751)       (4,007)        (3,749)
     has been an adverse change in estimated cash flows. The cumulative
                                                                                 Total                          $18,646       $16,484       $15,634
     effect of adopting EITF 99-20 at January 1, 2001, was a one-time
     reduction of net earnings of $120 million ($0.01 per share).
                                                                                 NOTE 4
     NOTE 2
                                                                                 supplemental cost info≥mation
     ge othe≥ income
                                                                                 Total expenditures for research and development were $2,656
     (In millions)                         2003            2002           2001   million, $2,631 million and $2,349 million in 2003, 2002 and
     Licensing and royalty                                                       2001, respectively. The portion we funded was $2,103 million in
       income                             $135          $÷«103          $«÷75    2003, $2,215 million in 2002 and $1,980 million in 2001.
     Associated companies                  118            (170)          (106)
     Marketable securities and                                                   Rental expense under operating leases is shown below.
       bank deposits                         75             31            184
     Bravo exchange                          —             571             —     (In millions)                      2003          2002          2001

     Global eXchange Services                                                    GE                                $733           $773       $÷«694
       gain                                  —             488             —     GECS                               893            977        1,006
     Other items                            317             83            280
     Total                                $645          $1,106          $«433
                                                                                 At December 31, 2003, minimum rental commitments under
                                                                                 noncancelable operating leases aggregated $2,764 million and
     NOTE 3                                                                      $4,354 million for GE and GECS, respectively. Amounts payable
                                                                                 over the next five years follow.
     gecs ≥evenues f≥om se≥vices
                                                                                 (In millions)        2004       2005      2006      2007       2008
     (In millions)                         2003            2002           2001
                                                                                 GE                  $568       $466       $375      $298      $240
     Premiums earned by
                                                                                 GECS                 759        627        539       509       418
       insurance businesses            $18,646         $16,484        $15,634
     Interest on time sales
       and loans                        16,495          14,068         12,136    GE’s selling, general and administrative expense totaled $9,870
     Operating lease rentals             7,199           6,879          6,762    million in 2003, $9,131 million in 2002 and $8,637 million in
     Investment income                   6,468           5,570          6,593    2001. Capitalized interest is insignificant in 2003, 2002 and 2001.
     Financing leases                    4,077           4,441          4,346
     Fees                                3,349           2,943          2,535
                                                                                 We recorded restructuring charges of $270 million ($354 million
     Other income                        5,122           5,018          7,223
                                                                                 including other related charges) in 2002 to rationalize certain
     Total                             $61,356         $55,403        $55,229
                                                                                 operations and facilities of GE’s worldwide industrial businesses.
                                                                                 Major elements of these restructuring programs included costs
                                                                                 for employee severance, lease termination, dismantlement, and
                                                                                 other exit costs. These programs were essentially completed by
                                                                                 the end of 2003.




80   ge 2003 annual ≥epo≥t
                                                                                                                       notes to consolidated financial statements




NOTE 5                                                                                        We amortize experience gains and losses, as well as the effects
≥eti≥ee health and life benefits                                                           of changes in actuarial assumptions and plan provisions, over a
                                                                                          period no longer than the average future service of employees.
We sponsor a number of retiree health and life insurance benefit
plans (retiree benefit plans). Principal retiree benefit plans are                          FUNDING POLICY for retiree health benefits is generally to pay cov-
discussed below; other such plans are not significant individually                         ered expenses as they are incurred. We fund retiree life insurance
or in the aggregate.                                                                      benefits at our discretion. Under the provisions of these plans, we
                                                                                          expect to contribute approximately $640 million in 2004 to
PRINCIPAL RETIREE BENEFIT PLANS   generally provide health and life
                                                                                          cover unfunded healthcare benefits.
insurance benefits to employees who retire under the GE Pension
                                                                                              Changes in the accumulated postretirement benefit obligation
Plan (see note 6) with 10 or more years of service. Retirees share
                                                                                          for retiree benefit plans follow.
in the cost of healthcare benefits. Benefit provisions are subject to
collective bargaining. These plans cover approximately 250,000                            ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION (APBO)
retirees and dependents. Our principal retiree benefit plans have                          (In millions)                                                          2003                 2002

a December 31 measurement date.                                                           Balance at January 1                                               $7,435             $6,796
    The effect on operations of principal retiree benefit plans is                         Service cost for benefits earned                                       307                277
shown in the following table.                                                             Interest cost on benefit obligation                                    535                469
                                                                                          Participant contributions                                              33                 32
EFFECT ON OPERATIONS
                                                                                          Plan amendments (a)                                                 2,483                     (60)
(In millions)                                      2003             2002          2001
                                                                                          Actuarial (gain) loss                                                (416)                   567
Expected return on plan assets                 $÷(159)             $(170)        $(185)   Benefits paid                                                         (720)                  (687)
Service cost for benefits earned                   307                277           191    Other                                                                  44                      41
Interest cost on benefit obligation                535                469           459    Balance at December 31 (b)                                         $9,701             $7,435
Prior service cost                                191                 96            90
                                                                                          (a)   For 2003, associated with changes in retiree benefit plans resulting from collective
Net actuarial loss recognized                     127                 78            60
                                                                                                bargaining agreements that extend through June 2007.
Retiree benefit plans cost                      $1,001              $«750         $«615    (b)   The APBO for the retiree health plans was $7,514 million and $5,458 million at year-end
                                                                                                2003 and 2002, respectively.


ACTUARIAL ASSUMPTIONS.    The discount rate at December 31 was
                                                                                          Increasing or decreasing the healthcare cost trend rates by one
used to measure the year-end benefit obligations and the earnings
                                                                                          percentage point would have had an insignificant effect on the
effects for the subsequent year. Actuarial assumptions used to
                                                                                          December 31, 2003, accumulated postretirement benefit obliga-
determine benefit obligations and earnings effects for principal
                                                                                          tion and the annual cost of retiree health plans. Our principal
retiree benefit plans follow.
                                                                                          retiree benefit plans are collectively bargained and have provisions
ACTUARIAL ASSUMPTIONS                                                                     that limit our per capita costs.
December 31                                   2003         2002          2001     2000

Discount rate (a)                              6.0%        6.75%        7.25%      7.5%
Compensation increases                           5            5            5         5
Expected return on assets                      8.5          8.5          9.5       9.5
Healthcare cost trend rate (b)                10.5           13           12        10

(a)   Weighted average discount rate for determination of 2003 costs was 6.4%.
(b)   For 2003, gradually declining to 5% after 2010.



To determine the expected long-term rate of return on retiree life
plan assets, we consider the current and expected asset allocations,
as well as historical and expected returns on various categories of
plan assets. We apply our expected rate of return to a market-
related value of assets, which reduces the underlying variability in
assets to which we apply that expected return.




                                                                                                                                                       ge 2003 annual ≥epo≥t                   81
     notes to consolidated financial statements




         Changes in the fair value of assets for retiree benefit plans                      Our recorded assets and liabilities for retiree benefit plans are
     follow.                                                                           as follows:

     FAIR VALUE OF ASSETS                                                              RETIREE BENEFIT ASSET/(LIABILITY)
     (In millions)                                              2003          2002     December 31 (In millions)                                             2003      2002

     Balance at January 1                                    $1,426       $1,771       Funded      status(a)                                            $(8,075)    $(6,009)
     Actual gain (loss) on plan assets                          309         (225)      Unrecognized prior service cost                                    3,045         753
     Employer contributions                                     565          535       Unrecognized net actuarial loss                                    1,584       2,277
     Participant contributions                                   33           32       Net liability recognized                                         $(3,446)    $(2,979)
     Benefits paid                                              (720)        (687)
                                                                                       Amounts recorded in the Statement
     Other                                                       13           —
                                                                                        of Financial Position:
     Balance at December 31                                  $1,626       $1,426          Prepaid retiree life plans asset                              $÷«÷«81     $÷÷««87
                                                                                              Retiree health plans liability                              (3,527)    (3,066)
     Plan assets are held in trust, as follows:                                        Net liability recognized                                         $(3,446)    $(2,979)

     PLAN ASSET ALLOCATION                                                             (a)   Fair value of assets less APBO, as shown in the preceding tables.
                                                      2003                  2002

                                             Target              Actual       Actual
     December 31                         allocation          allocation   allocation
                                                                                       The U.S. Medicare Prescription Drug, Improvement and Mod-
                                                                                       ernization Act of 2003 is not expected to have a significant effect
     Equity securities                    62-74%                   73%          64%
                                                                                       on our operations, obligations or cash flows.
     Debt securities                      20-26                    20           29
     Real estate                            1-5                     1           —
     Other                                  3-9                     6            7
     Total                                                       100%         100%


     Plan fiduciaries set investment policies and strategies for the trust.
     Long-term strategic investment objectives include preserving the
     funded status of the trust and balancing risk and return. The plan
     fiduciaries oversee the investment allocation process, which includes
     selecting investment managers, setting long-term strategic targets
     and monitoring asset allocations. Target allocation ranges are guide-
     lines, not limitations, and occasionally plan fiduciaries will approve
     allocations above or below a target range.
         Trust assets invested in short-term securities must be invested
     in securities rated A1/P1 or better. GE common stock represented
     5.4% and 4.8% of trust assets at year-end 2003 and 2002, respec-
     tively, and is subject to a statutory limit when it reaches 10% of
     total trust assets.




82   ge 2003 annual ≥epo≥t
                                                                                                                     notes to consolidated financial statements




NOTE 6                                                                                 To determine the expected long-term rate of return on pension
pension benefits                                                                        plan assets, we consider the current and expected asset allocations,
                                                                                       as well as historical and expected returns on various categories of
We sponsor a number of pension plans. Principal pension plans are
                                                                                       plan assets. We apply our expected rate of return to a market-
discussed below; other such plans are not significant individually or
                                                                                       related value of assets, which reduces the underlying variability in
in the aggregate. Principal pension plans constitute about 90% of
                                                                                       assets to which we apply that expected return.
global pension assets and obligations.
                                                                                           We amortize experience gains and losses, as well as the effects
PRINCIPAL PENSION PLANS are the GE Pension Plan and the GE                             of changes in actuarial assumptions and plan provisions, over a
Supplementary Pension Plan. These plans have a December 31                             period no longer than the average future service of employees.
measurement date.
                                                                                       FUNDING POLICY  for the GE Pension Plan is to contribute amounts
    The GE Pension Plan provides benefits to certain U.S. employ-
                                                                                       sufficient to meet minimum funding requirements as set forth in
ees based on the greater of a formula recognizing career earnings or
                                                                                       employee benefit and tax laws plus such additional amounts as we
a formula recognizing length of service and final average earnings.
                                                                                       may determine to be appropriate. We have not made contributions
Benefit provisions are subject to collective bargaining. The GE
                                                                                       to the GE Pension Plan since 1987; any such GE contribution
Pension Plan covers approximately 508,000 participants, includ-
                                                                                       would require payment of excise taxes and would not be deductible
ing 136,000 employees, 171,000 former employees with vested
                                                                                       for income tax purposes. We will not make any contributions to
rights to future benefits, and 201,000 retirees and beneficiaries
                                                                                       the GE Pension Plan in 2004. We expect to pay approximately
receiving benefits.
                                                                                       $100 million for GE Supplementary Pension Plan payments and
    The GE Supplementary Pension Plan is an unfunded plan
                                                                                       administrative expenses in 2004.
providing supplementary retirement benefits primarily to higher-
level, longer-service U.S. employees.                                                  BENEFIT OBLIGATIONS. Accumulated and projected benefit obliga-
    Details of the effect on operations of principal pension plans,                    tions (ABO and PBO) represent the obligations of a pension plan
and the total effect on cost of principal postretirement benefit                        for past service as of the measurement date. ABO is the present
plans, follow.                                                                         value of benefits earned to date with benefits computed based on
                                                                                       current compensation levels. PBO is ABO increased to reflect
EFFECT ON OPERATIONS
                                                                                       expected future compensation.
(In millions)                                2003               2002           2001
                                                                                           Changes in the PBO for principal pension plans follow.
Expected return on plan assets            $«4,072            $«4,084        $«4,327
Service cost for benefits earned (a)        (1,213)            (1,107)          (884)   PROJECTED BENEFIT OBLIGATION

Interest cost on benefit obligation         (2,180)            (2,116)        (2,065)   (In millions)                                                       2003               2002

Prior service cost                           (248)              (217)          (244)   Balance at January 1                                           $33,266            $30,423
Net actuarial gain recognized                 609                912            961    Service cost for benefits earned (a)                              1,213              1,107
Income from pensions                        1,040             1,556          2,095     Interest cost on benefit obligation                               2,180              2,116
Retiree benefit plans cost (note 5)         (1,001)              (750)          (615)   Participant contributions                                          169                158
Net cost reductions from principal                                                     Plan amendments                                                    654                  9
      postretirement benefit plans         $÷÷÷39             $÷÷806         $«1,480    Actuarial loss (b)                                               2,754              1,650
                                                                                       Benefits paid                                                    (2,409)            (2,197)
(a)   Net of participant contributions.                                                Balance at December 31 (c)                                     $37,827            $33,266

                                                                                       (a)   Net of participant contributions.
ACTUARIAL ASSUMPTIONS.  The discount rate at December 31 was
                                                                                       (b)   Principally associated with discount rate changes.
used to measure the year-end benefit obligations and the earnings                       (c)   The PBO for the GE Supplementary Pension Plan was $2.7 billion and $2.2 billion at
effects for the subsequent year. Actuarial assumptions used to                               year-end 2003 and 2002, respectively.
determine benefit obligations and earnings effects for principal
pension plans follow.                                                                  ABO balances for principal pension plans follow.
ACTUARIAL ASSUMPTIONS
                                                                                       ACCUMULATED BENEFIT OBLIGATION
December 31                               2003       2002           2001       2000
                                                                                       December 31 (In millions)                                           2003               2002
Discount rate                             6.0%       6.75%          7.25%       7.5%
                                                                                       GE Pension Plan                                                $33,859            $29,698
Compensation increases                      5           5              5          5
                                                                                       GE Supplementary Pension Plan                                    1,619              1,296
Expected return on assets                 8.5         8.5            9.5        9.5
                                                                                       Total                                                          $35,478            $30,994




                                                                                                                                                  ge 2003 annual ≥epo≥t              83
     notes to consolidated financial statements




     Changes in the fair value of assets for principal pension plans follow.               Trust assets are invested subject to the following policy restric-
                                                                                        tions: short-term securities must be rated A1/P1 or better; invest-
     FAIR VALUE OF ASSETS
                                                                                        ments in real estate —7% of trust assets at year end — may not
     (In millions)                                              2003           2002
                                                                                        exceed 25%; other investments in securities that are not freely
     Balance at January 1                                $37,811          $45,006       tradable — 11% of trust assets at year end — may not exceed 20%.
     Actual gain (loss) on plan assets                     8,203           (5,251)      GE common stock represented 6.3% and 6.0% of trust assets at
     Employer contributions                                  105               95
                                                                                        year-end 2003 and 2002, respectively, and is subject to a statutory
     Participant contributions                               169              158
                                                                                        limit when it reaches 10% of total trust assets.
     Benefits paid                                         (2,409)          (2,197)
                                                                                           Our recorded assets and liabilities for principal pension plans
     Balance at December 31                              $43,879          $37,811
                                                                                        are as follows:

     The GE Pension Plan’s assets are held in trust, as follows:                        PREPAID PENSION ASSET/(LIABILITY)
                                                                                        December 31 (In millions)                                                2003      2002
     PLAN ASSET ALLOCATION
                                                                                        Funded      status (a)                                           $÷6,052        $÷4,545
                                                      2003                   2002
                                                                                        Unrecognized prior service cost                                    1,571          1,165
                                             Target              Actual        Actual
     December 31                         allocation          allocation    allocation   Unrecognized net actuarial loss                                     7,588         8,356
                                                                                        Net asset recognized                                             $15,211        $14,066
     Equity securities                   51-63%                    60%           56%
     Debt securities                     21-27                     20            26     Amounts recorded in the Statement of
     Real estate                           4- 8                     7             6      Financial Position:
     Private equities                     5-11                      7             7        Prepaid pension asset                                         $17,038        $15,611
     Other                                 3-7                      6             5            Supplementary Pension Plan liability                        (1,827)       (1,545)

     Total                                                       100%          100%     Net asset recognized                                             $15,211        $14,066

                                                                                        (a)   Fair value of assets less PBO, as shown in the preceding tables.
     Plan fiduciaries set investment policies and strategies for the GE
     Pension Trust. Long-term strategic investment objectives include
     preserving the funded status of the trust and balancing risk and
     return. The plan fiduciaries oversee the investment allocation
     process, which includes selecting investment managers, commis-
     sioning periodic asset-liability studies, setting long-term strategic
     targets and monitoring asset allocations. Target allocation ranges
     are guidelines, not limitations, and occasionally plan fiduciaries
     will approve allocations above or below a target range.




