Text

Forwards GE Annual Rept for 1988
	ML20246M068
Person / Time
Site:	07200001, 07001308
Issue date:	03/17/1989
From:	Schmid S; GENERAL ELECTRIC CO.
To:	; NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
	25318, NUDOCS 8903270039
	Download: ML20246M068 (2)
	v • d • e

{{#Wiki_filter:_- g'z- ' R ETURN( TO M___ _ _ ____ ____ _______ ? g g ' ....e, /) GE Nuclear nergy x, N\\ I k / _h .9 s Operation DOCVU 7:.\\\\ ' Dectric Company _s ys%%C \\(3 &~ st Comns Road Mams, Il 604S0-9740 , y s ' 9*' S 61' $. %90 <f h-gg2MN C I T2 2 rch'17,'l J. get. g ooCtG /4 p i y + ryj mission U. S. Nuclear 'u M Office of Nuclea M als Safety and Safeguards Washington, D. C. 20555 Attention: R. E. Cunningham, Director Division of Fuel Cycle and Material Safety

Subject:

Annual Financial Report From General Electric Company Docket No. 72-1 Materials' License No. SNM-2500 A copy of the General Electric Company Annual report for 1988 is enclosed. This fulfills the requirement of 10 CFR 72.80 (b). Please contact me if further information is desired. Sincerely, h sz O Stephen P. Schmid Senior Specialist, Licensing and Safeguards

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1 General Elet tric Company and c consolidated af filiates (Dollar amounts in inilhons; per-shaic arnounts in dollars) 1988 1987 1986 Revenues $50,089 $48,158 $42,013 Net earnings 3,386 2.915 2,492 Dividends declared 1,314 1,209 1,081 Earned on average share owners' etjuity 19.4 % 18.5 % 17.3 % 5 Pershare Net earnings $ 3.75 $ 3.20 $ 2.73 Dividerxis declared 1.46 1.32 % 1.18 % See note I to the consolidated finar :ial stateincrits about the c hange in consolidation policy in 1988. Cc.aents Letter to Share Owners 1 Worldwide Business Profile 5 Board of Directors 18 Management 20 FinancialSection 23 Corporateinformation 71 l l

well. NBC was a part of RCA and the nation's number one the Roper Corporation to strengthen the gxisition of GE network. We kept it arxl aulded it to our other leadership Appliances in the domestic range market. GE Financial businesses. Services (GEFS) acquired the credit card business of Mont-The RCA Aerospace group, on the other harut, was a gomery Ward, a move that effectively doubled our private-natural fit with our own GE Aerospace business, so we label credit card assets and enhanced our number one merged them, strengthening our overall aerospace posi-Ix>sition in that market segment. GEFS' 1988 integration tion. Several discrete RCA businesses that were not stra-of the 1987 Gelco acquisition created a leading [x>sition in tegic to us, such as the carpet company, were neither automotive fleet leasing as well as in the cargo shipping graftable to our 14 key businesses nor large arxl freestand-container business. ing, so we dis [nsed of them alumst immediately. In all, we've invested some $16 billion in the 1980s on acquisitions. We would argue that some $15 billion of these funds has been very successfully invested. Only two niche electronics acquisitions-amounting to about $400 mil-But, for s(nue reason, our trade of the merged lion-didn't pan out and were sold. Another $600 million invested in Kidder, Pealxxty has thus far had-for a vari-ety of reasons -difficulty in reaching its [x>tential. Even GF/RCA television manufacturing business to Thomson of so, Kidder increased its 1988 earnings 20% to $46 mil-France in exchange fi>r its medical diagnostic business arxl lion-admittedly a small part of the total GEFS net of cash provoked some punling res[x>nses. Suddenly, tne $788 million; nevertheless, we see Kidder as a business manufacture of televisions became something quintessen-with important synergies across GEFS that shoukt become tially American,like baseball. S<nne felt we had betrayed more signifiant in the 1990s. our heritage in our compulsion to "do deals." We heard This track record gives us confidence in the acquisition phrases like: "Un-American,""giving up on manufactur-process as one of the means to strengthen our global lead-ing,""ex;mrtingjobs." ership positions. The facts were these: The combined GE/RCA television in addition to acquisitions, we continue to invest in alli-business lost $ 125 million in the 1980s, was a cash drain ances arxijoint ventures with other companies all over the arxl was number three or fi>ur in the global market with no globe to enhance our 14 key businesses. In 1988 alone, we way in sight of getting to number one or two. Thomson's concluded alliances between GE Lighting and Toshiba of TV business, while profitable, was in a similar market-Japan and between GE Motors and llosch of West Ger-share situation - stuck in the middle of the pack. Our many, and we expanded an alliance between GE Electrical trade with Thomson pr xluced the following results. Distribution aml Control and Fuji. Thomson, including its new employees from GE, broke out of the pack, doubled its volume and moved into a rumber one or two position in the industry. GE, by acquir-ing Thomson's medical business, with its $ 1 billion in sales, and grafting it emto the already strong GE Medical Sys-tems business, became numler one in a game central to inally,in early '989, we signed a series of historic j our strategy. Exportingjobs? Some 21,000 of the 31,000 agreements with GEC of the United Kingdom that will jobs in the TV business had been overseas fi>r a decade or open the door to increased European participation by limr more. H urting employees? The employees in that busi-of our 14 businesses-Medical Systems, Appliances, ness, formerly endangered by being part of an also-ran in a industrial and Power Systems, and Electrical Distribution globid mar ket, now have the reach and volume that gives and Control. This move appears complicated on the sur-them a real shot at winning. face because there are four businesses involved, but it is We think it is one of the most important, logical and driven, once again, by the simple strategy dictating that we universally beneficial moves inade anywhere in the 1980s advance our 14 businesses, on a global basis, whenever we - a win for the employees of the GF/RCA television busi-can, consistent with a consistent strategy. ness, a go(xl deal for Thomson and a key victory for a in addition to acquiring, divesting and forming alliances high-technology GE manufact uring business - Medical to sup;xnt these key businesses, we continue to supply Sptems-- that is now the global technology and market them with resources to propel their internal growth - leader. investing dose to $ 16 billion since 1981. In 1988, we made The divestitures we've made in the 1980s have pro-a multiyear, $1.8 billion conunitment to build a Spanish duced $9 billion in cash, which has been used for acquisi-plastics complex that will supply the European market, we tions to strengthen our 14 key businesses. In 1988, we conunitted another biVion dollars to further fuel the purchased llorg-Warner's chemicals businesses to expand strong growth of GE Financial Services, and we spent a GE Plastics' global market basket. In addition, we bought total of more than $1.8 h:llion on new plant and equip-ment. Another $3.6 billion -about $1.2 billion funded by the Company - was spent on research and development, almost exclusively in support of these 14 key businesses. r

r To Our Share Owners eteen eighty-eight was another exciting and sur-1988, we began hearing: GE is "i xi dilIicult to muler-cessful year fier GE. Earnings per share grew 171 thrn-staixl" arul"1x>rtlistio nnanaging?' We even heard ourselves ings were $3.386 billion on revenues of $50.089 billion. described by the "C" word - congkunerate - with its The fi>urth quarter was the first in which GE's relx>rted net usual pejorative cosullary: "Wlx> Limws what they'll buy or carnings broke the one-billion <lollar ma:L. Ret urn on sell next?" l equity was 19A%, up alaxist a jx> int. Operating margins You get the idea. grew, as did total cost pnxtuctivity, which is now gaining at Perhaps a strategy that appeat s to us crystal clear arnt three times the national average arxl accelerating. consistent - because we live by it - seems less so to some The year was punctuated by several L y acquisitions, of our key constituencies in the inedia arul financial alliances andjoint ventures that strengthened the Compa-conununity. ny's imsition arourxl the globe. The results of these arxl This is nmre likely a failure of our mmmunication other globalization effi>rts were apparent as revenues from effi>rts rather than one of mulerstarxling, so we have internationaloperations approached $11 billion Inuluc-decided to use a gmxl part of this letter to expliin again, ing an operating profit of $2 billion - up more than 50% witimut adornment, the operative premises arul wodd from the level ofjust two years ago and accounting fiir view that have guided, without exception, every najor umre than one-third of GE's total operating profit in 1988. nove we've made since 1981. The strong dematul li>r our pnxlucts aromxt the work! There is im denying we are a diverse company. We are hel wd GE make a $'l.1 billion Imsitive contribution to the imt a computer, or oil, or auto, or steel monolith. Those l U.S. balance ofInule in 1988,50% greater than in 1987. who tnu k us in the financial analyst community or finan-Ily virtually every measurement,it was a great year. Ilut, cial press have much more tunnewoi L than do those who as is usually the case in most years, a few thorns can be watch aixi reimrt on our peers. We have businesses rang-fomul among the roses - two, to be exact. ing from plastics to netwoiL broadcasting to the manufac-The first was a problem we've experienced with a new ture ofjet engines to reinsurance. Ilut ihe strategy, the iype of rotary compressor in certain models of our large management philosophy that drives the Company,is the L refrigerator s. There is no safety issue involved, and wc - e essence of simplicity. in the midst of an active campaign to replace every one of these compressors with minimum inconvenience to our l customers. Our aim is to come out of this situation with our reputation fi>r customer sup[mrt and satisfa(tion not only intact but-if anything-enhanced. While the cost j to the Company will be substantial, we have set up reserves e have two basic premises. The first is that we will to cover the estimated cost of the fix-and we still had a run only businesses that are number one or number two in I reconi perli>rmance in 1988. their global markets - or, in the case of servic es, that have The second disap[mintment of 1988 is one you, as share a substantial positian - and are of scale and potential owners, are quite familiar with: the price of our st< x k. appropriate to a $50 billion enterprise. Current y, there l Those who have held GE shares from the early 1980s have are 14 of these businesses, highly diverse in their pursuits been rewanted handsomely. Appreciation and vieki pro-but closely knit by common values, shared te( hnology aml vided a return averaging 20% per year, compounded from substantial resources; and they draw ulm a imol of man-1981 to 1988,even with the October 1987 mrrection,com-agement talent we believe is unequaled in the workl. pared with a return of 15% for the S&P 500. But that's The second ptemise is that in addition to the strength, yesterday's perfonnance. In 1988, the sta k appreciation resources and reach of a big company, which we have didn't keep pace with the Company's perfin inarne. already built, we are committed to developing the sensitiv-A We're not sure why this is the case, but it occurs to us ity, the leanness, the simplicity and the agility of a small I that perhaps the pace and variety of our activity appear company. We want the test ofloth. unfocused to those who view it from the outside. The gen-These piemises shape anxl explain everything we do. eral nelia and the financial press have, for the most part, In acquisition philosophy, for example, twing number been more than favorable in their appraisal of our per-one or number two dictates that we will only acquire com-Ibrmance, but as we've pic Led up t he tempo, especially in panics that are a direct and enhancing graft onto one of our 14 key businesses or that are large, freestanding and in a position ofleadership in their marketpla(es.The RCA acquisition, w hile oki news, illust rates this prindple very I (

