10-K

United States Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

(Mark One)
þ	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:
Title of each class		Name of each exchange 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 þ 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. þ

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ 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)

Name	Position	Age	Date assumed Executive 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 1^st 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)

EX-4.J

Exhibit 4(j)

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

EX-12

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.

EX-13

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 Financial Responsibility	We begin with Management's Discussion of Financial Responsibility. Here our Chief Executive and Financial Officers discuss our unyielding commitment to rigorous oversight, controllership 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   44   44   49   55	Management's Discussion and Analysis      Operations           Overview of Our Earnings           Segment Operations           International Operations	The next section is Management's Discussion and Analysis. We begin the Operations section with an overview of our earnings from 2001 to 2003, which provides perspective on how the global economic environment has affected our businesses over the last 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 meaningful analysis. This year's discussion of our segment results includes expanded quantitative and qualitative disclosure about the factors 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 information for GE and GECS. This table includes commonly used metrics 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.

41         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION OF FINANCIAL RESPONSIBILITY

High quality financial reporting is an excellent measure of a company and its management. We demonstrate our commitment to high quality reporting by adopting appropriate accounting policies, devoting our full, unyielding commitment to ensuring that those policies are applied properly and consistently, and presenting our results in a manner that is complete and clear. We welcome suggestions from those who use our reports.

Rigorous Management Oversight

Members of our corporate leadership team review each of our businesses constantly, on matters that range from overall strategy and financial performance to staffing and compliance. Our business leaders constantly monitor real-time financial and operating systems, enabling us to identify potential opportunities and concerns at an early stage, and positioning us to develop and execute rapid responses. Our Board of Directors oversees management's business conduct, and our Audit Committee, which consists entirely of independent directors, oversees our system of controls and procedures. We continually examine our governance practices in an effort to enhance investor trust and improve the board's overall effectiveness. Our Presiding Director, who conducts at least three meetings per year with non-employee directors, has helped us to set more focused and effective meeting agendas. We changed compensation policies for our executives, including modifying CEO compensation to award equity grants only if key performance metrics are met, thereby aligning leadership's interests with the long-term interests of GE investors.

Dedication to Controllership

We maintain a dynamic system of controls and procedures–including internal controls over financial reporting–designed to ensure reliable financial record-keeping, transparent financial reporting and disclosure, protection of physical and intellectual property, and efficient, effective use of resources. We recruit, 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, and pertain to such vital issues as upholding financial integrity and avoiding conflicts of interest. These integrity policies are available 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 extensively about compliance. Our strong compliance culture reinforces these efforts by requiring employees to raise any compliance concerns and by prohibiting retribution for doing so. We hold our consultants, agents and independent contractors to the same integrity standards.

Visibility to Investors

We are keenly aware of the importance of full and open presentation of our financial position and operating results. To facilitate this, we maintain a Disclosure Committee, which includes senior executives with exceptional knowledge of our businesses and the related needs of our investors. We ask this committee to evaluate the fairness of our financial and non-financial disclosures, and to report their findings to us and to the Audit Committee. We further ensure strong disclosure by holding more than 250 analyst and investor meetings every year, and by communicating any material information covered in those meetings to the public. In testament to the effectiveness of our stringent disclosure policies, investors surveyed annually by Investor Relations magazine have given us 19 awards in the last eight years, including Best Overall Investor Relations Program by a mega-cap company for six of those years. We are in regular contact with representatives of the major rating agencies, and our debt continues to receive their highest ratings. We welcome the strong oversight of our financial reporting activities by our independent audit firm, KPMG LLP, who are engaged by and report directly to the Audit Committee. Their report for 2003 appears on page 43.

A Great Company

GE continues to earn the admiration of the business world. We were named "The World's Most Respected Company" for the sixth consecutive year in the Financial Times annual CEO survey, ranking first for governance and integrity.

     Great companies are built on the foundation of reliable financial information and compliance with the law. For GE, the financial disclosures in this report are a vital part of that foundation. We present this information proudly, with the expectation that those who use it will understand our company, recognize our commitment to performance with integrity, and share our confidence in GE's future.

/s/ Jeffrey R. Immelt

Jeffrey R. Immelt
Chairman of the Board and
Chief Executive Officer

/s/ Keith S. Sherin

Keith S. Sherin
Senior Vice President, Finance, and
Chief Financial Officer

February 6, 2004

42         GE 2003 ANNUAL REPORT

INDEPENDENT AUDITORS' REPORT

To Shareowners and Board of Directors of
General Electric Company

We have audited the accompanying statement of financial position of General Electric Company and consolidated affiliates ("GE") 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. These consolidated financial statements are the responsibility of GE management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the aforementioned financial statements appearing on pages 70, 72, 74, 48 and 76-113 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 each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 1 to the consolidated financial statements, GE in 2003 changed its methods of accounting for variable interest entities and asset retirement obligations, in 2002 changed its methods of accounting for goodwill and other intangible assets and for stock-based compensation, and in 2001 changed its methods of accounting for derivative instruments and hedging activities and impairment of certain beneficial interests in securitized assets.

     Our audits were made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The accompanying consolidating information appearing on pages 71, 73 and 75 is presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of operations and cash flows of the individual entities. The consolidating information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole.

/s/ KPMG LLP
KPMG LLP
Stamford, Connecticut

February 6, 2004

43         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

OPERATIONS

Our consolidated financial statements combine the industrial manufacturing and product services businesses of General Electric Company (GE) and the financial services businesses of General Electric Capital Services, Inc. (GECS or financial services).

     We present Management's Discussion of Operations in three parts: Overview of Our Earnings from 2001 through 2003, Segment Operations and International Operations.

     In the accompanying analysis of financial information, we sometimes refer to data derived from consolidated financial information but not required by U.S. generally accepted accounting principles (GAAP) to be presented in financial statements. Certain of these data are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission (SEC) regulations; those rules require the supplemental explanation and reconciliation provided on page 69.

ON JANUARY 1, 2004, WE SIMPLIFIED OUR ORGANIZATION. With 11 operating segments, we will achieve lower costs of operations in platforms that will accommodate our future growth. The new segments most affected by this change follow:

• Advanced Materials–plastics, silicones and quartz
• Infrastructure–water, security, sensors and Fanuc Automation
• Transportation–aircraft engines and rail
• Consumer and Industrial–appliances, lighting and industrial
• Commercial Finance–the combination of Commercial Finance and the Fleet Services business that was previously part of Equipment Management
• Equipment and Other Services–the combination of Equipment Management and the former All Other GECS segments

Results for 2003 in this financial section are reported on the 13 business basis in effect in 2003.

     During 2003, we entered into an agreement to acquire U.K.-based Amersham plc, a world leader in medical diagnostics and life sciences. We also entered into an agreement to merge NBC with Vivendi Universal Entertainment to create one of the world's premier media companies, NBC Universal.

     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.

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 the preceding year. We have rewarded our shareowners with 28 consecutive years of dividend growth. Our dividend growth for the past five years has significantly outpaced dividend growth of companies in the Standard & Poor's 500 stock index.

     Except as otherwise noted, the analysis in the remainder of this section presents the results of GE (with GECS included on a one-line basis) and GECS. See the Segment Operations section on page 49 for a more detailed discussion of the businesses within GE and GECS.

Overview of Our Earnings from 2001 through 2003

The global economic environment must be considered when evaluating our 2001 to 2003 results. Important factors for us included slow global economic growth, a mild U.S. recession that did not cause significantly higher credit losses, lower global interest rates, distinct developments in three industries that are significant to us (power generation, property and casualty insurance and commercial aviation), and escalating raw material prices. As you will see in detail in the following pages, our diversification and risk management strategies reduced the earnings effects of many of the significant developments of the last three years.

     If, for comparison, we adjust 2001 results for the required accounting change to stop goodwill amortization, our earnings would have increased modestly in percentage terms over this three-year period. This modest increase results from a combination of factors, both positive and negative.

     First, consider two businesses whose results were noteworthy.

• Power Systems is significant to our consolidated results, at 16% and 21% of three-year revenues and earnings before accounting changes, respectively. Power Systems was significantly affected by the unprecedented industry dynamics sometimes referred to as the "U.S. power bubble," a phenomenon that dramatically increased demand for power generation

44         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

equipment, peaking during 2002. Power Systems continued shipping large numbers of gas turbine units in 2002, reaching $0.09 per share growth in earnings–up 29% from 2001. (Note that per-share results we present in this discussion are on a diluted basis.) The subsequent 2003 decline in shipments was reflected in the $0.14 per share drop in 2003 earnings. We foresaw the 2002 end of the "bubble" and took appropriate action to cushion the downturn, right-sizing the business and growing and investing in other lines of the power generation business such as product services and GE Wind. The result is a Power Systems business whose results are remarkable from any perspective save its own extraordinary recent history.

• At Employers Reinsurance Corporation (ERC), we, like most of the reinsurance industry, faced volatility throughout the period. We are now confident we have worked through our historical underwriting mistakes. But in 2002 we recognized losses on our 1997-2001 business, increasing loss reserves by $3.5 billion, resulting in a loss of $0.18 per share in 2002, a decline of $0.19 per share from 2001. In 2003, our turnaround efforts started to pay off. We realized benefits from improved ERC operations and ERC earnings rebounded by $0.23 per share to a profit of $0.05 per share.

Most of our operations achieved operating results in line with expectations in the 2001 to 2003 economic environment.

• Commercial and Consumer Finance at 22% and 33% of consolidated three-year revenues and earnings before accounting changes, respectively, are large, profitable growth businesses in which we continue to invest with confidence. In a challenging economic environment, these businesses grew earnings by $0.09 per share in 2003 and $0.06 per share in 2002. Solid core growth, disciplined risk management and successful acquisitions have delivered these strong results.
• Our transportation businesses–Aircraft Engines and Transportation Systems–continued to invest in market-leading technology and services. While our commercial aviation and rail customers were sometimes understandably reluctant to buy new equipment in these markets, our business model also succeeds by diversification. Product services and the military engines business continued strong, and overall these businesses grew 6%, or $0.01 per share, in 2003, following a 3% decline in 2002.
• NBC and Medical Systems contributed strong performances in their distinct markets. NBC's leadership in key demographics yielded higher pricing on strong demand from advertisers. Medical Systems continued to invest in new products and sustained its product leadership position, with strong double-digit growth in Healthcare IT and Ultrasound. The successful acquisitions of Bravo and Instrumentarium also provided growth, and Telemundo improved to a promising position entering 2004. Earnings from these segments increased $0.03 per share in 2003 following a $0.02 per share increase in 2002.
• Plastics, Equipment Management, Consumer Products, Industrial Products and Systems and Specialty Materials are economically sensitive and consequently were affected adversely by the U.S. recession and by slow global growth in developed countries. Even in the difficult environments 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 of these industries, resulted in fierce competitive price pressures. Plastics was hit particularly hard because of additional pressures from inflation in certain raw materials such as benzene and natural gas. Earnings from this group of businesses as a whole declined by $0.07 per share over this period with Plastics down $0.03 per share in 2003 and $0.02 per share in 2002. Acquisitions of new growth platforms, such as security and water, offset some of the weakness in these core product lines, and we continue to foresee dramatic growth in these platforms.

Other factors that were important to our recent earnings performance included reduced earnings from our principal postretirement benefit plans (down $0.05 per share in 2003 following a decline of $0.07 per share in 2002) and unusual events in 2002 such as the gains on the sale of Global eXchange Services ($0.03 per share) and the Bravo exchange net of restructuring ($0.03 per share), as well as favorable tax settlements with the U.S. Internal Revenue Service (IRS) in 2002 ($0.04 per share).

     Acquisitions affected our operations and contributed $5.4 billion, $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,

45         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

$0.6 billion and $0.2 billion, respectively, from acquired businesses. We integrate acquisitions as quickly as possible and only revenues and earnings during the first 12 months following the quarter in which we complete the acquisition are attributed to such businesses.

     Significant matters in our Statement of Earnings, pages 70 and 71, are explained below.

OPERATING MARGIN is sales of goods and services less the costs of goods and services sold, as well as selling, general and administrative expenses. GE operating margin was 15.9% of sales in 2003, down from 19.1% in 2002 and 19.6% in 2001. The decrease in 2003 was attributable to lower operating margins at Power Systems and Plastics. The decline in 2002 was attributable to Plastics and the Lighting business in Consumer Products, and also reflected $0.6 billion of restructuring and other charges, partially offset by improvements in operating margins at Power Systems and NBC. Restructuring and other charges included $0.4 billion for rationalizing certain operations and facilities of GE's worldwide industrial businesses.

     Sales of product services were $22.9 billion in 2003, a 10% increase over 2002. Increases in product services in 2003 and 2002 were widespread, led by continued strong growth at Power Systems, Medical Systems and Specialty Materials. Operating margin from product services was approximately $5.3 billion, compared with $5.2 billion in 2002. The increase reflected improvements at Power Systems and Specialty Materials.

TOTAL COST PRODUCTIVITY (sales in relation to costs, both on a constant dollar basis) for GE was negative 1.3% in 2003 on declining volume at Power Systems and Plastics. In 2002 variable cost productivity improvements (led by Industrial Systems and Plastics) and base cost productivity improvements at Plastics were more than offset by lower base cost productivity, primarily at Power Systems, Industrial Systems and Specialty Materials.

PRINCIPAL POSTRETIREMENT BENEFIT PLANS contributed modestly to 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.

     Considering current and expected asset allocations, as well as historical and expected returns on various categories of assets in which our plans are invested, we assumed that long-term returns on our pension plan assets would be 8.5% in 2003 and 2002 and 9.5% in 2001. Reducing the assumed return by 100 basis points in 2002 increased annual pension costs by about $480 million pretax. Actual annual investment returns are extremely volatile. Because this short-term market volatility occurs in context of the long-term nature of pension plans, U.S. accounting principles provide that differences between assumed and actual returns are recognized over the average future service of employees. See notes 5 and 6 for additional information about funding status, components of earnings effects and actuarial assumptions of the plans. See page 68 for discussion of pension assumptions.

     We believe our postretirement benefit costs will increase in 2004 for a number of reasons, including a further reduction in the pension discount rate from 6.75% to 6.0%, additional amortization of investment losses, plan benefit changes as a result of union negotiations and continued increases in retiree healthcare costs. We continue to expect that our plan assets will earn 8.5%, on average, over the long term.

     We will not make any contributions to the GE Pension Plan in 2004. To the best of our ability to forecast the next five years, we do not anticipate making contributions to that Plan so long as expected investment returns are achieved. The present funding status provides assurance of benefits for our participants, but future effects on operating results and funding depend on economic conditions and investment performance.

GE INTEREST AND OTHER FINANCIAL CHARGES amounted to $0.9 billion, $0.6 billion and $0.8 billion in 2003, 2002 and 2001, respectively. Interest costs in 2003 were higher as a result of our issuing $5.0 billion of long-term bonds in the first quarter of the year and higher average short-term borrowings, partially offset by lower average interest rates. The decrease in 2002 was primarily the result of reduced interest on lower tax liabilities following the 2002 settlements described on page 47.

46         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

GECS INTEREST EXPENSE ON BORROWINGS was $9.9 billion in 2003 and 2002, compared with $10.6 billion in 2001. Changes over the three-year period reflected the effects of lower interest rates, partially offset by the effects of higher average borrowings of $279.7 billion, $250.1 billion and $212.2 billion in 2003, 2002 and 2001, respectively, used to finance asset growth and acquisitions. The average composite effective interest rate was 3.5% in 2003, compared with 4.1% in 2002 and 5.1% in 2001. In 2003, average assets of $521.6 billion were 15% higher than in 2002, which in turn were 18% higher than in 2001. See page 60 for a discussion of interest rate risk management.

INCOME TAXES on consolidated earnings before accounting changes were 21.7%, compared with 19.9% in 2002 and 28.3% in 2001. Our consolidated income tax rate increased in 2003 by 1.8 percentage points over 2002 because our savings from 2003 business dispositions were less than our 2002 savings from settlements with the IRS. Income tax rates were lower than what they otherwise would have been in both 2003 and 2002 because of the increasing share of earnings from lower taxed international operations. A more detailed analysis of differences between the U.S. federal statutory rate and the consolidated rate, as well as other information about our income tax provisions, is provided in note 7. The nature of business activities and associated income taxes differ for GE and for GECS, and a separate analysis of each is presented in the paragraphs that follow.

     Because GE tax expense does not include taxes on GECS earnings, the GE effective tax rate is best analyzed in relation to GE earnings excluding GECS. In 2003, 2002 and 2001, respectively, GE's pre-tax earnings excluding GECS were $10.7 billion, $14.3 billion and $12.7 billion. On this basis, GE's effective tax rate was 26.7% in 2003 and 2002, and 32.9% in 2001. The 2003 GE rate was reduced by approximately 1.7 percentage points because certain reductions in pre-tax earnings–specifically, lower earnings at Power Systems and from our principal pension plans–affected taxes at higher than our average rate. The 2003 GE rate was also reduced by approximately 1.0 percentage point (after adjusting for the effect of the lower pre-tax income at Power Systems and our principal pension plans) from a tax benefit on the disposition of shares of GE Superabrasives U.S., Inc., included in the line, "All other–net" in note 7. In 2002, GE entered into settlements with the IRS concerning certain export tax benefits. The effect of the settlements, the tax portion of which is included on the line "Tax on international activities including exports" in note 7, was a reduction of the GE tax rate of approximately 2.7 percentage points. Also in 2002, GE entered into a tax-advantaged transaction to exchange certain assets for the cable network Bravo. The related reduction of approximately 1.0 percentage point in the GE effective tax rate is reflected in the line, "All other–net" in note 7.

     GECS effective tax rate was 15.8% in 2003, negative 1.7% in 2002 and 19.8% in 2001. The increase from 2002 to 2003 reflected the absence of a current year counterpart to the 2002 pre-tax loss at ERC and the IRS settlements discussed below, as well as lower pre-tax losses at GE Equity, partially offset by an approximately three percentage point decrease due to the 2003 pre-tax loss and tax benefit on the disposition of shares of ERC Life Reinsurance Corporation (ERC Life), included in the line "All other–net" in note 7.

     GECS 2002 effective tax rate reflected pre-tax losses at ERC and GE Equity, the effects of lower taxed earnings from international operations and favorable tax settlements with the IRS. Pre-tax losses of $2.9 billion at ERC and $0.6 billion at GE Equity reduced the effective tax rate of GECS by approximately 17 percentage points.

     During 2002, as a result of revised IRS regulations, GECS reached a settlement with the IRS allowing the deduction of previously realized losses associated with the prior disposition of Kidder Peabody. Also during 2002, we reached a settlement with the IRS regarding the treatment of certain reserves for obligations 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.

47         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

SUMMARY OF OPERATING 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 REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

Segment Operations

REVENUES AND SEGMENT PROFIT FOR OPERATING SEGMENTS are shown on page 48. As discussed in our 2002 Annual Report, effective January 1, 2003, we made changes to the way we report our segments, including the use of business specific, market-based leverage in measuring performance of our financial services businesses. Also, as a result of changes in the way we operated our industrial businesses during 2003, we disaggregated and reported Medical Systems, Plastics, Specialty Materials and Transportation Systems as separate segments. Prior year information has been reclassified to conform to the 2003 presentation. For additional information, including a description of the products and services included in each segment, see pages 112 and 113.

     Segment profit is determined based on internal performance measures used by the Chief Executive Officer to assess the performance of each business in a given period. In connection with that assessment, the Chief Executive Officer may exclude matters such as charges for restructuring; rationalization and other similar expenses; certain gains/losses from dispositions; and litigation settlements or other charges, responsibility for which precedes the current management team.

     Segment profit always excludes goodwill amortization, the effects of principal pension plans and accounting changes. Segment profit excludes or includes interest and other financial charges and segment income taxes according to how a particular segment management is measured–excluded in determining operating profit for Aircraft Engines, Consumer Products, Industrial Products and Systems, Medical Systems, NBC, Plastics, Power Systems, Specialty Materials and Transportation Systems; included in determining segment profit which we refer to as "segment net earnings" for Commercial Finance, Consumer Finance, Equipment Management, Insurance and All Other GECS.

AIRCRAFT ENGINES revenues decreased 4% to $10.7 billion in 2003 reflecting lower volume ($0.5 billion), primarily related to commercial aircraft and industrial aero-derivative engines, partially offset by higher military spare parts volume. Despite the decrease in revenues, operating profit rose 4% to $2.1 billion reflecting the effects of productivity ($0.2 billion) largely from workforce efficiency, and lower research and development spending upon completion of certain development programs, more than offsetting the effect of decreased volume ($0.1 billion). Aircraft Engines 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) including pricing for commercial engines, lower product services volume from reduced customer flight hours, and higher labor costs, partially offset by lower material costs and productivity.

     See GE Corporate Items and Eliminations on page 55 for a discussion of items not allocated to this segment.

     In 2003, revenues from sales to the U.S. government were $2.4 billion, compared with $2.2 billion and $1.9 billion in 2002 and 2001, respectively.

     Aircraft Engines received orders of $10.4 billion in 2003, compared with $11.6 billion in 2002 as military orders decreased from $4.3 billion to $2.2 billion and commercial engines increased $0.6 billion to $2.3 billion. The $10.5 billion total backlog at year-end 2003 comprised unfilled product orders of $7.9 billion (of which 37% was scheduled for delivery in 2004) and product services orders of $2.6 billion scheduled for 2004 delivery. Comparable December 31, 2002, total backlog was $11.4 billion.

COMMERCIAL FINANCE

(In millions)		2003			2002			2001
REVENUES
Real Estate	$	2,386		$	2,124		$	1,886
Commercial Equipment Financing		4,494			4,539			4,212
Corporate Financial Services		2,467			2,350			1,758
Structured Finance		1,423			1,243			1,093
Aviation Services		2,881			2,694			2,173
Vendor Financial Services		4,456			4,130			3,954
Healthcare Financial Services		735			665			372
Other Commercial Finance		27			36			311
Total revenues	$	18,869		$	17,781		$	15,759
NET REVENUES
Total revenues	$	18,869		$	17,781		$	15,759
Interest expense		5,577			5,753			5,754
Total net revenues	$	13,292		$	12,028		$	10,005
NET EARNINGS
Real Estate	$	834		$	650		$	528
Commercial Equipment Financing		817			719			640
Corporate Financial Services		675			599			384
Structured Finance		576			488			399
Aviation Services		506			454			497
Vendor Financial Services		432			369			332
Healthcare Financial Services		153			122			37
Other Commercial Finance		(228	)		(212	)		(29	)
Total net earnings	$	3,765		$	3,189		$	2,788

49       GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

December 31 (In millions)		2003		2002
TOTAL ASSETS
Real Estate	$	27,767	$	29,522
Commercial Equipment Financing		53,273		51,757
Corporate Financial Services		29,646		26,897
Structured Finance		21,309		19,293
Aviation Services		33,271		30,512
Vendor Financial Services		24,855		25,518
Healthcare Financial Services		8,367		7,905
Other Commercial Finance		5,495		2,841
Total assets	$	203,983	$	194,245
Financing receivables–net	$	130,129	$	128,277

Commercial Finance revenues and net earnings increased 6% and 18%, respectively, compared with 2002. The increase in revenues 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 securitization activity at Commercial Equipment Financing ($0.1 billion). The increase in net earnings resulted primarily from origination growth, acquisitions across substantially all businesses ($0.2 billion), higher investment gains at Real Estate as a result of the sale of properties and our investments in Regency Centers and Prologis ($0.1 billion), lower credit losses ($0.1 billion) resulting from continued improvement in overall portfolio credit quality as reflected by lower delinquencies and nonearning receivables, and growth in lower taxed earnings from international operations ($0.1 billion).

     The most significant acquisitions affecting Commercial Finance 2003 results were the commercial inventory financing business of Deutsche Financial Services and the structured finance business of ABB, both of which were acquired during the fourth quarter of 2002. These two acquisitions contributed $0.5 billion and $0.1 billion to 2003 revenues and net earnings, respectively.

     The 2002 increase in revenues of 13% principally reflected acquisitions and increased originations across substantially all businesses, partially offset by reduced market interest rates and lower securitization activity at Corporate Financial Services and Commercial Equipment Financing. The 2002 net earnings increase of 14% primarily reflected acquisitions ($0.4 billion) and origination growth, productivity across all businesses and growth in lower taxed earnings from international operations, partially offset by increased credit losses and lower securitization activity at Corporate Financial Services and Commercial Equipment Financing.

     See All Other GECS on page 54 for a discussion of items not allocated to this segment.

CONSUMER FINANCE

(In millions)		2003			2002			2001
REVENUES
Global Consumer Finance	$	8,502		$	6,489		$	5,561
Card Services		4,343			3,777			3,947
Total revenues	$	12,845		$	10,266		$	9,508
NET REVENUES
Total revenues	$	12,845		$	10,266		$	9,508
Interest expense		2,696			2,143			2,179
Total net revenues	$	10,149		$	8,123		$	7,329
NET EARNINGS
Global Consumer Finance	$	1,478		$	1,224		$	1,034
Card Services		781			670			669
Other Consumer Finance		(98	)		(95	)		(101	)
Total net earnings	$	2,161		$	1,799		$	1,602

December 31 (In millions)		2003		2002
TOTAL ASSETS
Global Consumer Finance	$	87,387	$	58,310
Card Services		19,143		18,655
Total assets	$	106,530	$	76,965
Financing receivables–net	$	90,693	$	63,254

Consumer Finance revenues increased 25% in 2003, a result of acquisitions ($1.1 billion), the net effects of the weaker U.S. dollar ($0.7 billion), origination growth as a result of continued global expansion and the premium on the sale of The Home Depot private label credit card receivables ($0.1 billion). Net earnings increased 20% in 2003 as a result of origination growth, growth in lower taxed earnings from international operations, the premium on the sale of The Home Depot private label credit card receivables ($0.1 billion) and acquisitions. These increases were partially offset by lower securitization activity at Card Services ($0.2 billion) and lower earnings in Japan, principally as a result of increased personal bankruptcies.