84   ge 2003 annual ≥epo≥t
                                                                                                 notes to consolidated financial statements




NOTE 7                                                                        $1,061 million and $1,225 million in 2003, 2002 and 2001,
p≥ovision fo≥ income taxes                                                    respectively. Consolidated deferred tax expense related to U.S.
                                                                              federal income taxes was $685 million, $2,112 million and $1,455
(In millions)                              2003     2002            2001
                                                                              million in 2003, 2002 and 2001, respectively.
GE                                                                                Deferred income tax balances reflect the effects of temporary
Current tax expense                    $2,468     $2,833        $3,632        differences between the carrying amounts of assets and liabilities
Deferred tax expense from
                                                                              and their tax bases and are stated at enacted tax rates expected to
 temporary differences                     389     1,004            561
                                                                              be in effect when taxes are actually paid or recovered. See note 21
                                         2,857     3,837          4,193
                                                                              for details.
GECS
                                                                                  We have not provided U.S. deferred taxes on cumulative earn-
Current tax expense (benefit)               720    (1,488)           517
                                                                              ings of non-U.S. affiliates and associated companies that have been
Deferred tax expense from
                                                                              reinvested indefinitely. These earnings relate to ongoing operations
 temporary differences                     738     1,409            863
                                                                              and, at December 31, 2003, were approximately $21 billion.
                                         1,458       (79)         1,380
                                                                              Because of the availability of U.S. foreign tax credits, it is not
CONSOLIDATED
                                                                              practicable to determine the U.S. federal income tax liability that
Current tax expense                      3,188     1,345          4,149
                                                                              would be payable if such earnings were not reinvested indefinitely.
Deferred tax expense from
                                                                              Deferred taxes are provided for earnings of non-U.S. affiliates and
 temporary differences                   1,127     2,413          1,424
                                                                              associated companies when we plan to remit those earnings.
Total                                  $4,315     $3,758        $5,573
                                                                                  Consolidated U.S. income before taxes and the cumulative
                                                                              effect of accounting changes was $11.2 billion in 2003, $12.0 bil-
GE and GECS file a consolidated U.S. federal income tax return.                lion in 2002 and $13.9 billion in 2001. The corresponding
The GECS provision for current tax expense includes its effect on             amounts for non-U.S.-based operations were $8.7 billion in
the consolidated return.                                                      2003, $6.9 billion in 2002 and $5.8 billion in 2001.
   Consolidated current tax expense includes amounts applicable                   A reconciliation of the U.S. federal statutory tax rate to the
to U.S. federal income taxes of $1,555 million, $137 million and              actual tax rate is provided below.
$2,514 million in 2003, 2002 and 2001, respectively, and
amounts applicable to non-U.S. jurisdictions of $1,304 million,

RECONCILIATION OF U.S. FEDERAL STATUTORY TAX RATE TO ACTUAL TAX RATE

                                                               Consolidated                         GE                            GECS

                                                       2003        2002        2001      2003      2002       2001     2003       2002       2001

Statutory U.S. federal income tax rate                 35.0%      35.0%       35.0%     35.0%      35.0%     35.0%     35.0%      35.0%     35.0%
Increase (reduction) in rate resulting from:
  Inclusion of after-tax earnings of GECS
    in before-tax earnings of GE                         —           —           —     (14.7)      (8.5)     (10.7)       —         —          —
  Amortization of goodwill                               —           —          1.0       —          —         0.8        —         —         0.9
  Tax-exempt income                                    (1.1)       (1.2)       (1.3)      —          —          —       (2.4)     (5.1)      (3.8)
  Tax on international activities
    including exports                                  (9.0)      (10.6)       (5.4)     (4.3)     (5.2)      (3.2)   (10.8)     (22.5)      (6.7)
  Americom/Rollins goodwill                              —            —        (1.1)       —         —          —        —           —       (3.2)
  All other — net                                      (3.2)        (3.3)       0.1      (0.5)     (1.1)       1.0     (6.0))      (9.1)     (2.4)
                                                      (13.3)      (15.1)       (6.7)   (19.5)     (14.8)     (12.1)   (19.2)     (36.7)     (15.2)
Actual income tax rate                                 21.7%      19.9%       28.3%     15.5%      20.2%     22.9%     15.8%      (1.7) %   19.8%




                                                                                                                        ge 2003 annual ≥epo≥t        85
     notes to consolidated financial statements




     NOTE 8
     ea≥nings pe≥ sha≥e info≥mation
                                                                                        2003                                           2002                                  2001

     (In millions; per-share amounts in dollars)                             Diluted                  Basic                  Diluted             Basic             Diluted              Basic

     CONSOLIDATED OPERATIONS
     Earnings before accounting changes                                 $15,589                $15,589                 $15,133                $15,133          $14,128              $14,128
     Dividend equivalents — net of tax                                        1                     —                       13                     —                12                   —
     Earnings before accounting changes
       for per-share calculation                                          15,590                15,589                      15,146             15,133             14,140             14,128
     Cumulative effect of accounting changes                                 (587)                    (587)                 (1,015)            (1,015)              (444)               (444)
     Net earnings available for per-share calculation                   $15,003                $15,002                 $14,131                $14,118          $13,696              $13,684
     AVERAGE EQUIVALENT SHARES
     Shares of GE common stock outstanding                                10,019                10,019                       9,947              9,947              9,932              9,932
     Employee compensation-related shares,
       including stock options                                                     56                   —                       81                 —                 120                   —
     Total average equivalent shares                                      10,075                10,019                      10,028              9,947             10,052              9,932
     PER-SHARE AMOUNTS
     Earnings before accounting changes                                 $÷÷1.55                $÷÷1.56                 $÷÷1.51                $÷÷1.52          $÷÷1.41              $÷÷1.42
     Cumulative effect of accounting changes                              (0.06)                 (0.06)                  (0.10)                 (0.10)           (0.04)               (0.04)
     Net earnings per share                                             $÷÷1.49                $÷÷1.50                 $÷÷1.41                $÷÷1.42          $÷÷1.37              $÷÷1.38




     NOTE 9
     investment secu≥ities
                                                                               2003                                                                        2002

                                                                          Gross              Gross                                                    Gross             Gross
                                                          Amortized   unrealized        unrealized            Estimated           Amortized       unrealized       unrealized        Estimated
     December 31 (In millions)                                 cost       gains             losses             fair value              cost           gains            losses         fair value

     GE
     Debt — U.S. corporate                              $÷÷÷«350      $÷÷«—             $÷÷«(28)        $÷÷÷«322                $÷÷÷«350           $÷÷«—           $÷÷«(86)         $÷÷«««264
     Equity                                                   42          18                  (2)             58                      86               10              (28)                68
                                                              392           18                 (30)               380                   436              10            (114)              332
     GECS
     Debt
       U.S. corporate                                     50,779        2,558              (684)              52,653               55,489           2,416            (1,490)          56,415
       State and municipal                                12,707          382                (23)             13,066               12,147             358                (45)         12,460
       Mortgage-backed                                    13,441          271                (93)             13,619               12,285             438                (46)         12,677
       Asset-backed                                       12,471          250               (84)              12,637                7,081             126                (32)          7,175
       Corporate — non-U.S.                               14,720          557               (89)              15,188               13,396             529              (230)          13,695
       Government — non-U.S.                               8,558          169               (65)               8,662                8,147             291                (62)          8,376
       U.S. government and federal agency                  1,611           58               (19)               1,650                1,678              67                (18)          1,727
     Equity                                                2,593          393              (117)               2,869                4,333             165              (493)           4,005
                                                         116,880        4,638            (1,174)          120,344                114,556            4,390            (2,416)         116,530
     Total consolidated                                 $117,272      $4,656            $(1,204)        $120,724                $114,992           $4,400          $(2,530)         $116,862




86   ge 2003 annual ≥epo≥t
                                                                                                        notes to consolidated financial statements




    The following table presents the gross unrealized losses on, and                    A substantial portion of our mortgage-backed securities are
estimated fair value of, our investment securities, aggregated by                   collateralized by U.S. residential mortgages.
investment category and length of time that individual investment
                                                                                    CONTRACTUAL MATURITIES OF GECS INVESTMENT IN DEBT SECURITIES
securities have been in a continuous unrealized loss position, at                   (EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)
December 31, 2003.                                                                                                               Amortized     Estimated
                                                                                    (In millions)                                     cost      fair value
                               Less than 12 months          12 months or more
                                                                                    Due in
                                                 Gross                      Gross
                              Estimated     unrealized   Estimated     unrealized    2004                                        $÷7,220      $÷7,265
(In millions)                  fair value       losses    fair value       losses    2005–2008                                    20,445       20,895
Debt:                                                                                2009–2013                                    25,232       25,829
 U.S. corporate              $÷7,915          $(255)     $2,360          $(457))     2014 and later                               35,478       37,230
 State and municipal           1,620             (23)         2              —
 Mortgage-backed               4,299             (86)       135              (7))   We expect actual maturities to differ from contractual maturi-
 Asset-backed                  2,279             (26)     1,523             (58))   ties because borrowers have the right to call or prepay certain
 Corporate — non-U.S.          2,925             (71)       123             (18)
                                                                                    obligations.
 Government — non-U.S.         3,317             (60)        24              (5))
                                                                                        Supplemental information about gross realized gains and losses
 U.S. government and
   federal agency                  256           (19)           —               —
                                                                                    on investment securities follows.
Equity                             402           (81)         105           (38)    (In millions)                      2003          2002           2001
Total consolidated           $23,013          $(621)     $4,272          $(583)
                                                                                    GE
                                                                                    Gains                           $÷÷«÷3       $÷÷««—        $÷«236
                                                                                    Losses, including
Of the $583 million of investment securities in an unrealized loss
                                                                                      impairments                      (38)           (76)         (100)
position for twelve months or more, approximately $355 million
                                                                                      Net                              (35)           (76)          136
relates to securities collateralized by commercial aircraft, of which
                                                                                    GECS
approximately $288 million are enhanced equipment trust cer-
                                                                                    Gains                            1,322         1,578         1,800
tificates. Commercial aircraft positions are in a loss position as a
                                                                                    Losses, including
result of ongoing negative market reaction to commercial airline
                                                                                      impairments                     (914)       (1,277)          (838)
industry difficulties. We review all of our investment securities
                                                                                      Net                              408           301            962
routinely for other than temporary impairment as described on
                                                                                    Total                           $÷«373       $÷÷225        $1,098
page 77. In accordance with that policy, we provide for all amounts
that we do not expect either to collect in accordance with the
contractual terms of the instruments or to recover based on                         Proceeds from securities sales amounted to $36.4 billion, $46.4
underlying collateral values.                                                       billion and $40.0 billion in 2003, 2002 and 2001, respectively.




                                                                                                                              ge 2003 annual ≥epo≥t          87
     notes to consolidated financial statements




     NOTE 10                                                              LIFO revaluations increased $26 million in 2003, compared with
     ge cu≥≥ent ≥eceivables                                               decreases of $70 million in 2002 and $169 million in 2001.
                                                                          Included in the 2003 change was an increase of $3 million that
     December 31 (In millions)                      2003          2002
                                                                          resulted from higher LIFO inventory levels. Included in the 2002
     Aircraft Engines                           $÷1,782       $÷1,841     and 2001 changes were decreases of $21 million and $8 million,
     Consumer Products                              565           734     respectively, that resulted from lower LIFO inventory levels. Net
     Industrial Products and Systems                908         1,041
                                                                          costs increased in 2003 and decreased in 2002 and 2001. As of
     Medical Systems                              2,024         1,411
                                                                          December 31, 2003, we are obligated to acquire certain raw
     NBC                                            938           891
                                                                          materials at market prices through the year 2023 under various
     Plastics                                       651           821
     Power Systems                                3,644         3,754     take-or-pay or similar arrangements. Annual minimum commit-
     Specialty Materials                            470           421     ments under these arrangements are insignificant.
     Transportation Systems                         202           165
     Corporate items and eliminations               275           347
                                                                          NOTE 12
                                                  11,459        11,426
     Less allowance for losses                      (486)         (453)   gecs financing ≥eceivables (investments in
     Total                                      $10,973       $10,973
                                                                          time sales, loans and financing leases)
                                                                          December 31 (In millions)                         2003          2002

     Receivables balances at December 31, 2003 and 2002, before           COMMERCIAL FINANCE
     allowance for losses, included $6,746 million and $6,269 million,    Equipment                                   $÷60,370       $÷61,961
     respectively, from sales of goods and services to customers, and     Commercial and industrial                     39,383         36,512
     $226 million and $304 million, respectively, from transactions       Real estate                                   20,171         21,041
     with associated companies.                                           Commercial aircraft                           12,424         11,397

         Current receivables of $444 million at year-end 2003 and                                                      132,348        130,911
     $344 million at year-end 2002 arose from sales, principally of       CONSUMER FINANCE

     aircraft engine goods and services, on open account to various       Non-U.S. installment, revolving
     agencies of the U.S. government, which is our largest single           credit and other                             34,440        23,655
                                                                          Non-U.S. residential                           19,593         9,731
     customer. About 4% of our sales of goods and services were to the
                                                                          Non-U.S. auto                                  18,668        15,113
     U.S. government in 2003, 2002 and 2001.
                                                                          U.S. installment, revolving
                                                                            credit and other                             16,545        14,312
     NOTE 11                                                              Other                                           5,431         3,225
                                                                                                                         94,677        66,036
     invento≥ies
                                                                          Other, principally Equipment
     December 31 (In millions)                      2003          2002
                                                                            Management                                    5,260         6,613
     GE                                                                                                                232,285        203,560
     Raw materials and work in process            $4,530        $4,894    Less allowance for losses (note 13)            (6,256)        (5,500)
     Finished goods                                4,376         4,379    Total                                       $226,029       $198,060
     Unbilled shipments                              281           372
                                                   9,187         9,645
     Less revaluation to LIFO                       (632)         (606)   GECS financing receivables include both time sales and loans and
                                                   8,555         9,039    financing leases. Time sales and loans represents transactions in a
     GECS                                                                 variety of forms, including time sales, revolving charge and credit,
     Finished goods                                  197          208     mortgages, installment loans, intermediate-term loans and
     Total                                        $8,752        $9,247    revolving loans secured by business assets. The portfolio includes
                                                                          time sales and loans carried at the principal amount on which
                                                                          finance charges are billed periodically, and time sales and loans
                                                                          carried at gross book value, which includes finance charges.
                                                                             Investment in financing leases consists of direct financing
                                                                          and leveraged leases of aircraft, railroad rolling stock, autos,
                                                                          other transportation equipment, data processing equipment
                                                                          and medical equipment, as well as other manufacturing, power
                                                                          generation, commercial real estate, and commercial equipment
                                                                          and facilities.




88   ge 2003 annual ≥epo≥t
                                                                                                              notes to consolidated financial statements




    As the sole owner of assets under direct financing leases and                 leased equipment, less related deferred income. GECS has no gen-
as the equity participant in leveraged leases, GECS is taxed on                  eral obligation for principal and interest on notes and other instru-
total lease payments received and is entitled to tax deductions                  ments representing third-party participation related to leveraged
based on the cost of leased assets and tax deductions for interest               leases; such notes and other instruments have not been included
paid to third-party participants. GECS is generally entitled to any              in liabilities but have been offset against the related rentals receiv-
residual value of leased assets.                                                 able. The GECS share of rentals receivable on leveraged leases is
    Investment in direct financing and leveraged leases represents                subordinate to the share of other participants who also have secu-
net unpaid rentals and estimated unguaranteed residual values of                 rity interests in the leased equipment.
NET INVESTMENT IN FINANCING LEASES
                                                                        Total financing leases                  Direct financing leases             Leveraged leases

December 31 (In millions)                                                 2003                  2002             2003              2002          2003                 2002

Total minimum lease payments receivable                            $«87,400              $«88,640            $57,929           $56,779       $«29,471         $«31,861
Less principal and interest on third-party
  nonrecourse debt                                                   (22,144)              (24,249)                —                    —     (22,144)          (24,249)
    Net rentals receivable                                            65,256                64,391            57,929            56,779          7,327                7,612
Estimated unguaranteed residual value
  of leased assets                                                     9,733                 9,807             6,058             6,032          3,675                3,775
Less deferred income                                                 (13,496)              (13,947)           (9,720)            (9,998)       (3,776)           (3,949)
Investment in financing leases                                         61,493                60,251            54,267            52,813          7,226                7,438
Less amounts to arrive at net investment
    Allowance for losses                                                 (830)                (861)             (734)              (759)          (96)                (102)
     Deferred taxes                                                  (10,250)               (9,763)           (5,793)            (5,559)       (4,457)           (4,204)
Net investment in financing leases                                  $«50,413              $«49,627            $47,740           $46,495       $«÷2,673         $«÷3,132



CONTRACTUAL MATURITIES                                                           “Impaired” loans are defined by generally accepted accounting
                                             Total time sales   Net rentals      principles as large balance loans for which it is probable that the
(In millions)                                      and loans     receivable
                                                                                 lender will be unable to collect all amounts due according to orig-
Due in                                                                           inal contractual terms of the loan agreement. An analysis of
 2004                                          $÷55,044         $16,490
                                                                                 impaired loans follows.
 2005                                            28,020          13,272
 2006                                            23,249          10,148          December 31 (In millions)                                       2003                 2002
 2007                                            13,951           6,883
                                                                                 Loans requiring allowance for losses                          $÷«940            $1,140
 2008                                            12,650           4,066
                                                                                 Loans expected to be fully recoverable                         1,355               845
 2009 and later                                  37,878          14,397
                                                                                                                                               $2,295            $1,985
Total                                          $170,792         $65,256
                                                                                 Allowance for losses                                          $÷«378            $÷«397
                                                                                 Average investment during year                                 2,193             1,747
We expect actual maturities to differ from contractual maturities.
                                                                                 Interest income earned while impaired (a)                         33                   16

                                                                                 (a)   Recognized principally on cash basis.




                                                                                                                                            ge 2003 annual ≥epo≥t             89
     notes to consolidated financial statements




     NOTE 13                                                                                             NOTE 14
     gecs allowance fo≥ losses on                                                                        gecs insu≥ance ≥eceivables
     financing ≥eceivables                                                                                December 31 (In millions)                          2003       2002

     (In millions)                                       2003               2002                  2001
                                                                                                         Reinsurance recoverables                       $12,067    $13,551
     BALANCE AT JANUARY 1                                                                                Commercial mortgage loans                        6,164      5,358
     Commercial Finance                              $2,634             $2,513             $1,682        Premiums receivable                              4,510      5,314
     Consumer Finance                                 2,782              2,173              2,149        Residential mortgage loans                       1,258      1,919
     Other                                               84                106                195        Corporate and individual loans — Edison Life        —       1,801
                                                      5,500               4,792              4,026       Policy loans                                     1,245      1,539
                                                                                                         Funds on deposit with reinsurers                   623        830
     PROVISION CHARGED
                                                                                                         Other                                            1,407      1,552
           TO OPERATIONS
                                                                                                         Allowance for losses                              (221)      (279)
     Commercial Finance                                 883               1,092                756
     Consumer Finance                                 2,808               1,950              1,646       Total                                          $27,053    $31,585
     Other                                               61                  42                 79
                                                      3,752               3,084              2,481
     OTHER ADDITIONS (a)                                 648                704                   563
     GROSS WRITE-OFFS
     Commercial Finance                              (1,317)             (1,247)              (551))
     Consumer Finance                                (3,114)             (2,383)            (2,076))
     Other                                               (61)                (92)             (147))
                                                     (4,492)             (3,722)            (2,774))
     RECOVERIES
     Commercial Finance                                  126                 95                    66
     Consumer Finance                                    710                534                   417
     Other                                                12                 13                    13
                                                         848                642                   496
     BALANCE AT DECEMBER 31
     Commercial Finance                               2,219               2,634              2,513
     Consumer Finance                                 3,984               2,782              2,173
     Other                                               53                  84                106
     Balance at December 31                          $6,256             $5,500             $4,792

     (a)   Includes $168 million, $493 million and $666 million related to acquisitions and
           $480 million, $211 million and $(103) million related to the net effects of exchange
           rates in 2003, 2002 and 2001, respectively.