^ 'Ib those who perceive us as institutionally fickle, we wouki [x> int to two of our key 14 businesses-Tnms[x>rta-tion Systems, which is mainly kicomotives, and Industrial and Power Systems.150th went through purgatory in the 1980s, in the Ix>ttom of market troughs of several years' i duration that saw few orders in kicomotives arxl none in large steam turbines. Instead of closing or selling these businesses, we reduced their costs consistent with the market, invested to make t them more competitive ($300 million in kicomotives alone) and stuck with them through the lean years - not out of sentimentality or inertia but because they are large, world-leading businesses with big [x>tential anxl because doing so fits our strategy. A 'd in 1988, we saw a significant i market revival mxter way in locomotives and the approach-( ~ ing dawn of a revival in areas of the turbine business. s - E. That, then,is the first part of our strategy: Creating a company consisting only of world-class global businesses 0 that can compete arxl win i i the 1990s arul beyond. The Ibcus of our R&D, investment, acquisitions and alliances-everything we do-is ensuring the growth and vitality of . g those businesses. E..t' ~ Chairann of the Board and Chief Executive Offia John f Welch, Jr. (ce nfer)is flankedby he secorKl part ofline strategy, as we mentioned,.is Mce Chairman of the Board and Executive making this $50 billion enterprise as lean, as agile and as $,',,',,"f"","n[rd ab[x$cfri e N# light on its feet as a small company-a big company with 8 er Edward E. Hood, Jr (right). the heart atx1 hunger of a small one. We've been grappling with how to achieve this unbeat-able amalgam fbr the entire decade, and, while we haven't yet achieved it, our progress is accelerating. Once again, the actions we have taken are totally consistent with ot. Oit-stated theory of the case. We believed layers of management wer e " big-company" l encumbrances-so we reduced ours from nine to as few I as four, from us in the Cor[x> rate Executive Office to the factory Ikx>r of any given business. In the mid-1980s, we made a calculated gamble arxl removed the entire second and third echelons of management in the Company-layers we called sectors and groups. The 14 key businesses now report not, as orten in the past, to senior vic e presi-dents who re[x>rt to executive vice presidents-all with staff entourages-but directly to us three. This arrange-ment is dependent for its success on the quality ofleader-ship at the business level. We gambled that we had that l quality, and we won. The runv arrangement has proved breathtakingly clean, simple and effective. Ideas, initiatives and decisions move, often at the speed of sound - voices - where on(c they were muffled arxl garbled by a gaunt-let of approvals and the oppressive ministrations of staff reviews. I ) Secondly, we ibund ourselves in the early 1980s with j cor[x> rate am.' business stalis that wer e viewed - and s s

l-i viewed themselves - as monitors, checkers, kibitzen arxl despite our mix of global cultures and enterprises, an approvers We changed that view and that mission to the ' American company; and, as such, our system, while pn>. lx> int where staff now sees itself as facilitatory, advisor and . viding no guanmtees, also has the fewest baniers to panner of operations - with a growing sense of satisfac-innovation, boldness and risk-taking-the stulIthat will - i tion and cooperation on Ix>th sides.Territoriality has given propel the real winners in the 1990s. way to a growing sense of unity and common purpose. And that's the "why" behind our program ofliberation The third step toward a small-company ;nanagement and empowerment - more fulfilling work for all and system began in 1988 when we formulated and began greatercompetitiveness for our OnnpanyJlhe worst thing planning a inuject we call " work-out." This will be an we coukt do is to stifle with bureaucracy our employees - intense and continuing prognun, conducted within the the Americans and Germans, the French andJapanese, and . businesses and with support from the Onnpany's manage-the scores of other nationalities that are now part of the ment institute, to " liberate" the employees of our Gun-global GE. If we did, we would then have none of the pany fnnn the cramping artifacts that pile up in the dmy advantages of our competitors-and many of the encmn-attics of century-old annpanies: the re[xnts, meetings, rit-brances that burden them all. We won't let that happen, u;1s, approvals, controls and forests of paper that often If we can become that big-company /small-company seem necessary until they are removed, hybrid while pursuing our global strategies and encourag-ing even more boldness in the leadership of our busi-nesses, we will be within striking distance of the goal we set out in pursuit of eight years ago: We will be a more con-temporary, more accessible, more responsive company, in touch with our customers, finnly in control of our s we succeed over the next three years in ridding own destiny, driven by more-fulfilled people in control our Onnpany of the tentacles of ritual and bureaucracy,. of theirs. we are now better able to attack the final, and perhaps the We are on the brink of the most exciting and op[xntunity-most difficult, challenge of all. And that is the empowering rich decade in world business history. We approach it with ofour 300,000 people, the releasing of their cmativity and a strategy that has been lxah consistent and very successful ambition, the direct coupling of theirjobs with some posi-during the 1980s. If this summary of the strategy we have tive effect on the cluality of a pnxluct or service. We want once again presented in this letter is clear, you will have no - each man and woman in this Onnpany to see a wnnection difficulty understanding everything we do in the 1990s. between what he <,r she does all day-arxl winning in the And we intend to do a lot. marketplace. Their roles. responsibilities and rewanis musnecome clear to them and to everyone. Small compa-nies thrive and grow on that sense of contribution and reward. We want it as well, and everything we do to evolve our management system will be consistent with getting it. phn E Welch,Jr. Liberauon and empowennent, as we use the concept Chainnan of the lloard ami stems from what we believe is a veg solidly grounded v:iew Chief Executive Officer of winning and losing around the worki. We, as a glot dt competing company, have some serious disadvantage 3 as we line up against our foreign competitors. Some of those competitors enjoy protection fnnn fi> reign inroads into their markets; others are financially supix>rted by their governments. Smne are beneficiaries of nationally fiscused 1.awrence A. Bossidy R&D in key technologies. Others are put of regimented, Vice Chainnan of the lloani ami paternalistic cultures that serve them well. Executive Officer We complain, on occasion, alxiut all of this, but it is we who have the ultimate advantage, one that few of us, if j pressed, wouki ever wish to trade. It is the fact that we are, l Edward E. limxt,Jr. Vice Chairman of the lloard and Executive Oflicer February 10,1989 4

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FinancialServices e . OfY ", e ' '~ ' $.ff MN * - I .a. n v. m Montgenen Wud j amr _,,,,,,,,,,,, dP**um -M e" ,,., A TT T 4 L % M" Q. o a c \\ Manager Carla Knauer(left) of the Virginia Beach, Va., store discusses new credit prog.ams with Tom Doyle and Kim Luckes of Montgomery Ward Credit Corporation, which is now part of GE Financial Services. GE FinancialServices(GEFS)had GE Capital's commercial real munications, financial services, strong growth in 1988. One of the estate operation expanded its earn-medical, retaila xt manufacturing most diversified participants in the ing assets in 1988 by continuing to markets.This GE Capital business global financial services market, it fi>cus on its highly successful also expanded geographic bases in reached ahnost $75 billion in assets, approach of financing well-utilized Canada and the United Kingdom an increase of alx>ut $ 14 billion, and existing properties. in 1988. grew earnings 43% to $788 million. Full-service leasing also continued Also during the year, GE Capital l GEFS has three subsidiaries-to expand. One of GE Capitafs fast-ananged to acquire, subject to cer-GE Capital Cor[x> ration, Employers est-growing areas, it includes auto ("Ifi approvals, FGIC Cmporation, Reinsurance Cor}x> ration and Kid-and truck leasing; trailer and space n msurer of municipallxnxis. In der, Pealxxly Group-that operate leasing; the leasing of more than niongage insurance, GE Capital 17 different financial and asset man-luired Foremost Mortgage Insur-47,000 railcars: Genstar Container d agement businesses. Cor[x> ration, the world's largest ance of Wisconsin. GE Capital, with $42 billion in lessor of shipping containers; and Employers Reinsurance Corix>ne carning assets, is a major suppher of. Polaris Aircraft Irasing, the world's tion, the second largest property capital arxl financial expertise t largest lessor of conunercialjet air nd casualty reinsurer in the United U.S. business. During 1988, it made craft. Another area of service States and founh largest in the gains in retailer financing, commer-involves 18 auto auctions. world, increased its net written pre-cial real estate, fleet leasing, corpo-In addition, GE Capital strength, rniums and earnings again in 1988. rate restructuring, auto auctions ened its ix>sition in tnxk leasing by This annpany, with $4 billion in and mongage insurance. It also fi>nning ajoint venture with the assets, has increased earnings each gained a first placc imition in con-Penske Caporation. When cong year since it was aajuired in 1984. tainer leasing. bined with GE Capitafs existing Kidder, Pealxxly spent 1988 In private-label credit cards, GE fleet, the resulting business has repositioning to meet the future in Capital acquired the Montgomery more than $1.5 billion in assets and its highly annpetitive trading, retail Ward Credit Corix> ration and its six 55,000 vehicles. brokerage, institutional brokenige million active customers. With this in structuring and financing and investment banking fields. [xn-tfolio, GE Capital now authon,ies leveraged buyouts and corix> rate Kidder, Peabody's operations were more than three million consumer restructuring, GE Capital contin, pn>fitable in 1988. purchases each week, ued its conservative but creative One of GEFS' strongest 1988 This transaction was part of a approach. In addition to the Mont. thrusts was into li> reign markets as $3.8 hillion leveraged buyout of gomen Ward inmsaction,it pn>- ! non-U.S. assets more than tripled to Montgomery Ward & Co., a deal vided $nancial restructuring $3.5 billion. also partially financed by GEfS. sen. ices for cusmnx rs in the com-o i