     The most significant acquisitions affecting Consumer Finance 2003 results were First National Bank, which provides mortgage and sales finance products in the United Kingdom, and the retail sales finance unit of Conseco Finance Corp., both of which were acquired during the second quarter of 2003. These businesses contributed $0.7 billion and $0.1 billion to 2003 revenues and net earnings, respectively.

     Revenues increased in 2002 primarily as a result of acquisitions ($0.8 billion) and increased international originations, partially offset by lower securitization activity at Card Services ($0.4 billion). 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 REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

CONSUMER PRODUCTS revenues decreased 2% to $8.3 billion in 2003, reflecting lower selling prices ($0.2 billion) primarily of home appliances and consumer lighting products. Operating profit rose 13% to $0.6 billion in 2003, as lower base costs ($0.1 billion), primarily achieved by combining the lighting and appliance businesses, and the mix of higher-margin appliances more than offset the effects of lower product pricing ($0.2 billion). In 2002, Consumer Products revenues of $8.5 billion were flat compared with 2001 as 5% higher appliances revenues, reflecting success of new products, were offset by a 9% decline in revenues from lighting products. Operating profit decreased 24% in 2002 to $0.5 billion, with adverse results in the lighting products business, particularly lower prices, higher base costs and higher charges resulting from customer credit issues. Lower prices reduced 2002 operating profit by $0.1 billion.

EQUIPMENT MANAGEMENT

(In millions)		2003		2002		2001
REVENUES	$	4,707	$	4,766	$	4,904
NET REVENUES
Total revenues	$	4,707	$	4,766	$	4,904
Interest expense		741		812		905
Total net revenues	$	3,966	$	3,954	$	3,999
NET EARNINGS	$	172	$	313	$	377

December 31 (In millions)		2003		2002
TOTAL ASSETS	$	25,469	$	25,222
Equipment leased to others	$	12,482	$	11,285

Equipment Management revenues and net earnings decreased 1% and 45%, respectively, in 2003 compared with 2002. The decrease in revenues resulted primarily from lower asset utilization and lower prices ($0.2 billion), an effect of industry-wide excess equipment capacity reflective of current economic conditions in the road and rail transportation sector. Also contributing to the decrease were $0.1 billion lower gains on asset sales related to our continuing strategy to optimize fleet mix, age and size. These decreases were substantially offset by the net effects of the weaker U.S. dollar ($0.3 billion) and the results of acquisitions. The decrease in net earnings resulted primarily from lower asset utilization, lower price and lower gains on asset sales.

     Equipment Management experienced business-wide declining utilization rates throughout 2002, resulting in both lower revenues and lower earnings. Equipment Management realized productivity benefits in 2002, partially offsetting lower utilization rate's effect on earnings.

     See All Other GECS on page 54 for a discussion of items not allocated to this segment.

INDUSTRIAL PRODUCTS AND SYSTEMS

(In millions)		2003		2002		2001
REVENUES
Industrial Systems	$	5,517	$	4,968	$	4,440
GE Supply		2,879		2,473		2,302
Total revenues	$	8,396	$	7,441	$	6,742
OPERATING PROFIT
Industrial Systems	$	501	$	488	$	527
GE Supply		130		109		99
Total operating profit	$	631	$	597	$	626

Industrial Products and Systems reported revenues of $8.4 billion, 13% higher than in 2002, primarily as a result of $0.5 billion of sales from recently acquired businesses that more than offset the effects of lower prices, while operating profit rose 6% to $0.6 billion in 2003. Industrial Systems revenues rose $0.5 billion on higher volume ($0.3 billion). Operating profit was slightly higher as productivity ($0.1 billion), higher volume, primarily as a result of recently acquired businesses, and an investment gain were partially offset by $0.1 billion from lower prices. In 2002, Industrial Systems revenues rose 12% compared with 2001 on higher volume ($0.6 billion), but operating profit declined 7%, reflecting the negative effects of lower selling prices ($0.1 billion).

INSURANCE

(In millions)		2003		2002			2001
REVENUES
GE Financial Assurance	$	13,130	$	12,317		$	12,826
Mortgage Insurance		1,293		1,090			1,075
GE Global Insurance
Holding (ERC)		11,600		9,432			9,453
Other Insurance		171		457			536
Total revenues	$	26,194	$	23,296		$	23,890
NET EARNINGS
GE Financial Assurance	$	918	$	934		$	1,088
Mortgage Insurance		564		538			500
GE Global Insurance
Holding (ERC)		481		(1,794	)		78
Other Insurance		139		227			213
Total net earnings	$	2,102	$	(95	)	$	1,879

Insurance revenues increased $2.9 billion (12%) in 2003 on increased premium revenues ($2.2 billion), a gain of $0.6 billion on sale of GE Edison Life Insurance Company (Edison Life) by GE Financial Assurance, higher investment income ($0.4 billion) and the net effects of the weaker U.S. dollar ($0.7 billion). The premium revenue increase reflected continued favorable pricing at ERC ($0.5 billion), net volume growth in certain ERC and GE Financial Assurance businesses ($0.8 billion), absence of prior year loss adjustments ($0.4 billion), adjustment of current year

51         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

premium accruals to actual ($0.3 billion) and lower levels of ceded premiums resulting from a decline in prior year ERC loss events ($0.1 billion). Partial revenue offsets resulted from absence of revenues following the sale of Edison Life ($0.7 billion) and a $0.2 billion loss on the disposition of Financial Guaranty Insurance Company (FGIC) at the end of 2003. Revenues decreased 2% in 2002, principally the result of ongoing planned run-off of acquired policies at Toho and lower realized investment gains.

     Net earnings increased $2.2 billion in 2003, primarily from the substantial improvement in current operating results at ERC ($2.3 billion) reflecting improved underwriting, lower adverse development (discussed below) and generally favorable industry conditions during the year. Net earnings also benefited from the gain on the sale of Edison Life ($0.3 billion). These increases were partially offset by the absence of a current year counterpart to the favorable tax settlement with the IRS in 2002 ($0.2 billion) and the loss on the sale of FGIC ($0.1 billion after tax).

     Net earnings decreased $2.0 billion in 2002, primarily the result of adverse development at ERC. Also in 2002, investment gains decreased, an effect partially offset by core premium growth including higher premium pricing at ERC, and benefit from the favorable tax settlement with the IRS at GE Financial Assurance.

     As described on page 68 under the caption "Insurance liabilities and reserves," insurance loss provisions are adjusted up or down based on the best available estimates. Reported claims activity at ERC related to prior year loss events, particularly for liability-related exposures underwritten in 1997 through 2001, has performed much worse than we anticipated.

• In the fourth quarter of 2002, considering the continued acceleration in reported claims activity, we concluded that our best estimate of ultimate pre-tax losses was $2.5 billion higher in the range of reasonably possible loss scenarios than we had previously estimated. The more significant 2002 adverse development was in hospital medical malpractice, product liability and professional liability ($0.3 billion each) and umbrella liability, workers compensation, individual liability and asbestos ($0.2 billion each). With amounts recognized in the first three quarters of 2002, our total 2002 pre-tax charge for adverse development at ERC amounted to $3.5 billion.
• 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 reasonably 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 pretax. We are confident we have worked through our historical underwriting mistakes.

Throughout 2003, ERC has remained disciplined in rejecting risks that either fail to meet the established standards of price or terms and conditions, or that involve risks for which sufficient historical data do not exist to permit us to make a satisfactory evaluation. For risks that pass our criteria, we have sought to retain and even judiciously expand our business. On the other hand, we have curtailed or exited business in particular property and casualty business channels when expected returns do not appear to justify the risks.

     ERC's improved operating performance is illustrated by its "combined ratio"–the sum of claims-related losses incurred plus related underwriting expenses in relation to earned premiums. A combined ratio of less than 100% reflects an underwriting profit, that is, profit before investment income, another significant revenue source for most insurance entities. ERC's 2003 combined ratio was 106%, but, in an early indication of the effectiveness of our revised underwriting standards, the combined ratio excluding prior-year loss events was 93%.

     Our Mortgage Insurance business had favorable development throughout the three years ended December 31, 2003, primarily reflecting continued strength in certain real estate markets and the success of our loss containment initiatives in that business.

     See All Other GECS on page 54 for a discussion of items not allocated to this segment and the discussion on page 44 of our planned Genworth offering.

MEDICAL SYSTEMS revenues increased 14% to $10.2 billion in 2003 reflecting $0.5 billion of sales from recently acquired businesses, primarily Instrumentarium, and other volume growth ($0.7 billion) that more than offset lower prices ($0.4 billion). Operating profit of $1.7 billion rose 10% as productivity ($0.3 billion) and higher volume ($0.2 billion) more than offset the $0.4 billion effects of lower prices. Medical Systems revenues increased 6% to $9.0 billion in 2002, on higher equipment and product services volume, partially offset by lower prices ($0.4 billion) and weak market conditions in Latin America and Japan. Operating profit rose 3% to $1.5 billion in 2002 as productivity ($0.2 billion) and increased volume ($0.2 billion) were partially offset by a $0.4 billion effect of lower pricing.

52         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     See GE Corporate Items and Eliminations on page 55 for a discussion of items not allocated to this segment.

     Orders received by Medical Systems in 2003 were $10.5 billion, compared with $9.4 billion in 2002. The $4.6 billion total backlog at year-end 2003 comprised unfilled product orders of $2.8 billion (of which 95% was scheduled for delivery in 2004) and product services orders of $1.8 billion scheduled for 2004 delivery. Comparable December 31, 2002, total backlog was $4.0 billion.

     During 2003, we entered into an agreement to acquire U.K.-based Amersham plc, a world leader in medical diagnostics and life sciences.

NBC revenues decreased 4% to $6.9 billion in 2003 following a 24% increase to $7.1 billion in 2002. Operating profit rose 21% to $2.0 billion in 2003, following an 18% increase in the prior year. Results were affected by several events during the three-year period. Improved pricing and higher syndication and network sales increased revenues by $0.2 billion in 2002 and higher prices and network sales increased revenues $0.5 billion in 2003, but were partially offset in 2003 by advertising reductions because of coverage of the Iraq war ($0.1 billion). The Salt Lake City Olympic Games and final year of NBA coverage contributed $0.7 billion and $0.3 billion, respectively, to 2002 revenues, but the NBA contract resulted in a loss that exceeded profit from the Olympics. We acquired Telemundo and Bravo in 2002; together they added $0.7 billion and $0.3 billion of advertising revenues in 2003 and 2002, respectively, and $0.1 billion operating profit in 2003. The 2002 exchange of certain assets for Bravo resulted in $0.6 billion of gain, $0.2 billion of which was attributed to NBC's segment results, an amount equal to $0.2 billion of other charges for impairments in 2002. The remainder was included in GE Corporate Items and Eliminations as discussed on page 55.

     During 2003, we entered into an agreement to merge NBC with Vivendi Universal Entertainment to create one of the world's premier media companies, NBC Universal.

PLASTICS revenues in 2003 were flat at $5.2 billion as lower volume ($0.3 billion) offset the effects of the weaker U.S. dollar ($0.2 billion) and price increases. Operating profit of $0.4 billion was 50% lower than in 2002 reflecting higher material costs ($0.2 billion), primarily benzene, and lower productivity ($0.2 billion). Plastics revenues of $5.2 billion in 2002 were relatively unchanged from 2001 levels, as weakness in pricing ($0.5 billion) offset increased volume ($0.4 billion). Operating profit declined 28% in 2002 to $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.

POWER SYSTEMS revenues fell 19% to $18.5 billion as growth in the energy services and wind businesses was more than offset by lower volume ($4.7 billion) reflecting the continued effects of the decline in sales of large gas turbines (208 in 2003 compared with 362 in 2002) and industrial aero-derivative products, partially offset by the net effects of the weaker U.S. dollar ($0.7 billion). Operating profit dropped 35% to $4.1 billion in 2003, principally reflecting the combined effects of lower volume ($1.3 billion), lower productivity ($0.7 billion) and lower prices ($0.4 billion). Customer contract termination fees, net of associated costs, were $0.6 billion in 2003 and $0.9 billion in 2002, reflecting the decline in demand for new power generation equipment that began in 2002, with such fees primarily occurring in that year and the first half of 2003. Power Systems revenues increased 13% to $22.9 billion in 2002 on higher volume ($2.3 billion) and price ($0.2 billion). Operating profit rose 29% to $6.3 billion in 2002 on higher volume ($0.6 billion), and productivity ($0.6 billion) which included the $0.9 billion positive effect of customer contract termination fees, net of associated costs. Results in 2002 also included restructuring and other charges of $0.2 billion as Power Systems adjusted its cost structure.

     Power Systems orders were $15.4 billion in 2003, compared with $13.3 billion in 2002, reflecting strong demand for wind turbines, oil and gas turbomachinery, and services. The $12.3 billion total backlog at year-end 2003 comprised unfilled product orders of $7.8 billion (of which 70% was scheduled for delivery in 2004) and product services orders of $4.5 billion scheduled for 2004 delivery. Comparable December 31, 2002, total backlog was $16.1 billion.

SPECIALTY MATERIALS reported a 30% increase in revenues, to $3.1 billion in 2003, on higher volume ($0.5 billion) primarily from acquisitions. Recently acquired businesses, the largest of which were Betz-Dearborn, Osmonics and OSi, contributed $0.6 billion of sales in 2003. Operating profit rose 35% to $0.4 billion on higher volume from acquisitions, the effect of dispositions and productivity, partially offset by price declines and higher material costs. Specialty Materials revenues increased 32% to $2.4 billion in 2002 on higher volume ($0.6 billion), reflecting the contributions of acquisitions, partially offset by lower selling prices ($0.1 billion). Operating profit at Specialty Materials rose 6% to $0.3 billion in 2002, reflecting higher volume ($0.1 billion) and lower material costs, partially offset by lower pricing ($0.1 billion) and higher base costs.

53         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

TRANSPORTATION SYSTEMS revenues of $2.5 billion increased 10% compared with 2002 on higher volume ($0.2 billion), primarily locomotive sales and growth in the global signaling business. Operating profit rose 14% to $0.5 billion in 2003 on the higher volume, partially offset by reduced pricing. In 2002, Transportation Systems revenues of $2.3 billion were 2% lower and operating profit of $0.4 billion was about the same as in 2001, as product services revenues, strong variable cost productivity and lower material costs offset the effects of lower volume and pricing pressures.

     Transportation Systems received orders of $2.9 billion in 2003, compared with $2.8 billion in 2002. The $2.4 billion total backlog at year-end 2003 comprised unfilled product orders of $1.3 billion (of which 69% was scheduled for delivery in 2004) and product services orders of $1.1 billion scheduled for 2004 delivery. Comparable December 31, 2002, total backlog was $2.1 billion.

ALL OTHER GECS

(In millions)		2003			2002			2001
REVENUES
IT Solutions	$	496		$	1,992		$	2,301
GE Equity		(169	)		(384	)		(126	)
Americom		–			–			1,698
Not allocated		–			–			(436	)
Other–All Other GECS		1,337			982			1,358
Total revenues	$	1,664		$	2,590		$	4,795
NET EARNINGS
IT Solutions	$	(45	)	$	(46	)	$	13
GE Equity		(176	)		(375	)		(264	)
Americom		–			–			901
Not allocated		–			–			(656	)
Other–All Other GECS		(225	)		(159	)		(502	)
Total net earnings	$	(446	)	$	(580	)	$	(508	)

All Other GECS includes our activities and businesses that we do not measure within one of the other financial services segments.

     In addition to comments on All Other GECS elsewhere in this report, the following comments relate to the table above:

• IT Solutions–Revenues decreased by 75% in 2003 primarily as a result of geographic market exits in Europe. Net losses remained flat in 2003 compared with 2002, largely because of tax benefits recorded in 2002 associated with, and offsetting losses generated by, certain European operations that we sold.
• GE Equity–GE Equity manages equity investments in early-stage, early-growth, pre-IPO companies. GE Equity revenues include income, gains and losses on such investments. Revenue and loss performance reflected the overall improvement in equity markets and lower level of losses in 2003. Operating performance during 2002 reflected increased losses on investments, including losses in the telecommunications and software industries, and lower gains. GE Equity ceased making new investments in 2002, but continues to provide financial support to companies in its portfolio which will be managed for maximum value over time, eventually liquidating.
• Americom–On November 9, 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. The transaction resulted in a gain of $1.2 billion ($0.6 billion after tax), representing the difference between the carrying value of the 69% investment in Americom and the amount of cash plus the market value of SES Global shares received at the closing date. No gain was recorded on the 31% interest in Americom that was indirectly retained by us. Our investment in SES Global is accounted for on the equity method in Commercial Finance.
• Not allocated–Certain amounts are not included in other financial services operating segments or businesses because they are excluded from the measurement of their operating performance for internal purposes. In 2001, after-tax charges of $0.7 billion primarily related to asset impairments and product line exits, including: other-than-temporary impairments of investments totaling $0.3 billion, the largest of which were held by GE Financial Assurance, GE Equity and ERC; charges of $0.1 billion related to loss events and the exit of certain insurance and financing product lines at ERC, primarily non-standard automobile and higher limit industrial property insurance coverages; charges of $0.1 billion related to the exit of certain financing product lines at Consumer Finance; and costs related to restructuring totaling $0.1 billion, consisting of involuntary termination benefits, facilities exit costs, and asset impairments.
• Other–All Other GECS includes GECS corporate expenses, liquidating businesses and other non-segment aligned operations. In 2003, the most significant of these activities were the consolidation of certain entities in our financial statements as a result of our July 1, 2003, adoption of Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities (see note 29); Auto Financial Services; the U.S. Auto and Home business, which was sold in the third quarter of 2003; and a tax benefit related to the sale of ERC Life. In 2002 and 2001, the most significant of these activities were Auto Financial Services and the U.S. Auto and Home business.

54        GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

GE CORPORATE ITEMS AND ELIMINATIONS

(In millions)		2003			2002			2001
REVENUES
Eliminations	$	(3,918	)	$	(2,522	)	$	(2,819	)
OPERATING PROFIT
Principal pension plans	$	1,040		$	1,556		$	2,095
Eliminations		(717	)		(817	)		(769	)
Underabsorbed corporate overhead		(582	)		(367	)		(334	)
Not allocated		(228	)		115			(545	)
Other		(254	)		288			85
Total	$	(741	)	$	775		$	532

GE Corporate Items and Eliminations include the effects of eliminating transactions between operating segments; cost reductions from our principal pension plans; liquidating businesses; underabsorbed corporate overhead; certain non-allocated amounts described below; a variety of sundry items; and, before 2002, goodwill amortization. Corporate overhead is allocated to GE operating segments based on a ratio of segment net cost of operations, excluding direct materials, to total company cost of operations. This caption also includes internal allocated costs for segment funds on deposit.

     Not allocated–Certain amounts are not included in GE operating segments because they are excluded from the measurement of their operating performance for internal purposes. In 2003 and 2002, these comprised charges of $0.2 billion and $0.1 billion, respectively, for settlement of litigation, restructuring and other charges at Medical Systems; in 2002, a portion of NBC's gain from the Bravo exchange; in 2002, a total of $0.1 billion for restructuring and other charges at Aircraft Engines and Plastics; and in 2001, a total of $0.5 billion of goodwill amortization.

     Other includes a $0.5 billion gain from the sale of 90% of Global eXchange Services in 2002.

International Operations

Our international activities span all global regions and primarily encompass manufacturing for local and export markets, import and sale of products produced in other regions, leasing of aircraft, sourcing for our plants domiciled in other global regions and provision of financial services within these regional economies. Thus, when countries or regions experience currency and/or economic stress, we often have increased exposure to certain risks, but also often have new profit opportunities. Potential increased risks include, among other things, higher receivables delinquencies and bad debts, delays or cancellation of sales and orders principally related to power and aircraft equipment, higher local currency financing costs and a slowdown in established financial services activities. New profit opportunities include, among other things, more opportunities for lower cost outsourcing, expansion of industrial and financial services activities through purchases of companies or assets at reduced prices and lower U.S. debt financing costs.

     Estimated results of international activities include the results of our operations located outside the United States plus all U.S. exports. We classify certain GECS operations that cannot meaningfully be associated with specific geographic areas as "Other international" for this purpose.

     International revenues rose 14% to $60.8 billion in 2003 compared with $53.4 billion and $51.9 billion in 2002 and 2001, respectively. International revenues as a percentage of consolidated revenues were 45% in 2003, compared with 40% and 41% in 2002 and 2001, respectively. The effects of exchange rates on reported results were to increase revenues by $3.8 billion and $0.4 billion in 2003 and 2002, respectively, and increase earnings by $0.1 billion in 2003 and decrease earnings by $0.1 billion in 2002.

CONSOLIDATED INTERNATIONAL REVENUES

(In millions)		2003		2002		2001
Europe	$	30,505	$	24,813	$	24,381
Pacific Basin		13,119		12,026		11,447
Americas		5,854		5,165		5,507
Other international		4,608		3,911		3,456
		54,086		45,915		44,791
Exports from the U.S. to external customers		6,719		7,481		7,149
Total	$	60,805	$	53,396	$	51,940

GE international revenues were $33.0 billion, $29.0 billion and $28.3 billion in 2003, 2002 and 2001, respectively. The $4.0 billion increase in GE international revenues related to increased operations outside the U.S., partially offset by lower U.S. exports.

55        GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     GE revenues in Europe rose 25%, led by Power Systems, Medical Systems and Industrial Products and Systems, reflecting the net effects of the weaker U.S. dollar and volume growth. GE revenues in the Pacific Basin increased 14% as most businesses reported improved results. Industrial Products and Systems and Power Systems were the primary contributors to a 16% increase in revenues in the Americas and Power Systems more than accounted for the 10% decrease in U.S. exports. The increase in 2002 related to both an increase in operations outside the U.S. and higher U.S. exports. Revenue increases in Europe were led by Medical Systems and Industrial Systems in 2002. Growth in Specialty Materials revenues across all geographic areas was partially offset by lower sales in all areas by Aircraft Engines. Increases in U.S. export sales in 2002 were primarily in Plastics and Power Systems, partially offset by lower exports by Medical Systems and Transportation Systems.

     GECS international revenues were $27.8 billion, $24.4 billion and $23.6 billion in 2003, 2002 and 2001, respectively. The $3.4 billion increase related to a 21% increase in Europe in 2003 as a result of the growth in premiums and price increases at Insurance ($2.1 billion), acquisitions ($1.0 billion) and the net effects of the weaker U.S. dollar ($0.7 billion), primarily at Consumer Finance and Commercial Finance, partially offset by geographic market exits at IT Solutions ($1.3 billion).

     International operating profit was $8.8 billion in 2003, an increase of 35% over 2002, which was 7% higher than in 2001. Operating profit in 2003 rose 89% to $4.0 billion in Europe, primarily as a result of lower adverse development at Insurance ($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).

     Total assets of international operations were $258.9 billion in 2003 (40% of consolidated assets), an increase of $29.9 billion, or 13%, over 2002. GECS international assets grew 12% from $207.5 billion at the end of 2002 to $231.9 billion at the end of 2003. GECS assets increased 31% in Europe as a result of acquisitions ($14.8 billion), primarily at Consumer Finance and Commercial Finance, the net effects of the weaker U.S. dollar ($11.7 billion) and growth at Consumer Finance and Insurance. GECS assets increased 13% in the Americas as a result of growth at Commercial Finance and Insurance.

     Financial results of our international activities reported in U.S. dollars are affected by currency exchange. We use a number of techniques to manage the effects of currency exchange, including selective borrowings in local currencies and selective hedging of significant cross-currency transactions. Such principal currencies are the British pound sterling, the euro, the Japanese yen and the Canadian dollar.

Environmental Matters

Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws.

     We have developed environmental, health and safety management systems that are implemented at all of our facilities and track our performance. Since 1996, we have reduced employee injuries by over 70% as well as reducing air and wastewater exceedances 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 Protection Program (VPP) as well as a similar government program in Mexico. Participation in these programs requires government audits to verify our comprehensive health and safety management systems. We are a leading participant in the U.S. VPP program with 82 sites, and have an additional 25 sites participating in the Mexico program. We have a Global Star program designed to recognize sites with world-class health and safety programs in those countries without government VPP programs. The 44 Global Star sites have passed a rigorous evaluation conducted by GE internal health and safety experts. We also have 79 sites accredited by outside auditors under the ISO 14000 Standard for Environmental Management Systems.