     SELECTED FINANCING RECEIVABLES RATIOS
     December 31                                                           2003                   2002

     ALLOWANCE FOR LOSSES ON FINANCING
       RECEIVABLES AS A PERCENTAGE
       OF TOTAL FINANCING RECEIVABLES
     Commercial Finance                                                    1.68%              2.01%
     Consumer Finance                                                      4.21               4.21
     Other                                                                 1.01               1.27
     Total                                                                 2.69               2.70
     NONEARNING AND REDUCED EARNING
      FINANCING RECEIVABLES AS A
      PERCENTAGE OF TOTAL FINANCING
      RECEIVABLES
     Commercial Finance                                                     1.3%                  1.7%
     Consumer Finance                                                       2.6                   2.4
     Other                                                                  1.3                   1.2
     Total                                                                  1.8                   1.9




90   ge 2003 annual ≥epo≥t
                                                                                                                   notes to consolidated financial statements




NOTE 15
p≥ope≥ty, plant and equipment                                                                     Amortization of GECS equipment leased to others was $4,224
(including equipment leased to othe≥s)                                                            million, $3,919 million and $3,461 million in 2003, 2002 and
                                                                                                  2001, respectively. Noncancelable future rentals due from cus-
                                               Estimated
                                                   useful                                         tomers for equipment on operating leases at year-end 2003 are
December 31 (In millions)                           lives            2003                  2002   due as follows:
ORIGINAL COST
                                                                                                  (In millions)
      GE
      Land and improvements                            8(a)     $«««««861          $«««««623      Due in
      Buildings, structures and related                                                            2004                                                  $÷5,267
        equipment                                  8-40           8,369               8,398        2005                                                    4,662
      Machinery and equipment                      4-20          24,184              22,264        2006                                                    3,426
      Leasehold costs and manufacturing                                                            2007                                                    2,373
        plant under construction                   1-10            2,228              1,964        2008                                                    1,661
                                                                 35,642              33,249        After 2008                                              5,673

      GECS (b)
                                                                                                  Total                                                  $23,062
      Buildings and equipment                      1-40            4,792              4,731
      Equipment leased to others
        Aircraft                                   6-19          23,065              20,053
        Vehicles                                   3-12          16,600              13,349
        Railroad rolling stock                     3-30           3,356               3,376
        Mobile and modular                         3-20           3,164               2,994
        Construction and manufacturing             3-25           1,562               1,326
        All other                                  2-35           3,025               3,004
                                                                 55,564              48,833
Total                                                           $91,206            $82,082

NET CARRYING VALUE
      GE
      Land and improvements                                     $«««««814          $«««««587
      Buildings, structures and related
        equipment                                                  4,332              4,375
      Machinery and equipment                                      7,547              7,083
      Leasehold costs and manufacturing
        plant under construction                                   1,873              1,698
                                                                 14,566              13,743
      GECS
      Buildings and equipment                                      2,827              2,893
      Equipment leased to others
        Aircraft (c)                                             19,093              17,030
        Vehicles                                                  9,745               8,481
        Railroad rolling stock                                    2,220               2,309
        Mobile and modular                                        1,814               1,632
        Construction and manufacturing                            1,120               1,010
        All other                                                 1,997               1,975
                                                                 38,816              35,330
Total                                                           $53,382            $49,073

(a)   Estimated useful lives excluding land.
(b)   Includes $1.8 billion and $1.4 billion of assets leased to GE as of December 31, 2003
      and 2002, respectively.
(c)   Commercial Finance recognized impairment losses of $0.2 billion in 2003 and 2002
      recorded in the caption “Other costs and expenses” in the Statement of Earnings to
      reflect adjustments to fair value based on current market values from independent
      appraisers.




                                                                                                                                         ge 2003 annual ≥epo≥t     91
     notes to consolidated financial statements




     NOTE 16                                                                                           and $1,999 million, respectively. The estimated percentage of the
     intangible assets                                                                                 December 31, 2003, net PVFP balance to be amortized over each
                                                                                                       of the next five years follows.
     December 31 (In millions)                                              2003               2002

                                                                                                       2004                    2005                 2006                  2007                  2008
     GE
     Goodwill                                                         $25,960             $20,044       8.8%                    8.2%                 7.5%                  6.9%                  6.4%
     Capitalized software                                               1,678               1,559
     Other intangibles                                                  2,566               1,446
                                                                                                       Change in PVFP balances follow.
                                                                        30,204              23,049
                                                                                                       (In millions)                                                        2003                2002
     GECS
     Goodwill                                                           21,527              19,094     Balance at January 1                                             $2,457             $2,198
     Present value of future profits (PVFP)                               1,562               2,457     Acquisitions                                                          46               494
     Capitalized software                                                  800                 894     Dispositions                                                       (658)                —
     Other intangibles                                                     932                 686     Accrued interest (a)                                                  80                83
                                                                        24,821              23,131     Amortization                                                       (318)              (369)
     Total                                                            $55,025             $46,180      Other                                                                (45)               51
                                                                                                       Balance at December 31                                           $1,562             $2,457
     GE intangible assets are net of accumulated amortization of $5,759 million in 2003
     and $5,203 million in 2002. GECS intangible assets are net of accumulated amortization            (a)   Interest was accrued at a rate of 4.3% and 3.5% for 2003 and 2002, respectively.
     of $11,515 million in 2003 and $10,603 million in 2002.


                                                                                                       Recoverability of PVFP is evaluated periodically by comparing
     INTANGIBLE ASSETS SUBJECT TO AMORTIZATION
                                                                                                       the current estimate of expected future gross profits to the
                                                         Gross
                                                       carrying      Accumulated                       unamortized asset balance. If such comparison indicates that the
     December 31 (In millions)                         amount         amortization               Net   expected gross profits will not be sufficient to recover PVFP, the
     2003                                                                                              difference is charged to expense. No such expense was recorded
     PVFP                                          $÷4,571           $÷(3,009)             $1,562      in 2003 or 2002.
     Capitalized software                            4,911             (2,433))             2,478          Amortization expense for PVFP in future periods will be affect-
     Servicing assets (a)                            3,539             (3,392))               147      ed by acquisitions, realized capital gains/losses or other factors
     Patents, licenses and other                     2,721               (806))             1,915
                                                                                                       affecting the ultimate amount of gross profits realized from certain
     All other                                       1,095               (417)                678
                                                                                                       lines of business. Similarly, future amortization expense for other
     Total                                         $16,837           $(10,057)             $6,780
                                                                                                       intangibles will depend on acquisition activity and other business
     2002                                                                                              transactions.
     PVFP                                          $÷«5,261           $÷«(2,804)           $«2,457
                                                                                                           The amount of goodwill amortization included in net earnings
     Capitalized software                             4,269              (1,816))            2,453
                                                                                                       (net of income taxes) in 2001 was $499 million and $552 million
     Servicing assets (a)                             3,582              (3,240))              342
                                                                                                       for GE and GECS, respectively.
     Patents, licenses and other                      1,665                (675))              990
     All other                                          556                (341)               215
                                                                                                           The effects on earnings and earnings per share of excluding
                                                                                                       such goodwill amortization from 2001 follow.
     Total                                         $«15,333           $÷«(8,876)           $«6,457
                                                                                                                                                                         2001
     (a)   Servicing assets, net of accumulated amortization, are associated primarily with serviced   (In millions;
                                                                                                       per-share amounts in dollars)               Consolidated                 GE              GECS
           residential mortgage loans amounting to $14 billion and $33 billion at December 31,
           2003 and 2002, respectively.
                                                                                                       Net earnings, as reported                     $13,684           $13,684             $5,417
                                                                                                       Net earnings, excluding
     Indefinite-lived intangible assets were $758 million and $585                                       goodwill amortization                         14,735            14,735              5,969
     million at December 31, 2003 and 2002, respectively, and princi-
     pally comprise U.S. Federal Communication Commission licenses                                                                                                        Diluted               Basic
     and cable affiliation agreements.
                                                                                                       Earnings per share, as reported                                 $÷÷1.37             $÷1.38
        Consolidated amortization expense related to intangible                                        Earnings per share, excluding
     assets, excluding goodwill, for 2003 and 2002 was $1,407 million                                    goodwill amortization                                             1.47                 1.48




92   ge 2003 annual ≥epo≥t
                                                                                                                                  notes to consolidated financial statements




Changes in goodwill balances, net of accumulated amortization, follow.

                                                                                              2003                                                               2002

                                                                                   Acquisitions/                                                             Acquisitions/
                                                                                      purchase         Foreign                                                  purchase         Foreign
                                                                         Balance    accounting       exchange      Balance         Balance      Transition    accounting       exchange        Balance
(In millions)                                                          January 1   adjustments (a)   and other December 31       January 1    impairment     adjustments (a)   and other   December 31

Aircraft Engines                                                     $÷2,286         $÷«354          $÷÷«11     $÷2,651         $÷1,916        $÷÷÷—          $÷÷«345          $÷÷«25        $÷2,286
Commercial Finance                                                     7,987            121              82       8,190           6,235            —            1,684              68          7,987
Consumer Finance                                                       5,562          1,294            923        7,779           3,826            —            1,286            450           5,562
Consumer Products                                                        396              2              17         415             393            —               —                3            396
Equipment Management                                                   1,242             91               6       1,339           1,160            —               31              51          1,242
Industrial Products and Systems                                        2,372            106              57       2,535             772            —            1,585              15          2,372
Insurance                                                              4,176             12             (96)      4,092           3,372            —              542            262           4,176
Medical Systems                                                        2,898          1,846              22       4,766           2,408            —              430              60          2,898
NBC                                                                    4,941          1,507              —        6,448           2,568            —            2,373              —           4,941
Plastics                                                               1,857             25              35       1,917           1,703            —              151               3          1,857
Power Systems                                                          3,095            484            388        3,967           1,948            —              942            205           3,095
Specialty Materials                                                    1,643            933            132        2,708             220            —            1,424              (1)         1,643
Transportation Systems                                                   556             —               (3)        553             426            —              127               3            556
All Other GECS                                                             127             —              —           127          1,340         (1,204)             —               (9)         127
Total                                                                $39,138         $6,775          $1,574     $47,487         $28,287        $(1,204)       $10,920          $1,135        $39,138

(a)   The amount of goodwill related to new acquisitions recorded during 2003 was $6,602 million, the largest of which were Instrumentarium ($1,754 million) by Medical Systems, Bravo
      ($1,473 million) by NBC and First National Bank ($680 million) by Consumer Finance. The amount of goodwill related to purchase accounting adjustments during 2003 was $173 million,
      primarily associated with the 2002 acquisitions of several businesses at Industrial Products and Systems, Australian Guarantee Corporation at Consumer Finance and Security Capital
      Group at Commercial Finance. The amount of goodwill related to new acquisitions recorded during 2002 was $9,641 million, the largest of which were Telemundo ($2,159 million) by
      NBC, Betz-Dearborn ($1,422 million) by Specialty Materials, Interlogix ($888 million) by Industrial Products and Systems and Australian Guarantee Corporation ($621 million) by
      Consumer Finance. The amount of goodwill related to purchase accounting adjustments during 2002 was $1,279 million, primarily associated with the 2001 acquisition of Heller
      Financial, Inc. Upon closing an acquisition, we estimate the fair values of assets and liabilities acquired and consolidate the acquisition as quickly as possible. Given the time it takes to
      obtain pertinent information to finalize the acquired company’s balance sheet (frequently with implications for the price of the acquisition), then to adjust the acquired company’s policies,
      procedures, books and records to our standards, it is often several quarters before we are able to finalize those initial fair value estimates. Accordingly, it is not uncommon for our initial
      estimates to be subsequently revised.




                                                                                                                                                                    ge 2003 annual ≥epo≥t                93
     notes to consolidated financial statements




     NOTE 17                                                                                               NOTE 18
     all othe≥ assets                                                                                      bo≥≥owings
     December 31 (In millions)                                                 2003                 2002   SHORT-TERM BORROWINGS
                                                                                                           December 31 (In millions)                    2003                                   2002
     GE
     Investments                                                                                                                                Amount         Average rate (a)      Amount           Average rate (a)

       Associated companies (a)                                          $««1,348             $««3,640     GE
       Other                                                                1,228                1,016     Commercial paper
                                                                            2,576                4,656       U.S.                 $÷÷1,149                           1.08%        $÷÷6,568                  1.69%
     Prepaid pension asset                                                 17,038               15,611       Non-U.S.                  340                           2.72              296                  2.89
     Contract costs and estimated earnings                                  3,505                3,466     Payable to banks,
     Prepaid broadcasting rights                                            1,582                1,053       principally non-U.S.      388                           4.89              660                  4.88
     Long-term receivables, including notes                                 1,932                1,824     Current portion of
     Derivative instruments (b)                                                454                 364       long-term debt            392                           2.58               57                  9.61
     Other                                                                   3,361               3,193     Other                       286                                           1,205
                                                                           30,448               30,167                                          2,555                                8,786
     GECS                                                                                                  GECS
     Investments                                                                                           Commercial paper
       Associated companies (a)                                            12,764               11,635       U.S.                             65,536                 1.11           66,629                  1.51
       Real estate (c)                                                     13,390               14,395       Non-U.S.                         15,062                 2.93           17,611                  3.41
       Assets held for sale (d)                                             1,833                2,998     Current portion of
       Other                                                                8,052                5,164       long-term debt                   37,885                 3.32           35,606                  4.19
                                                                           36,039               34,192     Other                              14,505                                10,280
     Separate accounts (see note 19)                                       16,820               14,978                                      132,988                                130,126
     Deferred acquisition costs                                             7,879                8,086     ELIMINATIONS                           (626)                                (137)
     Derivative instruments (b)                                              1,797               2,071
                                                                                                           Total                           $134,917                               $138,775
     Other                                                                   5,094               4,755
                                                                           67,629               64,082     (a)   Based on year-end balances and year-end local currency interest rates, including the
                                                                                                                 effects of interest rate and currency swaps, if any, directly associated with the original
     ELIMINATIONS                                                             (963)              (1,035)         debt issuance.
     Total                                                               $97,114              $93,214

     (a)   Includes advances to associated companies which are non-controlled, non-consolidated
           equity investments. Also, in 2002, included $2.0 billion of recent GE investments in
           controlled companies consolidated in early 2003.
     (b)   Amounts are stated at fair value in accordance with SFAS 133. We discuss types of
           derivative instruments and how we use them in note 28.
     (c)   GECS investment in real estate consists principally of two categories: real estate held
           for investment and equity method investments. Both categories contain a wide range
           of properties including the following at December 31, 2003: office buildings (24%),
           self storage facilities (20%), apartment buildings (17%), retail facilities (14%), industrial
           properties (8%), franchise properties (7%), parking facilities (7%) and other (3%).
           At December 31, 2003, investments were located in North America (60%), Europe
           (24%) and Asia (16%).
     (d)   These assets held for sale were accounted for at the lower of carrying amount or each
           asset’s fair value less costs to sell.



     Separate accounts represent investments controlled by policy-
     holders and are associated with identical amounts reported as
     insurance liabilities in note 19.




94   ge 2003 annual ≥epo≥t
                                                                                                                                  notes to consolidated financial statements




LONG-TERM BORROWINGS                                                                                 Committed credit lines totaling $57.2 billion had been extended
                                       2003                                                          to us by 85 banks at year-end 2003. Included in this amount was
December 31 (In millions)        Average rate (a)       Maturities          2003              2002
                                                                                                     $48.3 billion provided directly to GECS and $8.9 billion provided
GE
                                                                                                     by 22 banks to GE to which GECS also has access. The GECS
Senior notes                           3.74%        2005–2013 $÷÷7,483                 $÷÷÷÷«—
                                                                                                     lines include $19.9 billion of revolving credit agreements under
Industrial development/
                                                                                                     which we can borrow funds for periods exceeding one year. The
  pollution control bonds              1.39         2005–2027               331               346
                                                                                                     remaining $37.3 billion are 364-day lines of which $26.9 billion
Payable to banks,
  principally non-U.S.                 6.70         2005–2008               212               246    contain a term-out feature that allows GE Capital to extend the
Other (b)                                                                   362               378    borrowings for one year from the date of expiration of the lending
                                                                         8,388                970    agreement. We pay banks for credit facilities, but compensation
                                                                                                     amounts were insignificant in each of the past three years.
GECS
Senior notes                           3.42         2005–2055         149,049            127,573     INTEREST RATE AND CURRENCY RISK is managed through the direct
Extendible notes                       1.27         2007–2008          12,229             12,000
                                                                                                     issuance of debt or use of derivatives. We take positions in view of
Subordinated notes (c)                 7.52         2005–2035           1,262              1,263
                                                                                                     anticipated behavior of assets, including prepayment behavior. We
                                                                      162,540            140,836
                                                                                                     use a variety of instruments, including interest rate and currency
ELIMINATIONS                                                               (924)           (1,174)   swaps and currency forwards, to achieve our interest rate objec-
Total                                                                $170,004          $140,632      tives. Effective interest rates were lower under these “synthetic”
(a)
                                                                                                     positions than could have been achieved by issuing debt directly.
      Based on year-end balances and year-end local currency interest rates, including the
      effects of interest rate and currency swaps, if any, directly associated with the original     The following table shows GECS borrowing positions considering
      debt issuance.                                                                                 the effects of currency and interest rate swaps.
(b)   A variety of obligations having various interest rates and maturities, including certain
      borrowings by parent operating components and affiliates.                                       GECS EFFECTIVE BORROWINGS (INCLUDING SWAPS)
(c)   At year-end 2003 and 2002, $1.0 billion of subordinated notes were guaranteed by GE.                                                                      2003                         2002

                                                                                                     December 31 (In millions)                         Amount          Average rate           Amount

Our borrowings are addressed below from the perspectives of                                          Short-term (a)                               $÷66,501                  1.73%        $÷60,151
liquidity, interest rate and currency risk management. Additional
                                                                                                     Long-term (including
information about borrowings and associated swaps can be found                                         current portion)
in note 28.                                                                                              Fixed rate (b)                           $121,098                  4.89%        $121,147
                                                                                                            Floating rate                          107,929                  1.96           89,049
LIQUIDITY is affected by debt maturities and our ability to repay or
                                                                                                     Total long-term                              $229,027                               $210,196
refinance such debt. Long-term debt maturities over the next five
years follow.                                                                                        (a)   Includes commercial paper and other short-term debt.
                                                                                                     (b)   Includes fixed-rate borrowings and $26.5 billion ($34.4 billion in 2002) notional long-
(In millions)       2004              2005               2006              2007               2008
                                                                                                           term interest rate swaps that effectively convert the floating-rate nature of short-term
GE              $÷÷«392          $÷2,571            $÷÷«194           $÷÷÷«58            $÷÷÷«40           borrowings to fixed rates of interest.