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.4 "+. l f I Plastic parts for tomorrow's automobRes go through a series of tests at GCs Application Development Centerin Southfield. Mich. Reviewing test results are (left to right) Susan Nasiatka. Tracy Williamson Doug Wright, Ray Kolberg and Tony Kieliszewski. GE Plastics marked a true milestone is a recently fonned global market-ing technology.To that end, GE is year in 1988 as this business pre-ing organization.The new group is establishing a major pra :ss devel-pares li>r another decade of growth dedicated to providing a single, opment center in Pittsfield.The I in the 1990s. focused pnxluct and market stmt-facility, over 100,000 square feet l This business saw its third straight egy that addresses the growing in size, will feature the Alpha 1 year of record sales and earnings. international markets of today. machine, the world's largest, most Even more imix>rtant was the Major markets for the plastics advanced multiprocess machine for acquisition in Septemher of Ilorg-business will continue to be led by plastics.The new facility is seen as a Warner's chemicals businesses, the the automotive irxlustry. A gmxl key resource in maintaining world world's largest pnxlucer of Alls example: The 1989 Cadillac Fleet, leadership in the high-perfi>rmance thermoplastics. Alls is one of indus~ w(xxl and DeVille models feature plastics business. try's most versatile materials arxl is the enhanced value ofimpact. Along with thermoplastics, GE Plastics also markets several highly complementary to GE Plas-resistant front ferulers made from tics' existing materials [x>rtfolio. Noryl* GTX resin while the lxxly other high-perfi>rmance mate-rials. For example, GE Silicones The two businesses will combine side claddingis made from Xenoye excellent commercial teams arxl resin and the front fascia and rear recently announced a significant similar global marketing strategies, fender extensions are made from breakthrough in UV-curable The Cycolac* Alls resin line will lomml* engineering clastomers, all Cix>xy-silicone technology. The new, solventless material, which be one of the first pnxlucts to go from GE Plastics. into pnxluction at GE's recently Work continues on the GE Plas-was developedjointly with the announced European expansion in gic3.'I.iving Environments" concept Cmnpany's Research and Develop-Cartagena, Spain. house in Pittsfield, Mass. It is a ment Center in Schenectady, N.Y., in the Far East,a new Alls resin working laboratory fi>r the building will initially be used in a coating sys-compourxting plant will be built in ami constriction irxtustry. The ini, tem for labels, tapes and other 1long Kong. A new [x>lycarlx>nate tial step will be pouring the fi>un. pressure-sensitive adhesives. pilot plant, utilizing a new polymer dation using unique, lightweight GE Superabrasives, which began with GE's invention of Man-Made" pn cess, was recently completed in fi>rms made from a GE Plastics Japan; ami a new technical center material. diamorxis, t<xiay ;>nxitices a broad and comix>uruling plant are under In the packaging industry, a pat. range of abmsive materials for high-way in Korea. ented new PPO* fimn tray is being tolerance apph.cauons m the world-wide constru _ ion, automotive and Complementing this gniwing intnuluted for the fast-growing worldwide manufacturing network micniwave-ready fixxl market. aennpace industries. All of these market innovations require advanced polymer pnx ess-7

MedicalSystems syr q l' N l M 5$ a l e I l I g .\\ M, 'yI l f 1 Technician Die Cadiou of General Sectric CCR checks new Senographe' SCOTS x-ray systems in production at Stains France. GE MedicalSystems achieved addition to its already leading [x>si-hieanwhile, the U.S. ann of GE strong gains in orders, sales and tion in the U.S. market. hiedical Systems continues to lead earnings over the record levels Globalization also has provided the way in the premium MR and [xisted in 1987. substantial benefits in technology, CT segments with pnxlucts such Several pnxluct lines drove these pnxlucts and human resources. as the Signa

system and the excellent results, especially mag-General Electric CGR, for exam.

CT 9800 Quick scanner.They lx>th netic resonance (h1R).The MR busi-plc, adds a world-class x-my team maintained their technical pre-ness returned profits for the first with leadership pnxlucts such as eminence with software improve-time in 1988 after investments of Senographe" x-ray mammography ments that extend their perfonn-alx>ut $3(s0 million since 1979. systems, advanced vascular systems, ance and versatility. 'lixlay, the Gmnpany has more remote-control systems and radio-Other major pnxtuct intnxtuc-CT scanners and more MR systems thempy equipment.The new tions included a new Advantx" dig-installed worldwide than any other Radius" Doppler system with inno-ital x-my system fi>r angiography manufacturer. Iloth types ofimag-vative radial array technology was and the new Starcam" 2000/3000 ing systems were pioneered by GE's intnxluced, giving GE an exception-nuclear imaging line that features Research and Development Center. ally strong entry in the premium rectangular-field detector technology. GE's participation in diagnostic segment of the ultrasound market. While technical pre-eminence is imaging markets was substantially A new Paris headquarters facility required in the global diagnostic lxx>sted in 1988 by the integration has allowed the various manage-imaging market, customer service of CGR into its global operations ment functions to be consolidated and satisfaction also are keys to and by the launch of GE Medical at one k> cation. achieving market differentiation Systems-Asia, a new manufacturing-From the other side of the world, and a sustainable competitive marketing, sales and service organi-GE's 750ownedJapanesejoint advantage. zation in the Far East. CGR was ventute, Yokogawa Medical Systems In 1988, GE Medical Systems acquired from Thomson, S.A. of (YMS), contributes a line ofimaging continued to expand its offering of France in late 1987. pnxlucts to GEcustomers arouni customer-oriented services and sup-General Electric CGR, the combi-the globe. These include the self-lxnt Included were innovative nation of CGR and existing opem-shickled MR Max" midfield mag-financing pac kages, new equipment tions in Europe, and GE Medical netic resonance system and an inaintenance options and a renewed Systems-Asia give GE a highly com-extensive line of outstiuxling ultra-conunitment to pnxluct quality and petitive position in Europe and the somx! pnxlucts. YMS' broad CT narket responsiveness. Far East - two of the work!'s largest line was strengthened by the debut medical equipment markets-i" of the new CT Max" MO scanner with enhanced image display. I 8

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.b. h rme p f / a Brandon Tartikoff(center), president of 'IBC Entertainment and NBC Productions, talks about an upcoming entertainment show with programming executives Tom Gabbey and Charisse McGhee. l The National Broadcasting Company agreement with Reuters and the system for U.S. broadcasters should (NBC) held its commanding lead as BBC gave NBC News a 38% inter-be compatible with existing home the nation's most successful and est in Visnews, a worldwide video TV receivers.This is a favomoie profitable television network in news gathering organization. development for viewers who cur-1988 while exploring new cable NBC Sports also had an exciting rently rely on terrestrial broadcast-opportunities in the rapidly chang-year, covering lx>th the 1988 Sum-ing or cable and for the Advanced ing marketplace. mer Olympic Games and the 1988 Q)mpatible Television (ACTV) sys-For the fourth year in a row, NBC World Series, and followed that with tem sponsored by NBC and others. led in prime-time ratings, winning Super Bowl XXIll in early 1989. Taking a major step into the 47 of 52 weeks. Television advertis-NBC, which also won U.S. broad-cable TV business in 1988, NBC ing revenues are based on ratings cast rights to the 1992 Summer announced the formation of CNBC, performance. Games, dominated the ratings dur-the Consumer News and Business Ileading the NBC cast of pro-ing the 180 hours devoted to the Charmel-a 24-hour, consumer-grams was "The Cosby Show," XXIV Olympiad at Seoul, South oriented business news program which entered its fifth season as Korea. For the five-game World service. CNBC is scheduled to TV's highest-rated series "Cosby," Series between the los Angeles begin in 1989 with alx>ut 10 million " Cheers,""A Different World," Dodgers and Oakland Athletics, subscribers. " Golden Girls" and two new hit NBC's ratings exceeded what ABC NBC also announced a major comedies," Empty Nest" and " Dear had drawn in the first five games of cable programming venture with John," gave NBC six of the top 10 the 1987 Series. Cablevision Systems Cmporation under which NBC willobtain 50% series at year's end. The NBC Network currently serves "Today,""The Tonight Show more than 200 affiliated stations in of Cablevision's interest in nine pro-StarringJohnny Carson" and " late the United States. In addition, NBC gmmming services.This includes S x>rtsChannel America,a new Night With David 1.citennan" con-owns and operates seven TV sta. i national cable senice that NBC tinued to outpace their competition. tions h>cated in Chicago, Cleveland, Furthering its innovative leadership Denver, los Angeles, Miami, New will help develop ar,d manage. in late-night television, NBC suc-York and Washington, D.C. NBC also will pioneer the develop-cessfully launched the talk show During 1988, N BC sold all but ment of a 1992 Summer Olympics "l2ter With Bob Costas." one ofits eight radio stations as part padage for pay-per-view cable, I which will be in addition to its free j It was an extremely busy year in of a planned exit from the radio TVjournalism. In presidential pri-business. over-the-air coverage to U.S. homes. j mary, convention, debate and elec-The Federal Q>nununications A new division, NBC Cable, was tion coverage, NBC was the most-Onnmission tentatively ruled that created to manage these and other c ble TV and media initiatives, j watched network. In addition, a" any future high-definition television 9 l