56        GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     Over the last two years we spent a total of about $0.1 billion for projects related to the environment. These amounts exclude expenditures for remediation actions, which are principally expensed and are discussed below. Capital expenditures for environmental purposes have included pollution control devices–such as wastewater treatment plants, groundwater monitoring devices, air strippers or separators, and incinerators–at new and existing facilities constructed or upgraded in the normal course of business. Consistent with policies stressing environmental responsibility, we expect our capital expenditures other than for remediation projects to total about $0.1 billion over the next two years for new or expanded programs to build facilities or modify manufacturing processes to minimize waste and reduce emissions.

     We also are involved in a sizable number of remediation actions to clean up hazardous wastes as required by federal and state laws. Such statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site. Expenditures for site remediation actions amounted to $0.1 billion in each of the last two years. We presently expect that such remediation actions will require average annual expenditures in the range of $0.1 billion to $0.2 billion over the next two years.

     The U.S. Environmental Protection Agency (EPA) ruled in February 2002 that approximately 150,000 pounds of polychlorinated biphenyls (PCBs) must be dredged from a 40-mile stretch of the upper Hudson River in New York State. We have submitted what is known as a "Good Faith Offer" under the Superfund law and began negotiations with the EPA to undertake the design and engineering of the remedy. Our Statement of Financial Position as of December 31, 2003 and 2002, included liabilities for the estimated costs of this remediation.

FINANCIAL RESOURCES AND LIQUIDITY

This discussion of financial resources and liquidity addresses the Statement of Financial Position (pages 72-73), Statement of Changes in Shareowners' Equity (page 70) and the Statement of Cash Flows (pages 74-75).

     Only a small portion of GECS business is directly related to other GE operations. The fundamental differences between GE and GECS are reflected in the measurements commonly used by investors, rating agencies and financial analysts. These differences will become clearer in the discussion that follows with respect to the more significant items in the financial statements.

Overview of Financial Position

Major changes in our financial position resulted from the following:

• During 2003, we completed our acquisitions of First National Bank, Allbank and the retail sales finance business of Conseco. At the acquisition date, these transactions resulted in an increase in total assets of approximately $13.2 billion of which $11.6 billion was financing receivables before allowance for losses, and an increase in total liabilities of approximately $5.0 billion, $4.0 billion of which was debt.
• During 2003, we sold our Tokyo-based Edison Life and U.S. Auto and Home businesses to American International Group, Inc., our FGIC business to a group of investors led by The PMI Group, Inc. and our ERC Life business to Scottish Re Group Limited. These sales resulted in a reduction in assets at the disposition date of $24.9 billion, comprising primarily $18.8 billion of investment securities. Liabilities were reduced by approximately $21.4 billion, relating primarily to $19.9 billion of insurance liabilities and reserves.
• In 2003, Medical Systems acquired Instrumentarium at a total cost of $2.4 billion.
• We adopted FIN 46 on July 1, 2003, and consequently consolidated certain entities in our financial statements for the first time. New balance sheet captions, "Consolidated, liquidating securitization entities," included $36.3 billion of assets and $35.8 billion of liabilities at transition. Also, investment securities and other GECS receivables included an additional $14.1 billion and $1.0 billion, respectively, at transition for investment securities related to guaranteed investment contracts (GICs) issued by Trinity, a group of sponsored special purpose entities. The related GIC liabilities of $14.7 billion consolidated at transition are displayed in the caption, "Insurance liabilities, reserves and annuity benefits."

Statement of Financial Position (pages 72-73)

Because GE and GECS share certain significant elements of their Statements of Financial Position–property, plant and equipment, and borrowings, for example–the following discussion addresses significant captions in the "consolidated" statement. Within the following discussions, however, we distinguish between GE and GECS activities in order to permit meaningful analysis of each individual statement.

57         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

INVESTMENT SECURITIES for each of the past two years comprised mainly investment-grade debt securities held by Insurance in support of obligations to annuitants and policyholders. Investment securities were $120.7 billion at the end of 2003, compared with $116.9 billion at the end of 2002. The increase of $3.8 billion was primarily the result of $14.4 billion of investment securities held by Trinity. The increase was also attributed to the investment of premiums received, reinvestment of investment income and the performance of the equity and debt markets, net of impairments and losses ($5.7 billion). These were partially offset by the sales of Edison Life, U.S. Auto and Home, FGIC and ERC Life businesses ($18.6 billion).

     We regularly review investment securities for impairment based on criteria that include the extent to which carrying value exceeds market value, the duration of that market decline, our ability to hold to recovery and the financial strength and specific prospects for the issuer of the security. Of securities with unrealized losses at December 31, 2003, approximately $0.1 billion of portfolio value is at risk of being charged to earnings in the next 12 months. Impairment losses recognized in 2003 and 2002 were $0.5 billion and $0.8 billion, respectively.

     Gross unrealized gains and losses were $4.7 billion and $1.2 billion, respectively, at December 31, 2003, compared with $4.4 billion and $2.5 billion, respectively, at December 31, 2002, reflecting broad market improvement in 2003. We estimate that available gains, net of hedging positions and estimated impairment of insurance intangible assets, could be as much as $2.1 billion at December 31, 2003. Market value used in determining unrealized gains and losses is defined by relevant accounting standards and should not be viewed as a forecast of future gains or losses. See note 9.

WORKING CAPITAL, representing GE cash invested in inventories and receivables from customers, less trade payables and progress collections, increased to $5.3 billion at the end of 2003 from $3.8 billion at the end of 2002. Working capital balances are significantly affected by progress collections, primarily from Power Systems customers, as shown below:

December 31 (In millions)		2003			2002
Working capital	$	5,282		$	3,821
Less progress collections		(4,381	)		(6,603	)
Working capital, excluding progress collections	$	9,663		$	10,424

We expect Power Systems progress collections to continue to decline in 2004. We discuss current receivables and inventories, two important 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 end of 2003, compared with $6.3 billion at the end of 2002. Turnover of customer receivables from sales of goods and services was 10.4 in 2003, compared with 10.9 in 2002. Excluding Power Systems, turnover improved from 12.6 in 2002 to 13.3 in 2003. Other current receivables are primarily amounts that did not originate from sales of GE goods or services, such as advances to suppliers in connection with large contracts. See note 10.

INVENTORIES for GE were $8.6 billion at December 31, 2003, down $0.4 billion from the end of 2002. GE inventory turnover was 7.4 in 2003, a decrease from 7.7 in 2002, as a result of declining sales at Power Systems. Excluding Power Systems, turnover was 7.7 and 7.6 in 2003 and 2002, respectively. See note 11.

FINANCING RECEIVABLES is our largest category of assets and represents one of our primary sources of revenues. The portfolio of financing receivables, before allowance for losses, increased to $232.3 billion at December 31, 2003, from $203.6 billion at the end of 2002, as discussed in the following paragraphs. The related allowance for losses at the end of 2003 amounted to $6.3 billion compared with $5.5 billion at December 31, 2002, representing our best estimate of probable losses inherent in the portfolio.

     A discussion of the quality of certain elements of the financing receivables portfolio follows. For purposes of that discussion, "delinquent" receivables are those that are 30 days or more past due; "nonearning" receivables are those that are 90 days or more past due (or for which collection has otherwise become doubtful); and "reduced-earning" receivables are commercial receivables whose terms have been restructured to a below-market yield.

     Commercial Finance financing receivables, before allowance for losses, totaled $132.3 billion at December 31, 2003, compared with $130.9 billion at December 31, 2002, and consisted of loans and leases to the equipment, commercial and industrial, real estate and commercial aircraft industries. This portfolio of receivables increased primarily from origination growth ($16.4 billion), the net effects of international receivables translated into the weaker U.S. dollar ($5.2 billion) and acquisitions ($4.3 billion), partially offset by securitizations and sales ($24.6 billion). Related nonearning and reduced-earning receivables were $1.7 billion (1.3% of outstanding receivables) at December 31, 2003, compared with $2.2 billion (1.7% of outstanding receivables) at year-end 2002, the result of improving economic conditions and collection results. Commercial Finance financing receivables are generally backed by assets and there is a broad spread of geographic and credit risk in the portfolio.

58         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     Consumer Finance financing receivables, before allowance for losses, primarily card receivables, installment loans, auto loans and leases, and residential mortgages, were $94.7 billion at December 31, 2003, compared with $66.0 billion at December 31, 2002. This portfolio of receivables increased as a result of acquisitions ($13.9 billion), the net effects of international receivables translated into the weaker U.S. dollar ($8.6 billion) and origination growth, partially offset by the sale of The Home Depot private label credit card receivables. Acquisitions are a key to our growth strategy as we expand our global market presence. Nonearning consumer receivables at December 31, 2003, were $2.5 billion (2.6% of outstanding receivables), compared with $1.6 billion (2.4% of outstanding receivables) at year-end 2002. This increase is the result of adverse credit performance in Japan and growth in our secured financing business, a business that tends to experience relatively higher delinquencies but relatively lower losses than the rest of our consumer portfolio.

     Financing receivables in Other, principally Equipment Management, amounted to $5.3 billion and $6.6 billion at December 31, 2003 and 2002, respectively, before allowance for losses. Nonearning receivables of $0.1 billion, 1.3% and 1.2% of outstanding receivables at December 31, 2003 and 2002, respectively, were about the same as at the end of 2002.

     Delinquency rates on managed Consumer Finance financing receivables at December 31, 2003, were 5.57%; at year-end 2002 were 5.58%; and at year-end 2001 were 5.34%. Delinquency rates remained stable from 2002 to 2003, as a change in portfolio mix related to the growth in our secured financing business was offset by improved collection results. Increased 2002 delinquency rates reflected our secured financing business acquired in 2001 and volume growth in that business in 2002. When delinquent, these loans have relatively lower losses than the rest of our consumer portfolio. Delinquency rates on managed Commercial Finance equipment loans and leases were 1.34%, 1.71% and 2.16% at year-end 2003, 2002 and 2001, respectively. The decline at December 31, 2003, primarily reflected improved economic conditions and collection results. The decline at December 31, 2002, primarily reflected a higher concentration of Vendor Financial Services receivables coupled with improved collection results at Commercial Equipment Financing. See notes 12 and 13.

OTHER GECS RECEIVABLES totaled $11.9 billion at December 31, 2003, and $13.0 billion at December 31, 2002, and consist primarily of nonfinancing customer receivables, accrued investment income, amounts due from GE (generally related to certain material procurement programs), amounts due under operating leases, receivables due on sale of securities and various sundry items. Balances at December 31, 2003 and 2002, include securitized, managed GE trade receivables of $2.7 billion and $2.4 billion, respectively.

PROPERTY, PLANT AND EQUIPMENT (including equipment leased to others) was $53.4 billion at December 31, 2003, up $4.3 billion from 2002, primarily reflecting acquisitions of commercial aircraft at Commercial Finance and vehicles at Equipment Management. GE property, plant and equipment consists of investments for its own productive use, whereas the largest element for GECS is equipment provided to third parties on operating leases. Details by category of investment are presented in note 15.

     GE expenditures for plant and equipment during 2003 totaled $2.2 billion, compared with $2.4 billion in 2002. Total expenditures for the past five years were $12.5 billion, of which 37% was investment for growth through new capacity and product development; 35% was investment in productivity through new equipment and process improvements; and 28% was investment for other purposes such as improvement of research and development facilities and safety and environmental protection.

     GECS additions to property, plant and equipment (including equipment leased to others) were $7.6 billion and $11.7 billion during 2003 and 2002, respectively, primarily reflecting additions of commercial aircraft at Commercial Finance and vehicles at Equipment Management.

INTANGIBLE ASSETS were $55.0 billion at year-end 2003, up from $46.2 billion at year-end 2002. GE intangibles increased to $30.2 billion from $23.1 billion at the end of 2002, principally as a result of goodwill and other intangibles related to acquisitions by Medical Systems, NBC and Specialty Materials. GECS intangibles increased $1.7 billion to $24.8 billion, reflecting goodwill and other intangibles associated with acquisitions, and the net effects of the weaker U.S. dollar, partially offset by the disposition of Edison Life. See note 16.

ASSETS IN CONSOLIDATED, LIQUIDATING SECURITIZATION ENTITIES were $26.5 billion at December 31, 2003, as a result of our adoption of FIN 46 on July 1, 2003. At transition we consolidated $36.3 billion of assets, but because we have stopped transferring assets to these entities, balances decreased reflecting repayments. See note 29.

ALL OTHER ASSETS totaled $97.1 billion at year-end 2003, an increase of $3.9 billion. This increase resulted principally from investment of funds received as collateral on securities loaned from the GE Financial Assurance investment securities portfolio, increases in separate accounts (investments controlled by policyholders) resulting from the net effects of exchange rates and broad market improvements in 2003 and an increase in the prepaid pension asset. These increases were partially offset by the sale of The Home Depot private label credit card receivables, decreases in associated companies and the disposition of Edison Life. See note 17.

59         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

CONSOLIDATED BORROWINGS were $304.9 billion at December 31, 2003, compared with $279.4 billion at the end of 2002.

     GE total borrowings were $10.9 billion at year-end 2003 ($2.5 billion short term, $8.4 billion long term), an increase of $1.1 billion from year end 2002. GE total debt at the end of 2003 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, 2003, of which $133.0 billion is due in 2004 and $162.5 billion is due in subsequent years. Comparable amounts at the end of 2002 were $270.9 billion in total, $130.1 billion due within one year and $140.8 billion due thereafter. A large portion of GECS borrowings ($80.6 billion and $84.2 billion at the end of 2003 and 2002, respectively) was issued in active commercial paper markets that we believe will continue to be a reliable source of short-term financing. The average remaining terms and interest rates of GE Capital commercial paper were 50 days and 1.48% at the end of 2003, compared with 47 days and 1.95% at the end of 2002. The GE Capital ratio of debt to equity was 6.20 to 1 at the end of 2003 and 6.58 to 1 at the end of 2002. See note 18.

LIABILITIES IN CONSOLIDATED, LIQUIDATING SECURITIZATION ENTITIES were $25.7 billion at December 31, 2003, as a result of our adoption of FIN 46 on July 1, 2003. At transition we consolidated $35.8 billion of liabilities, but because we have stopped transferring assets to these entities, balances decreased reflecting repayments. See note 29.

INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS of $136.3 billion at December 31, 2003, were $0.4 billion higher than in 2002. The increase is primarily attributable to the additional liabilities associated with the consolidation of Trinity upon our 2003 adoption of FIN 46 ($14.1 billion), the net effects of the weaker U.S. dollar and growth in separate accounts, deferred annuities and adverse development ($6.2 billion), partially offset by the sale of Edison Life, U.S. Auto and Home, ERC Life and FGIC businesses ($19.7 billion). See note 19.

EXCHANGE RATE AND INTEREST RATE RISKS are managed with a variety of straightforward techniques, including match funding and selective use of derivatives. We use derivatives to mitigate or eliminate certain financial and market risks because we conduct business 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 risks, including prohibitions on derivatives trading, derivatives market-making or other speculative activities. Following is an analysis of the potential effects of changes in currency exchange and interest rates using so-called "shock" tests that model effects of shifts in rates. These are not forecasts.

• If, on January 1, 2004, interest rates had increased 100 basis points across the yield curve (a "parallel shift" in that curve) and that increase remained in place for 2004, we estimate, based on our year-end 2003 portfolio and holding everything else constant, that our 2004 GE and GECS net earnings would decline pro-forma by $0.1 billion and $0.2 billion, respectively.
• If, on January 1, 2004, currency exchange rates were to decline by 10% against the U.S. dollar and that decline remained in place for 2004, we estimate, based on our year-end 2003 portfolio and holding everything else constant, that the effect on our 2004 GE and GECS net earnings would be insignificant.

Statement of Changes in Shareowners' Equity (page 70)

Shareowners' equity increased $15.5 billion, $8.9 billion and $4.3 billion in 2003, 2002 and 2001, respectively. The increases were largely attributable to net earnings of $15.0 billion, $14.1 billion and $13.7 billion, partially offset by dividends declared of $7.8 billion, $7.3 billion and $6.6 billion in 2003, 2002 and 2001, respectively. Currency translation adjustments increased equity by $5.1 billion in 2003, compared with an increase of $1.0 billion in 2002 and a reduction of $0.6 billion in 2001. Changes in the currency translation adjustment reflect the effects of changes in currency exchange rates on our net investment in non-U.S. subsidiaries that have functional currencies other than the U.S. dollar. In 2003 and 2002, the euro and, to a lesser extent, Asian currencies strengthened against the dollar. In 2001, Asian currencies weakened versus the dollar, while the euro was relatively unchanged. Accumulated currency translation adjustments affect net earnings only when all or a portion of an affiliate is disposed of or substantially liquidated.

60        GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview of Our Cash Flow from 2001 through 2003 (pages 74-75)

GE cash from operating activities (CFOA) is a useful measure of performance for our non-financial businesses. Our GE Statement of Cash Flows on page 74 shows CFOA in the required format. While that display is of some use in analyzing how various assets and liabilities affected our year-end cash positions, we believe it is also useful to supplement that display and to examine in a broader context the business activities that provide and require cash. This overview provides that perspective.

     CFOA in 2003 totaled $12.9 billion, an increase of $2.8 billion from the previous year's $10.1 billion. Power Systems experience over this period, which was significantly affected by the 2002 peak of the U.S. power bubble, can obscure significant ongoing trends. For example, one major factor that affects CFOA comparisons is the effect of progress collections in Power Systems. Excluding these effects, CFOA was $15.2 billion in 2003, the same as 2002 and up from $13.8 billion in 2001, including effects of receivable monetization programs in both years.

     Generally, factors that affect our earnings–for example, pricing, volume, costs and productivity–affect CFOA similarly. However, while management of working capital, including timing of collections and payments and levels of inventory, affects operating results only indirectly, the effect of these programs on CFOA can be significant. Excluding progress collections, working capital improvements contributed $2.2 billion and $0.1 billion to CFOA in 2003 and 2002, respectively, as we applied our inventory and other working capital management tools broadly.

     The most significant source of cash in CFOA is customer-related activities, the largest of which is collecting cash following a product or services sale. Excluding Power Systems, GE cash collections from customer-related activities were about $52.5 billion in 2003, an increase of about $2.4 billion from 2002. This increase is consistent with the change in comparable GE operating segment revenues, including increases at Medical Systems, Specialty Materials and Transportation Systems, partially offset by decreases at Aircraft Engines, Consumer Products and NBC. Including Power Systems, cash from customer-related activities was about $68.4 billion and $67.5 billion in 2003 and 2002, respectively. Analyses of operating segment revenues on page 49 is the best way of understanding their customer-related CFOA.

     The most significant operating use of cash is to pay our suppliers and employees for the wide range of material and services necessary in a diversified global organization. Excluding payments by 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.

     CFOA also included cash dividends from GECS, totaling $3.4 billion in 2003 and $2.0 billion in 2002 and 2001. These dividends represented distribution of a portion of GECS retained earnings, and are distinct from cash from operating activities within the financial services businesses, which decreased in 2003 by $0.1 billion to $21.4 billion. Financial services cash is not necessarily freely available for alternative uses. For example, cash generated by our Insurance businesses is restricted by various insurance regulations (see note 23). Further, any reinvestment in financing receivables is shown in cash used for investing, not operating activities. Therefore maintaining or growing Commercial and Consumer Finance assets requires that we invest much of the cash they generate from operating activities in their earning assets. Also, we are increasing the equity of our financial services businesses as discussed on page 63. The amount we show in CFOA is the total dividend, including the normal dividend as well as any special dividends.

     Based on past performance and current expectations, in combination with the financial flexibility that comes with a strong balance sheet and the highest credit ratings, we believe we are in a sound position to grow dividends and continue making selective investments for long-term growth. With the financial flexibility that comes with excellent credit ratings, we believe that GE and GECS should be well positioned to meet the global needs of its customers for capital and to continue providing our shareowners with good returns.

61         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

Cash Requirements

Achieving optimal returns on cash used often involves making long-term commitments. SEC regulations require that we present our contractual obligations, and we have done so in the table that follows. However, our future cash flow prospects cannot reasonably be assessed based on such obligations–the most significant factor affecting our future cash flows is our ability to earn and collect cash from customers. Future cash outflows, whether they are contractual obligations or not, will vary based on our future needs. While some such outflows are completely fixed (for example, commitments to repay principal and interest on fixed-rate borrowings) most depend on future events (for example, supply agreements to purchase commodity raw materials at quantities to be determined in the future at then-market prices). Many purchase obligations are linked to cash-generating revenue contracts (for example, payments to subcontractors under long-term contracts). Further, normal operations involve significant expenditures that are not based on "commitments," for example, expenditures for income taxes or for payroll.

     As defined by reporting regulations, our consolidated contractual obligations as of December 31, 2003, follow:

	Payments due by period
(In millions)	Total	2004	2005-2006	2007-2008	2009 and thereafter
Borrowings (note 18)	$304,921	$134,917	$76,893	$31,379	$61,732
Operating lease obligations (note 4)	7,118	1,327	2,007	1,465	2,319
Purchase obligations(a)(b)	62,000	41,000	11,000	5,000	5,000
Insurance liabilities (note 19)(c)	52,000	10,000	9,000	7,000	26,000
Other liabilities(d)	58,000	15,000	3,000	2,000	38,000

(a) Includes all take-or-pay arrangements, capital expenditures, contractual commitments to purchase equipment that will be classified as equipment leased to others, software acquisition/license commitments, contractual minimum programming commitments and contractually required cash payments for acquisitions. We estimated ordinary course of business purchase orders and other commitments using Six Sigma statistical sampling techniques.

(b) Excludes funding commitments entered into in the ordinary course of business by our financial services businesses. Further information on these commitments is provided in note 30. Also excludes commitments of $14.3 billion to acquire businesses settleable in stock or cash at our option during 2004.

(c) Includes guaranteed investment contracts, structured settlements and single premium immediate annuities based on scheduled payouts, as well as those contracts with readily 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' compensation tabular indemnity loan and long-term liability claims.

(d) Because their future cash outflows are uncertain, the following non-current liabilities are 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.

Other matters that provide additional context for considering our liquidity position are discussed below.

WE USE OFF-BALANCE SHEET ARRANGEMENTS in the ordinary course of business to improve shareowner returns. Beyond improving returns, these securitization transactions serve as funding sources for a variety of diversified lending and securities transactions. Our securitization transactions are similar to those used by many financial institutions. In a typical transaction, assets are sold by the transferor to a special purpose entity, which purchases the assets with cash raised through issuance of beneficial interests (usually debt instruments) to third party investors. Investors in the beneficial interests usually have recourse to the assets in the special purpose entities (SPEs) and often benefit from credit enhancements supporting the assets (such as overcollateralization). The SPE may also hold derivatives, such as interest rate swaps, in order to match the interest rate characteristics of the assets with those of the beneficial interests. An example is an interest rate swap converting fixed rate assets to variable rate to match floating rate debt instruments issued by the SPE.

     Historically, we have used both sponsored and third-party entities to execute securitization transactions in the commercial paper and term markets. With our adoption of FIN 46 on July 1, 2003, consolidating $36.3 billion of assets and $35.8 billion of liabilities in certain sponsored entities, we stopped executing new securitization transactions with those entities. We continue to engage in securitization transactions with third party conduits and through public market term securitizations.

     Assets held by SPEs include: receivables secured by equipment, commercial real estate and other assets; credit card receivables; and trade receivables. Examples of these assets include loans and leases on manufacturing and transportation equipment, loans on commercial property, commercial loans, and balances of high credit quality accounts from sales of a broad range of products and services to a diversified customer base. In certain transactions, the credit quality of assets transferred is enhanced by providing credit support. Off-balance sheet assets securitized totaled $26.8 billion and $54.9 billion at December 31, 2003 and 2002, respectively. This comparison is significantly affected by the consolidation of a majority of our sponsored and supported securitization entities.

     In order to provide comparative information about our overall securitization activities, the disclosures that follow describe all entities used for securitization, including those that were recently consolidated under FIN 46.

     We provide financial support related to assets held by certain SPEs through liquidity agreements, credit support, and guarantee and reimbursement contracts. Net 2004 credit and liquidity 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 REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

billion includes credit support, in which we provide recourse for a 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. Potential credit losses are provided for in our financial statements. Based on management's best estimate of probable losses inherent in the portfolio of assets that remain off-balance sheet, our financial statements included $0.1 billion representing fair value of recourse obligations at year-end 2003. See note 29.

     We periodically enter into guarantees and other similar arrangements as part of transactions in the ordinary course of business. These are described further in note 30.

     We have extensive experience in evaluating economic, liquidity and credit risk. In view of this experience, the high quality of assets in these entities, the historically robust quality of commercial paper markets, and the historical reliability of controls applied to both asset servicing and to activities in the credit markets, we believe that, under any reasonable future economic developments, the likelihood is remote that any financial support arrangements could have an adverse economic effect on our financial position or results of operations.

Debt Instruments, Guarantees and Covenants

The major debt rating agencies routinely evaluate the debt of GE, GECS and GE Capital, the major borrowing affiliate of GECS. 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). One of our strategic objectives is to maintain these ratings as they serve to lower our cost of funds and to facilitate our access to a variety of lenders. We manage our businesses in a fashion that is consistent with maintaining our Triple-A ratings.

     GE, GECS and GE Capital have distinct business characteristics that the major debt rating agencies evaluate both quantitatively and qualitatively.