GECS             37,885           45,457 (a)         28,671            18,140             13,141
                                                                                                     At December 31, 2003, interest rate swap maturities ranged from
(a)   Floating rate extendible notes of $12.2 billion are due in 2005, but are extendible at the
      investor’s option to a final maturity in 2007 ($12.0 billion) or 2008 ($0.2 billion).
                                                                                                     2004 to 2048, including swap maturities for hedges of commercial
                                                                                                     paper that ranged from 2004 to 2024. The use of commercial paper
                                                                                                     swaps allows us to match our actual asset profile more efficiently and
                                                                                                     provides more flexibility as it does not depend on investor demand
                                                                                                     for particular maturities.




                                                                                                                                                                   ge 2003 annual ≥epo≥t               95
     notes to consolidated financial statements




     NOTE 19                                                                                            A summary of activity affecting unpaid claims and claims adjust-
     gecs insu≥ance liabilities, ≥ese≥ves                                                             ment expenses, principally in property and casualty lines, follows.
     and annuity benefits                                                                              (In millions)                       2003          2002          2001

     December 31 (In millions)                                              2003               2002   Balance at January 1 — gross    $30,571       $27,233       $22,886
     Investment contracts and                                                                         Less reinsurance
       universal life benefits                                       $««55,119           $««43,614       recoverables                   (9,646)        (9,400)       (5,477)
     Life insurance benefits (a)                                        28,040              39,254     Balance at January 1 — net       20,925        17,833        17,409
     Unpaid claims and claims                                                                         Claims and expenses incurred
       adjustment expenses (b)                                          29,176             30,571       Current year                    9,002         9,505         9,199
     Unearned premiums                                                   7,109              7,436       Prior years                       740         3,188           682
     Separate accounts (see note 17)                                    16,820             14,978     Claims and expenses paid
     Total                                                          $136,264            $135,853        Current year                   (2,565)        (3,173)       (3,021)
                                                                                                        Prior years                    (7,079)        (6,918)       (6,694)
     (a)   Life insurance benefits are accounted for mainly by a net-level-premium method using        Claims reserves related to
           estimated yields generally ranging from 1.2% to 8.5% in 2003 and 1.5% to 8.5% in 2002.
                                                                                                        acquired companies                 —              81            —
     (b)   Principally property and casualty reserves amounting to $24.9 billion and $26.1 billion
                                                                                                      Other                              (160)          409           258
           at December 31, 2003 and 2002, respectively. Includes amounts for both reported
           and incurred-but-not-reported claims, reduced by anticipated salvage and subrogation       Balance at December 31 — net     20,863        20,925        17,833
           recoveries. Estimates of liabilities are reviewed and updated continually, with changes    Add reinsurance recoverables      8,313         9,646         9,400
           in estimated losses reflected in operations.
                                                                                                      Balance at December 31 —
                                                                                                        gross                         $29,176       $30,571       $27,233
     When insurance affiliates cede insurance to third parties, they are
     not relieved of their primary obligation to policyholders. Losses on                             Claims and expenses incurred — prior years represents additional
     ceded risks give rise to claims for recovery; we establish allowances                            losses (adverse development) recognized in any year for loss
     for probable losses on such receivables from reinsurers as required.                             events that occurred before the beginning of that year. Adverse
         We recognize reinsurance recoveries as a reduction of the state-                             development, which amounted to 4%, 18% and 4% of beginning
     ment of earnings caption “Insurance losses and policyholder and                                  of year loss reserves in 2003, 2002 and 2001, respectively, was
     annuity benefits.” Reinsurance recoveries were $1,781 million,                                    primarily encountered at GE Global Insurance Holding.
     $2,234 million and $5,863 million for the years ended December 31,                                   In 2001, we began to experience an acceleration of reported
     2003, 2002 and 2001, respectively.                                                               claims activity in certain liability-related coverages, specifically,
         The insurance liability for unpaid claims and claims adjustment                              hospital liability, non-standard auto (automobile insurance
     expenses related to policies that may cover environmental and                                    extended to higher-risk drivers) and commercial and public entity
     asbestos exposures is based on known facts and an assessment of                                  general liability lines of business, and recognized the increase in
     applicable law and coverage litigation. Liabilities are recognized for                           projected ultimate losses.
     both known and unasserted claims (including the cost of related lit-                                 During 2002, reported claims activity accelerated dramatically,
     igation) when sufficient information has been developed to indicate                               affecting much of our liability-related insurance written in 1997
     that a claim has been incurred and a range of potential losses can                               through 2001. In connection with our normal actuarial updates, we
     be reasonably estimated. Developed case law and adequate claim                                   adjusted our best estimate of ultimate losses to reflect our experi-
     history do not exist for certain claims, principally due to significant                           ence, increasing recorded reserves by $2.5 billion in the fourth
     uncertainties as to both the level of ultimate losses that will occur                            quarter of 2002, for a total of $3.5 billion adverse development in
     and what portion, if any, will be deemed to be insured amounts.                                  ERC for the year.
                                                                                                          In 2003, we continued to monitor our reported claims activity
                                                                                                      compared with our revised expected loss levels. In a majority of
                                                                                                      our lines of business, reported claims activity in 2003 was rea-
                                                                                                      sonably close to expected amounts. In a few lines — principally
                                                                                                      medical malpractice, product liability and certain director and
                                                                                                      officer related coverage — reported claims volumes exceeded our
                                                                                                      revised loss expectations. Accordingly, we increased our loss
                                                                                                      reserves to the newly-indicated ultimate levels in 2003, recording
                                                                                                      adverse development of $0.9 billion. We will continue to monitor
                                                                                                      reported claims activity for all lines of business in the future and
                                                                                                      take necessary reserve actions — either to increase or decrease
                                                                                                      reserves — as our estimates continue to mature.




96   ge 2003 annual ≥epo≥t
                                                                                                       notes to consolidated financial statements




    Our Mortgage Insurance business experienced favorable                NOTE 21
development during the three-year period, primarily reflecting            defe≥≥ed income taxes
continued strength in certain real estate markets and the success
                                                                         Aggregate deferred income tax amounts are summarized below.
of our loss containment initiatives.
    Financial guarantees and credit life risk of insurance affiliates     December 31 (In millions)                                               2003                2002
are summarized below.                                                    ASSETS

December 31 (In millions)                          2003           2002
                                                                         GE                                                                 $««7,594            $««6,817
                                                                         GECS                                                                  9,948               7,584
Guarantees, principally on municipal
                                                                                                                                             17,542               14,401
  bonds and asset-backed securities           $÷÷1,190       $226,559
                                                                         LIABILITIES
Mortgage insurance risk in force               146,627        101,530
Credit life insurance risk in force             25,728         23,283    GE                                                                   9,505                8,744
Less reinsurance                                (2,207)       (38,883)   GECS                                                                20,684               18,174

Total                                         $171,338       $312,489                                                                        30,189               26,918
                                                                         NET DEFERRED INCOME TAX LIABILITY                                  $12,647             $12,517

Certain insurance affiliates offer insurance guaranteeing the
timely payment of scheduled principal and interest on municipal          Principal components of our net liability/(asset) representing
bonds and certain asset-backed securities. Substantially all of this     deferred income tax balances are as follows:
business was conducted by Financial Guaranty Insurance                   December 31 (In millions)                                               2003                2002
Company (FGIC), which we sold in the fourth quarter of 2003.
                                                                         GE
Other insurance affiliates provide insurance to protect residential
                                                                         Provisions for expenses (a)                                        $«(4,723)           $«(4,693)
mortgage lenders from severe financial loss caused by the non-
                                                                         Retiree insurance plans                                              (1,206)             (1,043))
payment of loans and issue credit life insurance designed to pay         Prepaid pension asset                                                 5,963               5,464
the balance due on a loan if the borrower dies before the loan is        Depreciation                                                          1,714               1,536
repaid. As part of their overall risk management process, insur-         Other — net                                                             163                 663
ance affiliates cede to third parties a portion of their risk associ-                                                                           1,911               1,927
ated with these guarantees. In doing so, they are not relieved of        GECS
their primary obligation to policyholders.                               Financing leases                                                    10,250                 9,763
                                                                         Operating leases                                                     3,523                 3,627
                                                                         Deferred acquisition costs                                           1,501                 1,494
NOTE 20
                                                                         Allowance for losses                                                (2,036)               (1,569)
all othe≥ liabilities                                                    Insurance reserves                                                  (1,109)               (1,218)
                                                                         Derivatives qualifying as hedges                                    (1,029)               (1,252)
This caption includes noncurrent compensation and benefit
                                                                         AMT credit carryforward                                               (351)                 (597)
accruals at year-end 2003 and 2002 of $10,380 million and
                                                                         Other — net                                                             (13)                 342
$8,826 million, respectively. Also included are amounts for
                                                                                                                                             10,736               10,590
deferred income, derivative instruments, interest on tax liabilities,
                                                                         NET DEFERRED INCOME TAX LIABILITY                                  $12,647             $12,517
product warranties and a variety of sundry items.
    We are involved in numerous remediation actions to clean up          (a)   Represents the tax effects of temporary differences related to expense accruals for a
hazardous wastes as required by federal and state laws. Liabilities            wide variety of items, such as employee compensation and benefits, interest on tax
                                                                               liabilities, product warranties and other sundry items that are not currently deductible.
for remediation costs at each site are based on our best estimate of
undiscounted future costs, excluding possible insurance recoveries.
When there appears to be a range of possible costs with equal like-
lihood, liabilities are based on the lower end of such range.
Uncertainties about the status of laws, regulations, technology and
information related to individual sites make it difficult to develop a
meaningful estimate of the reasonably possible aggregate environ-
mental remediation exposure. However, even in the unlikely event
that remediation costs amounted to the high end of the range of
costs for each site, the resulting additional liability would not be
material to our financial position, results of operations or liquidity.




                                                                                                                                        ge 2003 annual ≥epo≥t                97
     notes to consolidated financial statements




     NOTE 22                                                                NOTE 24
     gecs mino≥ity inte≥est in equity of                                    sha≥eowne≥s’ equity
     consolidated affiliates                                                 (In millions)                                        2003               2002                2001

     Minority interest in equity of consolidated GECS affiliates includes    COMMON STOCK ISSUED                            $÷÷«669             $÷÷«669            $«««««669
     preferred stock issued by GE Capital and by affiliates of GE Capital.   ACCUMULATED NONOWNER
     The preferred stock primarily pays cumulative dividends at variable      CHANGES OTHER
     rates. Value of the preferred shares is summarized below.                THAN EARNINGS
                                                                            Balance at January 1                $«(3,177)                      $«(4,323)          $«(2,500)
     December 31 (In millions)                         2003          2002   Cumulative effect of adopting
     GE Capital                                     $2,600        $2,600      SFAS 133 — net of
     GE Capital affiliates                            1,841         1,588      deferred taxes of $(513)                —                               —                (827)
                                                                            Investment securities — net
                                                                              of deferred taxes of $505,
     Dividend rates in local currency on the preferred stock ranged
                                                                              $805 and $111 (a)                      799                          1,555                 203
     from 0.91% to 5.65% during 2003 and from 1.44% to 6.20%
                                                                            Currency translation
     during 2002.
                                                                              adjustments — net of deferred taxes
                                                                              of $(1,447), $20 and $48             5,119                          1,000                (562)
                                                                            Derivatives qualifying as
     NOTE 23
                                                                              hedges — net of deferred taxes
     ≥est≥icted net assets of gecs affiliates                                  of $(448), $(822) and $(505)          (803)                        (2,070)               (690)
     Certain GECS consolidated affiliates are restricted from remitting      Reclassification adjustments —
     funds to GECS in the form of dividends or loans by a variety of          Investment securities — net of
                                                                                deferred taxes of $(135),
     regulations, the purpose of which is to protect affected insurance
                                                                                $(135) and $(274)                   (250)                           (252)              (509)
     policyholders, depositors or investors. At December 31, 2003 and
                                                                              Currency translation adjustments         4                              —                  —
     2002, net assets of regulated GECS affiliates amounted to $46.7
                                                                              Derivatives qualifying as
     billion and $43.7 billion, respectively, of which $37.0 billion and        hedges — net of deferred taxes
     $37.8 billion, respectively, was restricted.                               of $643, $207 and $397             1,123                             913                562
         At December 31, 2003 and 2002, the aggregate statutory cap-        Balance at December 31                         $÷2,815             $«(3,177)          $«(4,323)
     ital and surplus of the insurance businesses totaled $15.9 billion
                                                                            OTHER CAPITAL
     and $17.9 billion, respectively. Accounting practices prescribed by    Balance at January 1                           $17,288             $16,693            $15,195
     statutory authorities are used in preparing statutory statements.      Gains on treasury stock
                                                                             dispositions (b)                                    209                 595              1,498
                                                                            Balance at December 31                         $17,497             $17,288            $16,693
                                                                            RETAINED EARNINGS
                                                                            Balance at January 1                           $75,553             $68,701            $61,572
                                                                            Net earnings                                    15,002              14,118             13,684
                                                                            Dividends (b)                                   (7,759)             (7,266)            (6,555)
                                                                            Balance at December 31                         $82,796             $75,553            $68,701
                                                                            COMMON STOCK HELD
                                                                              IN TREASURY
                                                                            Balance at January 1                           $26,627             $26,916            $24,444
                                                                            Purchases (b)                                    1,177               2,851              4,708
                                                                            Dispositions (b)                                (3,207)             (3,140)            (2,236)
                                                                            Balance at December 31                         $24,597             $26,627            $26,916

                                                                            (a)   This category includes $(161) million and $(75) million, net of deferred taxes of $(85)
                                                                                  million and $(42) million, in 2003 and 2002, respectively, for minimum pension liabilities
                                                                                  on certain pension plans other than the principal pension plans.
                                                                            (b)   Total dividends and other transactions with shareowners reduced equity by $5,520 million,
                                                                                  $6,382 million and $7,529 million in 2003, 2002 and 2001, respectively.




98   ge 2003 annual ≥epo≥t
                                                                                                     notes to consolidated financial statements




    In December 2001, our Board of Directors increased the author-        Stock options and stock-settled SARs expire 10 years from the
ization to repurchase GE common stock to $30 billion. In 2003          date they are granted; options and SARs vest over service periods
we repurchased 12 million shares for a total of $0.3 billion.          that range from one to five years.
Through year-end 2003, 1,103 million shares having an aggregate           All grants of GE options under all plans must be approved by
cost of approximately $23.0 billion had been repurchased under         the Management Development and Compensation Committee,
this program and placed in treasury.                                   which comprises entirely outside directors.
    Common shares issued and outstanding are summarized in
                                                                       STOCK OPTION ACTIVITY
the following table.
                                                                                                                                                  Average per share

SHARES OF GE COMMON STOCK                                                                                           Shares subject           Exercise               Market
                                                                       (Shares in thousands)                             to option              price                price
December 31 (In thousands)          2003          2002          2001
                                                                       Balance at
Issued                       11,145,212    11,145,212    11,145,212
                                                                        December 31, 2000                              333,179              $21.03              $47.94
In treasury                  (1,082,092)   (1,175,318)   (1,219,274)
                                                                        Options granted                                 60,946               41.15               41.15
Outstanding                  10,063,120     9,969,894     9,925,938
                                                                        Options exercised                              (31,801)              10.04               43.95
                                                                        Options terminated                               (7,871)             39.02                  —
GE has 50 million authorized shares of preferred stock ($1.00 par      Balance at
value), but has not issued any such shares as of December 31, 2003.     December 31, 2001                              354,453                25.08                 40.08
   The effects of translating to U.S. dollars the financial state-       Options granted                                 46,928                27.37                 27.37
ments of non-U.S. affiliates whose functional currency is the local      Options exercised                              (29,146)                9.45                 31.86
currency are included in shareowners’ equity. Asset and liability            Options terminated                         (10,177)              38.14                    —
accounts are translated at year-end exchange rates, while revenues     Balance at
and expenses are translated at average rates for the period.            December 31, 2002                              362,058                26.26                 24.35
                                                                        Options granted                                  8,261                31.19                 31.19
                                                                        Options exercised                              (43,829)                9.45                 27.59
NOTE 25                                                                      Options terminated                         (10,643)              38.98                    —

othe≥ stock-≥elated info≥mation                                        Balance at
                                                                             December 31, 2003                         315,847              $28.30              $30.98
We grant stock options, stock appreciation rights (SARs), restricted
stock units (RSUs) and performance share units (PSUs) to
                                                                       STOCK COMPENSATION PLANS
employees under the 1990 Long-Term Incentive Plan as described
                                                                                                                        Securities          Weighted            Securities
in our current Proxy Statement. In addition, we grant options and      December 31, 2003                             to be issued             average         available for
RSUs in limited circumstances to consultants, advisors and inde-       (Shares in thousands)                        upon exercise       exercise price    future issuance

pendent contractors (primarily non-employee talent at NBC)             APPROVED BY SHAREOWNERS
under a plan approved by our Board of Directors in 1997 (the con-      Options                                         314,579              $28.31                      (a)

                                                                                                                                                   (b)                  (a)
sultants’ plan). There are outstanding grants under two separate       RSUs                                             28,074
                                                                       PSUs                                                                        (b)                  (a)
shareowner approved option plans for non-employee directors;                                                               250
the last grant was made in 2002 and no further grants are expected     SARs (c)                                                (d)                 (c)                  (a)

                                                                       NOT APPROVED BY SHAREOWNERS
to be made under these plans. With certain restrictions, require-
                                                                       Options                                            1,268               24.37                     (e)
ments for stock option shares may be met from either unissued or                                                                                   (b)                  (e)
                                                                       RSUs                                               3,867
treasury shares. RSUs give the recipients the right to receive
                                                                       Total (f)                                       348,038              $28.30             130,622
shares of our stock upon the lapse of their related restrictions.
Restrictions on RSUs lapse in various increments and at various        (a)   Under the 1990 Long-Term Incentive Plan, 0.95% of the company’s issued
dates after three years from date of grant to grantee retirement.            common stock (including treasury shares) as of the first day of each calendar year
                                                                             during which the Plan is in effect becomes available for awards in that calendar
Although the plan permits us to issue RSUs settleable in cash, we            year. Total shares available for future issuance under the 1990 Long-Term Incentive
have only issued RSUs settleable in shares of our stock.                     Plan amounted to 105.9 million shares.
                                                                       (b)
    We measure the total cost of each stock option grant at the date         Not applicable.
                                                                       (c)   During 2003, approximately 3.8 million SARs were granted at a weighted average
of grant using a market-based option trading model. We recognize
                                                                             exercise price of $31.41.
the cost of each stock option, SAR, RSU and PSU straight-line          (d)   Determined at vesting based on the difference between the exercise price and
over its vesting period.                                                     market price.
                                                                       (e)   Total shares available for future issuance under the consultants’ plan amount to
                                                                             24.7 million shares.
                                                                       (f)   In connection with various acquisitions, there are an additional 1.9 million options
                                                                             outstanding, with a weighted average exercise price of $20.89.