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<.t 4 a s %.,g /" Qantas took delivery ofits first GE-powered aircraft, this Boeing 761 with CFHOC2 engines. during 1988. GE Aircraft Engines extended its 17 aircraft per month. Each is [x>w-the U.S. Air Force arxl five foreign long string of global successes in the ered by CFM56 engines. governments as well as for the U.S. commercial, military, marine and The CFM56 engine has been se-Navy's F-14s. Technical advance-industrial engine and aviation serv-lected fbr the majority of A320s on ments are being incorporated into ice markets during 1988. order worldwide. Significant cus-the F110 Increased Performance For example, seven new cus-tomers included I,ufthansa, North-Engine now competing fbr use on tomers ordered the CF6-80C2 west and All Nipjxm Airways. Work the U.S. Air Force's upgradedjet engine for their new commercial also has begun on an increased-fighters. Switzerland arxl Kuwait wideix>dy aircraft, bringing to 41 thrust version of the engine to ordered F/A-18 jet fighters, which the total number of CF6-80C2 cus-power the new long-range A340 are powered by GE's F404 engines. tomers. Once again, this popular aircraft, which is scheduled to enter The Air Force also unveiled the GE engine was the world's best-service in 1992. Il-2 Advanced Tacticalllomber, selling high-thrust engine. GE continues to take the lead in imered by F118 engines fnnn GE. GE is detennined to maintain that new aviation engine technology with Engines for the Navy's Advanced leadership wellinto the 1990s with further development ofits UDP Tactical Aircraft and the Air Force's the continuing development of the engine, which may revolutionize the Advanced Tactical Fighter also are CF6-80El engine.This advanced industry over the next decade by under development for the 1990s. version provides for a future per-drastically reducing fuel consump. Adding to the 1988 success story, fonnance capability in excess of tion compared with today's conuner. the LM2500 marine engine was 70,000 [x>unds of thrust Ihr the c al engines. The UDP engine selected by two more navies to heavier twinjets of the future. continues to be actively considered Ix'wer surface vessels, bringing The CFM56 engine, marketed by fbr short-to-medium-range aircraft the current world total to 19 GE-GE and SNECMA of France, contin-for the 1990s. Imered navies. ued its record-breaking sales per-GE's military engines scored set. Recognizing the critical role cus-fbnnance. More than $6 billion eralimixntant wins in 1988. The tomer service has p!ayed in GE's worth of CFM56 orders were T700 engine received a third multi. attaining its current world leader-announced in 1988 alone to power year procurement contract from the ship position, GE is placing an even Airbus A320 sand A340s,Ih>cing U.S. Anny to gx>wer Illack 1lawk greater emphasis on :,erving c us-737s, U.S. Air Force KC-135R tank-and Seahawk helicopters.The U.S. tomers. Ily continuing to improve ers and other military aircraft. Navy selected lockheed's antisub-its global network of pnxluct service llecause of enonnous demand (br marine airemft, which launched the and support for an expanded cus-the 737 finnily of twinjets, lhicinX new GE38 turix>pmp engine. tomer base, GE Aircraft Engines announced a pnxluction increase to Also, GE's F110 fighter engine con. aims to ensure continued success tinues in production fbr F-16s ihr well into the future. 10

Lighting

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I GE Lighting tookinitiatives during in addition, GE Lighting inte-of tomonuw. New arc discharge 1988 to enhance its international grated its U.S. distribution facilities headlamp systems, for example, will presence while simultaneously into nine key centers, an action that produce light comparable to that of strengthening its lighting leader-improved customer delivery times present com1xisite lamps but will ship in the U.S. market arxl contin-and increased order fill rates while re(juire less space. uing its emphasis on new pnxluct at the same time reducing invento-In addition, GE's new high-development. ries and improving productivity. lumen, biax Fluorescent lamps are Internationally, GE Lighting The largest lighting manufac-gaining enthusiastic acceptance accelerated the mar keting of new turerin North America,GE Light-among customers based on the energy-efficient lighting products ing currently offers more than lamps' efficiency, compactness and in Europe it also established ajoint 6,000 different lighting pnxtucts color rendition. venture with Toshiba ofJapan to fbr the conunercial, industrial and Other 1988 highlights included conduct research and development consumer markets. These include the design of a new lighting system programs, tojointly manufacture incandescent, fluorescent, high for the Washington Monument with lighting products and to partici-intensity discharge, halogen arxl GE lamps and fixtures providing pate in market development op[x>r-specialty lamps. bright, energy-cllicient lighting tunities in the Asia-Pacific region. Consumer preference for GE's wide Ihr the landmark,and the lighting of the National Christmas Tree in Domestically, GE Lighting posted nmge oflighting pnxlucts was substantial pnxtuctisity improve-lxx>sted in 1988 by strong TV and Washington, D.C.,Ihr the 25th > var. ments, providing funds Ibr invest-print advertising }$rograms aimed at GE Lighting also added Chicago's ment in new programs and new reintbrcing brand awareness. In Wrigley Field, home of the baseball pnxiucts. It also improved its cus-addition, GE Lighting began s[xm. Cubs, and Philadelphia's Veterans Stadium, home of the baseball Phil-tomer service with the implementa-sorship of the Illuminations light tion of an innovative distribution show at EPCUIT. enter in Florida's lies and football Eagles, to the long program called " Lighting Express." Wah Disney WorkL This nightly list of sports stadiums lighted by GE. A key feature of the"1.ighting extravagan).a features five miles of Express" program was the consoli-GE light bulbs and will be seen dation of 25 order entry facilities annually by nine million visitors. ~ into one world-(lass customer serv-lxx) Ling to the future, GE Light-ice center in Ric hmond, Va. ing's research has generated techni-cal developments that are creating advances fbr headlamps on the cars ll

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~ ,w ............ u Technicians in Greenville, S.G., work on one of three GE gas turbines being prepared for export to Egypt for usein a powerplant. GEIndustrialand Power Systems desulfurization systems, beating out improved quality for steel mills and continued to face accelerated seven international competitors. other customers. change in its markets during 1988. A transition for this business Another priority is sustaining Major global alliances and merg-began in 1988 as emphasis shifted GE's superior customer service. ers restructured the competitive from an era ofdownsizing to selec-Engineering and manufacturing Lmdscape, resulting in fewer but tive rebuilding. Faced with intensi-resources, for example, are focused more formidable competitors as the fied global competition and the on programs that support the suppliers of power generation and prospects of a more robust market 12,000 GE turbines operating in 97 delivery equipment move aggres-in the 1990s, GE moved fonvard on countries. Upgrade prognuns for sively to gain economies of scale and programs to imprc.ve its competitive older GE steam and gas turbines not greater access to world markets, stance in all major product lines. only extend productive life but also Already well established in world For example,on the heels of improve efficiencies. markets with $5 billion in sales, this spending more than $400 million GE Nuclear Energy continues its GE business moved to strengthen its on restructuring and consolidation, commitment to provide customers global base in 1988. It now has 74 GE has earmarked an additional with the highest quality supixnt alliances with 63 different compa- $500 million for reinvestment in the senices and to be on the leading nies around the globe, and it is 1988-1991 time frame. Technology edge of nuclear fuel technology, actively exploring other alliances development continued to receive Other customer service programs that could bring additional technical high priority as GE moved to are focused on reducing delivery and global marketing strengths. advance world leadership [x>sitions cycles for critical parts and impmv-Success in penetrating offshore in its turbine and other industrial ing GE's field service network. markets has helped offset a soft and power systems businesses. Prospects for the 1990s are domestic market in recent years. This technologyleadershipis most encouraging. Key industries, such Foreign shipments accounted for evident in t<xlay's worldwide interest as p per and metals, are reinvesting over one-third of power generation ami acceptance of the new "F" gas to improve their competitiveness. revenues in 1988. Over 20% of the turbine models. A 7F unit, which set There also are signs that a long-current backlog is stated for off-new standards for efficient use of awaited reinvestment in the U.S. shore installation, including large fuel, was shipped to Virginia Electric utility infrastructure is beginning. steam turbine-generators for Korea, Power in 1988. Maint ining a strong competitive Taiwan and China. GF's advanced solid-state meters Ix>sition will be key to GE participa-GE also received a $93 million and electronic relavs are winning tion in what promises to be a strong commitmer.t from the Taiwan wide acceptance in transmission and mar ket with fierce competition. Power Company for two flue gas distribution. Advancesinindustrial drives and controls have resulted in 12

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a y,,, [, v E', >y }[ ^ $ S.hE D l d * {' up i l V /A. (f WMLLX - fA ' % d us This totally CE-equipped kitchen includes a gas cooktop and other major appliances designed with convenient features to make life easier and more enjoyable for homemakers. GE Appliances made significant as among the outstanding new featured models as a 27-cubic-foot strides during the year to pnxtuct designs by Business Week side-by-side refrigerator with strengthen its insition in Ix>th magazine. Refreshment Center. domestic and wodd markets, driven Serving the high-eixl kitchen GE Appliances also made strong by its long-term strategy to concen-design market, the Monogram line gains in the private-label market to trate resources in core pnxluct lines. added three new pnxluct offerings hedge against a mature appliance The 1988 acquisition of the in 1988. Included were 24-inch industry in the United States. In Roper Cor[x> ration and its range counter-depth refrigerators with ice particular,it began manufacturing manufacturing facilities, for exam-and water dispensers in the doors, refrigerators and ranges for Sears ple, served to increase GE's position downdraft modular cooktops and under the Kenmore label. in the gas range market. GE Appli-gas-fueled cooktops. In addition, GE is participating in ances has lx en in this market for Rounding out the third phase of Sears' nationwide rollout of"llrand only three years and already is an its investment in top-mount, no-Central" centers. At these centers, industry leader. frost refrigerators, GE Appliances the GE brand willbe available in The total U.S. market leader in intnxluced new I8-and 19-cubic-such major appliances as refrigera-major appliances with $5 billion in fix>t models.They include features tors, cooking pnxlucts, dishwashers revenues, GE once again added to that have been popular with con-and home laundry equipment. its reputation for quality service and sumers on larger models, such as During 1988,GE Appliances innovative pnxluct design in 1988. deep-(h x>r storage and increased experienced a problem with a new In customer service, the U.S. internal capacity. type of rotary compressor in certain OfHee of Consumer Affairs named Because of high dealerinterest and large refrigerator m(xlels. There is The GE Answer Center

service as consumer trust in the image arul no safety issue involved, and the business is in the midst of an active the state-of-the-art toll-free cus-quality of the RCA brand, GE tomer assistance number now oper-Appliances will add RCA to its exist.

campaign to replace every one of ating in the United States. ing GE, Monogram arx1 Ilotpoint kse cmnpmms wie minimum inconvenience to customers. The In pnxluct design, the GE brand braml names. Ileginning in 1989, a aint is to cmne out of this situation dishwasher was selected by Furlun' fullline of RCA appliances will be magazine as one of the year's top distributed directly to dealers with the Company's reputation 100 quality pnxlucts. And the through GE Appliances' sales and for customer supix>rt and satis-custom-kitchen Monogram line of distribution organization. faction not only intact but -if built-in appliances was recognized The iInt[x> int line of appliances, anything-enhanced. known for reliability and durability, has been enhanced with such full-13