     Quantitative measures include:

• Earnings and profitability, including earnings quality, revenue growth, the breadth and diversity of sources of income and return on assets,
• Asset quality, including delinquency and write-off ratios and reserve coverage,
• Funding and liquidity, including cash generated from operating activities, leverage ratios such as debt to capital, market access, back-up liquidity from banks and other sources, composition of total debt and interest coverage, and
• Capital adequacy, including required capital and tangible leverage ratios.

Qualitative measures include:

• Franchise strength, including competitive advantage and market conditions and position,
• Strength of management, including experience, corporate governance and strategic thinking, and
• Financial reporting quality, including clarity, completeness and transparency of all financial performance communications.

GE Capital's ratings are supported contractually by a GE commitment to maintain the ratio of earnings to fixed charges at a specified level.

     Before 2003, GE Capital maintained a capital structure that included about $8 of debt for each $1 of equity–a "leverage ratio" of 8:1. For purposes of measuring segment profit, each of our financial services businesses was also assigned debt and interest costs on the basis of that consolidated 8:1 leverage ratio. As of January 1, 2003, we extended a business-specific, market-based leverage to the performance measurement of each of our financial services businesses. As a result, at January 1, 2003, debt of $12.5 billion previously allocated to the segments was allocated to the All Other GECS segment. We refer to this as "parent supported debt."

     During 2003, a total of $4.6 billion of such debt was eliminated, reducing the total to $7.9 billion at year end. This reduction was the result of the following:

• The decision of the GECS Board of Directors to reduce GECS dividend payments to GE to 10% of operating earnings ($1.7 billion),
• Strategic dispositions of Edison Life and U.S. Auto and Home assets and FGIC ($1.7 billion),
• Rationalization of other insurance related activities including disposition of certain originated mortgages ($0.7 billion), and
• The continuing strategy to optimize fleet mix, age and size at Equipment Management ($0.5 billion).

We plan to continue to reduce debt relative to our equity in financial services businesses. As such, we remain on track to eliminate parent supported debt by the end of 2005. Proceeds from further strategic dispositions, including Genworth, will continue to be evaluated when and if they are received, but we anticipate using at least some of those proceeds to reduce financial services debt.

     During 2003, the financial services business declared special dividends to GE of $2.7 billion which related to the strategic dispositions in the Insurance segment ($1.7 billion) and more efficient capital management programs ($1.0 billion).

     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.

63         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     These funds were used primarily for maturing long-term debt, acquisitions and asset growth, with the remainder used to reduce the amount of commercial paper outstanding. GE Capital anticipates issuing approximately $50 billion to $60 billion of long-term debt using both U.S. and international institutional and retail markets during 2004. The ultimate amount of debt issuances will depend on the growth in assets, acquisition activity, availability of markets and movements in interest rates.

     Following is the debt composition of GECS:

December 31	2003		2002
Senior notes	55	%	52	%
Commercial paper	27		31
Current portion of long-term debt	13		13
Other–bank and other retail deposits	5		4
Total	100	%	100	%

We target a ratio for commercial paper of 25% to 35% of outstanding debt based on the anticipated composition of our assets and the liquidity profile of our debt. GE Capital is the most widely held name in global commercial paper markets.

     We believe that alternative sources of liquidity are sufficient to permit an orderly transition from commercial paper in the unlikely event of impaired access to those markets. Funding sources on which we would rely would depend on the nature of such a hypothetical event, but include $57.2 billion of contractually committed lending agreements with 85 highly-rated global banks and investment banks, an increase of $3.1 billion since December 31, 2002. See note 18.

     Beyond contractually committed lending agreements, other sources of liquidity include medium and long-term funding, monetization, asset securitization, cash receipts from our lending and leasing activities, short-term secured funding on global assets, and potential asset sales.

PRINCIPAL DEBT CONDITIONS are described below.

The following two conditions relate to GE and GECS:

• If the long-term credit rating of either GE or GECS under certain swap, forward and option contracts falls below A-/A3, certain remedies are required as discussed in note 28.
• If GE Capital's ratio of earnings to fixed charges, which was 1.84:1 at the end of 2003, were to deteriorate to 1.10:1 or, 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.

The following three conditions relate to securitization SPEs and apply to entities that were consolidated upon adoption of FIN 46 on July 1, 2003, that are reported in the captions, "Consolidated, liquidating securitization entities":

• If the short-term credit rating of GE Capital or certain consolidated SPEs discussed further in note 29 were to fall below A-1/P-1, GE Capital would be required to provide substitute liquidity for those entities or provide funds to retire the outstanding commercial paper. The maximum net amount that GE Capital would be required to provide in the event of such a downgrade is determined by contract, and amounted to $19.9 billion at January 1, 2004. Amounts related to non-consolidated SPEs were $2.1 billion.
• If the long-term credit rating of GE Capital were to fall below AA/Aa2, GE Capital would be required to provide substitute credit support or liquidate the consolidated SPEs. The maximum amount that GE Capital would be required to substitute in the event of such a downgrade is determined by contract, and amounted to $1.4 billion at December 31, 2003.
• For certain transactions, if the long-term credit rating of GE Capital were to fall below A/A2 or BBB+/Baa1 or its short-term credit rating were to fall below A-2/P-2, GE Capital could be required to provide substitute credit support or fund the undrawn commitment. GE Capital could be required to provide up to $3.2 billion in the event of such a downgrade based on terms in effect at December 31, 2003.

The following condition relates to the Trinity SPEs, which are reported in the captions, "Investment securities" and "Insurance liabilities, reserves and annuity benefits":

• If the long-term credit rating of GE Capital were to fall below AA-/Aa3 or its short-term credit rating were to fall below A-1+/P-1, GE Capital could be required to provide up 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 contracts based on terms in effect at December 31, 2003.

In our history, we have never violated any of the above conditions either at GE or at GECS. We believe that under any reasonable future economic developments, the likelihood that any such arrangements could have a significant effect on our operations, cash flows or financial position is remote.

64        GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

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 U.S. and European airlines achieved moderate improvements in operations, including traffic, revenues and load factors. Our customers that had been operating at losses generally reduced those losses in 2003, and their year end cash positions were improved.

     At December 31, 2003, we had the following positions related to our global commercial aviation business, principally in our Commercial Finance segment:

• 1,239 commercial aircraft, of which 1,236 were on lease,
• $29.0 billion of loans and leases,
• $2.3 billion of investment securities including $0.4 billion in our insurance businesses and $0.2 billion in the Trinity SPEs,
• $1.2 billion of funding commitments,
• $13.5 billion (list price) of multiple-year orders for various Boeing, Airbus and other aircraft. We had 104 aircraft ($4.5 billion) scheduled for delivery in 2004, of which 101 were under agreement to commence operations with commercial airline customers.

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 our total aircraft holdings. Two of our businesses have capitalized on the trend toward regional jets; Aircraft Engines through engine sales and servicing and Commercial Finance through leases. We believe that we continue to offer a suitable range of equipment that is attractive to the industry.

     Aircraft Engines sales of new equipment often include long-term customer financing commitments. Under these commitments, it is our policy to establish a secured position in the aircraft being financed. At year-end 2003, guarantees of $0.4 billion were in place. Further, we had committed $1.2 billion to provide financial assistance on future aircraft sales (see note 30). 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 associated 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.

     UAL Corp. and Air Canada, the parent companies of two of our major airline customers, are experiencing significant financial difficulties and both filed for reorganization in bankruptcy. UAL Corp. filed for bankruptcy protection in 2002 and Air Canada filed in Canada on April 1, 2003. At December 31, 2003, our total exposure related to these airlines amounted to $4.3 billion, including loans, leases, investment securities and commitments. Various Boeing, Airbus and Bombardier aircraft secure substantially all of these financial exposures. Included in this exposure is a $0.7 billion debtor-in-possession financing commitment to Air Canada. Another major airline customer, US Airways Group, parent of US Airways, filed for reorganization in bankruptcy in 2002 but emerged from bankruptcy on March 31, 2003. At December 31, 2003, our total exposure related to US Airways amounted to $2.5 billion, including leases, loans, investment securities and commitments. Atlas Air Worldwide Holdings Inc. (Atlas Air) filed for reorganization in bankruptcy in January 2004. At December 31, 2003, our total exposure to Atlas Air was $1.0 billion of operating leases, secured loans and investment securities. Our financial statements include provisions for probable losses based on our best estimates of such losses.

     Commercial Finance tests the recoverability of its commercial aircraft operating lease portfolio as described on page 67, and recognized impairment losses of $0.2 billion in each of the last two years.

SELECTED FINANCIAL DATA

Information summarized on the following page is divided into three sections: upper portion–consolidated data; middle portion–GE data that reflect various conventional measurements for such enterprises; and lower portion–GECS data that reflect key information pertinent to financial services businesses.

GE'S TOTAL RESEARCH AND DEVELOPMENT expenditures were $2.7 billion in 2003, compared with $2.6 billion and $2.3 billion in 2002 and 2001, respectively. In 2003, expenditures from GE's own funds were $2.1 billion compared with $2.2 billion in 2002. Expenditures funded by customers (mainly the U.S. government) were $0.6 billion in 2003, compared with $0.4 billion in 2002. The decrease in company funded expenditures was attributed to commercial introduction of major development programs, including the H System gas turbine at Power Systems and U.S. Federal Aviation Administration certification of the GE90-115B jet engine at Aircraft Engines. Product technology efforts in 2003 included continuing development work on the next generation of gas turbines, further advances in state-of-the-art diagnostic imaging technologies, developing reduced emissions and more fuel-efficient locomotives, improving the performance and efficiency of wind energy turbines and continuing development of more fuel-efficient, cost-effective aircraft engine designs. Services technologies include further advances in diagnostic applications, including remote diagnostic capabilities related to repair and maintenance of medical equipment, aircraft engines, power generation equipment and locomotives. Information technology advances in the healthcare field are helping our customers integrate their various devices and critical systems. Process technologies provided improved product quality and performance and increased capacity for manufacturing engineered materials.

65        GE 2003 ANNUAL REPORT

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			0.48	2/3
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 REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

GE'S TOTAL BACKLOG of firm unfilled orders at the end of 2003 was $31.2 billion, a decrease of 12% from year-end 2002, reflecting softening demand for new equipment in the power generation business at Power Systems and at Aircraft Engines, partially offset by higher backlog at Medical Systems. Of the total backlog, $21.2 billion related to products, of which 63% was scheduled for delivery in 2004. Product services orders, included in this reported backlog for only the succeeding 12 months, were $10.0 billion at the end of 2003. Orders constituting this backlog may be canceled or deferred by customers, subject in certain cases to penalties. See Segment Operations beginning on page 49 for further information.

CRITICAL ACCOUNTING ESTIMATES

Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties. For all of these estimates, we caution that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

LOSSES ON FINANCING RECEIVABLES are recognized when they are incurred. Our best estimate of such probable losses requires consideration of historical loss experience, adjusted for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates, financial health of specific customers and market sectors, collateral values, and the present and expected future levels of interest rates. Our lending and leasing experience and the extensive data we accumulate and analyze facilitate estimates that have been reliable over time. Our actual loss experience was in line with expectations for 2003, 2002 and 2001. While losses depend to a large degree on future economic conditions, we do not anticipate significant adverse credit development in 2004. Further information is provided in the financing receivables section on page 58, and in notes 1, 12, 13 and, for special purpose entities, in note 29.

REVENUE RECOGNITION ON LONG-TERM AGREEMENTS to provide product services (product services agreements) requires estimates of profits over the multiple-year terms of such agreements, considering factors such as the frequency and extent of future monitoring, maintenance and overhaul events; the amount of personnel, spare parts and other resources required to perform the services; and future cost changes. We routinely review estimates under product services agreements and regularly revise them to adjust for changes in outlook. Revisions that affect a product services agreement's total estimated profitability will also result in an immediate adjustment of earnings. We provide for probable losses. We also regularly assess customer credit risk inherent in the carrying amounts of contract costs and estimated earnings. We gain insight into future utilization and cost trends, as well as credit risk, through our knowledge of the installed base of equipment and the close interaction with our customers that comes with supplying critical services and parts over extended periods. Carrying amounts for product services agreements in progress at December 31, 2003 and 2002, were $3.2 billion and $2.9 billion, respectively, and are included in the line, "Contract costs and estimated earnings" in note 17. Adjustments to earnings resulting from revisions to estimates on product services agreements have been insignificant for each of the years in the three-year period ended December 31, 2003.

ASSET IMPAIRMENT assessment involves various estimates and assumptions as follows:

INVESTMENTS We regularly review investment securities for impairment based on criteria that include the extent to which the investment's carrying value exceeds its related market value, the duration of the market decline, our ability to hold to recovery and the financial strength and specific prospects of the issuer of the security. We perform comprehensive market research and analysis and monitor market conditions to identify potential impairments. Further information about actual and potential impairment losses is provided on page 58 and in note 9.

LONG-LIVED ASSETS We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset's residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use internal discounted cash flow estimates, quoted market prices when available and independent appraisals as appropriate to determine fair value. We derive the required cash flow estimates from our historical experience and our internal business plans and apply an appropriate discount rate.

     Commercial aircraft are a significant concentration of assets in our Commercial Finance business, and are particularly subject to market fluctuations. Therefore we test recoverability of each aircraft in our operating lease portfolio at least annually. Additionally we perform quarterly evaluations in circumstances such as when aircraft are re-leased, current lease terms have changed or a specific lessee's credit standing changes. Future rentals and residual values are based on historical experience and information received routinely from independent appraisers. Estimated cash flows from future leases are reduced for expected downtime between leases and for estimated technical costs required to prepare aircraft to be redeployed. Fair value used to measure impairment is based on current market values from independent appraisers.

67         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell or dispose of a reporting unit. Determining whether an impairment has occurred requires valuation of the respective reporting unit, which we estimate using a discounted cash flow methodology. When available and as appropriate, we use comparative market multiples to corroborate discounted cash flow results. In applying this methodology, we rely on a number of factors, including actual operating results, future business plans, economic projections and market data.

     If this analysis indicates goodwill is impaired, measuring its impairment requires a fair value estimate of each identified tangible and intangible asset. In this case we supplement the cash flow approach discussed above with independent appraisals, as appropriate.

     We test other identified intangible assets with defined useful lives and subject to amortization by comparing the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. We test intangible assets with indefinite lives annually for impairment using a fair value methodology such as discounted cash flows.

     Further information is provided on page 59 and in notes 1, 9, 15 and 16.

INSURANCE LIABILITIES AND RESERVES differ for short and long-duration insurance contracts. Short-duration contracts such as property and casualty policies are accounted for based on actuarial estimates of losses inherent in that period's claims, including losses for which claims have not yet been reported. Short-duration contract loss estimates rely on actuarial observations of ultimate loss experience for similar historical events. Measurement of long-duration insurance liabilities (such as guaranteed renewable term, whole life and long-term care insurance policies) also is based on approved actuarial methods that include assumptions about expenses, mortality, morbidity, lapse rates and future yield on related investments. Historical insurance industry experience indicates that a greater degree of inherent variability exists in assessing the ultimate amount of losses under short-duration property and casualty contracts than exists for long-duration mortality exposures. This inherent variability is particularly significant for liability-related exposures, including latent claims issues (such as asbestos and environmental related coverage disputes), because of the extended period of time–often many years–that transpires between when a given claim event occurs and the ultimate full settlement of such claim. This situation is then further exacerbated 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.

     We continually evaluate the potential for changes in loss estimates with the support of qualified reserving actuaries and use the results of these evaluations both to adjust recorded reserves and to proactively modify underwriting criteria and product offerings. For actuarial analysis purposes, reported and paid claims activity is segregated into several hundred reserving segments, each having differing historical settlement trends. A variety of actuarial methodologies are then applied to the underlying data for each of these reserving segments in arriving at an estimated range of "reasonably possible" loss scenarios. Factors such as line of business, length of historical settlement pattern, recent changes in underwriting standards and unusual trends in reported claims activity will generally affect which actuarial methodologies are given more weight for purposes of determining the "best estimate" of ultimate losses in a particular reserving segment. As discussed in the insurance section on page 51 and in note 19, reported claims activity at ERC related to prior year loss events, particularly for liability-related exposures underwritten in 1997 through 2001, has performed much worse than we anticipated. This trend was considered in the actuarial reserve study completed in the fourth quarter of 2002, resulting in a significant increase in recorded reserves. Following these actions, we have continued to monitor reported claims volumes relative to our revised expected loss levels. While for the majority of our lines of business, reported claims activity in 2003 was reasonably close to expected amounts, for certain lines of business the reported claims volumes exceeded our revised loss expectations. In response to this new data, we further increased our loss reserves in 2003. ERC continues its comprehensive efforts to apply more rigorous underwriting standards that began in 2002. Actuarial reserve studies and recorded reserves continue to be updated accordingly.

PENSION ASSUMPTIONS Pension benefit obligations and the related effects on operations are calculated using actuarial models. Two critical assumptions–discount rate and expected return on assets–are important elements of plan expense and asset/liability measurement. We evaluate these critical assumptions at least annually. Other assumptions involving demographic factors such as retirement age, mortality and turnover are evaluated periodically and are updated to reflect our experience. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

     The discount rate enables us to state expected future cash flows at a present value on the measurement date. We have little latitude in selecting this rate; it is the yield on high-quality fixed income investments at the measurement date. A lower discount rate increases the present value of benefit obligations and increases pension expense. To reflect market interest rate conditions, we reduced our discount rate at December 31, 2003, from 6.75% to 6.0%.

68         GE 2003 ANNUAL REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS

     To determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. We assumed that long-term returns on our pension plans were 8.5% in 2003 and 2002 and 9.5% in 2001.

     Sensitivity to changes in key assumptions follows:

• Discount rate–A 75 basis point reduction in discount rate would increase pension expense in 2004 by $0.3 billion.
• Expected return on assets–A 50 basis point increase in the expected return on assets of our principal plans would decrease pension expense in 2004 by $0.2 billion.

Further information on our principal postretirement benefit plans is provided on page 46 and in notes 5 and 6.

OTHER LOSS CONTINGENCIES are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple forecasts that often depend on judgments about potential actions by third parties such as regulators.

CERTAIN SIGNIFICANT ACCOUNTING POLICIES do not involve the same level of measurement uncertainties as those discussed above, but are nevertheless important to an understanding of the financial statements. Policies related to revenue recognition, financial instruments and business combinations require difficult judgments on complex matters that are often subject to multiple sources of authoritative guidance. Certain of these matters are among topics currently under reexamination by accounting standard setters and regulators; based on their tentative conclusions, significant changes to GAAP, and therefore to certain of our accounting policies, are possible in the future. Also see note 1, Summary of Significant Accounting Policies, which discusses accounting policies that we have selected from acceptable alternatives.

OTHER INFORMATION

New Accounting Standards

In December 2003, the FASB modified FIN 46, Consolidation of Variable Interest Entities with FIN 46R, which amended FIN 46 and deferred its application in certain cases. Our adoption of FIN46 on July 1, 2003, was unchanged by FIN 46R. However, on January 1, 2004, we will adopt FIN 46R, adding approximately $2.5 billion to our total assets and liabilities. No cumulative or significant future effect on our earnings or equity will result from this change.

Financial Measures that Supplement GAAP

We sometimes refer to data derived from consolidated financial information but not required by GAAP to be presented in financial statements. Certain of these data are considered "non-GAAP financial measures" under SEC regulations. Specifically, we have referred to:

• 2003 revenue and earnings growth excluding the operations of Power Systems,
• GECFOA excluding progress collections for the three years ended December 31, 2003, and
• GE earnings before income taxes and accounting changes and the corresponding effective tax rate for the three years ended December 31, 2003.

We believe trends in the Power Systems segment may be so significant as to obscure patterns and trends of our businesses in total. For this reason, we believe that investors may find it useful to see the measures noted above.

REVENUES EXCLUDING POWER SYSTEMS

					Percentage
(In billions)		2003		2002	change
Revenues as reported	$	134.2	$	132.2
Less Power Systems		18.5		22.9
Revenues excluding Power Systems	$	115.7	$	109.3	6	%

EARNINGS BEFORE ACCOUNTING CHANGES EXCLUDING POWER SYSTEMS

			Percentage
(In billions)	2003	2002	change
Earnings before accounting changes as reported	$15.6	$15.1
Less Power Systems at 35% tax rate	2.6	4.0
Earnings before accounting changes excluding Power Systems	$13.0	$11.1	17	%

GE CFOA EXCLUDING PROGRESS COLLECTIONS

(In billions)		2003			2002			2001
GE CFOA excluding progress collections	$	15.2		$	15.2		$	13.8
Progress collections		(2.3	)		(5.1	)		3.4
GE CFOA as reported	$	12.9		$	10.1		$	17.2

GE TAX RATE EXCLUDING GECS EARNINGS

(In millions)		2003		2002		2001
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%

69         GE 2003 ANNUAL REPORT

STATEMENT OF EARNINGS

	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 SHAREOWNERS' 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 REPORT

		GE								GECS
For the years ended December 31 (In millions; per-share amounts in dollars)		2003			2002			2001			2003			2002			2001
REVENUES
Sales of goods	$	47,767		$	51,957		$	49,057		$	2,228		$	3,296		$	3,627
Sales of services		22,675			21,360			18,961			—			—			—
Other income (note 2)		645			1,106			433			—			—			—
Earnings of GECS before accounting changes		7,754			4,626			5,586			—			—			—
GECS revenues from services (note 3)		—			—			—			61,356			55,403			55,229
Consolidated, liquidating securitization entities (note 29)		—			—			—			695			—			—
Total revenues		78,841			79,049			74,037			64,279			58,699			58,856
COSTS AND EXPENSES (note 4)
Cost of goods sold		35,102			35,951			32,419			2,119			3,039			3,266
Cost of services sold		14,301			14,245			13,658			—			—			—
Interest and other financial charges		941			569			817			9,869			9,935			10,598
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		9,870			9,131			8,637			22,342			20,343			20,320
Minority interest in net earnings of consolidated affiliates		181			183			185			109			143			163
Consolidated, liquidating securitization entities (note 29)		—			—			—			507			—			—
Total costs and expenses		60,395			60,079			55,716			55,067			54,152			51,890
EARNINGS BEFORE INCOME TAXES AND ACCOUNTING CHANGES		18,446			18,970			18,321			9,212			4,547			6,966
Provision for income taxes (note 7)		(2,857	)		(3,837	)		(4,193	)		(1,458	)		79			(1,380	)
EARNINGS BEFORE ACCOUNTING CHANGES		15,589			15,133			14,128			7,754			4,626			5,586
Cumulative effect of accounting changes (note 1)		(587	)		(1,015	)		(444	)		(339	)		(1,015	)		(169	)
NET EARNINGS	$	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 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 70.

71         GE 2003 ANNUAL REPORT

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 REPORT

	GE						GECS
At December 31 (In millions)		2003			2002			2003			2002
ASSETS
Cash and equivalents	$	1,670		$	1,079		$	11,273		$	7,918
Investment securities (note 9)		380			332			120,344			116,530
Current receivables (note 10)		10,973			10,973			—			—
Inventories (note 11)		8,555			9,039			197			208
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		—			—			11,901			12,984
Property, plant and equipment (including equipment leased to others)—
net (note 15)		14,566			13,743			38,816			35,330
Investment in GECS		45,308			36,929			—			—
Intangible assets —net (note 16)		30,204			23,049			24,821			23,131
Consolidated, liquidating securitization entities (note 29)		—			—			26,463			—
All other assets (note 17)		30,448			30,167			67,629			64,082
TOTAL ASSETS	$	142,104		$	125,311		$	554,526		$	489,828
LIABILITIES AND EQUITY
Short-term borrowings (note 18)	$	2,555		$	8,786		$	132,988		$	130,126
Accounts payable, principally trade accounts		8,753			8,095			13,440			12,608
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)		8,388			970			162,540			140,836
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)		18,449			16,621			22,828			18,441
Deferred income taxes (note 21)		1,911			1,927			10,736			10,590
Total liabilities		61,845			60,577			504,517			448,454
Minority interest in equity of consolidated affiliates (note 22)		1,079			1,028			4,701			4,445
Common stock (10,063,120,000 and 9,969,894,000 shares outstanding
at year-end 2003 and 2002, respectively)		669			669			1			1
Accumulated gains/(losses)—net
Investment securities		1,620			1,071			1,823			1,191
Currency translation adjustments		2,987			(2,136	)		2,639			(782	)
Derivatives qualifying as hedges		(1,792	)		(2,112	)		(1,727	)		(2,076	)
Other capital		17,497			17,288			12,268			12,271
Retained earnings		82,796			75,553			30,304			26,324
Less common stock held in treasury		(24,597	)		(26,627	)		—			—
Total shareowners’ equity (notes 24 and 25)		79,180			63,706			45,308			36,929
TOTAL LIABILITIES AND EQUITY	$	142,104		$	125,311		$	554,526		$	489,828

In the consolidating data on this page, “GE” means the basis of consolidation 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.