                                                                                                                                      ge 2003 annual ≥epo≥t                   99
    notes to consolidated financial statements




    Outstanding options and SARs expire on various dates through                                            NOTE 26
    December 11, 2013.                                                                                      supplemental cash flows info≥mation
       The following table summarizes information about stock
                                                                                                            Changes in operating assets and liabilities are net of acquisitions
    options outstanding at December 31, 2003.
                                                                                                            and dispositions of principal businesses.
    STOCK OPTIONS OUTSTANDING                                                                                   “Payments for principal businesses purchased” in the Statement
    (Shares in thousands)                      Outstanding                            Exercisable           of Cash Flows is net of cash acquired and includes debt assumed
                                                                  Average                       Average     and immediately repaid in acquisitions.
                                               Average            exercise                      exercise
    Exercise price range              Shares        life (a)         price      Shares             price        “All other operating activities” in the Statement of Cash Flows
                                                                                                            consists primarily of adjustments to current and noncurrent
    $««6.67– 13.23                   61,303        1.0           $÷9.05       61,303           $÷9.05
     13.48– 26.42                    71,992        3.5            19.96       71,705            19.94
                                                                                                            accruals and deferrals of costs and expenses, adjustments for gains
     26.65– 35.48                    70,106        8.5            29.79       10,570            28.02       and losses on assets, increases and decreases in assets held for sale,
     35.79– 43.17                    60,992        5.8            39.54       42,909            38.96       and adjustments to assets.
     43.75– 57.31                    51,454        7.3            47.55       27,798            47.72           Non-cash transactions include the following: in 2003, the
    Total                       315,847            5.2           $28.30      214,285           $24.63       acquisition of Osmonics, Inc. for GE common stock valued at
                                                                                                            $240 million; in 2002, the acquisition of Interlogix, Inc. for GE
    At year-end 2002, options with an average exercise price of $18.75 were exercisable on                  common stock valued at $395 million and the acquisition of
    214 million shares; at year-end 2001, options with an average exercise price of $14.73
    were exercisable on 209 million shares.                                                                 Bravo for GE common stock and other investment securities
    (a)   Average contractual life remaining in years.                                                      valued at $335 million and $886 million, respectively; and in
                                                                                                            2001, the acquisition of Imatron Inc. for GE common stock valued
    OPTION VALUE INFORMATION (a)                                                                            at $205 million.
    (In dollars)                                               2003           2002                  2001

    Fair value per      option (b)                       $9.44               $7.73             $12.15
    Valuation assumptions
      Expected option term (years)                          6.0                6.0                   6.0
      Expected volatility                                  34.7%              33.7%                 30.5%
      Expected dividend yield                               2.5%               2.7%                  1.6%
      Risk-free interest rate                               3.5%               3.5%                  4.9%

    (a)   Weighted averages of option grants during each period.
    (b)   Estimated using Black-Scholes option pricing model.




100 ge 2003 annual ≥epo≥t
                                                                                    notes to consolidated financial statements




Certain supplemental information related to GE and GECS cash flows is shown below.

For the years ended December 31 (In millions)                                                   2003           2002           2001

GE
  PURCHASES AND SALES OF GE SHARES FOR TREASURY
  Open market purchases under share repurchase program                                    $÷÷÷«(340)    $««««(1,981)   $««««(3,137)
  Other purchases                                                                              (837)           (870)        (1,571)
  Dispositions (mainly to employee and dividend reinvestment plans)                           1,903           1,866          2,273
                                                                                          $÷÷÷÷726      $«÷««««(985)   $««««(2,435)
GECS
  FINANCING RECEIVABLES
  Increase in loans to customers                                                          $(263,815)    $(209,431)     $(139,793)
  Principal collections from customers — loans                                              229,823       185,329        120,334
  Investment in equipment for financing leases                                                (22,825)      (19,828)       (20,618)
  Principal collections from customers — financing leases                                      18,018        15,305         11,764
  Net change in credit card receivables                                                      (11,483)      (19,108)       (14,815)
  Sales of financing receivables                                                              36,009        29,651         29,291
                                                                                          $÷(14,273)    $÷(18,082)     $÷(13,837)
  ALL OTHER INVESTING ACTIVITIES
  Purchases of securities by insurance and annuity businesses                             $÷(50,127)    $÷(64,721)     $÷(53,452)
  Dispositions and maturities of securities by insurance and annuity businesses              43,720        54,423         45,403
  Proceeds from principal business dispositions                                               3,337             —           2,572
  Consolidated, liquidating securitization entities                                           9,375             —              —
  Other                                                                                       3,483         (4,936)        (2,264)
                                                                                          $÷«÷9,788     $««(15,234)    $÷÷(7,741)
  NEWLY ISSUED DEBT HAVING MATURITIES LONGER THAN 90 DAYS
  Short-term (91 to 365 days)                                                             $«««÷1,576    $«««÷1,796     $«÷12,622
  Long-term (longer than one year)                                                            57,572        93,026        16,118
  Proceeds — nonrecourse, leveraged lease debt                                                   791         1,222         2,012
                                                                                          $«««59,939    $«««96,044     $÷«30,752
  REPAYMENTS AND OTHER REDUCTIONS OF DEBT HAVING MATURITIES
   LONGER THAN 90 DAYS
  Short-term (91 to 365 days)                                                             $÷(38,694)    $÷(32,950)     $÷(29,195)
  Long-term (longer than one year)                                                           (3,402))       (5,936)        (6,582)
  Principal payments — nonrecourse, leveraged lease debt                                       (782))         (339))         (274)
                                                                                          $÷(42,878)    $÷(39,225)     $÷(36,051)
  ALL OTHER FINANCING ACTIVITIES
  Proceeds from sales of investment contracts                                             $«««÷9,319    $«««÷7,894     $«««««9,080
  Redemption of investment contracts                                                          (9,556)       (6,834)         (7,033)
  Capital contributions from GE                                                                   —          6,300           3,043
  Consolidated, liquidating securitization entities                                           (9,761)           —               —
  Cash received upon assumption of insurance liabilities                                          —          2,813              —
                                                                                          $÷««(9,998)   $÷«10,173      $÷÷«5,090




                                                                                                        ge 2003 annual ≥epo≥t         101
    notes to consolidated financial statements




    NOTE 27
    ope≥ating segments
    REVENUES
                                                                       Total revenues                           Intersegment revenues                           External revenues

    For the years ended December 31 (In millions)               2003           2002         2001              2003          2002            2001           2003           2002         2001

    Aircraft Engines                                     $÷10,703 $÷11,141 $÷11,389                      $÷÷717         $«1,018         $«1,282     $÷÷9,986 $÷10,123 $÷10,107
    Commercial Finance                                     18,869   17,781   15,759                          172             55              37       18,697   17,726   15,722
    Consumer Finance                                       12,845   10,266    9,508                           23             12              12       12,822   10,254    9,496
    Consumer Products                                       8,282    8,456    8,435                           81             89              89        8,201    8,367    8,346
    Equipment Management                                    4,707    4,766    4,904                           34             83              90        4,673    4,683    4,814
    Industrial Products and Systems                         8,396    7,441    6,742                          762            859             834        7,634    6,582    5,908
    Insurance                                              26,194   23,296   23,890                           23              2              13       26,171   23,294   23,877
    Medical Systems                                        10,198    8,955    8,409                            2              2                2      10,196    8,953    8,407
    NBC                                                     6,871    7,149    5,769                           —              —               —         6,871    7,149    5,769
    Plastics                                                5,245    5,245    5,252                           34              7               (2)      5,211    5,238    5,254
    Power Systems                                          18,462   22,926   20,211                          113            192             152       18,349   22,734   20,059
    Specialty Materials                                     3,126    2,406    1,817                           36             18              23        3,090    2,388    1,794
    Transportation Systems                                  2,543    2,314    2,355                           36             20                4       2,507    2,294    2,351
    All Other GECS                                          1,664    2,590    4,795                         (252)          (152)           (152)       1,916    2,742    4,947
    Corporate items and eliminations                       (3,918)  (2,522)  (2,819)                      (1,781)        (2,205)         (2,384)      (2,137)    (317)    (435)
    Consolidated revenues                                $134,187 $132,210 $126,416                      $÷÷÷—          $÷÷÷—           $÷÷÷—       $134,187 $132,210 $126,416

    Revenues of GE businesses include income from sales of goods and services to customers and other income. Sales from one company component to another generally are priced at equivalent
    commercial selling prices.


    Revenues originating from operations based in the United States
    were $84,795 million, $90,954 million and $85,999 million in
    2003, 2002 and 2001, respectively. Revenues originating from
    operations based outside the United States were $49,392 million,
    $41,256 million and $40,417 million in 2003, 2002 and 2001,
    respectively.




102 ge 2003 annual ≥epo≥t
                                                                                                                                notes to consolidated financial statements




                                                                                                               Property, plant and equipment
                                                                                                               additions (including equipment
                                                                            Assets                                   leased to others) (a)               Depreciation and amortization

                                                                        At December 31                         For the years ended December 31          For the years ended December 31

(In millions)                                                    2003           2002             2001            2003           2002             2001     2003           2002             2001

Aircraft Engines                                          $÷10,785 $÷10,326 $÷÷9,972                     $÷÷«486           $÷÷«304      $÷÷«402         $÷«339       $÷«310        $÷«313
Commercial Finance                                         203,983  194,245  169,869                       4,456             7,456        8,838          2,205        2,056         1,465
Consumer Finance                                           106,530   76,965   62,978                         191               221          195            276          232           178
Consumer Products                                            4,439    5,165    5,366                         231               266          390            367          364           332
Equipment Management                                        25,469   25,222   24,940                       3,854             2,606        5,161          2,127        1,904         1,976
Industrial Products and Systems                              7,215    6,891    4,547                         178               361          186            289          256           186
Insurance                                                  169,882  182,297  155,500                          35                71           37            469          432           502
Medical Systems                                             10,816    7,573    6,625                         289               170          177            278          247           177
NBC                                                         11,619   10,401    5,572                         121               252           64            117          109            94
Plastics                                                     9,207    9,137    8,367                         497               602          656            516          497           433
Power Systems                                               16,532   15,835   13,237                         516               731          774            544          505           328
Specialty Materials                                          5,837    4,277    2,150                         388               325          158            182          161           124
Transportation Systems                                       2,240    2,102    1,998                         109                44           52             71           67            59
All Other GECS                                              48,662   11,099   12,197                         231             1,354          392            285          207           379
Corporate items and eliminations (b)                        14,267   13,709   11,705                         175               110          130            120          160         1,408
Consolidated totals                                       $647,483 $575,244 $495,023                     $11,757           $14,873      $17,612         $8,185       $7,507        $7,954

(a)   Additions to property, plant and equipment include amounts relating to principal businesses purchased.
(b)   In 2001, depreciation and amortization included $1,316 million of goodwill amortization.


Property, plant and equipment associated with operations based in
the United States were $20,790 million, $19,778 million and
$18,557 million at year-end 2003, 2002 and 2001, respectively.
Property, plant and equipment associated with operations based
outside the United States were $32,592 million, $29,295 million and
$25,386 million at year-end 2003, 2002 and 2001, respectively.

Basis for presentation
Our operating businesses are organized based on the nature of
products and services provided. Segment accounting policies are
the same as described in note 1.
   A description of our operating segments can be found on
pages 112-113 and details of segment profit by operating segment
can be found on page 48 of this report.




                                                                                                                                                          ge 2003 annual ≥epo≥t 103
    notes to consolidated financial statements




    NOTE 28                                                                       We use currency forwards and options to manage exposures to
    de≥ivatives and othe≥ financial inst≥uments                                changes in currency exchange rates associated with commercial
                                                                              purchase and sale transactions. These instruments permit us to
    Derivatives and hedging
                                                                              eliminate the cash flow variability, in local currency, of costs or
    Exchange rate and interest rate risks are managed with a variety of       selling prices denominated in currencies other than the functional
    straightforward techniques, including match funding and selective         currency. In addition, we use these instruments, along with interest
    use of derivatives. We use derivatives to mitigate or eliminate certain   rate and currency swaps, to optimize borrowing costs and invest-
    financial and market risks because we conduct business in diverse         ment returns. For example, currency swaps and non-functional
    markets around the world and local funding is not always efficient.        currency borrowings together provide lower funding costs than
    In addition, we use derivatives to adjust the debt we are issuing to      could be achieved by issuing debt directly in a given currency.
    match the fixed or floating nature of the assets we are acquiring.              At December 31, 2003, amounts related to derivatives qualify-
    We apply strict policies to manage each of these risks, including         ing as cash flow hedges amounted to a reduction of equity of $1,792
    prohibitions on derivatives trading, derivatives market-making or         million, of which we expect to transfer $392 million to earnings in
    other speculative activities.                                             2004 along with the earnings effects of the related forecasted trans-
        To qualify for hedge accounting, the details of the hedging           actions. At December 31, 2003, the amount of unrecognized losses
    relationship must be formally documented at inception of the              related to cash flow hedges of short-term borrowings was $2,242
    arrangement, including the risk management objective, hedging             million. In 2003, there were no forecasted transactions that failed
    strategy, hedged item, specific risks that are being hedged, the           to occur. At December 31, 2003, the maximum term of derivative
    derivative instrument and how effectiveness is being assessed.            instruments that hedge forecasted transactions, other than interest
    The derivative must be highly effective in offsetting either              rate swaps designated as hedges of commercial paper (discussed in
    changes in fair value or cash flows, as appropriate, for the risk          note 18), was 24 months.
    being hedged. Effectiveness is evaluated on a retrospective and
    prospective basis based on quantitative measures of correlation.          Fair value hedges
    If a hedge relationship becomes ineffective, it no longer qualifies        Fair value hedges are hedges that eliminate the risk of changes in
    as a hedge. Any excess gains or losses attributable to such ineffec-      the fair values of assets, liabilities and certain types of firm com-
    tiveness, as well as subsequent changes in the fair value of the          mitments. For example, we will use an interest rate swap in which
    derivative, are recognized in earnings.                                   we receive a fixed rate of interest and pay a variable rate of interest
                                                                              to change the cash flow profile of a fixed rate borrowing to match
    Cash flow hedges
                                                                              the variable rate financial asset that it is funding. We record
    Cash flow hedges are hedges that use simple derivatives to offset          changes in fair value of derivatives designated and effective as fair
    the variability of expected future cash flows. Variability can appear      value hedges in earnings, offset by corresponding changes in the
    in floating rate assets, floating rate liabilities or from certain types    fair value of the hedged item.
    of forecasted transactions, and can arise from changes in interest            We use interest rate swaps, currency swaps and interest rate
    rates or currency exchange rates. For example, GECS often borrows         and currency forwards to hedge the effect of interest rate and cur-
    at a variable rate of interest to fund our financial services busi-        rency exchange rate changes on local and nonfunctional currency
    nesses. If Commercial Finance needs the funds to make a floating           denominated fixed-rate borrowings and certain types of fixed-
    rate loan, there is no exposure to interest rate changes, and no          rate assets. Fair value adjustments decreased the carrying amount
    hedge is necessary. However, upon making a fixed rate loan, we             of debt outstanding at December 31, 2003, by $1,671 million. We
    will contractually commit to pay a fixed rate of interest to a coun-       use equity options to hedge price changes in investment securities
    terparty who will pay us a variable rate of interest (an “interest rate   and, at Insurance, equity-indexed annuity liabilities.
    swap”). We then designate this swap as a cash flow hedge of the
    associated variable rate borrowing. If, as expected, the derivative is    Net investment hedges
    perfectly effective in offsetting variable interest in the borrowing,     Net investment hedges are hedges that use derivative contracts or
    we record changes in its fair value in a separate component in            cash instruments to hedge the foreign currency exposure of a net
    equity, then release those changes to earnings contemporaneously          investment in a foreign operation. We manage currency exposures
    with the earnings effects of the hedged item. Further information         that result from net investments in affiliates principally by funding
    about hedge effectiveness is provided on page 105.                        assets denominated in local currency with debt denominated in
                                                                              that same currency. In certain circumstances, we manage such
                                                                              exposures with currency forwards and currency swaps.