1 1 Aerospace ? ,L j-p // cf, -,g: I, h' a. w .x A worldleaderin solid state radar technology GE currently has orders for or has delivered more than 90 of these long-range air defense systems i GE Aerospaceis one of thelargest lluilding on its tradition in space on a prognun to design and develop and most diversified manufacturers programs, GE Aerospace won a a combat system fi>r the U.S. Navy's in its field. contract worth over $260 million to new Seawolf submarine. With annual sales over $5 billion, provide NASA's Second Tracking Other highlights for this business GE Aerospace is a leader in many and Data Relay Satellite System in 1988 included a contract from l pnxluct lines.These range from Ground Terminal. the U.S. Navy to study an anti air i radar air defense systems to com-Nine new GE-built satellites were defense system for NKFO. GE munications systems and satellites. launched during the year. GE televi. heads a multinational team of 10 They also include military data sion cameras and radios perfi>rmed companies on this project. systems, visual simulation systems, Ilawlessiv as America's space shuttle Another major development was aircraft electronics, automated test returned to flight status. a $90 million <:ontract from the systems, submarine combat systems, in addition,GE Aerospace was U.S. Navy for an air defense system armament systems, transmissions awarded a five-year, $235 million for theJapanese 51aritime Self-and turret stabilization systems contract fi>r systems engineering Defense hce. fi>r tracked vehicles, fire control and integration fi>r the nation's Stra. GE continues a vigorous pnw and guidance systems, and surfiice tegic Defense Initiative program. gram within GE Aerospace arxl ship sonar, in the radar business, orders were other businesses holding U.S. gov-In the fince ofintensifying compe-received for the manufacture and enunent contracts to comply with tition and a slightly declining installation of solid-state radars in contracting and procurement reg-domestic market, GE Aerospace Iceland and West Gennany. ulations and to self-police its con-experienced a 139 improvement i" Two U.S. Navy cruisers equipped tracting activities. orders in 1988. It also took aggres-with the GE-developed Aegis fleet Despite this, GE was indicted in sive action to pn> vide fi>r future air defense system were commis-November 1988 fi>r alleged acts competitiveness by streamlining its sioned in 1988. Aegis systems were that occurred in 1983 in hiATSCO, organization to reflect market delivered fi>r three ships, and pnw a subsidiary of GE Aen> space. The trends, by reducing costs signifi-duction was under way fi>r use on Cmnpany views this indictment as cantly and by increasing pniluctivily. 16 other cruisers and ilestroyers. unf ir and overreaching and The U.S. Navy also awarded GE intends to defend itself at trial. Aemspace a $277 million contract for the integration of antisubmarine warfare systems on surface ships. During 1988, woi k also progressed M I

Communications and Services 1 Computer. It also offers a system board facility in Salisbury, N.C., that that allows treasury managers at furthers the Company's competi-international banks to monitor anxl tiveness in rapidly developing inter- [ control the risk of dealing in inter-national markets. national currency markets. As an industry leader in the man-GE Consulting Services, an infor-ufacture of products for the distri-mation systems and professional bution, control and protection of senice consulting company, pro-electrical power, GE continued its vides custom software solutions to progmm ofintnxtucing innovative communications, financial and pnxlucts to the marketplace. manufacturing clients. A newly designed safety switch, GE Mobile Communications molded from Valox* thermoplastic meets the growing need for mobile from GE, met strong acceptance in laixl-based communications with the growing retail home improve-products mnging from hand-held ment market.The unit offers the two-way mdios and cellular tele-do-it-yourself consumer signifi-phones to new trunking systems. In cantly improved pnxiuct features GE Americom's large disHike antennas in New 1988,it started shipping the largest and benefits while providing the ,lersey and California keep track of GE's fleet of international order in its history - a business with increased cost advan-orbiting communications satellite * $35 million contract from the King-tages. Additionalnew" automation-dom ofjordan. designed" pnxlucts will be intro-GE Communications and Services GE Govenunent Senices per-duced to the market during 1989. provides communications equip-forms various technical, profes-GE Electrical Distribution arxl ment and services,information sional and management senices in Control also announced a saks semces, mstallation senices and the United States and abroad for joint venture in the Middle East facility mamtenance for businesses, pvenunent customers and GE and Southeast Asia as another step governments and individuals that components. In 1988,it won a in strengthening its previously use satellites, computers and other contract to provide and maintain announced strategic alliance with advanced technologies. aerostats, which are tethered, radar-Fuji Electric ofJapan. In addition, This business, which had reve-equipped balloon surveillance sys-the C(nnpany continues to emlore nues of more than $1.6 b;llion and tems, for U.S. Customs Senice use op;mrtunities with potential part-i record earnings in 1988,is com-in the federal government's drug ners in Europe and North America posed of hve diverse operating interdiction program. to increase the global competitive-units. Sale of a sixth unit, GE C.om-ness of this business. puter Senice,is expected to be completed during 1989. ((gc/y/cg/ D/S/r/hy/fon .hg y aHu; puON/ toc .yg,y; GE American Commum,can,ons y (Americom) continued its leader. sh.. domestic commercial satel- <e n ~ ip m lite senices in 1988. It was awarded in addition to approaching the r a long-term contract with Alascom, billion-dollar sales mark during the [ the Alaskan longlines phone com-year, GE Electrical Distribution and A pany, for u}y to 16 transponders on Control made significant advances g a new satelhte to replace Alascom s in the areas of cost-competitiveness ?W NihlP 1 present satelhte m 1991. and strategic alliances. ' h GE Infonnation Senices has one Despite higher than-anticipated of the world's largest commercially cost increases for commodities and ' %- W available teleprocessing networks. It steel, this business continued to g T offers a broad range of techmcally achieve strong earnings growth due 2 advanced computing and value-to record working-capital turnover g added commumcanons semces for and improved pnxluctivity. It also network-based business apphcanons concluded the final phase of a major and systems integation.1 or exam-cap;tal investment project, including Completed circuit breaker panelboards glide plc, it provi(les tlle wor l(lWKle (legler the automation of a lighting panel-down conveyors past wayne Mosher at the communications system for Apple highly automated Salisbury N C., plant. 15 r

Motors Transportation Systems Building on theleadership position 100 locomotives included in a multi-established by its Dash 8 k>comm year conunitment based on per-tive, GE Transportation Systems is formance guarantees in the agree-implementing a service-driven ment. CSX placed its first order fi>r organization, pursuing global part-Dash 8s. Conrail, Norfolk Southern, nerships and continually improv-Santa Fe, Southern Pacific, and ing its cost stmcture. the New York, Susquehanna and The Dash 8 delivers new value to Western all added Dash 8s to exist-railroads worldwide as a result of ing fleets. GE programs to lxxist horsepower and tractive effort while improving fuel efficiency and reliability. FaClory AMloMallon The sersice structure of GE New motors from GC awaiting installation into "N Trane variable speedheatpumps andair cond;. passes full-service support of LMN tioners help make the units more efficient. " power-by-the-hour" locomotives. It i also includes partial service in sup- -i ~ GE Motors made severalstrategic [x>rt of perfi>rmance guarantees fi>r .A moves in 1988 to build on its posi-the Union Pacific and Southern 6 tion as the world's leading pnxiucer Pacific railroads. In addition, GE ofelectric motors. offers customers several options for ,\\ GE strengthened its technology remanufactured equipment. leadership with the intnxiuction of Alliances beyond the U.S. lx>rders variable speed, electronically com-have pnxluced the Company's first 4 mutated motors and controls for Dash 8 k>comotive order from Can- \\ advanced heating and air condi-ada and five successful bids totaling tioning systems that offer greatly 40 kicomotives for Australian rail-GE and GE fonuc equipment controls this auto-mcreased elliciencies, roads, in addition, a new agreement matedprocess for casting engine heads at GAf's GE Motors also pnxluced a new with Mitsui will help secure financ-saturn automobae plant being boatin rennessee. line of dishwasher and dryer motors ing (br equipment sales to third-for major appliances. In addition, it world countries. GE Fanuc Automation Corporation, intnxluced a line ofindustrial Orders in 1988 were the highest the 50/50 joint venture between GE motors with industry-leading oper-in recent years. They were led by and FANUC Limited ofJapan,is ating efficiencies and continued to Union Pacific's order for more than achieving solid growth. expand its designs fbr the growing Despite consolidation moves by a leisure markets encompassing number of major competitors, GE [xx>ls, spas and exercise machines. ../) T~ ~ ~ V the market during 1988. It gained The business improved its global 7 Fanuc Automation outperfi>rmed m ix>sition with pnxluction increases ( share in several major pnxluct at twojoint ventures in Korea that areas, particularly in computer supply ind ustrial, air conditioning gfugg - numerical controls lbr the mac hine and appliance motors to kical and ~ tool market. world markets. Earlyin 1988 GE Fanuc Autm GE Motors also won a major con-mation Canada was established to tract from Ford to enter the expand-take advantage of the expanding ing market for small automotive Canadian market. Another signifi-4 motors. These motors, initially for jl k. cant achievement was the pnxtuct I climate control and engine cooling 1 // branding agreement with Combus-1 ~~ applications, may later be used for tion Engineering,a major supplier power windows and windscreen sys-r. to the pnicess industries. tems. They will be pnx!uced in a new 50/50 joint venture with Robert l\\osch of West Germany. Union Pacific has the worWs largest lleet of GE's Dash 8 locomotives includmg these units in the North Platte. Neb railroad yard. 16