73         GE 2003 ANNUAL REPORT

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 REPORT

	GE									GECS
For the years ended December 31 (In millions)		2003			2002			2001			2003			2002			2001
CASH FLOWS — OPERATING ACTIVITIES
Net earnings	$	15,002		$	14,118		$	13,684		$	7,415		$	3,611		$	5,417
Adjustments to reconcile net earnings to cash provided
from operating activities
Cumulative effect of accounting changes		587			1,015			444			339			1,015			169
Depreciation and amortization of property, plant and equipment		2,277			2,199			1,919			4,679			4,312			3,954
Amortization of goodwill		—			—			545			—			—			707
Earnings (before accounting changes) retained by GECS		(4,319	)		(2,661	)		(3,625	)		—			—			—
Deferred income taxes		389			1,005			564			738			1,409			862
Decrease (increase) in GE current receivables		585			(486	)		207			—			—			—
Decrease (increase) in inventories		909			(149	)		(881	)		(35	)		62			396
Increase (decrease) in accounts payable		676			708			364			666			(880	)		4,804
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		(913	)		(590	)		530			2,215			(556	)		(8,688	)
CASH FROM OPERATING ACTIVITIES		12,925			10,097			17,197			21,448			21,511			18,296
CASH FLOWS — INVESTING ACTIVITIES
Additions to property, plant and equipment		(2,158	)		(2,386	)		(2,876	)		(7,609	)		(11,670	)		(13,518	)
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		(3,870	)		(8,952	)		(1,436	)		(10,537	)		(12,618	)		(10,993	)
Investment in GECS		—			(6,300	)		(3,043	)		—			—			—
All other investing activities		236			203			1,508			9,788			(15,234	)		(7,741	)
CASH USED FOR INVESTING ACTIVITIES		(5,792	)	(17,435		)		(5,847	)		(17,686	)		(51,247	)		(38,498	)
CASH FLOWS — FINANCING ACTIVITIES
Net increase (decrease) in borrowings (maturities of 90 days or less)		(6,704	)		7,924			327			(4,035	)		(34,687	)		23,634
Newly issued debt (maturities longer than 90 days)		7,356			66			1,303			59,939			96,044			30,752
Repayments and other reductions (maturities longer than 90 days)		(277	)		(1,229	)		(950	)		(42,878	)		(39,225	)		(36,051	)
Net dispositions (purchases) of GE shares for treasury		726			(985	)		(2,435	)		—			—			—
Dividends paid to shareowners		(7,643	)		(7,157	)		(6,358	)		(3,435	)		(1,965	)		(1,961	)
All other financing activities		—			—			—			(9,998	)		10,173			5,090
CASH FROM (USED FOR) FINANCING ACTIVITIES		(6,542	)		(1,381	)		(8,113	)		(407	)		30,340			21,464
INCREASE (DECREASE) IN CASH AND EQUIVALENTS     DURING YEAR		591			(8,719	)		3,237			3,355			604			1,262
Cash and equivalents at beginning of year		1,079			9,798			6,561			7,918			7,314			6,052
Cash and equivalents at end of year	$	1,670		$	1,079		$	9,798		$	11,273		$	7,918		$	7,314
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS     INFORMATION
Cash paid during the year for interest	$	(248	)	$	(155	)	$	(358	)	$	(10,313	)	$	(9,499	)	$	(10,767	)
Cash recovered (paid) during the year for income taxes		(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 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 74.

75         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

Our financial statements consolidate all of our affiliates–companies that we control and in which we hold a majority voting interest. In 2003, as we describe on page 79, we added certain non-affiliates that we do not control to our consolidated financial statements because of new accounting requirements that require consolidation of entities based on holding qualifying residual interests.

     Associated companies are companies that we do not control but over which we have significant influence, most often because we hold a shareholder voting position of 20% to 50%. Results of associated companies are presented on a "one-line" basis.

Financial statement presentation

We have reclassified certain prior-year amounts to conform to this year's presentation.

     Financial data and related measurements are presented in the following categories:

• GE This represents the adding together of all affiliates other than General Electric Capital Services, Inc. (GECS), whose operations are presented on a one-line basis.
• GECS This affiliate owns all of the common stock of General Electric Capital Corporation (GE Capital) and GE Global Insurance Holding Corporation (GE Global Insurance Holding), the parent of Employers Reinsurance Corporation (ERC). GE Capital, GE Global Insurance Holding and their respective affiliates are consolidated in the GECS columns and constitute its business.
• CONSOLIDATED This represents the adding together of GE and GECS.

Effects of transactions between related companies are eliminated. Transactions between GE and GECS are immaterial and consist primarily of GECS services for material procurement and trade receivables management, aircraft engines and medical equipment manufactured by GE that are leased by GECS to others, buildings and equipment leased by GE from GECS, and GE investments in GECS commercial paper.

     Preparing financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.

Sales of goods and services

We record sales of goods when a firm sales agreement is in place, delivery has occurred and collectibility of the fixed or determinable sales price is reasonably assured. If customer acceptance of products is not assured, sales are recorded only upon formal customer acceptance.

     Sales of goods in the Consumer Products, Industrial Systems, IT Solutions, Plastics, Specialty Materials and Supply businesses typically do not include multiple product and/or service elements, in contrast with sales in certain of the businesses referred to below. Consumer lighting products and computer hardware and software are often sold with a right of return. Accumulated experience is used to estimate and provide for such returns when we record the sale.

     Sales of goods in the Aircraft Engines, Medical Systems, Power Systems, Transportation Systems and certain Industrial Systems businesses sometimes include multiple components and sometimes include services such as installation. In such contracts, amounts assigned to each component are based on that component's objectively determined fair value, such as the sales price for the component when it is sold separately or competitor prices for similar components. Sales are recognized individually for delivered components only if undelivered components are not essential to functionality of delivered components, fair values of delivered components have been objectively determined, and the delivered components have value to the customer on a standalone basis. However, when undelivered components are inconsequential or perfunctory and not essential to the functionality of the delivered components (like certain training commitments), we recognize sales on the total contract and make provision for the cost of the incomplete elements.

     We record sales of product services and certain power generation equipment in accordance with contracts. For long-term product services agreements, we use estimated contract profit rates to record sales as work is performed. For certain power generation equipment, we use estimated contract profit rates to record sales as major components are completed and delivered to customers. Estimates are subject to revisions; revisions that affect an agreement's total estimated profitability result in an immediate adjustment of earnings. We provide for probable losses. We expense costs to acquire or originate sales agreements as incurred.

     Sales by NBC are recorded when advertisements are broadcast, with provision made for any shortfalls from viewer commitments ("make goods") based on specific contracts and independent viewer census information.

GECS revenues from services (earned income)

We use the interest method to recognize income on all loans. Interest on time sales and loans includes origination, commitment and other non-refundable fees related to funding (recorded in earned income on the interest method). Nonearning loans are loans on which we have stopped accruing interest at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days past due. We recognize interest income on nonearning loans either as cash is collected or on a cost-recovery basis as conditions warrant. We resume accruing interest on nonearning, non-restructured Commercial Finance loans only when (a) payments are brought current according to

76         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the loan's original terms and (b) future payments are reasonably assured. When we agree to restructured terms with the borrower, we resume accruing interest only when reasonably assured that we will recover full contractual payments, and pass underwriting reviews equivalent to those to which we subject new loans. We resume accruing interest on nonearning Consumer Finance loans only upon receipt of the third consecutive minimum monthly payment or the equivalent. Specific limits restrict the number of times any particular type of delinquent loan may be categorized as non-delinquent and interest accrual resumed.

     We record financing lease income on the interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values of leased assets are based primarily on periodic independent appraisals of the values of leased assets remaining at expiration of the lease terms. Significant assumptions we use in estimating residual values include estimated net cash flows over the remaining lease term, results of future remarketing, and future component part and scrap metal prices, discounted at an appropriate rate.

     We recognize operating lease income on a straight-line basis over the terms of underlying leases.

     Fees include commitment fees related to loans that we do not expect to fund and line-of-credit fees. We record these fees in earned income on a straight-line basis over the period to which they relate. We record syndication fees in earned income at the time related services are performed unless significant contingencies exist.

     See below and page 78 for a discussion of income from investment and insurance activities.

Depreciation and amortization

The cost of GE manufacturing plant and equipment is depreciated over its estimated economic life. U.S. assets are depreciated using an accelerated method based on a sum-of-the-years digits formula; non-U.S. assets are depreciated on a straight-line basis.

     The cost of GECS equipment leased to others on operating leases is amortized on a straight-line basis to estimated residual value over the lease term or over the estimated economic life of the equipment. See note 15.

Losses on financing receivables

Our allowance for losses on financing receivables represents our best estimate of probable losses inherent in the portfolio. Our method of calculating estimated losses depends on the size, type and risk characteristics of the related receivables.

     Our consumer loan portfolio consists of homogeneous card receivables, installment loans, auto loans and leases and residential mortgages. The allowance for losses on these receivables is based on ongoing statistical analyses of our historical experience adjusted for the effects of economic cycles.

     Our allowance for losses on our commercial and equipment loan and lease portfolios is based on relevant observable data that include, but are not limited to, historical experience; loan stratification by portfolio and, when applicable, geography; collateral type; credit class or program type; size of the loan balance; and delinquency. In certain commercial loan and lease portfolios, we review all loans based on a number of monitored risk factors other than size, including collateral value, financial performance of the borrower, aging and bankruptcy. We stratify portfolios in which we believe that it is informative to differentiate between small and large balance loans depending on geography and portfolio. For loans deemed individually impaired, we determine allowances using the present values of expected future cash flows. If repossession is expected to be a source of repayment, we estimate the fair value of that collateral using independent appraisals when necessary.

     Delinquencies are the clearest indication of a developing loss, and we monitor delinquency rates closely in all of our portfolios. Experience is not available with new products; therefore, while we are developing that experience, we set loss allowances based on our experience with the most closely analogous products in our portfolio. When we repossess collateral in satisfaction of a commercial loan, we write the receivable down against the allowance for losses. We transfer the asset to "Other assets" and carry it at the lower of cost or estimated fair value less costs to sell.

Cash and equivalents

Debt securities with original maturities of three months or less are included in cash equivalents unless designated as available for sale and classified as investment securities.

Investment securities

We report investments in debt and marketable equity securities, and equity securities at our insurance affiliates, at fair value based on quoted market prices or, if quoted prices are not available, discounted expected cash flows using market rates commensurate with credit quality and maturity of the investment. Substantially all investment securities are designated as available for sale with unrealized gains and losses included in shareowners' equity, net of applicable taxes and other adjustments. We regularly review investment securities for impairment based on criteria that include the extent to which the investment's carrying value exceeds its related market value, the duration of the market decline, our ability to hold to recovery and the financial strength and specific prospects of the issuer of the security. Unrealized losses that are other than temporary are recognized in earnings. Realized gains and losses are accounted for on the specific identification method.

Inventories

All inventories are stated at the lower of cost or realizable values. Cost for substantially all of GE's U.S. inventories is determined on a last-in, first-out (LIFO) basis. Cost of other GE inventories is determined on a first-in, first-out (FIFO) basis. GECS inventories consist of finished products held for sale. Cost is determined on a FIFO basis.

77        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets

As of January 1, 2002, goodwill is no longer amortized but is tested for impairment using a fair value approach, at the "reporting unit" level. A reporting unit is the operating segment, or a business one level below that operating segment (the "component" level) if discrete financial information is prepared and regularly reviewed by management at the component level. We recognize an impairment charge for any amount by which the carrying amount of a reporting unit's goodwill exceeds its fair value. We use discounted cash flows to establish fair values. When available and as appropriate, we use comparative market multiples to corroborate discounted cash flow results. When a business within a reporting unit is disposed of, goodwill is allocated to the gain or loss on disposition using the relative fair value methodology.

     We amortize the cost of other intangibles over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Intangible assets with indefinite lives are tested annually for impairment and written down to fair value as required.

     Before January 1, 2002, we amortized goodwill over its estimated period of benefit on a straight-line basis; we amortized other intangible assets on appropriate bases over their estimated lives. No amortization period exceeded 40 years. When an intangible asset's carrying value exceeded associated expected operating cash flows, we considered it to be impaired and wrote it down to fair value, which we determined based on either discounted future cash flows or appraised values.

GECS insurance accounting policies

Accounting policies for GECS insurance businesses follow.

PREMIUM INCOME. We report insurance premiums as earned income as follows:

• For short-duration insurance contracts (including property and casualty, accident and health, and financial guaranty insurance), we report premiums as earned income, generally on a pro-rata basis, over the terms of the related agreements. For retrospectively rated reinsurance contracts, we record premium adjustments based on estimated losses and loss expenses, taking into consideration both case and incurred-but-not-reported (IBNR) reserves.
• For traditional long-duration insurance contracts (including term and whole life contracts and annuities payable for the life of the annuitant), we report premiums as earned income when due.
• For investment contracts and universal life contracts, we report premiums received as liabilities, not as revenues. Universal life contracts are long-duration insurance contracts with terms that are not fixed and guaranteed; for these contracts, we recognize revenues for assessments against the policyholder's account, mostly for mortality, contract initiation, administration and surrender. Investment contracts are contracts that have neither significant mortality nor significant morbidity risk, including annuities payable for a determined period; for these contracts, we recognize revenues on the associated investments and amounts credited to policyholder accounts are charged to expense.

LIABILITIES FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES represent our best estimate of the ultimate obligations for reported claims plus those IBNR and the related estimated claim settlement expenses for all claims incurred through December 31 of each year. Specific reserves–also referred to as case reserves–are established for reported claims using case-basis evaluations of the underlying claim data and are updated as further information becomes known. IBNR reserves are determined using generally accepted actuarial reserving methods that take into account historical loss experience data and, as appropriate, certain qualitative factors. IBNR reserves are adjusted to take into account certain additional factors that can be expected to affect the liability for claims over time, such as changes in the volume and mix of business written, revisions to contract terms and conditions, changes in legal precedents or developed case law, trends in healthcare and medical costs, and general inflation levels. Settlement of complex claims routinely involves threatened or pending litigation to resolve disputes as to coverage, interpretation of contract terms and conditions or fair compensation for damages suffered. These disputes are settled through negotiation, arbitration or actual litigation. Recorded reserves incorporate our best estimate of the effect that ultimate resolution of such disputes have on both claims payments and related settlement expenses. Liabilities for unpaid claims and claims adjustment expenses are continually reviewed and adjusted; such adjustments are included in current operations and accounted for as changes in estimates.

DEFERRED ACQUISITION COSTS. Costs that vary with and are directly related to the acquisition of new and renewal insurance and investment contracts are deferred and amortized as follows:

• Short-duration contracts–Acquisition costs consist of commissions, brokerage expenses and premium taxes and are amortized ratably over the contract periods in which the related premiums are earned.
• Long-duration contracts–Acquisition costs consist of first-year commissions in excess of recurring renewal commissions, certain variable sales expenses and certain support costs such as underwriting and policy issue expenses. For traditional long-duration insurance contracts, we amortize these costs over the respective contract periods in proportion to either anticipated premium income, or, in the case of limited-payment contracts, estimated benefit payments. For investment contracts and universal life contracts, amortization of these costs is based on estimated gross profits and is adjusted as those estimates are revised.

78         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We review deferred acquisition costs periodically for recoverability considering anticipated investment income.

PRESENT VALUE OF FUTURE PROFITS. The actuarially determined present value of anticipated net cash flows to be realized from insurance, annuity and investment contracts in force at the date of acquisition of life insurance policies is recorded as the present value of future profits and is amortized over the respective policy terms in a manner similar to deferred acquisition costs. We adjust unamortized balances to reflect experience and impairment, if any.

Accounting changes

We adopted Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities, on July 1, 2003, and consolidated certain entities in our financial statements for the first time. New balance sheet captions, "Consolidated, liquidating securitization entities," included $36.3 billion of assets and $35.8 billion of liabilities at transition related to entities involved in securitization arrangements. Given their unique nature and the fact that their activities have been discontinued, they are classified in separate financial statement captions. Further information about these entities is provided in note 29. In addition, $14.1 billion and $1.0 billion were added to "Investment securities" and "Other GECS receivables," respectively, at transition for investment securities related to guaranteed investment contracts (GICs) issued by Trinity, a group of sponsored special purpose entities. The related GIC liabilities of $14.7 billion, consolidated at transition, are displayed in "Insurance liabilities, reserves and annuity benefits." As issuance of GICs by these entities is likely to continue in the future, we have displayed these investment securities in financial statement captions consistent with like items of our Insurance businesses. Our consolidation of these entities resulted in a $372 million after-tax accounting charge ($0.04 per share) to net earnings and is reported in the caption "Cumulative effect of accounting changes." This charge resulted from several factors. For entities consolidated based on carrying amounts, the effect of changes in interest rates resulted in transition losses on interest rate swaps that did not qualify for hedge accounting before transition. Losses also arose from the FIN 46 requirement to record carrying amounts of assets in certain securitization entities as if those entities had always been consolidated, requiring us to eliminate certain previously recognized gains. For certain other entities that we were required to consolidate at their July 1, 2003, fair values, we recognized a loss on consolidation because their liabilities, including the fair value of interest rate swaps, exceeded independently appraised fair values of the related assets.

     Statement of Financial Accounting Standards (SFAS) 143, Accounting for Asset Retirement Obligations, became effective for us on January 1, 2003. Under SFAS 143, obligations associated with the retirement of long-lived assets are recorded when there is a legal obligation to incur such costs. This amount is accounted for like an additional element of cost, and, like other cost elements, is depreciated over the corresponding asset's useful life. SFAS 143 primarily affects our accounting for costs associated with the future retirement of facilities used for storage and production of nuclear fuel. On January 1, 2003, we recorded a one-time, non-cash transition charge of $330 million ($215 million after tax, or $0.02 per share) which is reported in the caption "Cumulative effect of accounting changes."

     In 2002, we adopted SFAS 142, Goodwill and Other Intangible Assets, under which goodwill is no longer amortized but is tested for impairment using a fair value methodology. Using the required reporting unit basis, we tested all of our goodwill for impairment as of January 1, 2002, and recorded a non-cash charge of $1.204 billion ($1.015 billion after tax, or $0.10 per share). Substantially all of the charge related to the GECS IT Solutions business and the GECS U.S. Auto and Home business. Factors contributing to the impairment charge were the difficult economic environment in the information technology sector and heightened price competition in the auto insurance industry. No impairment charge had been required under our previous goodwill impairment policy, which was based on undiscounted cash flows.

     Also in 2002, we adopted the stock option expense provisions of SFAS 123, Accounting for Stock-Based Compensation. A comparison of reported and pro-forma net earnings, including effects of expensing stock options, follows.

(In millions; per-share amounts in dollars)		2003		2002		2001
Net earnings, as reported	$	15,002	$	14,118	$	13,684
Earnings per share, as reported
Diluted		1.49		1.41		1.37
Basic		1.50		1.42		1.38
Stock option expense included in net earnings		81		27		–
Total stock option expense(a)		315		330		296
PRO-FORMA EFFECTS
Net earnings, on pro-forma basis		14,768		13,815		13,388
Earnings per share, on pro-forma basis
Diluted		1.47		1.38		1.33
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.

79         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In 2001, we adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Under SFAS 133, all derivative instruments are recognized in the balance sheet at their fair values. Further information about derivatives and hedging is provided in note 28. The cumulative transition effect of adopting this accounting change at January 1, 2001, was a $324 million ($0.03 per share) reduction of net earnings and $827 million reduction in equity.

     Also in 2001, we adopted Emerging Issues Task Force (EITF) Issue 99-20. Under this consensus, impairment of certain retained interests in securitized assets must be recognized when (a) the asset's fair value is below its carrying value, and (b) it is probable that there has been an adverse change in estimated cash flows. The cumulative 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 2

GE OTHER INCOME

(In millions)		2003		2002			2001
Licensing and royalty income	$	135	$	103		$	75
Associated companies		118		(170	)		(106	)
Marketable securities and bank deposits		75		31			184
Bravo exchange		–		571			–
Global eXchange Services gain		–		488			–
Other items		317		83			280
Total	$	645	$	1,106		$	433

NOTE 3

GECS REVENUES FROM SERVICES

(In millions)		2003		2002		2001
Premiums earned by insurance businesses	$	18,646	$	16,484	$	15,634
Interest on time sales and loans		16,495		14,068		12,136
Operating lease rentals		7,199		6,879		6,762
Investment income		6,468		5,570		6,593
Financing leases		4,077		4,441		4,346
Fees		3,349		2,943		2,535
Other income		5,122		5,018		7,223
Total	$	61,356	$	55,403	$	55,229

For insurance businesses, the effects of reinsurance on premiums written and premiums earned were as follows:

(In millions)		2003			2002			2001
PREMIUMS WRITTEN
Direct	$	11,640		$	11,659		$	9,958
Assumed		9,616			9,409			9,603
Ceded		(2,654	)		(4,069	)		(3,718	)
Total	$	18,602		$	16,999		$	15,843
PREMIUMS EARNED
Direct	$	11,433		$	10,922		$	9,912
Assumed		9,964			9,569			9,471
Ceded		(2,751	)		(4,007	)		(3,749	)
Total	$	18,646		$	16,484		$	15,634

NOTE 4

SUPPLEMENTAL COST INFORMATION

Total expenditures for research and development were $2,656 million, $2,631 million and $2,349 million in 2003, 2002 and 2001, respectively. The portion we funded was $2,103 million in 2003, $2,215 million in 2002 and $1,980 million in 2001.

Rental expense under operating leases is shown below.

(In millions)		2003		2002		2001
GE	$	733	$	773	$	694
GECS		893		977		1,006

At December 31, 2003, minimum rental commitments under noncancelable operating leases aggregated $2,764 million and $4,354 million for GE and GECS, respectively. Amounts payable over the next five years follow.

(In millions)	2004	2005	2006	2007	2008
GE	$568	$466	$375	$298	$240
GECS	759	627	539	509	418

GE's selling, general and administrative expense totaled $9,870 million in 2003, $9,131 million in 2002 and $8,637 million in 2001. Capitalized interest is insignificant in 2003, 2002 and 2001.

We recorded restructuring charges of $270 million ($354 million including other related charges) in 2002 to rationalize certain 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5

RETIREE HEALTH AND LIFE BENEFITS

We sponsor a number of retiree health and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans are discussed below; other such plans are not significant individually or in the aggregate.

PRINCIPAL RETIREE BENEFIT PLANS generally provide health and life insurance benefits to employees who retire under the GE Pension Plan (see note 6) with 10 or more years of service. Retirees share in the cost of healthcare benefits. Benefit provisions are subject to collective bargaining. These plans cover approximately 250,000 retirees and dependents. Our principal retiree benefit plans have a December 31 measurement date.

     The effect on operations of principal retiree benefit plans is shown in the following table.

EFFECT ON OPERATIONS

(In millions)		2003			2002			2001
Expected return on plan assets	$	(159	)	$	(170	)	$	(185	)
Service cost for benefits earned		307			277			191
Interest cost on benefit obligation		535			469			459
Prior service cost		191			96			90
Net actuarial loss recognized		127			78			60
Retiree benefit plans cost	$	1,001		$	750		$	615

ACTUARIAL ASSUMPTIONS. The discount rate at December 31 was used to measure the year-end benefit obligations and the earnings effects for the subsequent year. Actuarial assumptions used to determine benefit obligations and earnings effects for principal retiree benefit plans follow.

ACTUARIAL ASSUMPTIONS

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.

     We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over a period no longer than the average future service of employees.

FUNDING POLICY for retiree health benefits is generally to pay covered expenses as they are incurred. We fund retiree life insurance benefits at our discretion. Under the provisions of these plans, we expect to contribute approximately $640 million in 2004 to cover unfunded healthcare benefits.

     Changes in the accumulated postretirement benefit obligation for retiree benefit plans follow.

ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION (APBO)

(In millions)		2003			2002
Balance at January 1	$	7,435		$	6,796
Service cost for benefits earned		307			277
Interest cost on benefit obligation		535			469
Participant contributions		33			32
Plan amendments(a)		2,483			(60	)
Actuarial (gain) loss		(416	)		567
Benefits paid		(720	)		(687	)
Other		44			41
Balance at December 31(b)	$	9,701		$	7,435

(a) For 2003, associated with changes in retiree benefit plans resulting from collective bargaining agreements that extend through June 2007.
^(b) The APBO for the retiree health plans was $7,514 million and $5,458 million at year-end 2003 and 2002, respectively.

Increasing or decreasing the healthcare cost trend rates by one percentage point would have had an insignificant effect on the December 31, 2003, accumulated postretirement benefit obligation and the annual cost of retiree health plans. Our principal retiree benefit plans are collectively bargained and have provisions that limit our per capita costs.

81         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Changes in the fair value of assets for retiree benefit plans follow.

FAIR VALUE OF ASSETS

(In millions)		2003			2002
Balance at January 1	$	1,426		$	1,771
Actual gain (loss) on plan assets		309			(225	)
Employer contributions		565			535
Participant contributions		33			32
Benefits paid		(720	)		(687	)
Other		13			–
Balance at December 31	$	1,626		$	1,426

Plan assets are held in trust, as follows:

PLAN ASSET ALLOCATION

	2003				2002
December 31	Target allocation		Actual allocation		Actual allocation
Equity securities	62-74	%	73	%	64	%
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 guidelines, 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, respectively, and is subject to a statutory limit when it reaches 10% of total trust assets.