104 ge 2003 annual ≥epo≥t
                                                                                                       notes to consolidated financial statements




Derivatives not designated as hedges                                     below), as measured by current market value of the derivative con-
We must meet specific criteria in order to apply any of the three         tract, no additional transactions are permitted to be executed until
forms of hedge accounting. For example, hedge accounting is not          the exposure with that counterparty is reduced to an amount that
permitted for hedged items that are marked to market through             is within the established limits. Swaps are required to be executed
earnings. We use derivatives to hedge exposures when it makes            under master agreements containing mutual credit downgrade
economic sense to do so, including circumstances in which the            provisions that provide the ability to require assignment or termi-
hedging relationship does not qualify for hedge accounting as            nation in the event either party is downgraded below A3 or A-.
described in the following paragraph. We also will occasionally              To further mitigate credit risk, in certain cases we have entered
receive derivatives, such as equity warrants, in the ordinary course     into collateral arrangements that provide us with the right to hold
of business. Derivatives that do not qualify for hedge accounting        collateral when the current market value of derivative contracts
are marked to market through earnings.                                   exceeds an exposure threshold. Under these arrangements, we may
    We use option contracts, including caps, floors and collars, as an    receive U.S. Treasury and other highly-rated securities or cash to
economic hedge of changes in interest rates, currency exchange           secure our exposure to counterparties; such collateral is available
rates and equity prices on certain types of assets and liabilities. We   to us in the event that a counterparty defaults. From an economic
occasionally obtain equity warrants as part of sourcing or financing      standpoint, we evaluate credit risk exposures and compliance with
transactions. Although these instruments are considered to be            credit exposure limits net of such collateral. If the downgrade
derivatives, their economic risk is similar to, and managed on the       provisions had been triggered at December 31, 2003, we could
same basis as, other equity instruments we hold.                         have been required to disburse up to $3.8 billion and could have
                                                                         claimed $2.4 billion from counterparties (including $1.3 billion of
Earnings effects of derivatives                                          collateral that has been pledged to us).
The table that follows provides additional information about the             Fair values of our derivative assets and liabilities represent the
earnings effects of derivatives. In the context of hedging relation-     replacement value of existing derivatives at market prices and
ships, “effectiveness” refers to the degree to which fair value          can change significantly from period to period based on, among
changes in the hedging instrument offset the corresponding               other factors, market movements and changes in our positions.
expected earnings effects of the hedged item. Certain elements of        At December 31, 2003 and 2002, gross fair value gains amount-
hedge positions cannot qualify for hedge accounting under SFAS           ed to $5.5 billion and $5.0 billion, respectively. At December 31,
133 whether effective or not, and must therefore be marked to            2003 and 2002, gross fair value losses amounted to $6.9 billion
market through earnings. Time value of purchased options is the          and $7.1 billion, respectively.
most common example of such elements in instruments we use.                  The following tables illustrate our policy relating to exposure
Pre-tax earnings effects of such items are shown in the following        limits to counterparties.
table as “Amounts excluded from the measure of effectiveness.”
                                                                         COUNTERPARTY CREDIT CRITERIA
December 31 (In millions)                          2003           2002                                                                                Credit rating

CASH FLOW HEDGES                                                                                                                               Moody’s                   S&P

Ineffectiveness                                    $(19)         $(24)   Foreign exchange forwards less than one year                             P-1                    A-1
Amounts excluded from the                                                Other derivatives less than one year                                     Aa3 (a)               AA– (a)
  measure of effectiveness                           —             —     All derivatives between one and five years                                Aa3 (a)               AA– (a)
FAIR VALUE HEDGES                                                        All derivatives greater than five years                                   Aaa (a)               AAA (a)
Ineffectiveness                                      —              3
Amounts excluded from the                                                (a)   Counterparties that have an obligation to provide collateral to cover credit exposure in
  measure of effectiveness                           —              3          accordance with a credit support agreement must have a minimum A3/A- rating.



                                                                         EXPOSURE LIMITS
Counterparty credit risk
                                                                                                                                             Exposure
The risk that counterparties to derivative contracts will default and
                                                                                                                                               Greater than one year
not make payments to us according to the terms of the agreements                                                          Less than
                                                                         (In millions)                                     one year      With collateral    Without collateral
is counterparty credit risk. We manage counterparty credit risk on
an individual counterparty basis, which means that we net expo-          Minimum rating
sures on transactions by counterparty where legal right of offset         Aaa/AAA                                            $150               $100                  $75
                                                                          Aa3/AA–                                             150                 50                   50
exists to determine the amount of exposure to each counterparty.
                                                                          A3/A–                                               150                  5          Not allowed
When a counterparty exceeds credit exposure limits (see table




                                                                                                                                       ge 2003 annual ≥epo≥t                     105
    notes to consolidated financial statements




    FINANCIAL INSTRUMENTS

                                                                                                             2003                                                     2002

                                                                                                                  Assets (liabilities)                                     Assets (liabilities)

                                                                                            Notional         Carrying              Estimated        Notional        Carrying                Estimated
    December 31 (In millions)                                                               amount        amount (net)              fair value      amount       amount (net)                fair value

    GE
    Investments and notes receivable                                                    $÷«÷÷÷«(a)        $«««««««645         $÷«««««645         $÷÷÷÷÷(a)       $«««««««567             $÷«««««567
    Borrowings (b)(c)                                                                            (a)        (10,943)           (10,991)                  (a)         (9,756)                (9,816)
    GECS
    Assets
      Time sales and loans                                                                       (a)       165,384               164,696                 (a)       138,695                 140,309
      Other commercial and residential mortgages                                                 (a)         8,759                 9,085                 (a)         8,093                   8,461
      Consolidated, liquidating securitization entities (d)                                      (a)        26,463                26,469                 (a)            —                       —
      Other financial instruments                                                                 (a)         2,701                 2,701                 (a)         6,702                   6,703
    Liabilities
      Borrowings (b)(c)                                                                          (a)      (295,528)            (300,189)                 (a)      (270,962)               (281,035)
      Investment contract benefits                                                                (a)        (34,224)             (34,035)                (a)        (37,814)                (37,522)
      Insurance — financial guarantees and credit life (e)                                171,338              (3,935)              (3,935)        312,489             (3,614)                 (3,519)
      Consolidated, liquidating securitization entities (d)                                      (a)        (25,721)             (25,714)                (a)              —                       —
    Other firm commitments
      Ordinary course of business lending commitments (f)
        Fixed rate                                                                          2,158                   —                    —            842                   —                      —
        Variable rate                                                                       8,923                   —                    —         11,114                   —                      —
      Unused revolving credit lines
        Commercial
          Fixed rate                                                                        3,396                   —                    —          8,879                   —                      —
          Variable rate                                                                    23,167                   —                    —         19,646                   —                      —
        Consumer — principally credit cards
          Fixed rate                                                                     111,392                    —                    —        136,249                   —                      —
          Variable rate                                                                  121,806                    —                    —        122,836                   —                      —

    (a)   These financial instruments do not have notional amounts.
    (b)   Includes effects of interest rate swaps.
    (c)   See note 18.
    (d)   See note 29.
    (e)   See note 19.
    (f)   Excludes inventory financing arrangements which may be withdrawn at our option of $4.2 billion and $4.7 billion as of December 31, 2003 and 2002, respectively.



    Assets and liabilities that are reflected in the accompanying finan-                                 Borrowings
    cial statements at fair value are not included in the above disclo-                                Based on discounted future cash flows using current market rates
    sures; such items include cash and equivalents, investment                                         which are comparable to market quotes.
    securities, separate accounts and derivative financial instruments.
    Other assets and liabilities — those not carried at fair value — are                               Investment contract benefits
    discussed below. Apart from certain of our borrowings and certain                                  Based on expected future cash flows, discounted at currently
    marketable securities, few of the instruments discussed below are                                  offered discount rates for immediate annuity contracts or cash
    actively traded and their fair values must often be determined using                               surrender values for single premium deferred annuities.
    models. Although we have made every effort to represent accurate
                                                                                                       All other instruments
    fair values in this section, it would be unusual if the estimates could
    actually have been realized at December 31, 2003 or 2002.                                          Based on comparable market transactions, discounted future
        A description of how we estimate fair values follows.                                          cash flows, quoted market prices, and/or estimates of the cost to
                                                                                                       terminate or otherwise settle obligations.
    Time sales and loans
    Based on quoted market prices, recent transactions and/or dis-
    counted future cash flows, using rates at which similar loans would
    have been made to similar borrowers.




106 ge 2003 annual ≥epo≥t
                                                                                                                                   notes to consolidated financial statements




NOTE 29                                                                                              transferring assets to these entities, balances will decrease as the
securitization entities                                                                              assets repay. Given their unique nature the entities are classified
                                                                                                     in separate financial statement captions, “Consolidated, liquidating
We securitize financial assets in the ordinary course of business to
                                                                                                     securitization entities.”
improve shareowner returns. The securitization transactions we
                                                                                                         We continue to engage in off-balance sheet securitization
engage in are similar to those used by many financial institutions.
                                                                                                     transactions with third-party entities and to use public market,
Beyond improving returns, these securitization transactions serve
                                                                                                     term securitizations. Further information about these activities is
as funding sources for a variety of diversified lending and securities
                                                                                                     provided on page 108.
transactions. Historically, we have used both supported and third-
party entities to execute securitization transactions funded in the                                  On-balance sheet arrangements
commercial paper and term bond markets.                                                              The following tables summarize the revenues, expenses, assets, lia-
    The following table represents assets in securitization entities                                 bilities and cash flows associated with consolidated securitization
both consolidated and off-balance sheet.                                                             entities.
December 31 (In millions)                                                 2003                2002   (In millions)                                                                             2003

Receivables secured by:                                                                              REVENUES (a)
  Equipment                                                         $15,616              $13,926     Interest on time sales and loans                                                         $513
  Commercial real estate                                             16,713               14,168     Financing leases                                                                          129
  Other assets                                                        9,114               12,000     Other                                                                                      53
Credit card receivables                                               8,581               11,292
                                                                                                     Total                                                                                    $695
GE trade receivables                                                  3,249                2,841
                                                                                                     EXPENSES (a)
Other trade receivables                                                     —                 693
                                                                                                     Interest                                                                                 $393
Total securitized assets                                            $53,273              $54,920
                                                                                                     Costs and expenses (b)                                                                    114
On-balance sheet assets in
                                                                                                     Total                                                                                    $507
 securitization entities (a)                                        $26,463              $÷÷÷«—
Off-balance sheet (b)(c)                                                                             (a)   Entities consolidated on July 1, 2003.
  Supported entities                                                  5,759               42,222     (b)   Includes minority interest expense of $20 million.
  Other                                                              21,051               12,698
Total securitized assets                                            $53,273              $54,920
                                                                                                     December 31 (In millions)                                                                 2003
(a)   Related credit and liquidity support amounted to $18.4 billion, net of $5.3 billion of
                                                                                                     ASSETS
      participated liquidity and arrangements that defer liquidity beyond 2005. This amount
      includes credit support, in which we provide recourse for a maximum of $8.6 billion            Cash                                                                                   $÷«÷684
      at December 31, 2003.                                                                          Debt securities                                                                          1,566
(b)   Liabilities for recourse obligations related to off-balance sheet assets were $0.1 billion     Financing receivables (a)(b)                                                            21,877
      and $0.3 billion at December 31, 2003 and 2002, respectively.
(c)
                                                                                                     Other                                                                                    2,336
      At December 31, 2003 and 2002, related credit and liquidity support amounted to
      $3.1 billion and $27.5 billion, respectively, net of participated liquidity and arrangements   Total                                                                                  $26,463
      that defer liquidity beyond one year which amounted to $2.4 billion and $13.6 billion,
                                                                                                     LIABILITIES
      respectively. These amounts include credit support of $5.5 billion and $17.2 billion at
      December 31, 2003 and 2002, respectively.                                                      Short-term borrowings (c)                                                              $22,842
                                                                                                     Long-term notes payable (d)                                                              1,948
                                                                                                     Other liabilities                                                                          517
Securitized assets that are on-balance sheet were consolidated on
                                                                                                     Minority interest                                                                          414
July 1, 2003, upon adoption of FIN 46, Consolidation of Variable
                                                                                                     Total                                                                                  $25,721
Interest Entities. Although we do not control these entities, con-
solidation was required because we provided a majority of the                                        (a)   Includes $0.9 billion of retained interests associated with securitized assets
credit and liquidity support for their activities. A majority of these                                     now consolidated.
                                                                                                     (b)   At July 1, 2003, the carrying amount of financing receivables was recorded
entities were established to issue asset-backed securities, using
                                                                                                           net of a previously recorded recourse obligation of $0.1 billion.
assets that were sold by us and by third parties. These entities dif-                                (c)   Primarily commercial paper with original maturities less than one year.
fer from others included in our consolidated statements because                                            Average interest rate of 1.1%, including the effect of interest rate swaps
                                                                                                           designated and effective as hedges.
the assets they hold are legally isolated and are unavailable to us
                                                                                                     (d)   Weighted average rate of 2.0%; matures between 2005 and 2007.
under any circumstances. Use of the assets is restricted by terms
of governing documents, and their liabilities are not our legal
obligations. Repayment of their liabilities depends primarily on
cash flows generated by their assets. Because we have ceased




                                                                                                                                                                    ge 2003 annual ≥epo≥t             107
    notes to consolidated financial statements




                                                                                      (In millions)                                                                             2003
    The portfolio of financing receivables consists of loans and financ-
    ing lease receivables secured by equipment, commercial real estate                CASH FLOWS — INVESTING ACTIVITIES (a)
    and other assets; credit card receivables; and trade receivables.                 Net collections                                                                   $÷÷«9,150
    Examples of these assets include loans and leases on manufactur-                  Other                                                                                   225
    ing and transportation equipment, loans on commercial property,                   Total                                                                             $÷÷«9,375
    commercial loans, and balances of high credit quality accounts                    CASH FLOWS — FINANCING ACTIVITIES (a)
    from sales of a broad range of products and services to a diversified              Newly issued debt                                                                 $«157,593
    customer base. Under terms of credit and liquidity support agree-                 Repayments and other reductions                                                    (167,354)
    ments with these entities, when predefined triggers are met related                Total                                                                             $÷««(9,761)
    to asset credit quality or a put is exercised by beneficial interest
                                                                                      (a)   Entities consolidated on July 1, 2003.
    holders, we may be required to repurchase financing receivables.
    Upon such repurchases, the underlying receivable is classified as
    “Financing receivables” (disclosed in note 12).                                   Derivatives included in consolidated securitization entities consist
       “Financing receivables” includes $3,827 million of direct                      principally of pay fixed, receive variable interest rate swaps. These
    financing leases, an analysis of which follows.                                    swaps are designated, and effective, as hedges of fixed rate assets
                                                                                      (fair value hedges) or variable rate liabilities (cash flow hedges).
    December 31 (In millions)                                                2003     Risk management objectives are consistent with those described
    DIRECT FINANCING LEASES                                                           in note 28. Ineffectiveness recognized on fair value hedges was zero;
    Total minimum lease payments receivable                              $4,192       ineffectiveness recognized on cash flow hedges was insignificant.
    Estimated unguaranteed residual value of leased assets                   14       No amounts were excluded from the measure of ineffectiveness of
    Less deferred income                                                   (379)      either fair value or cash flow hedges.
    Investment in financing leases                                        $3,827
                                                                                      Off-balance sheet arrangements

    A schedule of changes in the financing receivables balance since                   As discussed on page 107, assets in off-balance sheet securitiza-
    we adopted FIN 46 follows.                                                        tion entities amounted to $26.8 billion and $54.9 billion at
                                                                                      December 31, 2003 and 2002, respectively.
    (In millions)                                                            2003         Additional information about securitization transactions
    Balance at July 1                                                   $31,395       follows.
    Net collections                                                      (9,150)
                                                                                      (In millions)                                       2003                2002               2001
    Net write-offs                                                          (42))
    Credit and liquidity support repurchases                                 (54)     Gross gains                                    $«1,394             $«1,796             $2,193
    All other                                                              (272)      Reduction of retained interest
    Balance at December 31                                              $21,877         in revolving facilities, before
                                                                                        replenishment                                  (1,160)             (1,029)              (866)
                                                                                      Net                                            $÷÷234              $«÷«767             $1,327
    Although we expect actual maturities to differ from contractual
    maturities, the following table summarizes the contractual matu-
    rities of financing receivables in our consolidated securitization                 Amounts recognized in our financial statements related to sales
    entities.                                                                         to off-balance sheet securitization entities are as follows:

                                                                                      December 31 (In millions)                                              2003                2002
    CONTRACTUAL MATURITIES

                                                     Total time sales   Net rentals   Retained interests                                                 $2,663              $3,283
    (In millions)                                          and loans     receivable   Servicing assets (a)                                                  150                 340
    Due in                                                                            Recourse liability                                                    (75)               (261)
     2004                                                $÷4,810          $1,329      Total                                                              $2,738              $3,362
     2005                                                  1,317           1,001
                                                                                      (a)   Includes mortgage servicing rights related to an amortizing pool of mortgages associated
     2006                                                  1,325             636
                                                                                            with a business exited in 2000. As of December 31, 2003, the net carrying value of
     2007                                                  1,104             330            remaining mortgage servicing rights relating to these former operations was $115 million.
     2008                                                    965             130
     2009 and later                                        8,529             766
    Total                                                $18,050          $4,192




108 ge 2003 annual ≥epo≥t
                                                                                                                 notes to consolidated financial statements




•       RETAINED INTERESTS.   When we securitize receivables, we deter-               Key assumptions used in measuring the fair value of retained
        mine fair value based on discounted cash flow models that                      interests in securitizations and the sensitivity of the current fair
        incorporate, among other things, assumptions including loan                   value of residual cash flows to changes in those assumptions are
        pool credit losses, prepayment speeds and discount rates.                     noted in the following table. These assumptions may differ from
        These assumptions are based on our experience, market                         those in the previous table as these relate to all outstanding
        trends and anticipated performance related to the particular                  retained interests as of December 31, 2003.
        assets securitized. Subsequent to recording retained interests,                                                               Commercial      Other   Credit card
                                                                                      (In millions)                       Equipment    real estate   assets   receivables
        we review recorded values quarterly in the same manner and
        using current assumptions. We recognize impairments when                      DISCOUNT RATE (a)                        6.5%       10.7%        7.7%        10.9%
        carrying amounts exceed current fair values.                                  Effect of:
                                                                                        10% Adverse change                    $(10)      $«(14)      $(30)        $÷«(8)
•       SERVICING ASSETS.  Following a securitization transaction, we
                                                                                        20% Adverse change                     (20)        (27)       (57)         (25)
        retain responsibility for servicing the receivables, and are
                                                                                      PREPAYMENT RATE (a)                     11.0%         4.1%       1.0%        15.4%
        therefore entitled to an ongoing fee based on the outstanding
                                                                                      Effect of:
        principal balances of the receivables. Servicing assets are                     10% Adverse change                    $÷(5)      $÷«(1)      $÷(7)        $«(33)
        primarily associated with residential mortgage loans. Their                         20% Adverse change                 (11)          (3)       (14)         (62)
        value is subject to credit, prepayment and interest rate risk.                ESTIMATE OF CREDIT LOSSES (a)            2.0%         1.9%       0.1%         9.9%
•       RECOURSE LIABILITY. Certain transactions require credit                       Effect of:
        support agreements. As a result, we provide for expected                        10% Adverse change                    $÷(2)      $÷«(8)      $÷(2)        $«(46)
        credit losses under these agreements and such amounts                           20% Adverse change                      (3)       (16)         (4)          (91))
                                                                                      Remaining weighted
        approximate fair value.
                                                                                        average lives (in months)               43        112          64            7
The following table summarizes data related to securitization                         Net credit losses                       $«««5      $÷—         $«14         $443
sales that we completed during 2003.                                                  Delinquencies                             52         52           4          139

                                                Commercial      Other   Credit card
                                                                                      (a)   Based on weighted averages.
(In millions)                       Equipment    real estate   assets   receivables

Cash proceeds from
  securitization                     $5,416       $3,082 $÷2,009              N/A     GUARANTEE AND REIMBURSEMENT CONTRACTS.       We provide protection
Proceeds from collections                                                             to certain counterparties of interest rate swaps entered into by
  reinvested in new receivables         N/A            N/A $14,047      $11,453       securitization-related entities related to changes in the relation-
Weighted average lives                                                                ship between commercial paper interest rates and the timing and
  (in months)                             29            72      106              7    amount of the payment streams. These arrangements provide
ASSUMPTIONS AS OF SALE DATE (a)                                                       protection for the life of the assets held by the SPE but generally
      Discount rate                      6.6%         11.5%     6.4%         11.2%
                                                                                      amortize in proportion to the decline in underlying asset principal
      Prepayment rate                   10.1%         10.8%     4.6%         15.0%
                                                                                      balances. The notional amount of such support is $0.3 billion; fair
      Estimate of credit losses          1.6%          1.6%     0.2%         10.8%
                                                                                      value of the related assets was $1 million at year-end 2003.
(a)   Based on weighted averages.