Other Operations l v }qytg]rq GEInternationalpromotes the "N l . global competitiveness of GE's 14 ? ,f key businesses. 'y Operating through regional cen-g j ters and a country management '1 system in major markets outside the Americas, the GE International g \\ organization achieved significant advances during 1988 in its primary g g* \\ t roles ofidentifying and implement-ing global alliances, supporting $gg "g 4 \\ l l mapr pnyect sales, increasing the l N \\1 depk>yment of global resources and g promoting an enhanced interna- 'g g g \\ I g g ( \\ tional awareness within GE. i [,' J} l \\ 71 i Alliances that were announced in m I4 \\ \\ 1987 began to yield real benefitsin l988.The integration of CGR into In Europe. GEis taking action now through acquisitions. alliances and business development to \\ GE hiedical Systems was completed, capitalize on major opportunities inherent in the 1992 opening of markets within the European Community which has its headquarters (above)in Brussels. Belgium. creating a strong European pres-ence fi>r this important global busi-ness.The alliance of GE Electrical 1988.This was led by GE's aircraft working with GE businesses in the Distribution and Control with Fuji engine, medical systems, [x>wer sys-United States toidentify opportun-Electric has led to the [xx> ling of tems, materials and aerospace busi-ities for more effective integration sales and marketing activities in the nesses. Significant increases were of resources and activities on lx>th hiiddle East and Southeast Asia. recorded in Europe, Japan, the hiid-sides of the lx>rder. In addition, GE Nfotors started up die East, Southern Asia and the GE Supply sells over $1.1 billion its joint ventures with IlyurJai a ul Asia-Pacific region. of electrical puxlucts from GE and Daewoo in Korea, and it agreed m To support this growth of world-other companies to commercial, fi>rm ajoint venture with Robert wide activity, GE continues to invest construction, industrial and l Bosch of West Germany to make in recruiting, training and deploy-utility customers. automotive motors in Tennessee. ing people from many countries. In 1988, GE Supply began GE Lighting began operating two With the increasing impact of Eum-innovative marketing, sales and dis-joint ventures with a Korean part, pean integration and the opening tribution programs to help the i ner anxl announced an alliance with up of markets in the Soviet Union, Company's industrial and lighting ) India and China, GE is committed businesses grow in targeted mar- 'li>shiba ofJapan. GE also reached agreement with the Spanish govern. to staymg ahead m the mcreasmgly kets. It supports other GE busi-ment on tenns for a major invest. cmnpeutive global arena. nesses by being a distributor of ment to manufacture plastic GE Canadais one of the top 60 specialized spare parts to domestic materials in Spain. companies in Canada arxl GE's and international customers. In early 1989, GE and GEC of the largest international operation. In Ladd Petroleum Corporation was United Kingdom reached agree-1988,it had earnings (in Canadian able to maintain its reserves posi-ments, subject to requisite govern-dollars) of $75 million on sales of tion in 1988 despite continued vola-ment reviews, on a broad set of $1.6 billion. tility in oil and gas prices. alliances in appliances, medical sys-Aix>ut $276 million of those sales One of the nation's 10 largest tems, electrical controls and, poten-were fi>r ex[xnt from C:mada. Over irxleperxlent (non-major) oil arxl tially, gas turbines. GE Aircraft the past few years, GE Canada has gas pnxtucers,ladd provides a Engines had previously teamed up changed its market mix and manu- [x>tential backup supply of petro-with GEC-Ruston on helicopter facturing operations to emphasize chemical feedstock fi>r GE Plastics engines and on a new small-aircraft new growth op[xntunities overseas and its newly acquired Borg-Warner engme. as well as in Canada. businesses. It also supplies over 50% There also was major progress in In addition, the ratification of of the natural gas used at GE plants increasing international orders in the U.S/ Canada Free Trade Agree-in the United States. ment is expected to open up more opjxntunities for GE C;mada. It is 17 _ _ _ - _ _ - _ ~ __ ___

Board ofDirectors <A,a Fcuruary w. !989, i 19 q g ~ y 9 r h H.Brewster Atwater,Jr. Richard T. Baker Lawrence A.Bossidy Charles D. Dickey, Jr, Lawrence E. Fouraker Chairman of the Board, Consultant to Ernst & Vice Chairman of the Retircd Chairman of the Fellow, John E Kennedy Chief Executive Olkcer Whinney, public account. Ikiard, Executive Officcr Board and Director, School of Government, and Director. General ants, Cleveland, Ohio. and Director, General Scott Pa ier Compa,ny, llarvard University, Mills, Inr., consumer Director since 1977. Electric Company, Philadel >hia, Pa. Director Cambridge, hiass. Imxis and restaurants, Fairfield, Conn. Director since 19 2. Director since 1981. Afinneapolis, Minn. since 1984. Director since 1989. ~ I E e-r .v 4 y ~ W Henry L. Hillman Edward E. Hood, Jr. David C. Jones Robert E. Mercer Gertrude G.Michelson Chairman of the Board Vice Chairman of the Retired U.S. Air Force Chairman of the Board Senior Vice President-and Director,The flillman Board, Executive Officer General and former Chair-and Director The External Affairsatul Staff, Wash, joint Chiefs ofGoodyear Tire & Rubber Director, R.ll. Macy & Co.. Company, diversified arxl Director, General man of the operauons and invest-Electric Company, mgton, D.C. Company, Akron, Ohio. Inc., retailers, New You k, ments, Pittsburgh, Pa. Fairfield, Conn. Director Director since 1986. Director since 1984. N.Y. Director since 1976. j Director since 1972. since 1980. l 7- .m r-w.m., ,, y t e a p(. c.

===== s 4 ,m. 7,. h Ier F g 1 t: .t 3,, g .nse i' g I {g t F b Lewis T. Preston Frank H.T. Rhodes Andrew C. Sigler William French Smith John F. Welch, Jr. Chairman of the Board President, Cornell Univer. Chairman of the Board, Senior partner, Gibson, Chairman of the Board, and Director J.P. Morgan sity, Ithaca, N.Y. Director Chief Executive Officer Dunn & Crutc her, law Chief Executive Officer & Co. Incorix> rated and sinc e 1984. and Director, Champion firm,los Angeles, Calif. and Director, General Morgan Guaranty Trust laternational Corpora-Director since 1986. Electric Company, Company, New iork, N.Y. tion, paper and forest Fairfield, Conn. Director Director since 1976. pnxtucts, Stamford, Conn. since 1980. Director since 1984. 18

~ -tc w s J The entire GE family was saddened in December by the Committees of the Board 4 1 passing of Thornton E Bradshaw, a member of the Board Audit committee of Directors since 1986. Richard T. Baker, Chairman i

1. wrence E. Fouraker Mr. Bradshaw was chairman of RCA durinE the eariI Gertrude G. Michelson j

1980s arxl successfully led that company through turbu-Barbara scott Preiskel L M lent times. After the acquisition of RCA by GE, his counsel, tewis T. Preston Frank it.T. Rh<xles FI wisdom and concern for the people oflx>th companies helped create a smooth, humane and highly successful $"t gI,'"e"Ni aYman combination. Mr. Bradshaw's business acumen and leader-John E Wekh,Jr., Vice Chairman ship were widely respected, but, for those who knew him, $$INkey.jr. s Hanry H. Henley, Jr. the warmth and charrn of this decent and worxlerful man 11ent 11. ilenley,Jr. Retired Chairman of the are what will be most missed, and most remembered. I rank 11.)F. "Rhcxles D'vi C-e5 Board, Chief Executive Officer arxl Director, II. Brewster Atwater,J r., chairman and chief executive Walter it Wriston Clueu, Peabixty & Co., officer of General Mills, Inc., was elected to the Board on Manasement NtIIi'""""r a"f"l February 10,1989. Development and New Yo k, N.h.ar2 "" Director The Board held 10 egular meetings in 1988. In addi-So3*i t.. N"" m2 tion, the Directors panicipated on the following commit-Walter it Wriston, Chairman $"l[Y [,,"'Z'J'- tees that aid the Board in its duties. ii i pt1gwmq Davi C. >y The Arulit Committee, which includes only Directors from "*""d* Jones G Mi'h'I"" W y outside GE, held five meetings.This committee reviewed ti m ee the activities and independence of GE's public accountants $ j,"t) r if and the actmties of the Company's internal audit staff. Its IIenry 11. lienlev. ir. 1 reviews included the Company's financial reporting proc-Ge". rude G. Michelson trwis F. Preston V ess, internal h.nancial controls and compliance with key GE Andrew C. Sigler j] policies, including those related to the defense procure-operations committee ment process. It also reviewed the investment portfolio of IIenry I Ilillman, Chairman b J 1 GE Finanaal Services. aN idy' t.awren ce The Finance Committee met four times. h examined GE's I. B rewst Atwater Jr. Barbara Scott Preiskel Attorney, New Yor k, N.Y. financial position, pension funding and trust operations, Bh &ou Preiskel Director smcc 1982. foreign investments, financing commitments with the air-tewis T. Preston line industry and other matters involving large-scale utili- ^'jire"l[$i,'f smith y; zation of unnpany funds. Public responsibilities The Afanagement Dwelopment and Comjwnsation Commit-committee tee, which includes only Directors from outside GE, held llenry i t. E lenley,J r., Chairman i lohn E Welch. r., Vice Chairman j 1 I meetings. In addition to approving changes. GE,s

11. Brewster Ail water.jr.

m Richard T. Baker N4. ', management,it reviewed the Company's exempt salary E structure arxl executive compensation programs. N*n'r""[NiktEa'I"k" ^ The Nominating Committee, which held three meetings, Gertrude G. Michelson reviewed camtidates for the Bord and recommemled the U'c',"$7;'[lr" committee structurc atxl membership for the ensuing year. William French Smith The Oferatium Committee met five times,includingjoint Technology and I nitte sessions with the Audit, Finance, and Technology and Sci. seignce c ence Committees. It reviewed the Company's operatmg Edward E. iiood,Jr., Vice Chairman results and plans as well as the activities of GE Medical Charles D. Dic key,Jr. -((.l Systems and Corporate Research and Development, lawrence E. Fouraker Ws,lter B. Wriston The Public Respomibilities Committee, at its two meetings, itenry 1 1tillman Reured Chairman of David C. Jones the Board arxl Director, reviewed the activities of the G,eneral Electnc F.oumlatioris Robert E. Mercer Citicorp arxl Citibank, arKI evaluated environmental issues that could affect GE. N. A., New Yoi k, N.). Diret tor since 1962. The Technology and Science Committee held two meetings, bothjoint sessions with the Operations Onnmittee. Its activities included reviews of GE Lighting and NBC. 19