     Our recorded assets and liabilities for retiree benefit plans are as follows:

RETIREE BENEFIT ASSET/(LIABILITY)

December 31 (In millions)		2003			2002
Funded status(a)	$	(8,075	)	$	(6,009	)
Unrecognized prior service cost		3,045			753
Unrecognized net actuarial loss		1,584			2,277
Net liability recognized	$	(3,446	)	$	(2,979	)
Amounts recorded in the Statement of Financial Position:
Prepaid retiree life plans asset	$	81		$	87
Retiree health plans liability		(3,527	)		(3,066	)
Net liability recognized	$	(3,446	)	$	(2,979	)

(a) Fair value of assets less APBO, as shown in the preceding tables.

The U.S. Medicare Prescription Drug, Improvement and Modernization Act of 2003 is not expected to have a significant effect on our operations, obligations or cash flows.

82         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6

PENSION BENEFITS

We sponsor a number of pension plans. Principal pension plans are discussed below; other such plans are not significant individually or in the aggregate. Principal pension plans constitute about 90% of global pension assets and obligations.

PRINCIPAL PENSION PLANS are the GE Pension Plan and the GE Supplementary Pension Plan. These plans have a December 31 measurement date.

     The GE Pension Plan provides benefits to certain U.S. employees based on the greater of a formula recognizing career earnings or a formula recognizing length of service and final average earnings. Benefit provisions are subject to collective bargaining. The GE Pension Plan covers approximately 508,000 participants, including 136,000 employees, 171,000 former employees with vested rights to future benefits, and 201,000 retirees and beneficiaries receiving benefits.

     The GE Supplementary Pension Plan is an unfunded plan providing supplementary retirement benefits primarily to higher-level, longer-service U.S. employees.

     Details of the effect on operations of principal pension plans, and the total effect on cost of principal postretirement benefit plans, follow.

EFFECT ON OPERATIONS

(In millions)		2003			2002			2001
Expected return on plan assets	$	4,072		$	4,084		$	4,327
Service cost for benefits earned(a)		(1,213	)		(1,107	)		(884	)
Interest cost on benefit obligation		(2,180	)		(2,116	)		(2,065	)
Prior service cost		(248	)		(217	)		(244	)
Net actuarial gain recognized		609			912			961
Income from pensions		1,040			1,556			2,095
Retiree benefit plans cost (note 5)		(1,001	)		(750	)		(615	)
Net cost reductions from principal postretirement benefit plans	$	39		$	806		$	1,480

(a) Net of participant contributions.

ACTUARIAL ASSUMPTIONS. The discount rate at December 31 was used to measure the year-end benefit obligations and the earnings effects for the subsequent year. Actuarial assumptions used to determine benefit obligations and earnings effects for principal pension plans follow.

ACTUARIAL ASSUMPTIONS

December 31	2003		2002		2001		2000
Discount rate	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

To determine the expected long-term rate of return on pension 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.

     We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions, over a period no longer than the average future service of employees.

FUNDING POLICY for the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as we may determine to be appropriate. We have not made contributions to the GE Pension Plan since 1987; any such GE contribution would require payment of excise taxes and would not be deductible for income tax purposes. We will not make any contributions to the GE Pension Plan in 2004. We expect to pay approximately $100 million for GE Supplementary Pension Plan payments and administrative expenses in 2004.

BENEFIT OBLIGATIONS. Accumulated and projected benefit obligations (ABO and PBO) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation.

     Changes in the PBO for principal pension plans follow.

PROJECTED BENEFIT OBLIGATION

(In millions)		2003			2002
Balance at January 1	$	33,266		$	30,423
Service cost for benefits earned(a)		1,213			1,107
Interest cost on benefit obligation		2,180			2,116
Participant contributions		169			158
Plan amendments		654			9
Actuarial loss(b)		2,754			1,650
Benefits paid		(2,409	)		(2,197	)
Balance at December 31(c)	$	37,827		$	33,266

(a) Net of participant contributions.

(b) Principally associated with discount rate changes.

(c) The PBO for the GE Supplementary Pension Plan was $2.7 billion and $2.2 billion at year-end 2003 and 2002, respectively.

ABO balances for principal pension plans follow.

ACCUMULATED BENEFIT OBLIGATION

December 31 (In millions)		2003		2002
GE Pension Plan	$	33,859	$	29,698
GE Supplementary Pension Plan		1,619		1,296
Total	$	35,478	$	30,994

83         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the fair value of assets for principal pension plans follow.

FAIR VALUE OF ASSETS

(In millions)		2003			2002
Balance at January 1	$	37,811		$	45,006
Actual gain (loss) on plan assets		8,203			(5,251	)
Employer contributions		105			95
Participant contributions		169			158
Benefits paid		(2,409	)		(2,197	)
Balance at December 31	$	43,879		$	37,811

The GE Pension Plan's assets are held in trust, as follows:

PLAN ASSET ALLOCATION

	2003				2002
December 31	Target allocation		Actual allocation		Actual allocation
Equity securities	51-63	%	60	%	56	%
Debt securities	21-27		20		26
Real estate	4-8		7		6
Private equities	5-11		7		7
Other	3-7		6		5
Total			100	%	100	%

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, commissioning 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.

     Trust assets are invested subject to the following policy restrictions: short-term securities must be rated A1/P1 or better; investments in real estate–7% of trust assets at year end–may not exceed 25%; other investments in securities that are not freely tradable–11% of trust assets at year end–may not exceed 20%. GE common stock represented 6.3% and 6.0% of trust assets at year-end 2003 and 2002, respectively, and is subject to a statutory limit when it reaches 10% of total trust assets.

     Our recorded assets and liabilities for principal pension plans are as follows:

PREPAID PENSION ASSET/(LIABILITY)

December 31 (In millions)		2003			2002
Funded status(a)	$	6,052		$	4,545
Unrecognized prior service cost		1,571			1,165
Unrecognized net actuarial loss		7,588			8,356
Net asset recognized	$	15,211		$	14,066
Amounts recorded in the Statement of Financial Position:
Prepaid pension asset	$	17,038		$	15,611
Supplementary Pension Plan liability		(1,827	)		(1,545	)
Net asset recognized	$	15,211		$	14,066

(a) Fair value of assets less PBO, as shown in the preceding tables.

84         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7

PROVISION FOR INCOME TAXES

(In millions)		2003		2002			2001
GE
Current tax expense	$	2,468	$	2,833		$	3,632
Deferred tax expense from temporary differences		389		1,004			561
		2,857		3,837			4,193
GECS
Current tax expense (benefit)		720		(1,488	)		517
Deferred tax expense from temporary differences		738		1,409			863
		1,458		(79	)		1,380
CONSOLIDATED
Current tax expense		3,188		1,345			4,149
Deferred tax expense from temporary differences		1,127		2,413			1,424
Total	$	4,315	$	3,758		$	5,573

GE and GECS file a consolidated U.S. federal income tax return. The GECS provision for current tax expense includes its effect on the consolidated return.

     Consolidated current tax expense includes amounts applicable to U.S. federal income taxes of $1,555 million, $137 million and $2,514 million in 2003, 2002 and 2001, respectively, and amounts applicable to non-U.S. jurisdictions of $1,304 million, $1,061 million and $1,225 million in 2003, 2002 and 2001, respectively. Consolidated deferred tax expense related to U.S. federal income taxes was $685 million, $2,112 million and $1,455 million in 2003, 2002 and 2001, respectively.

     Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. See note 21 for details.

     We have not provided U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. These earnings relate to ongoing operations and, at December 31, 2003, were approximately $21 billion. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely. Deferred taxes are provided for earnings of non-U.S. affiliates and associated companies when we plan to remit those earnings.

     Consolidated U.S. income before taxes and the cumulative effect of accounting changes was $11.2 billion in 2003, $12.0 billion in 2002 and $13.9 billion in 2001. The corresponding amounts for non-U.S.-based operations were $8.7 billion in 2003, $6.9 billion in 2002 and $5.8 billion in 2001.

     A reconciliation of the U.S. federal statutory tax rate to the actual tax rate is provided below. 

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	%

85        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8

EARNINGS PER SHARE INFORMATION

(In millions; per-share amounts in dollars)	2003						2002						2001
	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 SECURITIES

	2003									2002
December 31 (In millions)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table presents the gross unrealized losses on, and estimated fair value of, our investment securities, aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position, at December 31, 2003.

	Less than 12 months					12 months or more
(In millions)	Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses
Debt:
U.S. corporate	$	7,915	$	(255	)	$	2,360	$	(457	)
State and municipal		1,620		(23	)		2		–
Mortgage-backed		4,299		(86	)		135		(7	)
Asset-backed		2,279		(26	)		1,523		(58	)
Corporate–non-U.S.		2,925		(71	)		123		(18	)
Government–non-U.S.		3,317		(60	)		24		(5	)
U.S. government and federal agency		256		(19	)		–		–
Equity		402		(81	)		105		(38	)
Total consolidated	$	23,013	$	(621	)	$	4,272	$	(583	)

Of the $583 million of investment securities in an unrealized loss position for twelve months or more, approximately $355 million relates to securities collateralized by commercial aircraft, of which approximately $288 million are enhanced equipment trust certificates. Commercial aircraft positions are in a loss position as a result of ongoing negative market reaction to commercial airline industry difficulties. We review all of our investment securities routinely for other than temporary impairment as described on 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 underlying collateral values.

     A substantial portion of our mortgage-backed securities are collateralized by U.S. residential mortgages.

CONTRACTUAL MATURITIES OF GECS INVESTMENT IN DEBT SECURITIES
(EXCLUDING MORTGAGE-BACKED AND ASSET-BACKED SECURITIES)

		Amortized		Estimated
(In millions)		cost		fair value
Due in
2004	$	7,220	$	7,265
2005–2008		20,445		20,895
2009–2013		25,232		25,829
2014 and later		35,478		37,230

We expect actual maturities to differ from contractual maturities because borrowers have the right to call or prepay certain obligations.

     Supplemental information about gross realized gains and losses on investment securities follows.

(In millions)		2003			2002			2001
GE
Gains	$	3		$	–		$	236
Losses, including impairments		(38	)		(76	)		(100	)
Net		(35	)		(76	)		136
GECS
Gains		1,322			1,578			1,800
Losses, including impairments		(914	)		(1,277	)		(838	)
Net		408			301			962
Total	$	373		$	225		$	1,098

Proceeds from securities sales amounted to $36.4 billion, $46.4 billion and $40.0 billion in 2003, 2002 and 2001, respectively.

87        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10

GE CURRENT RECEIVABLES

December 31 (In millions)		2003			2002
Aircraft Engines	$	1,782		$	1,841
Consumer Products		565			734
Industrial Products and Systems		908			1,041
Medical Systems		2,024			1,411
NBC		938			891
Plastics		651			821
Power Systems		3,644			3,754
Specialty Materials		470			421
Transportation Systems		202			165
Corporate items and eliminations		275			347
		11,459			11,426
Less allowance for losses		(486	)		(453	)
Total	$	10,973		$	10,973

Receivables balances at December 31, 2003 and 2002, before allowance for losses, included $6,746 million and $6,269 million, respectively, from sales of goods and services to customers, and $226 million and $304 million, respectively, from transactions with associated companies.

     Current receivables of $444 million at year-end 2003 and $344 million at year-end 2002 arose from sales, principally of aircraft engine goods and services, on open account to various agencies of the U.S. government, which is our largest single customer. About 4% of our sales of goods and services were to the U.S. government in 2003, 2002 and 2001.

NOTE 11

INVENTORIES

December 31 (In millions)		2003			2002
GE
Raw materials and work in process	$	4,530		$	4,894
Finished goods		4,376			4,379
Unbilled shipments		281			372
		9,187			9,645
Less revaluation to LIFO		(632	)		(606	)
		8,555			9,039
GECS
Finished goods		197			208
Total	$	8,752		$	9,247

LIFO revaluations increased $26 million in 2003, compared with decreases of $70 million in 2002 and $169 million in 2001. Included in the 2003 change was an increase of $3 million that resulted from higher LIFO inventory levels. Included in the 2002 and 2001 changes were decreases of $21 million and $8 million, respectively, that resulted from lower LIFO inventory levels. Net costs increased in 2003 and decreased in 2002 and 2001. As of December 31, 2003, we are obligated to acquire certain raw materials at market prices through the year 2023 under various take-or-pay or similar arrangements. Annual minimum commitments under these arrangements are insignificant.

NOTE 12

GECS FINANCING RECEIVABLES (INVESTMENTS IN TIME SALES, LOANS AND FINANCING LEASES)

December 31 (In millions)		2003			2002
COMMERCIAL FINANCE
Equipment	$	60,370		$	61,961
Commercial and industrial		39,383			36,512
Real estate		20,171			21,041
Commercial aircraft		12,424			11,397
		132,348			130,911
CONSUMER FINANCE
Non-U.S. installment, revolving credit and other		34,440			23,655
Non-U.S. residential		19,593			9,731
Non-U.S. auto		18,668			15,113
U.S. installment, revolving credit and other		16,545			14,312
Other		5,431			3,225
		94,677			66,036
Other, principally Equipment Management		5,260			6,613
		232,285			203,560
Less allowance for losses (note 13)		(6,256	)		(5,500	)
Total	$	226,029		$	198,060

GECS financing receivables include both time sales and loans and financing leases. Time sales and loans represents transactions in a variety of forms, including time sales, revolving charge and credit, mortgages, installment loans, intermediate-term loans and 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     As the sole owner of assets under direct financing leases and as the equity participant in leveraged leases, GECS is taxed on total lease payments received and is entitled to tax deductions based on the cost of leased assets and tax deductions for interest paid to third-party participants. GECS is generally entitled to any residual value of leased assets.

     Investment in direct financing and leveraged leases represents net unpaid rentals and estimated unguaranteed residual values of leased equipment, less related deferred income. GECS has no general obligation for principal and interest on notes and other instruments representing third-party participation related to leveraged leases; such notes and other instruments have not been included in liabilities but have been offset against the related rentals receivable. The GECS share of rentals receivable on leveraged leases is subordinate to the share of other participants who also have security 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

(In millions)		Total time sales and loans		Net rentals receivable
Due in
2004	$	55,044	$	16,490
2005		28,020		13,272
2006		23,249		10,148
2007		13,951		6,883
2008		12,650		4,066
2009 and later		37,878		14,397
Total	$	170,792	$	65,256

We expect actual maturities to differ from contractual maturities.

"Impaired" loans are defined by generally accepted accounting principles as large balance loans for which it is probable that the lender will be unable to collect all amounts due according to original contractual terms of the loan agreement. An analysis of impaired loans follows.

December 31 (In millions)		2003		2002
Loans requiring allowance for losses	$	940	$	1,140
Loans expected to be fully recoverable		1,355		845
	$	2,295	$	1,985
Allowance for losses	$	378	$	397
Average investment during year		2,193		1,747
Interest income earned while impaired(a)		33		16

(a) Recognized principally on cash basis.

89         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13

GECS ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

(In millions)		2003			2002			2001
BALANCE AT JANUARY 1
Commercial Finance	$	2,634		$	2,513		$	1,682
Consumer Finance		2,782			2,173			2,149
Other		84			106			195
		5,500			4,792			4,026
PROVISION CHARGED TO OPERATIONS
Commercial Finance		883			1,092			756
Consumer Finance		2,808			1,950			1,646
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

NOTE 14

GECS INSURANCE RECEIVABLES

December 31 (In millions)		2003			2002
Reinsurance recoverables	$	12,067		$	13,551
Commercial mortgage loans		6,164			5,358
Premiums receivable		4,510			5,314
Residential mortgage loans		1,258			1,919
Corporate and individual loans–Edison Life		–			1,801
Policy loans		1,245			1,539
Funds on deposit with reinsurers		623			830
Other		1,407			1,552
Allowance for losses		(221	)		(279	)
Total	$	27,053		$	31,585

90        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15

PROPERTY, PLANT AND EQUIPMENT (INCLUDING EQUIPMENT LEASED TO OTHERS)

	Estimated
	useful
December 31 (In millions)	lives			2003		2002
ORIGINAL COST
GE
Land and improvements		8	(a)	$	861	$	623
Buildings, structures and related equipment		8-40			8,369		8,398
Machinery and equipment		4-20			24,184		22,264
Leasehold costs and manufacturing plant under construction		1-10			2,228		1,964
					35,642		33,249
GECS(b)
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.

Amortization of GECS equipment leased to others was $4,224 million, $3,919 million and $3,461 million in 2003, 2002 and 2001, respectively. Noncancelable future rentals due from customers for equipment on operating leases at year-end 2003 are due as follows:

(In millions)
Due in
2004	$	5,267
2005		4,662
2006		3,426
2007		2,373
2008		1,661
After 2008		5,673
Total	$	23,062

91         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16

INTANGIBLE ASSETS

December 31 (In millions)		2003		2002
GE
Goodwill	$	25,960	$	20,044
Capitalized software		1,678		1,559
Other intangibles		2,566		1,446
		30,204		23,049
GECS
Goodwill		21,527		19,094
Present value of future profits (PVFP)		1,562		2,457
Capitalized software		800		894
Other intangibles		932		686
		24,821		23,131
Total	$	55,025	$	46,180

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 of $11,515 million in 2003 and $10,603 million in 2002.

INTANGIBLE ASSETS SUBJECT TO AMORTIZATION

December 31 (In millions)	Gross carrying amount		Accumulated amortization			Net
2003
PVFP	$	4,571	$	(3,009	)	$	1,562
Capitalized software		4,911		(2,433	)		2,478
Servicing assets(a)		3,539		(3,392	)		147
Patents, licenses and other		2,721		(806	)		1,915
All other		1,095		(417	)		678
Total	$	16,837	$	(10,057	)	$	6,780
2002
PVFP	$	5,261	$	(2,804	)	$	2,457
Capitalized software		4,269		(1,816	)		2,453
Servicing assets(a)		3,582		(3,240	)		342
Patents, licenses and other		1,665		(675	)		990
All other		556		(341	)		215
Total	$	15,333	$	(8,876	)	$	6,457

(a) Servicing assets, net of accumulated amortization, are associated primarily with serviced residential mortgage loans amounting to $14 billion and $33 billion at December 31, 2003 and 2002, respectively.

Indefinite-lived intangible assets were $758 million and $585 million at December 31, 2003 and 2002, respectively, and principally comprise U.S. Federal Communication Commission licenses and cable affiliation agreements.

     Consolidated amortization expense related to intangible assets, excluding goodwill, for 2003 and 2002 was $1,407 million and $1,999 million, respectively. The estimated percentage of the December 31, 2003, net PVFP balance to be amortized over each of the next five years follows.

2004	2005	2006	2007	2008
8.8%	8.2%	7.5%	6.9%	6.4%

Change in PVFP balances follow.

(In millions)		2003			2002
Balance at January 1	$	2,457		$	2,198
Acquisitions		46			494
Dispositions		(658	)		–
Accrued interest(a)		80			83
Amortization		(318	)		(369	)
Other		(45	)		51
Balance at December 31	$	1,562		$	2,457

(a) Interest was accrued at a rate of 4.3% and 3.5% for 2003 and 2002, respectively.

Recoverability of PVFP is evaluated periodically by comparing the current estimate of expected future gross profits to the unamortized asset balance. If such comparison indicates that the expected gross profits will not be sufficient to recover PVFP, the difference is charged to expense. No such expense was recorded in 2003 or 2002.

     Amortization expense for PVFP in future periods will be affected by acquisitions, realized capital gains/losses or other factors affecting the ultimate amount of gross profits realized from certain lines of business. Similarly, future amortization expense for other intangibles will depend on acquisition activity and other business transactions.

     The amount of goodwill amortization included in net earnings (net of income taxes) in 2001 was $499 million and $552 million for GE and GECS, respectively.

     The effects on earnings and earnings per share of excluding such goodwill amortization from 2001 follow.

	2001
(In millions; per-share amounts in dollars)		Consolidated		GE		GECS
Net earnings, as reported	$	13,684	$	13,684	$	5,417
Net earnings, excluding goodwill amortization		14,735		14,735		5,969
				Diluted		Basic
Earnings per share, as reported			$	1.37	$	1.38
Earnings per share, excluding goodwill amortization				1.47		1.48

92         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	2003										2002
(In millions)	Balance January 1		Acquisitions/ purchase accounting adjustments		(a)	Foreign exchange and other			Balance December 31		Balance January 1		Transition impairment			Acquisitions/ purchase accounting adjustments		(a)	Foreign exchange and other				Balance 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. 

93         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17

ALL OTHER ASSETS

December 31 (In millions)		2003			2002
GE
Investments
Associated companies(a)	$	1,348		$	3,640
Other		1,228			1,016
		2,576			4,656
Prepaid pension asset		17,038			15,611
Contract costs and estimated earnings		3,505			3,466
Prepaid broadcasting rights		1,582			1,053
Long-term receivables, including notes		1,932			1,824
Derivative instruments(b)		454			364
Other		3,361			3,193
		30,448			30,167
GECS
Investments
Associated companies(a)		12,764			11,635
Real estate(c)		13,390			14,395
Assets held for sale(d)		1,833			2,998
Other		8,052			5,164
		36,039			34,192
Separate accounts (see note 19)		16,820			14,978
Deferred acquisition costs		7,879			8,086
Derivative instruments(b)		1,797			2,071
Other		5,094			4,755
		67,629			64,082
ELIMINATIONS		(963	)		(1,035	)
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 policyholders and are associated with identical amounts reported as insurance liabilities in note 19.

NOTE 18

BORROWINGS

SHORT-TERM BORROWINGS

December 31 (In millions)	2003						2002
		Amount		Average rate	(a)		Amount		Average rate	(a)
GE
Commercial paper
U.S.	$	1,149		1.08	%	$	6,568		1.69	%
Non-U.S.		340		2.72			296		2.89
Payable to banks, principally non-U.S.		388		4.89			660		4.88
Current portion of long-term debt		392		2.58			57		9.61
Other		286					1,205
		2,555					8,786
GECS
Commercial paper
U.S.		65,536		1.11			66,629		1.51
Non-U.S.		15,062		2.93			17,611		3.41
Current portion of long-term debt		37,885		3.32			35,606		4.19
Other		14,505					10,280
		132,988					130,126
ELIMINATIONS		(626	)				(137	)
Total	$	134,917				$	138,775

(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 debt issuance.

94        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

LONG-TERM BORROWINGS

December 31 (In millions)	2003 Average rate(a)		Maturities		2003			2002
GE
Senior notes	3.74	%	2005–2013	$	7,483		$	–
Industrial development/pollution control bonds	1.39		2005–2027		331			346
Payable to banks, principally non-U.S.	6.70		2005–2008		212			246
Other(b)					362			378
					8,388			970
GECS
Senior notes	3.42		2005–2055		149,049			127,573
Extendible notes	1.27		2007–2008		12,229			12,000
Subordinated notes(c)	7.52		2005–2035		1,262			1,263
					162,540			140,836
ELIMINATIONS					(924	)		(1,174	)
Total				$	170,004		$	140,632

(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 debt issuance.
^(b) A variety of obligations having various interest rates and maturities, including certain borrowings by parent operating components and affiliates.
^(c) At year-end 2003 and 2002, $1.0 billion of subordinated notes were guaranteed by GE.

Our borrowings are addressed below from the perspectives of liquidity, interest rate and currency risk management. Additional information about borrowings and associated swaps can be found in note 28.

LIQUIDITY is affected by debt maturities and our ability to repay or refinance such debt. Long-term debt maturities over the next five years follow.

(In millions)	2004	2005	2006	2007	2008
GE	$      392	$     2,571	$     194	$       58	$        40
GECS	37,885	45,457(a)	28,671	18,140	13,141

(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).

Committed credit lines totaling $57.2 billion had been extended to us by 85 banks at year-end 2003. Included in this amount was $48.3 billion provided directly to GECS and $8.9 billion provided by 22 banks to GE to which GECS also has access. The GECS lines include $19.9 billion of revolving credit agreements under which we can borrow funds for periods exceeding one year. The remaining $37.3 billion are 364-day lines of which $26.9 billion contain a term-out feature that allows GE Capital to extend the borrowings for one year from the date of expiration of the lending agreement. We pay banks for credit facilities, but compensation amounts were insignificant in each of the past three years.

INTEREST RATE AND CURRENCY RISK is managed through the direct issuance of debt or use of derivatives. We take positions in view of anticipated behavior of assets, including prepayment behavior. We use a variety of instruments, including interest rate and currency swaps and currency forwards, to achieve our interest rate objectives. Effective interest rates were lower under these "synthetic" positions than could have been achieved by issuing debt directly. The following table shows GECS borrowing positions considering the effects of currency and interest rate swaps.

GECS EFFECTIVE BORROWINGS (INCLUDING SWAPS)

	2003		2002
December 31 (In millions)	Amount	Average rate	Amount
Short-term(a)	$66,501	1.73%	$60,151
Long-term (including current portion)
Fixed rate(b)	$121,098	4.89%	$121,147
Floating rate	107,929	1.96	89,049
Total long-term	$229,027		$210,196

(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-term interest rate swaps that effectively convert the floating-rate nature of short-term borrowings to fixed rates of interest.

At December 31, 2003, interest rate swap maturities ranged from 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.