                                                                                                                                          ge 2003 annual ≥epo≥t 109
      notes to consolidated financial statements




      NOTE 30                                                                •      CONTINGENT CONSIDERATION. These are agreements to provide

      commitments and gua≥antees                                                    additional consideration in a business combination to the
                                                                                    seller if contractually specified conditions related to the
      Commitments
                                                                                    acquired entity are achieved. At December 31, 2003, we had
      In our Aircraft Engines business, we have committed to provide                recognized liabilities for estimated payments amounting to
      financial assistance on future sales of aircraft equipped with our             $96 million of our exposure of $0.4 billion.
      engines, totaling $1.2 billion at year-end 2003. In addition, our
      Commercial Finance business had placed multiple-year orders            At year-end 2003, we had $8,084 million of commitments to
      for various Boeing, Airbus and other aircraft with list prices         acquire broadcast material and the rights to broadcast television
      approximating $13.5 billion at year-end 2003.                          programs, including U.S. television rights to future Olympic
         At year-end 2003, we were committed under the following             Games, and commitments under long-term television station affil-
      guarantee arrangements beyond those provided on behalf of SPEs         iation agreements that require payments through 2012.
      (see note 29):                                                             Our guarantees are provided in the ordinary course of business.
                                                                             We underwrite these guarantees considering economic, liquidity
      •   LIQUIDITY SUPPORT. Liquidity support provided to holders of
                                                                             and credit risk of the counterparty. We believe that the likelihood
          certain variable rate bonds issued by municipalities amounted      is remote that any such arrangements could have a significant
          to $3.8 billion at December 31, 2003. If holders elect to sell     adverse effect on our financial position, results of operations or liq-
          supported bonds that cannot be remarketed, we are obligated        uidity. We record liabilities, as disclosed above, for such guarantees
          to repurchase them at par. If called upon, our position would      based on our best estimate of probable losses, which considers
          be secured by the repurchased bonds. While we hold any             amounts recoverable under recourse provisions. For example, at
          such bonds, we would receive interest payments from the            year-end 2003, the total fair value of aircraft securing our airline
          municipalities at a rate that is in excess of the stated rate on   industry guarantees exceeded the guaranteed amounts, net of the
          the bond. To date, we have not been required to perform            associated allowance for losses.
          under such arrangements. In addition, we are currently not
          providing any new liquidity facilities and will continue to        Product warranties
          reassess the decision in the future. The current liquidity         We provide for estimated product warranty expenses when we sell
          facilities discussed above will remain in effect in accordance     the related products. Because warranty estimates are forecasts
          with their original terms.                                         that are based on the best available information — mostly historical
      •   CREDIT SUPPORT. We have provided $6.3 billion of credit            claims experience — claims costs may differ from amounts provided.
          support on behalf of certain customers or associated               An analysis of changes in the liability for product warranties follows.
          companies, predominantly joint ventures and partnerships,          (In millions)                                       2003      2002     2001
          using arrangements such as standby letters of credit and
                                                                             Balance at January 1                            $1,304      $÷«968    $«767
          performance guarantees. These arrangements enable our
                                                                             Current year provisions                            751         918      841
          customers and associated companies to execute transactions
                                                                             Expenditures (a)                                  (749)       (694)    (658)
          or obtain desired financing arrangements with third parties.        Other changes (b)                                  131         112       18
          Should the customer or associated company fail to perform
                                                                             Balance at December 31                          $1,437      $1,304    $«968
          under the terms of the transaction or financing arrangement,
          we would be required to perform on their behalf. Under most        (a)   Primarily related to Power Systems.
          such arrangements, our guarantee is secured, usually by the        (b)   Primarily related to acquisitions at Power Systems.

          asset being purchased or financed but possibly by total assets
          of the customer or associated company. The length of these
          credit support arrangements parallels the length of the related
          financing arrangements or transactions. The liability for such
          credit support was $85 million at December 31, 2003.
      •   INDEMNIFICATION AGREEMENTS. These are agreements that
          require us to fund up to $1.2 billion under residual value
          guarantees on a variety of leased equipment and $0.2 billion
          of other indemnification commitments arising from sales
          of businesses or assets. Under most of our residual value
          guarantees, our commitment is secured by the leased asset
          at termination of the lease. The liability for indemnification
          agreements was $66 million at December 31, 2003.




110   ge 2003 annual ≥epo≥t
                                                                                                                notes to consolidated financial statements




NOTE 31
qua≥te≥ly info≥mation (unaudited)
                                                                  First quarter              Second quarter                Third quarter               Fourth quarter

(Dollar amounts in millions; per-share amounts in dollars)       2003             2002       2003             2002       2003              2002       2003              2002

CONSOLIDATED OPERATIONS
Earnings before accounting changes                           $÷3,214        $÷3,518      $÷3,794       $÷4,426       $÷4,021        $÷4,087       $÷4,560       $÷3,102
Cumulative effect of accounting changes                         (215)        (1,015)          —             —           (372)            —             —             —
Net earnings                                                 $÷2,999        $÷2,503      $÷3,794       $÷4,426       $÷3,649        $÷4,087       $÷4,560       $÷3,102
Per-share amounts before
 accounting changes
    Diluted earnings per share                               $««««0.32      $««««0.35    $««««0.38     $««««0.44     $««««0.40      $««««0.41     $««««0.45     $««««0.31
    Basic earnings per share                                      0.32           0.35         0.38          0.45          0.40           0.41          0.45          0.31
Per-share amounts after
 accounting changes
    Diluted earnings per share                                   0.30             0.25       0.38             0.44       0.36              0.41       0.45              0.31
     Basic earnings per share                                    0.30             0.25       0.38             0.45       0.36              0.41       0.45              0.31
SELECTED DATA
GE
 Sales of goods and services                                 $15,758        $16,748      $17,640       $19,459       $16,463        $17,386       $20,581       $19,724
 Gross profit from sales                                        4,836          5,067        5,590         6,319         4,568          5,702         6,045         6,033
GECS
 Total revenues                                               14,867          14,024      15,887         13,970       17,007          15,115       16,518         15,590
 Earnings before accounting changes                            1,670           1,657       1,602          1,327        2,207           1,551        2,275             91



For GE, gross profit from sales is sales of goods and services less
costs of goods and services sold.
    Fourth quarter earnings in 2002 included an after-tax charge
of $1,386 million ($0.14 per share) to record adverse development
at Insurance.
    Earnings-per-share amounts for each quarter are required to
be computed independently. As a result, their sum does not
equal the total year basic earnings per share after accounting
changes in 2003.


NOTE 32
subsequent events
We announced in November 2003 our intent for an initial public
offering (IPO) of a new company, Genworth Financial, Inc.
(Genworth), comprising most of our life and mortgage insurance
businesses. We plan to sell approximately one-third of Genworth’s
equity in the IPO, and we expect (subject to market conditions)
to reduce our ownership over the next three years as Genworth
transitions to full independence. We commenced the IPO process
in January 2004 and expect to complete the IPO in the first half
of the year, subject to market conditions and receipt of various
regulatory approvals.
    On January 14, 2004, Commercial Finance acquired most of
the commercial lending business of Transamerica Finance
Corporation. This acquisition of approximately $8.5 billion in
managed assets expands our distribution finance business and
enhances our leasing and commercial loan financing in equip-
ment, real estate and international structured finance.




                                                                                                                                             ge 2003 annual ≥epo≥t             111
      notes to consolidated financial statements




      ou≥ businesses                                                           Industrial Products and Systems

      A description of operating segments for General Electric Company         Electrical distribution and control equipment (including power
      and consolidated affiliates as of December 31, 2003, and the basis        delivery and control products such as transformers, meters, relays,
      for presentation in this report, follows.                                capacitors and arresters); measurement and sensing equipment
                                                                               (products and subsystems for sensing temperatures, humidity and
      Aircraft Engines                                                         pressure); security equipment and systems (including card access
      Jet engines and replacement parts and repair and maintenance             systems, video and sensor monitoring equipment and integrated
      services for all categories of commercial aircraft (short/medium,        facility monitoring systems); electric motors and related products;
      intermediate and long-range); for a wide variety of military aircraft,   a broad range of electrical and electronic industrial automation
      including fighters, bombers, tankers and helicopters; and for             products (including drive systems); installation, engineering and
      executive and commuter aircraft. Products and services are sold          repair services, which includes management and technical
      worldwide to airframe manufacturers, airlines and government             expertise for large projects such as process control systems; and
      agencies. Also includes aircraft engine derivatives used as marine       GE Supply, a network of electrical supply houses. Markets are
      propulsion and industrial power sources; the latter is also reported     extremely diverse. Products and services are sold to commercial
      in Power Systems.                                                        and industrial end-users, including utilities; original equipment
                                                                               manufacturers; electrical distributors; retail outlets; railways;
      Commercial Finance                                                       and transit authorities. Increasingly, products and services are
      Loans, financing and operating leases, and other financial services        developed for and sold in global markets.
      for customers, including manufacturers, distributors and end-
      users, for a variety of equipment and major capital assets including     Insurance
      industrial facilities and equipment, energy-related facilities, com-     U.S. and international multiple-line property and casualty rein-
      mercial and residential real estate loans and investments, vehicles,     surance, certain directly written specialty insurance and life rein-
      aircraft, and equipment used in construction, manufacturing, data        surance, consumer investment, insurance and retirement
      processing and office applications, electronics and telecommunica-        services, private mortgage insurance and, before its sale in the
      tions, and healthcare.                                                   fourth quarter of 2003, financial guaranty insurance, principally
                                                                               on municipal bonds and asset-backed securities.
      Consumer Finance
      Card receivables, installment loans, auto loans and leases, and          Medical Systems
      residential mortgages for customers on a global basis.                   Medical imaging systems such as magnetic resonance (MR) and
                                                                               computed tomography (CT) scanners, x-ray, nuclear imaging and
      Consumer Products                                                        ultrasound, as well as diagnostic cardiology and patient monitor-
      Major appliances and related services for products such as refrig-       ing devices; related services, including equipment monitoring and
      erators, freezers, electric and gas ranges, cooktops, dishwashers,       repair, computerized data management and customer productivity
      clothes washers and dryers, microwave ovens, room air condi-             services. Products and services are sold worldwide to hospitals and
      tioners and residential water system products. Distributed to            medical facilities.
      both retail outlets and direct to consumers, mainly for the
      replacement market, and to building contractors and distributors         Plastics
      for new installations. Lighting products include a wide variety of       High-performance engineered plastics used in applications
      lamps, lighting fixtures and wiring devices. Products and services        such as automobiles and housings for computers and other
      are sold in North America and in global markets under various            business equipment, and ABS resins. Products are sold worldwide
      GE and private-label brands.                                             to a diverse customer base consisting mainly of manufacturers.

      Equipment Management                                                     NBC
      Rentals, leases, sales, asset management services and loans for          Principal businesses are the furnishing of U.S. network televi-
      portfolios of commercial and transportation equipment, including         sion services to more than 230 affiliated stations, production of
      tractors, trailers, auto fleets, railroad rolling stock, intermodal       television programs, operation of 29 VHF and UHF television
      shipping containers and modular space units.                             broadcasting stations, operation of four cable/satellite networks
                                                                               around the world, and investment and programming activities in
                                                                               the Internet, multimedia and cable television.




112   ge 2003 annual ≥epo≥t
                                                                        notes to consolidated financial statements




Power Systems
Power plant products and services, including design, installation,
operation and maintenance services sold into global markets. Gas
turbines, steam turbines, generators and related services including
total asset optimization solutions and equipment upgrades are sold
to power generation and other industrial customers. Renewable
energy solutions including wind turbines and hydro. Advanced
turbomachinery products and related services for the oil and gas
market, also including total pipeline integrity solutions. Substation
automation and network solutions sold to power transmission and
distribution customers. Also includes portable and rental power
plants, nuclear reactors, fuel and nuclear support services.

Specialty Materials
Chemical water treatment programs; process additives; and fused
quartz and silicone products. Products and services are sold world-
wide to a diverse customer base consisting mainly of manufacturers.

Transportation Systems
Transportation systems products and maintenance services includ-
ing diesel and electric locomotives, transit propulsion equipment,
motorized wheels for off-highway vehicles, and railway signaling
communications systems.

All Other GECS
GECS activities and businesses that we have chosen not to allocate
to one of the four GECS segments, including IT Solutions, GE
Equity, the consolidation of certain entities in our financial state-
ments as a result of our July 1, 2003, adoption of FIN 46; Auto
Financial Services; and the U.S. Auto and Home business, which
was sold in the third quarter of 2003.




                                                                                           ge 2003 annual ≥epo≥t    113
      glossa≥y




      ADVERSE OR FAVORABLE DEVELOPMENT An adjustment to increase                  FINANCIAL LEVERAGE The relationship of debt to equity. Expressed
      (adverse development) or reduce (favorable development) the pro-            for financial services businesses as borrowings divided by equity.
      vision for estimated ultimate insurance losses in a year following          Expressed for industrial businesses as borrowings divided by
      the year in which the loss occurred.                                        total capital.

      BACKLOG  Unfilled customer orders for products and product serv-             FINANCING RECEIVABLES Investment in contractual loans and leases
      ices (12 months for product services).                                      due from customers (not investment securities).

      BORROWING Financial liability (short or long-term) that obliges us          FORWARD CONTRACT  Fixed price contract for purchase or sale of a
      to repay cash or another financial asset to another entity.                  specified quantity of a commodity, security, currency or other
                                                                                  financial instrument with delivery and settlement at a specified
      CASH EQUIVALENTS   Highly liquid debt instruments with maturities
                                                                                  future date. Commonly used as a hedging tool. See “Hedge.”
      of less than three months, such as commercial paper. Typically
      included with cash for reporting purposes, unless designated as             GOODWILL The premium paid for acquisition of a business.
      available for sale and included with investment securities.                 Calculated as the purchase price less the fair value of net assets
                                                                                  acquired (net assets are identified tangible and intangible assets,
      CASH FLOW HEDGES Qualifying derivative instruments that we use to
                                                                                  less liabilities assumed).
      protect ourselves against exposure to volatility in future cash flows.
      The exposure may be associated with an existing asset or liability,         GUARANTEED INVESTMENT CONTRACTS (GICs)  Deposit-type products
      or with a forecasted transaction. See “Hedge.”                              that guarantee a minimum rate of return, which may be fixed or
                                                                                  floating.
      COMMERCIAL PAPER Unsecured, unregistered promise to repay
      borrowed funds in a specified period ranging from overnight to               HEDGE A technique designed to eliminate risk. Often refers to the
      270 days.                                                                   use of derivative financial instruments to offset changes in inter-
                                                                                  est rates, currency exchange rates or commodity prices, although
      CUSTOMER SERVICE AGREEMENTS (also referred to as “product serv-
                                                                                  many business positions are “naturally hedged”— for example,
      ices agreements”) Contractual commitments, with multiple-year
                                                                                  funding a U.S. fixed rate investment with U.S. fixed rate borrow-
      terms, to provide specified services for products in our industrial
                                                                                  ings is a natural interest rate hedge.
      installed base — for example, monitoring, maintenance, overhaul
      and spare parts for a gas turbine/generator set installed in a cus-         INSURANCE RECEIVABLES     Receivables of our insurance businesses
      tomer’s power plant.                                                        associated with (1) reinsurance agreements in which those busi-
                                                                                  nesses legally transferred (ceded) insurance losses (and related
      DERIVATIVE INSTRUMENT A financial instrument or contract with
                                                                                  premiums) to reinsurers and are entitled to recovery of those
      another party (counterparty) that is structured to meet any of a
                                                                                  insurance losses; (2) premiums on insurance and reinsurance
      variety of financial objectives, including those related to fluctuations
                                                                                  contracts; (3) policy loans to policyholders of certain life insurance
      in interest rates, currency exchange rates and commodity prices.
                                                                                  contracts; and (4) premium funds on deposit with reinsurance
      Options, forwards and swaps are the most common derivative
                                                                                  customers as collateral for our obligations as a reinsurer.
      instruments we employ. See “Hedge.”
                                                                                  INTANGIBLE ASSET   A non-financial asset lacking physical substance,
      DIRECT WRITTEN PREMIUMS    Amounts charged to insureds in
                                                                                  such as goodwill, patents, trademarks and licenses. Also includes
      exchange for coverages provided in accordance with the terms of
                                                                                  present value of future profits, which are anticipated net discounted
      an insurance/reinsurance contract.
                                                                                  cash flows to be realized from certain in-force insurance, annuity
      EARNED PREMIUMS   Portion of the premium, net of any amount                 and investment contracts at the date we acquire a life insurance
      ceded, pertaining to the segment of the policy period for which             business.
      insurance coverage has been provided.
                                                                                  INTEREST RATE SWAP Agreement under which two counterparties
      EFFECTIVE TAX RATE    Provision for income taxes as a percentage of         agree to exchange one type of interest rate cash flow for another. In
      earnings before income taxes and accounting changes. Does not rep-          a typical arrangement, one party periodically will pay a fixed
      resent cash paid for income taxes in the current accounting period.         amount of interest, in exchange for which that party will receive
                                                                                  variable payments computed using a published index. See “Hedge.”
      EQUIPMENT LEASED TO OTHERS        Rental equipment we own that is
      available to rent and is stated at cost less accumulated depreciation.      INVESTMENT SECURITIES  Generally, an instrument that provides an
                                                                                  ownership position in a corporation (a stock), a creditor relation-
      FAIR VALUE HEDGE  Qualifying derivative instruments that we use to
                                                                                  ship with a corporation or governmental body (a bond), or rights
      eliminate the risk of changes in the fair value of assets, liabilities or
                                                                                  to ownership such as those represented by options, subscription
      certain types of firm commitments. Changes in the fair values of
                                                                                  rights and subscription warrants.
      derivative instruments that are designated and effective as fair
      value hedges are recorded in earnings, but are offset by correspon-
      ding changes in the fair values of the hedged items. See “Hedge.”