Management <4sorrehruary io,i989> I Corporate Executive Officers Senior Corporate Officers Corporate Staff Officers John F. Welch, Jr. 'W g .T r i ; e75 Nigel D.T. Andrews Chairman of the floard and 5 j..j Vice President,11usiness g Chief Executive Officer j Development arxl Planning Lawrence A. Bossidy [g Vice President and Comptroller James J. Costello ViceChairmanof theikurd 4 arx! Executive Officer Dale F. Frey Edward E. Hood, Jr. Vice President and Treasurer; Vice Chairman of the Board a Chairman arxl Piesident, arul Executive Officer General Electric investment ] James R. Bunt Corporation l Vice President Joseph Handros Dennis D. Dammerman Jack O. Peif for Vice President arxl Deputy Senior Vice President, Senior Vice President, General Counsel rinance Executive Management Joyce Hergenhan y_ Vice President, Public Relations .h, ' (I Philip A.Lacovara i s }. T-i Vice President and Senior 4f l Counsel. Litigation arx! e g [, Q i Irgal Policy c D d

j h

Teresa M. LeGrand M Vice President, Audit Staff Phillips S. Peter '/ m Vice President,Gosernment Relations Arthur V. Puccini Frank P. Doyle Walter L Robb Vice President, Employee Senior Vice President, Senior Vice President, Relations Relations Research and &velopinent John M. Samuels x cu e ice i re i lent Vice President and Senior MQ9 Counsel, Tax Policy and Planning Edward J. Skiko Vice President, Information Technology 1 i Vi b Benjamin W. Heineman, Jr. Senior Vice President, General Counsel and Secretary 20

Operating Management (As of February 10,1989) I Financial Services Plastics Medical Systems Aircraft Engines \\ l Gary C. Wendt Glen H. Hiner John M. Trani Brian H. Rowe l President and Chief Operating Senior Vice President, Senior Vice President, Senior Vice President, Officer, General Electric GE Plastics GE Medical Systems GE Aircraft Engines Financial Services, Inc.; Robert H. Brust James G. Del Mauro Brian Brimelow

"I' I

,Ger rit ctri P""g"Ct8 Capital Cor;x> ration (GECC) Paul L. Dawson Thomas E. Dunham Vice President,GE Plastics-Vice President, Manufacturing S,am Dolfi Leo A.Halloran A criC35 \\ ice President, iluman Senior Vice President, Vincenzo Morelli Resources Finance Edward R. Koscher President arxl Chief Executive Bur Vice President, Sales Ofhcer, General Electric - Lee Kapor Sem. ton J. Kloster, Jr. CGR S. A. Vice President, Commercial or Vice 1 resident, General William H. Westendorf Counsel and Secretary Vice President, Manufacturing Charles P. Pieper Engine Operations President arxl Chief Executive Edward C.Bavaria Michael A. Carpenter Joseph G. Wirth Officer, GE Medical Systems - Vice President, Airline Executive Vice President, GECC; Vice President, Technology Asia 1.td. Marketing President arxl Chief Executive P,hilip M,. Gross. Sib. Steven C. Riedel W. George Krall O, fhcer, Kidder, Pealxxly Group\\ ice President, GE cones Vice President, Marketing Vice President, Production Herbert G. Rammrath Robert L. Stocking James A.Parke Dennis J. Carey C5K C"t-I Id50C8 - Vice President, Sales Vice President, Finance Senior Vice President, acif c 1.td. and liusiness Development GECC Corporate Finance se . aa, J r. NBC Frank E. Pickering Charles V. Sheehan Chainnan and Chief Executive Vice President, Engineering Senior Vice President'nce and F "" W ~*'* T "'? !1 Robert C.Turnbull Kidder, Peabody Fina i ;3g Adrmmstration t Vice President, Military " Dona @ S,mpson ,e ', ' 0 Engine Operations i James H. Ozanne b '"" """E I[ Executive Vice President, GECC t ywe S. as her I b Lighting Silas S. Cathcart \\ ice Presulent, I nxtuct (jhairman, I'.idder, Peabody hianagement and Marketing Group Inc. ~T TN1 h. Michael G. Fitt Chairman, President and Chief ~P ~ fi k' p$ 1" i] Executive Officer, Emgyloyers Reinsurance Cor[x>ranon 4 Robert C. Wright g r ;- Ofhter, National llroadcasting

tu President and Chief Execuuve n

'jd hs 3 J jj Company, Inc. I1 Albert F. Barber Executive Vice President $d Michael G. Gartner John D. Opie President NilC News Senior Vice President, GE 1.ighting Albert D. Jerome President NBCTelevision William S. Frago Stations Vice President, Marketing and Sales Edward L. Scanlon Executive Vice President Robert P. Morgala Vice President, Pnxtuction Brandon R. Tartikof f President, N BC Stephen Rabinowitz Entertainment and Vice President, Technology N BC Pnuluctions Raymond J. Timothy l Group Executive Vice j President l I i 21 l i

i Operating Management omtinucd> Industrial and Electrical Distribution and Power Systems Aerospace Control Canada / Latin America Gary L. Rogers William R.C. Blundell i r e Vice President, GE Electrical Chairman and Chief Executive ,g ' Distribution arxl Control Officer, GE Canada David M. Engelman Robert T.E. Gillespie %f )J Vice President, Sales Executive Vice President Motors GE Supply Stephen J. O'Brien J. Richard Stonesifer q x Vice President,GE hiotors Vice President, GE Supply i Roger D. M orey John A.Urquhart John D. Rittenhouse Vice President, Sales Ladd Petroleum Senior Vice President, Senior Vice President, Ronald G. Spence GE inclustrial arxl Power GE Aerospace Transportation Systems President and Chief Executive Systems James B. Feller Michael D. Lockhart gfHcer, Ladd Petrolemn l David C. Genever-Watling Vice President, Aerospace Vice President, Cor[mauon Vice President, GE Power Technology GE Transportation Systems Generation Jack A.Frohbieter Aerospace Technology Russell L. Noll, Jr. Vice President. Government Factory Automation Thomas E. Cooper Vice President. Production Electronic Systems Robert P. Collins Vice President Aerospace Eugene J. Kovarik Arthur L Glenn President arxi Chief Executive Technology Vice President, GE Power Vice President, Defense OfHcer, GE Fanuc Automation Delivery arxl Control Systems North America,Inc. Environmental Programs Joel Tenzer Raymond P. Kurlak W. Roger Strelow Vice President,GE Drive Vice President. International Vice President, Environmental Systems Communications arxl Programs Delbert L.Williamson Strategic Systems 7 Vice President, GE trxiustry and Charles A.Schmidt a y Licensing / Trading Utility Sales Vice President, Astro-Space F g g p; Bertram Wolfe Robert G. Stiber 7 President arxl Chief Executive x Vice President, GE Nuclear Vice President, Aircraft p Officer, GE and RCA Licensing Energy Electromcs '( Robert W. Tieken -w Nianagement Operation, Inc., Appliances Vice President, Finance arxl h and GE Trading Company Information Technology j r Marketing and Sales d Clyde D. Keaton ] Communications and Services Paolo Fresco Vice President, Marketing and Sales Senior Vice President, Albert J. Febbo , Na GE International Vice President, Automotive Alberto F. Cerruti Itxtustry Marketing ux! Sales ummin Vice President, Finance Henry J. Singer g-and Business Support Vice President, Area Management Alistair C. Stewart and Sales .Y Vice i resident, Middle East, j Africa and South Asia i Roger W. Schipke i L Thomas W. Tucker Senior Vice President, b Vice President, Asia-Pacific GE Appliances Richard L. Burke Vice President, Technology, Eugene F. Murphy Product Design and Senior Vice President, Manufacturing GE Communications and Gerald R. Cote Services Vice President, GE Consunwr W. James McNerney, Jr. Senice President, GE Information Bruce A. Enders Senices Vice President, Marketing 1 22

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24 'fullp General Electric FinancialServiceslInc GEFS)pPrevin. < M, .i - i-- Earnmgs E6uslplGEFS'financialdatawere presentAd'se;(para rinancial position -

2e1

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share olyners'_ equity nor does it change the way in w

' Companp's business ~es'are' managed. W .m a 1 .'.]' ; , q i l f 23 [

Statement ofEarnings General Electric Company and consolidated affiliates l'or the years ended December 31 On millions) 1988 1987 1986 Revenues Sales of go(xis $28,953 $29,937 $28,139 Sales of senices 9,840 9,370 7,067 Other income (note 4) 675 655 1,016 Earnings of GEFS ' GEFS earned income from operations (note 5) 10,621 8,196 5,963 Effect of change in tax-rate assumptions for leveraged leases (note 5) (172) Total revenues 50,089 48,158 42,013 Costs and expenses (note 6) Cost of g(xxis sold 21,155 22,359 20,707 Cost of services sold 7,676 7,290 5,425 Interest and other financial charges (note 8) 4,817 3,912 2,679 Insurance policy holder losses and benefits 1,501 1,560 1,439 Provision for losses on financing receivables (note 9) 434 290 558 Other costs and expenses 9,724 8,406 7,760 Unusual expenses, including provisions for business restructuring (note 10) 1,118 311 Minority interest in net earnings (loss) of consolidated affiliates 61 (4) 7 Totalcosts and expenses 45,368 '44,931 38,886 Earnings (loss) before income taxes, extraordinary item and cumulative effect of accounting changes 4,721 3,227 3,127 (Provision) credit for income taxes (note 11) (1,335) (1,108) (1,027) Effect of change in tax-rate assumptions for leveraged leases (note 5) 392 Earnings before extraordinary item and cumulative effect of accounting changes 3,386 2,119 2,492 Extraordinary item (note 26) (62) Cumulative effect toJanuary 1,1987 of accounting changes Initial application of Statement of Financial Accounting Standards No. 96 " Accounting for Income Taxes"(note 1) 577 Change in overhead recorded in inventory (note 1) 281 Net earnings $ 3,386 $ 2,915 $ 2,492 Net earnings per share (in dollars) i liefore extraordinary item and cumulative effect of accounting changes $ 3.75 $ 2.33 $ 2.73 Extraordinary item (note 26) (.07) Cumulative effect toJanuary 1,1987 of accounting changes Initial application of Statement of Financial Accounting Standards No. 96 " Accounting for Income Taxes"(note 1) .63 Change in overhead recorded in inventory (note 1) .31 Net earnings per share $ 3.75 $ 3.20 $ 2.73 Dividends declared per share (in dollars) $ 1.46 $ 1.32 % $ 1.18% The notes to consolidated financial statements on pages 44-70 are an integral part of this statement. 24 l