95         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19

GECS INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS

December 31 (In millions)		2003		2002
Investment contracts and universal life benefits	$	55,119	$	43,614
Life insurance benefits(a)		28,040		39,254
Unpaid claims and claims adjustment expenses(b)		29,176		30,571
Unearned premiums		7,109		7,436
Separate accounts (see note 17)		16,820		14,978
Total	$	136,264	$	135,853

(a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 1.2% to 8.5% in 2003 and 1.5% to 8.5% in 2002.
^(b) Principally property and casualty reserves amounting to $24.9 billion and $26.1 billion at December 31, 2003 and 2002, respectively. Includes amounts for both reported and incurred-but-not-reported claims, reduced by anticipated salvage and subrogation recoveries. Estimates of liabilities are reviewed and updated continually, with changes in estimated losses reflected in operations.

When insurance affiliates cede insurance to third parties, they are not relieved of their primary obligation to policyholders. Losses on ceded risks give rise to claims for recovery; we establish allowances for probable losses on such receivables from reinsurers as required.

     We recognize reinsurance recoveries as a reduction of the statement of earnings caption "Insurance losses and policyholder and annuity benefits." Reinsurance recoveries were $1,781 million, $2,234 million and $5,863 million for the years ended December 31, 2003, 2002 and 2001, respectively.

     The insurance liability for unpaid claims and claims adjustment expenses related to policies that may cover environmental and asbestos exposures is based on known facts and an assessment of applicable law and coverage litigation. Liabilities are recognized for both known and unasserted claims (including the cost of related litigation) when sufficient information has been developed to indicate that a claim has been incurred and a range of potential losses can be reasonably estimated. Developed case law and adequate claim history do not exist for certain claims, principally due to significant uncertainties as to both the level of ultimate losses that will occur and what portion, if any, will be deemed to be insured amounts.

     A summary of activity affecting unpaid claims and claims adjustment expenses, principally in property and casualty lines, follows.

(In millions)		2003			2002			2001
Balance at January 1–gross	$	30,571		$	27,233		$	22,886
Less reinsurance recoverables		(9,646	)		(9,400	)		(5,477	)
Balance at January 1–net		20,925			17,833			17,409
Claims and expenses incurred
Current year		9,002			9,505			9,199
Prior years		740			3,188			682
Claims and expenses paid
Current year		(2,565	)		(3,173	)		(3,021	)
Prior years		(7,079	)		(6,918	)		(6,694	)
Claims reserves related to acquired companies		–			81			–
Other		(160	)		409			258
Balance at December 31–net		20,863			20,925			17,833
Add reinsurance recoverables		8,313			9,646			9,400
Balance at December 31–gross	$	29,176		$	30,571		$	27,233

Claims and expenses incurred–prior years represents additional losses (adverse development) recognized in any year for loss events that occurred before the beginning of that year. Adverse development, which amounted to 4%, 18% and 4% of beginning of year loss reserves in 2003, 2002 and 2001, respectively, was primarily encountered at GE Global Insurance Holding.

     In 2001, we began to experience an acceleration of reported claims activity in certain liability-related coverages, specifically, hospital liability, non-standard auto (automobile insurance extended to higher-risk drivers) and commercial and public entity general liability lines of business, and recognized the increase in projected ultimate losses.

     During 2002, reported claims activity accelerated dramatically, affecting much of our liability-related insurance written in 1997 through 2001. In connection with our normal actuarial updates, we adjusted our best estimate of ultimate losses to reflect our experience, increasing recorded reserves by $2.5 billion in the fourth quarter of 2002, for a total of $3.5 billion adverse development in 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 reasonably 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Our Mortgage Insurance business experienced favorable development during the three-year period, primarily reflecting continued strength in certain real estate markets and the success of our loss containment initiatives.

     Financial guarantees and credit life risk of insurance affiliates are summarized below.

December 31 (In millions)		2003			2002
Guarantees, principally on municipal bonds and asset-backed securities	$	1,190		$	226,559
Mortgage insurance risk in force		146,627			101,530
Credit life insurance risk in force		25,728			23,283
Less reinsurance		(2,207	)		(38,883	)
Total	$	171,338		$	312,489

Certain insurance affiliates offer insurance guaranteeing the timely payment of scheduled principal and interest on municipal bonds and certain asset-backed securities. Substantially all of this business was conducted by Financial Guaranty Insurance Company (FGIC), which we sold in the fourth quarter of 2003. Other insurance affiliates provide insurance to protect residential mortgage lenders from severe financial loss caused by the non-payment of loans and issue credit life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid. As part of their overall risk management process, insurance affiliates cede to third parties a portion of their risk associated with these guarantees. In doing so, they are not relieved of their primary obligation to policyholders.

NOTE 20

ALL OTHER LIABILITIES

This caption includes noncurrent compensation and benefit accruals at year-end 2003 and 2002 of $10,380 million and $8,826 million, respectively. Also included are amounts for deferred income, derivative instruments, interest on tax liabilities, product warranties and a variety of sundry items.

     We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities 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 likelihood, 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 environmental 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.

NOTE 21

DEFERRED INCOME TAXES

Aggregate deferred income tax amounts are summarized below.

December 31 (In millions)		2003		2002
ASSETS
GE	$	7,594	$	6,817
GECS		9,948		7,584
		17,542		14,401
LIABILITIES
GE		9,505		8,744
GECS		20,684		18,174
		30,189		26,918
NET DEFERRED INCOME TAX LIABILITY	$	12,647	$	12,517

Principal components of our net liability/(asset) representing deferred income tax balances are as follows:

December 31 (In millions)		2003			2002
GE
Provisions for expenses(a)	$	(4,723	)	$	(4,693	)
Retiree insurance plans		(1,206	)		(1,043	)
Prepaid pension asset		5,963			5,464
Depreciation		1,714			1,536
Other–net		163			663
		1,911			1,927
GECS
Financing leases		10,250			9,763
Operating leases		3,523			3,627
Deferred acquisition costs		1,501			1,494
Allowance for losses		(2,036	)		(1,569	)
Insurance reserves		(1,109	)		(1,218	)
Derivatives qualifying as hedges		(1,029	)		(1,252	)
AMT credit carryforward		(351	)		(597	)
Other–net		(13	)		342
		10,736			10,590
NET DEFERRED INCOME TAX LIABILITY	$	12,647		$	12,517

(a) Represents the tax effects of temporary differences related to expense accruals for a 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.

97         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22

GECS MINORITY INTEREST IN EQUITY OF CONSOLIDATED AFFILIATES

Minority interest in equity of consolidated GECS affiliates includes preferred stock issued by GE Capital and by affiliates of GE Capital. The preferred stock primarily pays cumulative dividends at variable rates. Value of the preferred shares is summarized below.

December 31 (In millions)		2003		2002
GE Capital	$	2,600	$	2,600
GE Capital affiliates		1,841		1,588

Dividend rates in local currency on the preferred stock ranged from 0.91% to 5.65% during 2003 and from 1.44% to 6.20% during 2002.

NOTE 23

RESTRICTED NET ASSETS OF GECS AFFILIATES

Certain GECS consolidated affiliates are restricted from remitting funds to GECS in the form of dividends or loans by a variety of regulations, the purpose of which is to protect affected insurance policyholders, depositors or investors. At December 31, 2003 and 2002, net assets of regulated GECS affiliates amounted to $46.7 billion and $43.7 billion, respectively, of which $37.0 billion and $37.8 billion, respectively, was restricted.

     At December 31, 2003 and 2002, the aggregate statutory capital and surplus of the insurance businesses totaled $15.9 billion and $17.9 billion, respectively. Accounting practices prescribed by statutory authorities are used in preparing statutory statements.

NOTE 24

SHAREOWNERS' EQUITY

(In millions)		2003			2002			2001
COMMON STOCK ISSUED	$	669		$	669		$	669
ACCUMULATED NONOWNER CHANGES      OTHER THAN EARNINGS
Balance at January 1	$	(3,177	)	$	(4,323	)	$	(2,500	)
Cumulative effect of adopting SFAS 133–net of      deferred taxes of $(513)		–			–			(827	)
Investment securities–net of deferred taxes      of $505, $805 and $111(a)		799			1,555			203
Currency translation adjustments–net of deferred taxes      of $(1,447), $20 and $48		5,119			1,000			(562	)
Derivatives qualifying as hedges–net of deferred taxes      of $(448), $(822) and $(505)		(803	)		(2,070	)		(690	)
Reclassification adjustments–       Investment securities–net      of deferred taxes of $(135), $(135) and $(274)		(250	)		(252	)		(509	)
Currency translation adjustments		4			–			–
Derivatives qualifying as hedges–net of deferred taxes      of $643, $207 and $397		1,123			913			562
Balance at December 31	$	2,815		$	(3,177	)	$	(4,323	)
OTHER CAPITAL
Balance at January 1	$	17,288		$	16,693		$	15,195
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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In December 2001, our Board of Directors increased the authorization to repurchase GE common stock to $30 billion. In 2003 we repurchased 12 million shares for a total of $0.3 billion. Through year-end 2003, 1,103 million shares having an aggregate cost of approximately $23.0 billion had been repurchased under this program and placed in treasury.

     Common shares issued and outstanding are summarized in the following table.

SHARES OF GE COMMON STOCK

December 31 (In thousands)	2003		2002		2001
Issued	11,145,212		11,145,212		11,145,212
In treasury	(1,082,092	)	(1,175,318	)	(1,219,274	)
Outstanding	10,063,120		9,969,894		9,925,938

GE has 50 million authorized shares of preferred stock ($1.00 par value), but has not issued any such shares as of December 31, 2003.

     The effects of translating to U.S. dollars the financial statements of non-U.S. affiliates whose functional currency is the local currency are included in shareowners' equity. Asset and liability accounts are translated at year-end exchange rates, while revenues and expenses are translated at average rates for the period.

NOTE 25

OTHER STOCK-RELATED INFORMATION

We grant stock options, stock appreciation rights (SARs), restricted stock units (RSUs) and performance share units (PSUs) to employees under the 1990 Long-Term Incentive Plan as described in our current Proxy Statement. In addition, we grant options and RSUs in limited circumstances to consultants, advisors and independent contractors (primarily non-employee talent at NBC) under a plan approved by our Board of Directors in 1997 (the consultants' plan). There are outstanding grants under two separate shareowner approved option plans for non-employee directors; the last grant was made in 2002 and no further grants are expected to be made under these plans. With certain restrictions, requirements for stock option shares may be met from either unissued or treasury shares. RSUs give the recipients the right to receive shares of our stock upon the lapse of their related restrictions. Restrictions on RSUs lapse in various increments and at various dates after three years from date of grant to grantee retirement. Although the plan permits us to issue RSUs settleable in cash, we have only issued RSUs settleable in shares of our stock.

     We measure the total cost of each stock option grant at the date of grant using a market-based option trading model. We recognize the cost of each stock option, SAR, RSU and PSU straight-line over its vesting period.

     Stock options and stock-settled SARs expire 10 years from the date they are granted; options and SARs vest over service periods that range from one to five years.

     All grants of GE options under all plans must be approved by the Management Development and Compensation Committee, which comprises entirely outside directors.

STOCK OPTION ACTIVITY

				Average per share
(Shares in thousands)	Shares subject to option			Exercise price		Market price
Balance at
December 31, 2000	333,179		$	21.03	$	47.94
Options granted	60,946			41.15		41.15
Options exercised	(31,801	)		10.04		43.95
Options terminated	(7,871	)		39.02		–
Balance at
December 31, 2001	354,453			25.08		40.08
Options granted	46,928			27.37		27.37
Options exercised	(29,146	)		9.45		31.86
Options terminated	(10,177	)		38.14		–
Balance at
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
Options terminated	(10,643	)		38.98		–
Balance at
December 31, 2003	315,847		$	28.30	$	30.98

STOCK COMPENSATION PLANS

December 31, 2003 (Shares in thousands)	Securities to be issued upon exercise		Weighted average exercise price	Securities available for future issuance
APPROVED BY SHAREOWNERS
Options	314,579	$	28.31	(a)
RSUs	28,074		(b)	(a)
PSUs	250		(b)	(a)
SARs(c)	(d)		(c)	(a)
NOT APPROVED BY SHAREOWNERS
Options	1,268		24.37	(e)
RSUs	3,867		(b)	(e)
Total(f)	348,038	$	28.30	130,622

(a) Under the 1990 Long-Term Incentive Plan, 0.95% of the company's issued 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 year. Total shares available for future issuance under the 1990 Long-Term Incentive Plan amounted to 105.9 million shares. |
^(b) Not applicable.
^(c) During 2003, approximately 3.8 million SARs were granted at a weighted average exercise price of $31.41.
^(d) Determined at vesting based on the difference between the exercise price and 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.

99         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Outstanding options and SARs expire on various dates through December 11, 2013.

     The following table summarizes information about stock options outstanding at December 31, 2003.

STOCK OPTIONS OUTSTANDING

(Shares in thousands)	Outstanding			Exercisable
Exercise price range	Shares	Average life(a)	Average exercise price	Shares	Average exercise price
$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
26.65-35.48	70,106	8.5	29.79	10,570	28.02
35.79-43.17	60,992	5.8	39.54	42,909	38.96
43.75-57.31	51,454	7.3	47.55	27,798	47.72
Total	315,847	5.2	$28.30	214,285	$24.63

At year-end 2002, options with an average exercise price of $18.75 were exercisable on 214 million shares; at year-end 2001, options with an average exercise price of $14.73 were exercisable on 209 million shares.

(a) Average contractual life remaining in years.

OPTION VALUE INFORMATION^(a)

(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.

NOTE 26

SUPPLEMENTAL CASH FLOWS INFORMATION

Changes in operating assets and liabilities are net of acquisitions and dispositions of principal businesses.

     "Payments for principal businesses purchased" in the Statement of Cash Flows is net of cash acquired and includes debt assumed and immediately repaid in acquisitions.

     "All other operating activities" in the Statement of Cash Flows consists primarily of adjustments to current and noncurrent accruals and deferrals of costs and expenses, adjustments for gains and losses on assets, increases and decreases in assets held for sale, and adjustments to assets.

     Non-cash transactions include the following: in 2003, the acquisition of Osmonics, Inc. for GE common stock valued at $240 million; in 2002, the acquisition of Interlogix, Inc. for GE common stock valued at $395 million and the acquisition of Bravo for GE common stock and other investment securities valued at $335 million and $886 million, respectively; and in 2001, the acquisition of Imatron Inc. for GE common stock valued at $205 million.

100         GE 2003 ANNUAL REPORT

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

101         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 27

OPERATING 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Assets						Property, plant and equipment (including equipment 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.

103         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 28

DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS

Derivatives and hedging

Exchange rate and interest rate risks are managed with a variety of straightforward techniques, including match funding and selective use of derivatives. We use derivatives to mitigate or eliminate certain financial and market risks because we conduct business 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 risks, including prohibitions on derivatives trading, derivatives market-making or other speculative activities.

     To qualify for hedge accounting, the details of the hedging relationship must be formally documented at inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks that are being hedged, the derivative instrument and how effectiveness is being assessed. The derivative must be highly effective in offsetting either changes in fair value or cash flows, as appropriate, for the risk being hedged. Effectiveness is evaluated on a retrospective and prospective basis based on quantitative measures of correlation. If a hedge relationship becomes ineffective, it no longer qualifies as a hedge. Any excess gains or losses attributable to such ineffectiveness, as well as subsequent changes in the fair value of the derivative, are recognized in earnings.

Cash flow hedges

Cash flow hedges are hedges that use simple derivatives to offset the variability of expected future cash flows. Variability can appear in floating rate assets, floating rate liabilities or from certain types of forecasted transactions, and can arise from changes in interest rates or currency exchange rates. For example, GECS often borrows at a variable rate of interest to fund our financial services businesses. If Commercial Finance needs the funds to make a floating rate loan, there is no exposure to interest rate changes, and no hedge is necessary. However, upon making a fixed rate loan, we will contractually commit to pay a fixed rate of interest to a counterparty who will pay us a variable rate of interest (an "interest rate swap"). We then designate this swap as a cash flow hedge of the associated variable rate borrowing. If, as expected, the derivative is perfectly effective in offsetting variable interest in the borrowing, we record changes in its fair value in a separate component in equity, then release those changes to earnings contemporaneously with the earnings effects of the hedged item. Further information about hedge effectiveness is provided on page 105.

     We use currency forwards and options to manage exposures to changes in currency exchange rates associated with commercial purchase and sale transactions. These instruments permit us to eliminate the cash flow variability, in local currency, of costs or selling prices denominated in currencies other than the functional currency. In addition, we use these instruments, along with interest rate and currency swaps, to optimize borrowing costs and investment returns. For example, currency swaps and non-functional currency borrowings together provide lower funding costs than could be achieved by issuing debt directly in a given currency.

     At December 31, 2003, amounts related to derivatives qualifying as cash flow hedges amounted to a reduction of equity of $1,792 million, of which we expect to transfer $392 million to earnings in 2004 along with the earnings effects of the related forecasted transactions. At December 31, 2003, the amount of unrecognized losses related to cash flow hedges of short-term borrowings was $2,242 million. In 2003, there were no forecasted transactions that failed to occur. At December 31, 2003, the maximum term of derivative instruments that hedge forecasted transactions, other than interest rate swaps designated as hedges of commercial paper (discussed in note 18), was 24 months.

Fair value hedges

Fair value hedges are hedges that eliminate the risk of changes in the fair values of assets, liabilities and certain types of firm commitments. For example, we will use an interest rate swap in which 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 the variable rate financial asset that it is funding. We record changes in fair value of derivatives designated and effective as fair value hedges in earnings, offset by corresponding changes in the fair value of the hedged item.

     We use interest rate swaps, currency swaps and interest rate and currency forwards to hedge the effect of interest rate and currency exchange rate changes on local and nonfunctional currency denominated fixed-rate borrowings and certain types of fixed-rate assets. Fair value adjustments decreased the carrying amount of debt outstanding at December 31, 2003, by $1,671 million. We use equity options to hedge price changes in investment securities and, at Insurance, equity-indexed annuity liabilities.

Net investment hedges

Net investment hedges are hedges that use derivative contracts or cash instruments to hedge the foreign currency exposure of a net investment in a foreign operation. We manage currency exposures that result from net investments in affiliates principally by funding 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 REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives not designated as hedges

We must meet specific criteria in order to apply any of the three forms of hedge accounting. For example, hedge accounting is not permitted for hedged items that are marked to market through earnings. We use derivatives to hedge exposures when it makes economic sense to do so, including circumstances in which the hedging relationship does not qualify for hedge accounting as described in the following paragraph. We also will occasionally receive derivatives, such as equity warrants, in the ordinary course of business. Derivatives that do not qualify for hedge accounting are marked to market through earnings.

     We use option contracts, including caps, floors and collars, as an economic hedge of changes in interest rates, currency exchange rates and equity prices on certain types of assets and liabilities. We occasionally obtain equity warrants as part of sourcing or financing transactions. Although these instruments are considered to be derivatives, their economic risk is similar to, and managed on the same basis as, other equity instruments we hold.

Earnings effects of derivatives

The table that follows provides additional information about the earnings effects of derivatives. In the context of hedging relationships, "effectiveness" refers to the degree to which fair value changes in the hedging instrument offset the corresponding expected earnings effects of the hedged item. Certain elements of hedge positions cannot qualify for hedge accounting under SFAS 133 whether effective or not, and must therefore be marked to market through earnings. Time value of purchased options is the most common example of such elements in instruments we use. Pre-tax earnings effects of such items are shown in the following table as "Amounts excluded from the measure of effectiveness."

December 31 (In millions)		2003			2002
CASH FLOW HEDGES
Ineffectiveness	$	(19	)	$	(24	)
Amounts excluded from the measure of effectiveness		–			–
FAIR VALUE HEDGES
Ineffectiveness		–			3
Amounts excluded from the measure of effectiveness		–			3

Counterparty credit risk

The risk that counterparties to derivative contracts will default and not make payments to us according to the terms of the agreements is counterparty credit risk. We manage counterparty credit risk on an individual counterparty basis, which means that we net exposures on transactions by counterparty where legal right of offset exists to determine the amount of exposure to each counterparty. When a counterparty exceeds credit exposure limits (see table below), as measured by current market value of the derivative contract, no additional transactions are permitted to be executed until the exposure with that counterparty is reduced to an amount that is within the established limits. Swaps are required to be executed under master agreements containing mutual credit downgrade provisions that provide the ability to require assignment or termination in the event either party is downgraded below A3 or A-.

     To further mitigate credit risk, in certain cases we have entered into collateral arrangements that provide us with the right to hold collateral when the current market value of derivative contracts exceeds an exposure threshold. Under these arrangements, we may receive U.S. Treasury and other highly-rated securities or cash to secure our exposure to counterparties; such collateral is available to us in the event that a counterparty defaults. From an economic standpoint, we evaluate credit risk exposures and compliance with credit exposure limits net of such collateral. If the downgrade provisions had been triggered at December 31, 2003, we could have been required to disburse up to $3.8 billion and could have claimed $2.4 billion from counterparties (including $1.3 billion of collateral that has been pledged to us).

     Fair values of our derivative assets and liabilities represent the replacement value of existing derivatives at market prices and can change significantly from period to period based on, among other factors, market movements and changes in our positions. At December 31, 2003 and 2002, gross fair value gains amounted to $5.5 billion and $5.0 billion, respectively. At December 31, 2003 and 2002, gross fair value losses amounted to $6.9 billion and $7.1 billion, respectively.

     The following tables illustrate our policy relating to exposure limits to counterparties.

COUNTERPARTY CREDIT CRITERIA

	Credit rating
	Moody's		S&P
Foreign exchange forwards less than one year	P-1		A-1
Other derivatives less than one year	Aa3	(a)	AA-	(a)
All derivatives between one and five years	Aa3	(a)	AA-	(a)
All derivatives greater than five years	Aaa	(a)	AAA	(a)

(a) Counterparties that have an obligation to provide collateral to cover credit exposure in accordance with a credit support agreement must have a minimum A3/A- rating.

EXPOSURE LIMITS

	Exposure
		Greater than one year
(In millions)	Less than one year	With collateral	Without collateral
Minimum rating
Aaa/AAA	$150	$100	$75
Aa3/AA-	150	50	50
A3/A-	150	5	Not allowed

105         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL INSTRUMENTS

	2003					2002
		Assets (liabilities)					Assets (liabilities)
December 31 (In millions)	Notional amount	Carrying amount (net)		Estimated fair value		Notional amount	Carrying amount (net)		Estimated 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 financial statements at fair value are not included in the above disclosures; such items include cash and equivalents, investment securities, separate accounts and derivative financial instruments. Other assets and liabilities–those not carried at fair value–are discussed below. Apart from certain of our borrowings and certain marketable securities, few of the instruments discussed below are actively traded and their fair values must often be determined using models. Although we have made every effort to represent accurate fair values in this section, it would be unusual if the estimates could actually have been realized at December 31, 2003 or 2002.

     A description of how we estimate fair values follows.

Time sales and loans

Based on quoted market prices, recent transactions and/or discounted future cash flows, using rates at which similar loans would have been made to similar borrowers.

Borrowings

Based on discounted future cash flows using current market rates which are comparable to market quotes.

Investment contract benefits

Based on expected future cash flows, discounted at currently offered discount rates for immediate annuity contracts or cash surrender values for single premium deferred annuities.

All other instruments

Based on comparable market transactions, discounted future cash flows, quoted market prices, and/or estimates of the cost to terminate or otherwise settle obligations.

106        GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 29

SECURITIZATION ENTITIES

We securitize financial assets in the ordinary course of business to improve shareowner returns. The securitization transactions we engage in are similar to those used by many financial institutions. Beyond improving returns, these securitization transactions serve as funding sources for a variety of diversified lending and securities transactions. Historically, we have used both supported and third-party entities to execute securitization transactions funded in the commercial paper and term bond markets.

     The following table represents assets in securitization entities both consolidated and off-balance sheet.

December 31 (In millions)		2003		2002
Receivables secured by:
Equipment	$	15,616	$	13,926
Commercial real estate		16,713		14,168
Other assets		9,114		12,000
Credit card receivables		8,581		11,292
GE trade receivables		3,249		2,841
Other trade receivables		–		693
Total securitized assets	$	53,273	$	54,920
On-balance sheet assets in securitization entities(a)	$	26,463	$	–
Off-balance sheet(b)(c)
Supported entities		5,759		42,222
Other		21,051		12,698
Total securitized assets	$	53,273	$	54,920

(a) Related credit and liquidity support amounted to $18.4 billion, net of $5.3 billion of 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 at December 31, 2003.
^(b) Liabilities for recourse obligations related to off-balance sheet assets were $0.1 billion and $0.3 billion at December 31, 2003 and 2002, respectively.
^(c) 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 that defer liquidity beyond one year which amounted to $2.4 billion and $13.6 billion, respectively. These amounts include credit support of $5.5 billion and $17.2 billion at December 31, 2003 and 2002, respectively.

Securitized assets that are on-balance sheet were consolidated on July 1, 2003, upon adoption of FIN 46, Consolidation of Variable Interest Entities. Although we do not control these entities, consolidation was required because we provided a majority of the credit and liquidity support for their activities. A majority of these entities were established to issue asset-backed securities, using assets that were sold by us and by third parties. These entities differ from others included in our consolidated statements because the assets they hold are legally isolated and are unavailable to us 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 transferring assets to these entities, balances will decrease as the assets repay. Given their unique nature the entities are classified in separate financial statement captions, "Consolidated, liquidating securitization entities."

     We continue to engage in off-balance sheet securitization transactions with third-party entities and to use public market, term securitizations. Further information about these activities is provided on page 108.