114   ge 2003 annual ≥epo≥t
                                                                                                                                         glossa≥y




MANAGED RECEIVABLES Total receivable amounts on which we con-              REINSURANCE A form of insurance that insurance companies buy
tinue to perform billing and collection activities, including receiv-      for their own protection.
ables that have been sold with and without credit recourse.
                                                                           RETROCESSION AGREEMENT    Contract to acquire third-party insur-
MATCH FUNDING    A risk control policy that provides funds for a par-      ance protection for reinsurance policies written. Retrocession is a
ticular financial asset having the same currency, maturity and              risk mitigation technique.
interest rate characteristics as that asset. Match funding ensures
                                                                           RETURN ON AVERAGE SHAREOWNERS’ EQUITY Earnings before account-
that we maintain initial financing spreads or margins for the life
                                                                           ing changes divided by average total equity (on an annual basis,
of a financial asset, and is executed directly, by issuing debt, or
                                                                           calculated using a five-point average).
synthetically, through a combination of debt and derivative finan-
cial instruments. For example, when we lend at a fixed interest             RETURN ON AVERAGE TOTAL CAPITAL INVESTED Earnings before
rate in the U.S., we can borrow those U.S. dollars either at a fixed        accounting changes plus the sum of after-tax interest and other
rate of interest or at a floating rate executed concurrently with a         financial charges and minority interest, divided by the sum of
pay-fixed interest rate swap. See “Hedge.”                                  total equity, borrowings and minority interest (on an annual
                                                                           basis, calculated using a five-point average).
MONETIZATION  Sale of financial assets to a third party for cash. For
example, we sell certain loans, credit card receivables and trade          SECURITIZATION A process whereby loans or other receivables are
receivables to third-party financial buyers, typically providing at         packaged, underwritten and sold to investors. In some instances,
least some credit protection and often agreeing to provide collec-         the assets sold are first transferred to an unconsolidated SPE.
tion and processing services for a fee. Monetization normally              These entities are structured to be bankruptcy remote in order to
results in gains on interest-bearing assets and losses on non-             isolate the credit risk of the assets from the overall credit risk of the
interest bearing assets.                                                   selling entity. Outside investors, usually institutions, typically pur-
                                                                           chase a debt instrument issued by the SPE. Whether or not credit
NET REVENUES   For our lending and leasing businesses, revenues
                                                                           risk associated with the securitized assets is retained by the seller
from services less interest and other financial charges.
                                                                           depends on the structure of the securitization. See “Monetization.”
OPERATING MARGIN   Sales of goods and services less the sum of cost
                                                                           SEPARATE ACCOUNT   Investments controlled by policyholders and
of goods and services sold plus selling, general and administrative
                                                                           associated with identical amounts reported as insurance liabilities.
expenses. Operating margin is often expressed as a percentage of
sales — the operating margin rate.                                         TURNOVER    Broadly based on the number of times that working
                                                                           capital is replaced during a year. Accounts receivable turnover is
OPERATING PROFIT  Earnings before interest and other financial
                                                                           total sales divided by the five-point average balance of customer
charges, income taxes and effects of accounting changes.
                                                                           receivables from sales of goods and services (trade receivables).
OPTION  The right, not the obligation, to execute a transaction at a       Inventory turnover is total sales divided by a five-point average
designated price, generally involving equity interests, interest           balance of inventories. See “Working Capital.”
rates, currencies or commodities. See “Hedge.”
                                                                           UNEARNED PREMIUMS   Portion of the premium received, net of any
PREMIUM   Rate that is charged under insurance/reinsurance                 amount ceded, that relates to future coverage periods.
contracts.
                                                                           UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES  Claims reserves
PRESENT VALUE OF FUTURE PROFITS     See “Intangible Asset.”                for events that have occurred, including both reported and
                                                                           incurred-but-not-reported (IBNR) reserves, and the expenses of
PRODUCT SERVICES   For purposes of the financial statement display of
                                                                           settling such claims.
sales and costs of sales on pages 70 and 71, “goods” is required by
U.S. Securities and Exchange Commission regulations to include all         VARIABLE INTEREST ENTITY Entity defined by Financial Accounting
sales of tangible products, and “services” must include all other          Standards Board Interpretation No. 46, and that must be consoli-
sales, including broadcasting and other services activities. We refer      dated by its primary beneficiary. A variable interest entity has one
to sales of both spare parts (goods) and related services as sales of      or both of the following characteristics: (1) its equity at risk is not
“product services,” which is an important part of our operations.          sufficient to permit the entity to finance its activities without
                                                                           additional subordinated financial support from other parties, or
PRODUCT SERVICES AGREEMENTS      See “Customer Service Agreements.”
                                                                           (2) as a group, the equity investors lack one or more of the follow-
PRODUCTIVITY The rate of increased output for a given level of input,      ing characteristics: (a) direct/indirect ability to make decisions, (b)
with both output and input measured in constant currency. A                obligation to absorb expected losses, or (c) right to receive expected
decline in output for a given level of input is “negative” productivity.   residual returns.

PROGRESS COLLECTIONS   Payments received from customers as                 WORKING CAPITAL   Sum of receivables from the sales of goods and
deposits before the associated work is performed or product is             services, plus inventories, less trade accounts payables and
delivered.                                                                 progress collections.




                                                                                                                         ge 2003 annual ≥epo≥t         115
                                                                                                              Exhibit 21

SUBSIDIARIES OF REGISTRANT


        General Electric's principal affiliates as of December 31, 2003, are listed below. All other affiliates, if
considered in the aggregate as a single affiliate, would not constitute a significant affiliate.


                                AFFILIATES OF REGISTRANT INCLUDED IN
                                 REGISTRANT'S FINANCIAL STATEMENTS

                                                                          Percentage of
                                                                              voting
                                                                            securities
                                                                           directly or
                                                                            indirectly         State or Country of
                                                                            owned by            incorporation or
                                                                          registrant (1)          organization

AMERICAN SILICONES, INC.                                                        100                  Indiana
BENTLY NEVADA, LLC                                                              100                 Delaware
CARIBE GE INTERNATIONAL ELECTRIC METERS CORP                                    100                Puerto Rico
CARDINAL COGEN, INC.                                                            100                 Delaware
DATEX-OHMEDA, INC.                                                              100                 Delaware
ELANO CORPORATION                                                               100                    Ohio
GEAE TECHNOLOGY, INC.                                                           100                 Delaware
GE CGR EUROPE                                                                   100                   France
GE DRIVES and CONTROLS, INC.                                                    100                 Delaware
GE DRUCK HOLDINGS LIMITED                                                       100                 Delaware
GE ELECTRIC CANADA, INC.                                                        100                  Canada
GE ENERGY EUROPE, BV                                                            100                Netherlands
GE ENERGY PARTS INC                                                             100                 Delaware
GE ENERGY PRODUCTS, INC                                                         100                 Delaware
GE ENERGY SERVICES, INC.                                                        100                 Delaware
GE ENERGY SERVICES-DALLAS, LP                                                   100                 Delaware
GE ENGINE SERVICES DISTRIBUTION, LLC.                                           100                 Delaware
GE ENGINE SERVICES, INC.                                                        100                 Delaware
GE FANUC AUTOMATION CORPORATION                                                  50                 Delaware
GE GAS TURBINES (GREENVILLE) L.L.C                                              100                 Delaware
GE HUNGARY CO., LTD                                                             100                  Hungary
GE INTERLOGIX, INC.                                                             100                 Delaware
GE INVESTMENT, INC.                                                             100                  Nevada
GE KEPPEL ENERGY SERVICES PTE, INC.                                             100                 Singapore
GE MEDICAL GLOBAL TECHNOLOGY CO., LLC                                           100                 Delaware
GE MEDICAL SYSTEMS INFORMATION TECHNOLOGIES,
INC.                                                                            100                 Wisconsin
GE MEDICAL SYSTEMS, INC.                                                        100                 Delaware
GE PACKAGED POWER L.P.                                                          100                 Delaware
GE PETROCHEMICALS, INC.                                                         100                 Delaware
GE PLASTIC FINISHING, INC.                                                      100                 Delaware




                                                      Page 1 of 2
                                                                      Percentage of
                                                                          voting
                                                                        securities
                                                                       directly or
                                                                        indirectly        State or Country of
                                                                        owned by           incorporation or
                                                                      registrant (1)         organization

                                                                                        Spain & Canary Islands,
GE PLASTICS ESPANA ScPA                                                     100             Balearic Island
GE PLASTICS PACIFIC PTE. LTD                                                100               Singapore
GE POLYMERLAND, INC                                                         100                Delaware
GE POWER SYSTEMS LICENSING INC                                              100                Delaware
GE QUARTZ, INC.                                                             100                Delaware
GE SILICONES WV, LLC                                                        100              West Virginia
GE SUPERABRASIVES, INC.                                                     100                Delaware
GE TRANSPORTATION PARTS, LLC                                                100                Delaware
GE TRANSPORTATION SERVICES, LLC.                                            100                Delaware
GE TRANSPORTATION SYSTEMS GLOBAL SIGNALING,
LLC.                                                                        100               Delaware
GEA PRODUCTS LP                                                             100               Delaware
GENERAL ELECTRIC INTERNATIONAL (BENELUX) BV                                 100              Netherlands
GENERAL ELECTRIC INTERNATIONAL, INC.                                        100               Delaware
GRANITE SERVICES, INC.                                                      100               Delaware
NATIONAL BROADCASTING COMPANY (NBC)                                         100               Delaware
NUCLEAR FUEL HOLDING CO.,INC                                                100               Delaware
NUOVO PIGNONE HOLDING S.P.A                                                 100                  Italy
OEC MEDICAL SYSTEMS INC                                                     100               Delaware
                                                                                          United Kingdom &
PII LIMITED                                                                 100            Northern Ireland
REUTER-STOKES, INC.                                                         100               Delaware
SENSING SOLUTIONS, INC.                                                     100               Delaware
VICEROY, INC.                                                               100               Delaware

GENERAL ELECTRIC CAPITAL SERVICES, INC.                                     100                Delaware
  General Electric Capital Corporation                                      100                New York
  GE Global Insurance Holding Corporation                                   100                Missouri

(1) With respect to certain companies, shares in names of nominees and qualifying shares in names of directors are
    included in above percentages.




                                                   Page 2 of 2
                                                                                       Exhibit 23


                               Consent of Independent Auditors


The Board of Directors
General Electric Company

We consent to incorporation by reference in the registration statements on Form S-3 (Registration
Nos. 33-50639, 33-39596, 33-39596-01, 33-29024, 333-59671, 333-96571, 333-104526 and 333-
110771), on Form S-4 (Registration No. 333-107556) and on Form S-8 (Registration Nos. 333-
01953, 333-42695, 333-74415, 333-83164, 333-98877, 333-94101, 333-65781, 333-88233, 333-
57734, 333-99671 and 333-102111) of General Electric Company of our report dated February 6,
2004, relating to the statement of financial position of General Electric Company and consolidated
affiliates as of December 31, 2003 and 2002, and the related statements of earnings, changes in
shareowners’ equity and cash flows for each of the years in the three-year period ended December
31, 2003, which report appears in the December 31, 2003 annual report on Form 10-K of General
Electric Company. Our report refers to changes in the methods of accounting for variable interest
entities and for asset retirement obligations in 2003, changes in the methods of accounting for
goodwill and other intangible assets and for stock-based compensation in 2002, and changes in
the methods of accounting for derivative instruments and hedging activities and impairment of
certain beneficial interests in securitized assets in 2001.




KPMG LLP
Stamford, Connecticut

March 1, 2004
                                                                                  Exhibit 24

                                 POWER OF ATTORNEY



        KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer of General Electric Company, a New York corporation (the "Company"),
hereby constitutes and appoints Jeffrey R. Immelt, Benjamin W. Heineman, Jr., Keith S.
Sherin, Philip D. Ameen, Michael R. McAlevey, and Robert E. Healing, and each of them,
his or her true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead in any and all
capacities, to sign one or more Annual Reports for the Company's fiscal year ended
December 31, 2003, on Form 10-K under the Securities Exchange Act of 1934, as
amended, or such other form as any such attorney-in-fact may deem necessary or
desirable, any amendments thereto, and all additional amendments thereto, each in such
form as they or any one of them may approve, and to file the same with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and necessary to
be done so that such Annual Report shall comply with the Securities Exchange Act of
1934, as amended, and the applicable Rules and Regulations adopted or issued pursuant
thereto, as fully and to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or
their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.


       IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her
hand this 1st day of March, 2004.



                              _________________________
                                  Jeffrey R. Immelt
                                  Chairman of the Board
                                  (Principal Executive
                                  Officer and Director)


_________________________                            _________________________
Keith S. Sherin                                      Philip D. Ameen
Senior Vice President-Finance                        Vice President and Comptroller
(Principal Financial Officer)                        (Principal Accounting Officer)




                                                                              (Page 1 of 2)
________________________            ________________________
James I. Cash, Jr.                  Rochelle B. Lazarus
Director                            Director


________________________            ________________________
Dennis D. Dammerman                 Sam Nunn
Director                            Director


________________________            ________________________
Ann M. Fudge                        Roger S. Penske
Director                            Director


________________________            ________________________
Claudio X. Gonzalez                 Andrew C. Sigler
Director                            Director


________________________            ________________________
Andrea Jung                         Robert J. Swieringa
Director                            Director


________________________            ________________________
Alan G. Lafley                      Douglas A. Warner III
Director                            Director


________________________            ________________________
Kenneth G. Langone                  Robert C. Wright
Director                            Director


________________________
Ralph S. Larsen
Director




             A MAJORITY OF THE BOARD OF DIRECTORS
                                                          (Page 2 of 2)
                                                                                                            Exhibit 31(a)

                                    CERTIFICATION PURSUANT TO
                           SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey R. Immelt, certify that:

1. I have reviewed this annual report on Form 10-K of General Electric Company;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
  material fact necessary to make the statements made, in light of the circumstances under which such statements
  were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
   present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
   and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
   and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
     designed under our supervision, to ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
     which this report is being prepared;

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
     our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
     covered by this report based on such evaluation; and

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
     during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to
     materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
   control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
   directors:

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over
     financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
     summarize and report financial information; and

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role
     in the registrant’s internal control over financial reporting.




Date: March 1, 2004



/s/ Jeffrey R. Immelt
    Jeffrey R. Immelt
    Chief Executive Officer
                                                                                                            Exhibit 31(b)

                                     CERTIFICATION PURSUANT TO
                            SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith S. Sherin, certify that:

1. I have reviewed this annual report on Form 10-K of General Electric Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
   material fact necessary to make the statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
   present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
   and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
   and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
     designed under our supervision, to ensure that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
     which this report is being prepared;

  b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
     our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
     covered by this report based on such evaluation; and

  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
     during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to
     materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
   control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
   directors:

  a) All significant deficiencies and material weaknesses in the design or operation of internal control over
     financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
     summarize and report financial information; and

  b) Any fraud, whether or not material, that involves management or other employees who have a significant role
     in the registrant’s internal control over financial reporting.




Date: March 1, 2004




/s/ Keith S. Sherin
    Keith S. Sherin
    Chief Financial Officer
                                                                                                              Exhibit 32

                                    CERTIFICATION PURSUANT TO
                                        18 U.S.C. SECTION 1350,
                                      AS ADOPTED PURSUANT TO
                           SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of General Electric Company (the “registrant”) on Form 10-K for the year
ending December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “report”),
we, Jeffrey R. Immelt and Keith S. Sherin, Chief Executive Officer and Chief Financial Officer, respectively, of the
registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that to our knowledge:

         (1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended; and

         (2) The information contained in the report fairly presents, in all material respects, the financial condition
and results of operations of the registrant.




March 1, 2004




/s/ Jeffrey R. Immelt
    Jeffrey R. Immelt
    Chief Executive Officer




/s/ Keith S. Sherin
    Keith S. Sherin
    Chief Financial Officer

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:0
posted:3/6/2013
language:Unknown
pages:115