On-balance sheet arrangements

The following tables summarize the revenues, expenses, assets, liabilities and cash flows associated with consolidated securitization entities.

(In millions)		2003
REVENUES(a)
Interest on time sales and loans	$	513
Financing leases		129
Other		53
Total	$	695
EXPENSES(a)
Interest	$	393
Costs and expenses(b)		114
Total	$	507

(a) Entities consolidated on July 1, 2003.
^(b) Includes minority interest expense of $20 million.

December 31 (In millions)		2003
ASSETS
Cash	$	684
Debt securities		1,566
Financing receivables(a)(b)		21,877
Other		2,336
Total	$	26,463
LIABILITIES
Short-term borrowings(c)	$	22,842
Long-term notes payable(d)		1,948
Other liabilities		517
Minority interest		414
Total	$	25,721

(a) Includes $0.9 billion of retained interests associated with securitized assets now consolidated.
^(b) At July 1, 2003, the carrying amount of financing receivables was recorded net of a previously recorded recourse obligation of $0.1 billion.
^(c) Primarily commercial paper with original maturities less than one year. Average interest rate of 1.1%, including the effect of interest rate swaps designated and effective as hedges.
^(d) Weighted average rate of 2.0%; matures between 2005 and 2007.

107         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The portfolio of financing receivables consists of loans and financing lease receivables secured by equipment, commercial real estate and other assets; credit card receivables; and trade receivables. Examples of these assets include loans and leases on manufacturing and transportation equipment, loans on commercial property, commercial loans, and balances of high credit quality accounts from sales of a broad range of products and services to a diversified customer base. Under terms of credit and liquidity support agreements with these entities, when predefined triggers are met related to asset credit quality or a put is exercised by beneficial interest holders, we may be required to repurchase financing receivables. Upon such repurchases, the underlying receivable is classified as "Financing receivables" (disclosed in note 12).

     "Financing receivables" includes $3,827 million of direct financing leases, an analysis of which follows.

December 31 (In millions)		2003
DIRECT FINANCING LEASES
Total minimum lease payments receivable	$	4,192
Estimated unguaranteed residual value of leased assets		14
Less deferred income		(379	)
Investment in financing leases	$	3,827

A schedule of changes in the financing receivables balance since we adopted FIN 46 follows.

(In millions)		2003
Balance at July 1	$	31,395
Net collections		(9,150	)
Net write-offs		(42	)
Credit and liquidity support repurchases		(54	)
All other		(272	)
Balance at December 31	$	21,877

Although we expect actual maturities to differ from contractual maturities, the following table summarizes the contractual maturities of financing receivables in our consolidated securitization entities.

CONTRACTUAL MATURITIES

(In millions)		Total time sales and loans		Net rentals receivable
Due in
2004	$	4,810	$	1,329
2005		1,317		1,001
2006		1,325		636
2007		1,104		330
2008		965		130
2009 and later		8,529		766
Total	$	18,050	$	4,192

(In millions)		2003
CASH FLOWS–INVESTING ACTIVITIES(a)
Net collections	$	9,150
Other		225
Total	$	9,375
CASH FLOWS–FINANCING ACTIVITIES(a)
Newly issued debt	$	157,593
Repayments and other reductions		(167,354	)
Total	$	(9,761	)

(a) Entities consolidated on July 1, 2003.

Derivatives included in consolidated securitization entities consist principally of pay fixed, receive variable interest rate swaps. These swaps are designated, and effective, as hedges of fixed rate assets (fair value hedges) or variable rate liabilities (cash flow hedges). Risk management objectives are consistent with those described in note 28. Ineffectiveness recognized on fair value hedges was zero; ineffectiveness recognized on cash flow hedges was insignificant. No amounts were excluded from the measure of ineffectiveness of either fair value or cash flow hedges.

Off-balance sheet arrangements

As discussed on page 107, assets in off-balance sheet securitization entities amounted to $26.8 billion and $54.9 billion at December 31, 2003 and 2002, respectively.

     Additional information about securitization transactions follows.

(In millions)		2003			2002			2001
Gross gains	$	1,394		$	1,796		$	2,193
Reduction of retained interest in revolving facilities,      before replenishment		(1,160	)		(1,029	)		(866	)
Net	$	234		$	767		$	1,327

Amounts recognized in our financial statements related to sales to off-balance sheet securitization entities are as follows:

December 31 (In millions)		2003			2002
Retained interests	$	2,663		$	3,283
Servicing assets(a)		150			340
Recourse liability		(75	)		(261	)
Total	$	2,738		$	3,362

(a) Includes mortgage servicing rights related to an amortizing pool of mortgages associated with a business exited in 2000. As of December 31, 2003, the net carrying value of remaining mortgage servicing rights relating to these former operations was $115 million.

108         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• RETAINED INTERESTS. When we securitize receivables, we determine fair value based on discounted cash flow models that incorporate, among other things, assumptions including loan pool credit losses, prepayment speeds and discount rates. These assumptions are based on our experience, market trends and anticipated performance related to the particular assets securitized. Subsequent to recording retained interests, we review recorded values quarterly in the same manner and using current assumptions. We recognize impairments when carrying amounts exceed current fair values.
• SERVICING ASSETS. Following a securitization transaction, we retain responsibility for servicing the receivables, and are therefore entitled to an ongoing fee based on the outstanding principal balances of the receivables. Servicing assets are primarily associated with residential mortgage loans. Their value is subject to credit, prepayment and interest rate risk.
• RECOURSE LIABILITY. Certain transactions require credit support agreements. As a result, we provide for expected credit losses under these agreements and such amounts approximate fair value.

The following table summarizes data related to securitization sales that we completed during 2003.

(In millions)		Equipment			Commercial real estate			Other assets			Credit card receivables
Cash proceeds from securitization	$	5,416		$	3,082		$	2,009			N/A
Proceeds from collections reinvested in new receivables		N/A			N/A		$	14,047		$	11,453
Weighted average lives (in months)		29			72			106			7
ASSUMPTIONS AS OF SALE DATE(a)
Discount rate		6.6	%		11.5	%		6.4	%		11.2	%
Prepayment rate		10.1	%		10.8	%		4.6	%		15.0	%
Estimate of credit losses		1.6	%		1.6	%		0.2	%		10.8	%

(a) Based on weighted averages.

Key assumptions used in measuring the fair value of retained interests in securitizations and the sensitivity of the current fair value of residual cash flows to changes in those assumptions are noted in the following table. These assumptions may differ from those in the previous table as these relate to all outstanding retained interests as of December 31, 2003.

(In millions)		Equipment			Commercial real estate			Other assets			Credit card receivables
DISCOUNT RATE(a)		6.5	%		10.7	%		7.7	%		10.9	%
Effect of:
10% Adverse change	$	(10	)	$	(14	)	$	(30	)	$	(8	)
20% Adverse change		(20	)		(27	)		(57	)		(25	)
PREPAYMENT RATE(a)		11.0	%		4.1	%		1.0	%		15.4	%
Effect of:
10% Adverse change	$	(5	)	$	(1	)	$	(7	)	$	(33	)
20% Adverse change		(11	)		(3	)		(14	)		(62	)
ESTIMATE OF CREDIT LOSSES(a)		2.0	%		1.9	%		0.1	%		9.9	%
Effect of:
10% Adverse change	$	(2	)	$	(8	)	$	(2	)	$	(46	)
20% Adverse change		(3	)		(16	)		(4	)		(91	)
Remaining weighted average lives (in months)		43			112			64			7
Net credit losses	$	5		$	–		$	14		$	443
Delinquencies		52			52			4			139

(a) Based on weighted averages.

GUARANTEE AND REIMBURSEMENT CONTRACTS. We provide protection to certain counterparties of interest rate swaps entered into by securitization-related entities related to changes in the relationship between commercial paper interest rates and the timing and amount of the payment streams. These arrangements provide protection for the life of the assets held by the SPE but generally amortize in proportion to the decline in underlying asset principal balances. The notional amount of such support is $0.3 billion; fair value of the related assets was $1 million at year-end 2003.

109         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 30

COMMITMENTS AND GUARANTEES

Commitments

In our Aircraft Engines business, we have committed to provide financial assistance on future sales of aircraft equipped with our engines, totaling $1.2 billion at year-end 2003. In addition, our Commercial Finance business had placed multiple-year orders for various Boeing, Airbus and other aircraft with list prices approximating $13.5 billion at year-end 2003.

     At year-end 2003, we were committed under the following guarantee arrangements beyond those provided on behalf of SPEs (see note 29):

• LIQUIDITY SUPPORT. Liquidity support provided to holders of certain variable rate bonds issued by municipalities amounted to $3.8 billion at December 31, 2003. If holders elect to sell supported bonds that cannot be remarketed, we are obligated to repurchase them at par. If called upon, our position would be secured by the repurchased bonds. While we hold any such bonds, we would receive interest payments from the municipalities at a rate that is in excess of the stated rate on the bond. To date, we have not been required to perform under such arrangements. In addition, we are currently not providing any new liquidity facilities and will continue to reassess the decision in the future. The current liquidity facilities discussed above will remain in effect in accordance with their original terms.
• CREDIT SUPPORT. We have provided $6.3 billion of credit support on behalf of certain customers or associated companies, predominantly joint ventures and partnerships, using arrangements such as standby letters of credit and performance guarantees. These arrangements enable our customers and associated companies to execute transactions or obtain desired financing arrangements with third parties. Should the customer or associated company fail to perform under the terms of the transaction or financing arrangement, we would be required to perform on their behalf. Under most such arrangements, our guarantee is secured, usually by the 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.
• CONTINGENT CONSIDERATION. These are agreements to provide additional consideration in a business combination to the seller if contractually specified conditions related to the acquired entity are achieved. At December 31, 2003, we had recognized liabilities for estimated payments amounting to $96 million of our exposure of $0.4 billion.

At year-end 2003, we had $8,084 million of commitments to acquire broadcast material and the rights to broadcast television programs, including U.S. television rights to future Olympic Games, and commitments under long-term television station affiliation agreements that require payments through 2012.

     Our guarantees are provided in the ordinary course of business. We underwrite these guarantees considering economic, liquidity and credit risk of the counterparty. We believe that the likelihood is remote that any such arrangements could have a significant adverse effect on our financial position, results of operations or liquidity. We record liabilities, as disclosed above, for such guarantees based on our best estimate of probable losses, which considers amounts recoverable under recourse provisions. For example, at year-end 2003, the total fair value of aircraft securing our airline industry guarantees exceeded the guaranteed amounts, net of the associated allowance for losses.

Product warranties

We provide for estimated product warranty expenses when we sell the related products. Because warranty estimates are forecasts that are based on the best available information–mostly historical claims experience–claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows.

(In millions)		2003			2002			2001
Balance at January 1	$	1,304		$	968		$	767
Current year provisions		751			918			841
Expenditures(a)		(749	)		(694	)		(658	)
Other changes(b)		131			112			18
Balance at December 31	$	1,437		$	1,304		$	968

(a) Primarily related to Power Systems.
^(b) Primarily related to acquisitions at Power Systems.

110         GE 2003 ANNUAL REPORT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 31

QUARTERLY INFORMATION (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 equipment, real estate and international structured finance.

111         GE 2003 ANNUAL REPORT

OUR BUSINESSES

A description of operating segments for General Electric Company and consolidated affiliates as of December 31, 2003, and the basis for presentation in this report, follows.

Aircraft Engines

Jet engines and replacement parts and repair and maintenance services for all categories of commercial aircraft (short/medium, intermediate and long-range); for a wide variety of military aircraft, including fighters, bombers, tankers and helicopters; and for executive and commuter aircraft. Products and services are sold worldwide to airframe manufacturers, airlines and government agencies. Also includes aircraft engine derivatives used as marine propulsion and industrial power sources; the latter is also reported in Power Systems.

Commercial Finance

Loans, financing and operating leases, and other financial services for 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 loans and investments, vehicles, aircraft, and equipment used in construction, manufacturing, data processing and office applications, electronics and telecommunications, and healthcare.

Consumer Finance

Card receivables, installment loans, auto loans and leases, and residential mortgages for customers on a global basis.

Consumer Products

Major appliances and related services for products such as refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners and residential water system products. Distributed to both retail outlets and direct to consumers, mainly for the replacement market, and to building contractors and distributors for new installations. Lighting products include a wide variety of lamps, lighting fixtures and wiring devices. Products and services are sold in North America and in global markets under various GE and private-label brands.

Equipment Management

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.

Industrial Products and Systems

Electrical distribution and control equipment (including power delivery and control products such as transformers, meters, relays, capacitors and arresters); measurement and sensing equipment (products and subsystems for sensing temperatures, humidity and pressure); security equipment and systems (including card access systems, video and sensor monitoring equipment and integrated facility monitoring systems); electric motors and related products; a broad range of electrical and electronic industrial automation products (including drive systems); installation, engineering and repair services, which includes management and technical expertise for large projects such as process control systems; and GE Supply, a network of electrical supply houses. Markets are extremely diverse. Products and services are sold to commercial and industrial end-users, including utilities; original equipment manufacturers; electrical distributors; retail outlets; railways; and transit authorities. Increasingly, products and services are developed for and sold in global markets.

Insurance

U.S. and international multiple-line property and casualty reinsurance, certain directly written specialty insurance and life reinsurance, consumer investment, insurance and retirement services, private mortgage insurance and, before its sale in the fourth quarter of 2003, financial guaranty insurance, principally on municipal bonds and asset-backed securities.

Medical Systems

Medical imaging systems such as magnetic resonance (MR) and computed tomography (CT) scanners, x-ray, nuclear imaging and ultrasound, as well as diagnostic cardiology and patient monitoring devices; related services, including equipment monitoring and repair, computerized data management and customer productivity services. Products and services are sold worldwide to hospitals and medical facilities.

Plastics

High-performance engineered plastics used in applications such as automobiles and housings for computers and other business equipment, and ABS resins. Products are sold worldwide to a diverse customer base consisting mainly of manufacturers.

NBC

Principal businesses are the furnishing of U.S. network television services to more than 230 affiliated stations, production of television programs, operation of 29 VHF and UHF television 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 REPORT

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 worldwide to a diverse customer base consisting mainly of manufacturers.

Transportation Systems

Transportation systems products and maintenance services including 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 statements 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.

113        GE 2003 ANNUAL REPORT

GLOSSARY

ADVERSE OR FAVORABLE DEVELOPMENT An adjustment to increase (adverse development) or reduce (favorable development) the provision for estimated ultimate insurance losses in a year following the year in which the loss occurred.

BACKLOG Unfilled customer orders for products and product services (12 months for product services).

BORROWING Financial liability (short or long-term) that obliges us to repay cash or another financial asset to another entity.

CASH EQUIVALENTS Highly liquid debt instruments with maturities of less than three months, such as commercial paper. Typically included with cash for reporting purposes, unless designated as available for sale and included with investment securities.

CASH FLOW HEDGES Qualifying derivative instruments that we use to protect ourselves against exposure to volatility in future cash flows. The exposure may be associated with an existing asset or liability, or with a forecasted transaction. See "Hedge."

COMMERCIAL PAPER Unsecured, unregistered promise to repay borrowed funds in a specified period ranging from overnight to 270 days.

CUSTOMER SERVICE AGREEMENTS (also referred to as "product services agreements") Contractual commitments, with multiple-year terms, to provide specified services for products in our industrial installed base–for example, monitoring, maintenance, overhaul and spare parts for a gas turbine/generator set installed in a customer's power plant.

DERIVATIVE INSTRUMENT A financial instrument or contract with another party (counterparty) that is structured to meet any of a variety of financial objectives, including those related to fluctuations in interest rates, currency exchange rates and commodity prices. Options, forwards and swaps are the most common derivative instruments we employ. See "Hedge."

DIRECT WRITTEN PREMIUMS Amounts charged to insureds in exchange for coverages provided in accordance with the terms of an insurance/reinsurance contract.

EARNED PREMIUMS Portion of the premium, net of any amount ceded, pertaining to the segment of the policy period for which insurance coverage has been provided.

EFFECTIVE TAX RATE Provision for income taxes as a percentage of earnings before income taxes and accounting changes. Does not represent cash paid for income taxes in the current accounting period.

EQUIPMENT LEASED TO OTHERS Rental equipment we own that is available to rent and is stated at cost less accumulated depreciation.

FAIR VALUE HEDGE Qualifying derivative instruments that we use to eliminate the risk of changes in the fair value of assets, liabilities or certain types of firm commitments. Changes in the fair values of derivative instruments that are designated and effective as fair value hedges are recorded in earnings, but are offset by corresponding changes in the fair values of the hedged items. See "Hedge."

FINANCIAL LEVERAGE The relationship of debt to equity. Expressed for financial services businesses as borrowings divided by equity. Expressed for industrial businesses as borrowings divided by total capital.

FINANCING RECEIVABLES Investment in contractual loans and leases due from customers (not investment securities).

FORWARD CONTRACT Fixed price contract for purchase or sale of a specified quantity of a commodity, security, currency or other financial instrument with delivery and settlement at a specified future date. Commonly used as a hedging tool. See "Hedge."

GOODWILL The premium paid for acquisition of a business. Calculated as the purchase price less the fair value of net assets acquired (net assets are identified tangible and intangible assets, less liabilities assumed).

GUARANTEED INVESTMENT CONTRACTS (GICs) Deposit-type products that guarantee a minimum rate of return, which may be fixed or floating.

HEDGE A technique designed to eliminate risk. Often refers to the use of derivative financial instruments to offset changes in interest rates, currency exchange rates or commodity prices, although many business positions are "naturally hedged"–for example, funding a U.S. fixed rate investment with U.S. fixed rate borrowings is a natural interest rate hedge.

INSURANCE RECEIVABLES Receivables of our insurance businesses associated with (1) reinsurance agreements in which those businesses legally transferred (ceded) insurance losses (and related premiums) to reinsurers and are entitled to recovery of those insurance losses; (2) premiums on insurance and reinsurance contracts; (3) policy loans to policyholders of certain life insurance contracts; and (4) premium funds on deposit with reinsurance customers as collateral for our obligations as a reinsurer.

INTANGIBLE ASSET A non-financial asset lacking physical substance, such as goodwill, patents, trademarks and licenses. Also includes present value of future profits, which are anticipated net discounted cash flows to be realized from certain in-force insurance, annuity and investment contracts at the date we acquire a life insurance business.

INTEREST RATE SWAP Agreement under which two counterparties agree to exchange one type of interest rate cash flow for another. In a typical arrangement, one party periodically will pay a fixed amount of interest, in exchange for which that party will receive variable payments computed using a published index. See "Hedge."

INVESTMENT SECURITIES Generally, an instrument that provides an ownership position in a corporation (a stock), a creditor relationship with a corporation or governmental body (a bond), or rights to ownership such as those represented by options, subscription rights and subscription warrants.

114         GE 2003 ANNUAL REPORT

MANAGED RECEIVABLES Total receivable amounts on which we continue to perform billing and collection activities, including receivables that have been sold with and without credit recourse.

MATCH FUNDING A risk control policy that provides funds for a particular financial asset having the same currency, maturity and interest rate characteristics as that asset. Match funding ensures that we maintain initial financing spreads or margins for the life of a financial asset, and is executed directly, by issuing debt, or synthetically, through a combination of debt and derivative financial instruments. For example, when we lend at a fixed interest rate in the U.S., we can borrow those U.S. dollars either at a fixed rate of interest or at a floating rate executed concurrently with a pay-fixed interest rate swap. See "Hedge."

MONETIZATION Sale of financial assets to a third party for cash. For example, we sell certain loans, credit card receivables and trade receivables to third-party financial buyers, typically providing at least some credit protection and often agreeing to provide collection and processing services for a fee. Monetization normally results in gains on interest-bearing assets and losses on non-interest bearing assets.

NET REVENUES For our lending and leasing businesses, revenues from services less interest and other financial charges.

OPERATING MARGIN Sales of goods and services less the sum of cost of goods and services sold plus selling, general and administrative expenses. Operating margin is often expressed as a percentage of sales–the operating margin rate.

OPERATING PROFIT Earnings before interest and other financial charges, income taxes and effects of accounting changes.

OPTION The right, not the obligation, to execute a transaction at a designated price, generally involving equity interests, interest rates, currencies or commodities. See "Hedge."

PREMIUM Rate that is charged under insurance/reinsurance contracts.

PRESENT VALUE OF FUTURE PROFITS See "Intangible Asset."

PRODUCT SERVICES For purposes of the financial statement display of sales and costs of sales on pages 70 and 71, "goods" is required by U.S. Securities and Exchange Commission regulations to include all sales of tangible products, and "services" must include all other sales, including broadcasting and other services activities. We refer to sales of both spare parts (goods) and related services as sales of "product services," which is an important part of our operations.

PRODUCT SERVICES AGREEMENTS See "Customer Service Agreements."

PRODUCTIVITY The rate of increased output for a given level of input, with both output and input measured in constant currency. A decline in output for a given level of input is "negative" productivity.

PROGRESS COLLECTIONS Payments received from customers as deposits before the associated work is performed or product is delivered.

REINSURANCE A form of insurance that insurance companies buy for their own protection.

RETROCESSION AGREEMENT Contract to acquire third-party insurance protection for reinsurance policies written. Retrocession is a risk mitigation technique.

RETURN ON AVERAGE SHAREOWNERS' EQUITY Earnings before accounting changes divided by average total equity (on an annual basis, calculated using a five-point average).

RETURN ON AVERAGE TOTAL CAPITAL INVESTED Earnings before accounting changes plus the sum of after-tax interest and other financial charges and minority interest, divided by the sum of total equity, borrowings and minority interest (on an annual basis, calculated using a five-point average).

SECURITIZATION A process whereby loans or other receivables are packaged, underwritten and sold to investors. In some instances, the assets sold are first transferred to an unconsolidated SPE. These entities are structured to be bankruptcy remote in order to isolate the credit risk of the assets from the overall credit risk of the selling entity. Outside investors, usually institutions, typically purchase a debt instrument issued by the SPE. Whether or not credit risk associated with the securitized assets is retained by the seller depends on the structure of the securitization. See "Monetization."

SEPARATE ACCOUNT Investments controlled by policyholders and associated with identical amounts reported as insurance liabilities.

TURNOVER Broadly based on the number of times that working capital is replaced during a year. Accounts receivable turnover is total sales divided by the five-point average balance of customer receivables from sales of goods and services (trade receivables). Inventory turnover is total sales divided by a five-point average balance of inventories. See "Working Capital."

UNEARNED PREMIUMS Portion of the premium received, net of any amount ceded, that relates to future coverage periods.

UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES Claims reserves for events that have occurred, including both reported and incurred-but-not-reported (IBNR) reserves, and the expenses of settling such claims.

VARIABLE INTEREST ENTITY Entity defined by Financial Accounting Standards Board Interpretation No. 46, and that must be consolidated by its primary beneficiary. A variable interest entity has one or both of the following characteristics: (1) its equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) as a group, the equity investors lack one or more of the following characteristics: (a) direct/indirect ability to make decisions, (b) obligation to absorb expected losses, or (c) right to receive expected residual returns.

WORKING CAPITAL Sum of receivables from the sales of goods and services, plus inventories, less trade accounts payables and progress collections.

115         GE 2003 ANNUAL REPORT

EX-21

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 owned by registrant (1)	State or Country of incorporation or 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

(1)

		Percentage of voting securities directly or indirectly owned by registrant (1)		State or Country of incorporation or organization
GE PLASTICS ESPANA ScPA	100		Spain & Canary Islands, 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
PII LIMITED	100		United Kingdom & 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.

(2)

EX-23

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.

/s/ KPMG LLP

KPMG LLP

Stamford, Connecticut
March 1, 2004

EX-24

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 1^st day of March, 2004.

	/s/ Jeffrey R. Immelt
	Jeffrey R. Immelt
	Chairman of the Board
	(Principal Executive
	Officer and Director)
/s/ Keith S. Sherin		/s/ Philip D. Ameen
Keith S. Sherin		Philip D. Ameen
Senior Vice President-Finance		Vice President and Comptroller
(Principal Financial Officer)		(Principal Accounting Officer)

(Page 1 of 2)

/s/ James I. Cash, Jr.	/s/ Rochelle B. Lazarus
James I. Cash, Jr.	Rochelle B. Lazarus
Director	Director
/s/ Dennis D. Dammerman	/s/ Sam Nunn
Dennis D. Dammerman	Sam Nunn
Director	Director
/s/ Ann M. Fudge
Ann M. Fudge	Roger S. Penske
Director	Director
/s/ Claudio X. Gonzalez	/s/ Andrew C. Sigler
Claudio X. Gonzalez	Andrew C. Sigler
Director	Director
/s/ Andrea Jung	/s/ Robert J. Swieringa
Andrea Jung	Robert J. Swieringa
Director	Director
	/s/ Douglas A. Warner III
Alan G. Lafley	Douglas A. Warner III
Director	Director
/s/ Kenneth G. Langone	/s/ Robert C. Wright
Kenneth G. Langone	Robert C. Wright
Director	Director
/s/ Ralph S. Larsen
Ralph S. Larsen
Director
A MAJORITY OF THE BOARD OF DIRECTORS
(Page 2 of 2)

EX-31.A

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

EX-31.B

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

EX-32

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