i GE GEFS 1988 1987 1986 1988 1987 1986 $28,958 $29,937 $28,139 9,866 9,378 7,072 680 649 1,010 788 552 504 10,655 8,225 5,986 (172) 40,292 40,516 36,725 10,655 8,225 , 5,814 21,160 22,359 20,707 / 7,702 7,298 5,430 669 645 625 4,177 3,277 2,063 l 1,501 1,560 1,439 434 290 558 6,250 5,979 5,963 3,484 2,440 1,805 1,027 311 91 29 1 (3) 32 (5) 10 35,810 37,309 33,033 9,628 7,653 5,875 4,482 3,207 3,692 1,027 572 (61) (1,096) (1,088) (1,200) (239) (20) 173 392 3,386 2,119 2,492 788 552 504 (62) (62) 577 518 281 $ 3,386 $ 2,915 $ 2,492 788 $ 1,008 504 In the supplemental consolidating data on this page,"GE" means the former basis of consolidation as described in note I to the consolidated financial statements; "GEFS" means General Electric Financial Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GEFS have been eliminated Irom the " General Electric Company and consolidated affihates" columns on the preceding page. Eliminations are shown on page 45. 25

d Statement ofFinancialPosition General Electric Cmnpany and consolidated alliliates At December 31 (in millions) 1988 1987 l l Assets { - Cash (note 12) $ 2,187 $ 2,543 Marketable securities carried at cost (note 13) 5,779 5,353 Marketable securities carried at market (note 14) 5,089 4,000 Securities purchased under agreements to resell 13,811 12,889 Current receivables (note 15) 6,780 6,745 inventories (note 16) 6,486 6,265 GEFS financing receivables (investment in time sales, loans and financing leases)- net (note 17) 35,832 27,839 Other GEFS receivables (note 18) - 4,699 4,458 Propert;, plant and equipment (including equipment leased .to others)- net (note 19) 13,611 12,973 . Investmentin GEFS Intangible assets (note 20) 8,552 5,748 All other assets (note 21) 8,039 6,601 Totalassets $110,865 $ 95,414 Liabilities and equity Short-term borrowings (note 22) $ 30,422 $ 23.873 Accounts payable (note 23). 6,004 5,728 Securities sok! utxler agreements to repurchase 13,864 13,187 Securities sold but not yet purchased, at market (note 24) 2,088 1,407 Progress collections and price adjustments accrued 3,504 3,760 Dividerxis payable 369 319 All other GE current costs and expenses accrued (note 25) 5,549 4,867 long-term borrowings (note 26) 15,082 12,517 Reserves ofinsurance affiliates 4,177 3,549 Allotherliabilities(note 27) 6,986 6,325 Defemtiincome taxes 3,373 3,100 t Totalliabilities 91,418 78,632 Minority interest in equity of consolidated affiliates (note 28) 981 302 Common stock (926,564,000 shares issued) 584 584 Other capital 823 878 Retained earnings 17,950 15,878 Less common stock held in treasury (891) (860) Total share owners' equity (notes 29 and 30) 18,466 16,480 Totalliabilities and equity $110,865 $ 95,414 Commitments arxl contingent liabilities (note 31) The notes to consolidated financial statements on pages 44-70 are an integral part of ahis statement. 26

i 1 1 l GE - GEFS 1988 1987 1988 1987 $ 1,554 $ 1,834 633 709 349 ' 858 5,430 4,495' 5,089 4,000 13,811 12,889 7,110. 6,782 6,486 6,265 35,939 27,931 4,806 4,641 9,360 9,255 4,251 3,718 4,819 3,980 6,984 4,430 1,568 1,318 4,621 4,896 3,418 1,705 $ 41,283 $ 38,300 $ 74,945 $ 61,406 $ 1,861 $ 1,i10 $ 28,731 $ 22,848 2,136 2,615 4,132 3,329 13,864 13,187 2,088 1,407 3,504 3,760 369 319 5,549 4,867 4,330 4,491 10,862 8,037 4,177 3,549 5,481 5,088 1,505 1,237 (641) (620) 4,014 3,720 22,589 21,630 69,373 57,314 228 190 753 112 584 584 1 1 823 878 1,379 1,328 17,950 15,878 3,439 2,651 (891) (860) 18,466 16,480 4,819 3,980 $ 41,283 $ 38.300 $ 74,945 $ 61,406 in the supplenwntal consolidating data on this page,"GE" means the former basis of <onsohdation as descrifwd in note I to the consolidated financial statements; "GEI S" nwans General Electric l'inanc ial Servic es, Inc. and all of its afbliates and associated companies. ' transactions hetween G F rul GEFS have lx eri clirriinated from the " General Electric Gompany and <onsot !ated afhliates" columns on the j prueding page. Eliminations are shown on pagt 45. ) 27 l

l l Statement ofCash Flows ) I i . General Electric Company and consolidated affiliates For the years ended December 31 On millions) 1988 1987 1986 Cash flows from operating activities - Net earnings $ 3,386 $ 2,915 $ 2,492 Adjustments to reconcile net earnings to cash provided from operating activities Extraordinary item and cumulative effect of changes in accounting principles (796) Depreciation, depletion and amortization 2,266 1,913 1,825 Earnings retained by GEFS Deferred income taxes 124 37 103 Decrease (increase) in GE current receivables 123 138 624 Decrease (increase) in GE inventories (209) 375 (317) Increase in insurance reserves 315 669 852 Provision for losses on financing receivables 434 290 558 Net change in certain broker-dealer accounts (573) (103) (1,298) Allotheroperating activities 1,236 _ 401 1,124 Cash provided from operating activities 7,102 5,839 5.963 Cash flows from investing activities . Property, plant and equipment including equipment leased to others -additions - (3,681) (2,277) (2,806) - -dispositions 470 890 694 Net increase in GEFS fmancing receivables (6,057) (4,575) (4,203) Payments for principal businesses purchased, net ofcash acquired (3,504) (555) (6,730) Proceeds from principal business dispositions 880 646 1,386 All other investing activities (1,772) (1,084) (1,821) Cash used forinvesting activities (13,664) (6,955) (13,480) Cash flows from financing activities Net change in borrowings (less than 90-day maturities) 3,868 2,519 4,536 Debt having maturities more than 90 days -newly issued 11,324 8,219 9,576 - repayments and other reductions (8,801) (6,883) (6,214) Sale of preferred stock by GECC 600 Disposition of GE shares from treasury 356 361 283 Purchase of GE shares for treasury (387) (846) (348) Dividends paid to GE share owners (1,263) (1,177) (1,058) Cash provided from (used for) financing activities 5,697 2,193 6,775 Total cash flows -increase (decrease) in cash and equivalents $ (Sti5) $ 1,077 $ (742) The notes to consolidated financial statements on pages 44 70 are an integral part of this statement. 23 l 1

,o ( GE GEFS 1988 1987 1986 1988 '1987 1986 $ 3,386 ' $ 2,915 $ 2,492 b 788 $ 1,008 $' 504 (796) (456) 1,522. 1,544 1d60 744 369 365 (788) (552) (504) (215) .(158) - (158). 339 195 250 (170) 111 629 (209) 375 (317) 315 669 852 434 290 558 (573) (103) (1,298) 98 434 226 1,444 207 421 3,624 3,873 3,828 3,491 2,179 1,652 - (1,884) (1,698) (2,042) (1,797) (579) (764) 118' 410 275 352 480 419 (5,943) (4,627) (3,779) (2,963) (6,110) - (541) (555) (620) 880 646 1,367 19 292 7 (120) (2,007) (1,282) (1,617) (3,557) (Q5) (6,630) (9,936) (6,563) (6,342) (466) (961) 466 4,249 3,515 4,039 934 396 3,387 10,291 7,818 6,195 (30). (238) (566) (8,771) (6,645) (5,648) 600 356 361 283 (387) (846) (348) (1,263) (1,177) (1,058) (856) (2,465) 2,164 6,369 4,688 4,586 $ (789) $ 773 $ (638) (76) $ 304 $ (104) In the supplemental consolidating data on this page,"GE" means the former basis of consolidation as descrited in note I to the consolidated financial statements; "GEFS" rneans General Electric Financial Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GEFS have been eliminated from the " General Electric Company and consolidated affihates" columns on the preceding page. Eliminations are shown on page 45. l l 29

Managemena Discussion ofEarnings Overview The consolidated Statement of Earnings (page 24) shows For the first time, General Elcaric Company's consolidated that revenues were $50.1 billion in 1988 compared with financial statements include the detailed effects of adding $48.2 billion in 1987 and $42.0 billion in 1986. These to the Company's manufiicturing and industrial services anmunts are restated because of the change in consolida-businesses the accounts of General Electric Financial Serv-ti n metixxi. The principal componems of consolidated iceA Inc. (GEFS). The reason for the required change is revenues are " sales of g(xxis and services" by GE and discussed in note I to the consolidated financial state- " earned income" of GEFS. ments Anumg other things, that note also explains how

GE sales for 1988 were $38.8 billion,1% less than the the tenns "G E" or "G E except GEFS" arxl "GEFS" are used year befi>re. Total volume of shipments in 1988 was down in this reIx>rt to help readers understand the various data.

alx>ut 2%, but the effect was partly offset by higher prices These tenns are used fre juently in this Management in some markets. If sales fi>r the two periods were adjusted Discussion for darification or emphasis, for business dispositions (which were only partly offset by Consolidated net earnings fi>r 1988 were $3.386 billion, or sales added by acquisitions), GE's sales for 1988 would 16% more than for 1987. Net earnings were not affected have Ex en up 4% year

year. Sales in 1987 were 12%

by the change in methal of consolidation. This was the in re than in 1986, mainly because ofinclusion in 1987 of Company's second consecutive year of strong double-digit a full year of operations for businesses acquired from carnings growth. Most businesses contributed to the better RCA, whereas 1986 sales had included RCA operations earnings. Pnxluctivity gains in GE operations were perva-only fi>r seven m nths. sive, arxl GE Plastics and GE Medical Systems had excel.

GE's other income fi>r 1988 was slightly above 1987 lent increases in revenues arxl operating profit. GEFS had following a sharp decrease from 1986. Principal reasons much higher earnings. Consolidated operating profit arxl fi>r the 1987 decrease were lower income from short-tenn carnings improved despite a sharp reduction in GE Appli.

investments, which had built up in 1986 preparatory to the ances' profitability because of significantly higher wan anty acquisition of RCA, arxl lower gains from sales of Toshiba expense for certain refrigerator compressors. See "indus. Cor[mration sux k. Details of GE's other income are in try segments" beginning on page 32 for additional detail note 4. about performance by various businesses of the Company.

GEFS'camed income from operations for 1988 was Net earnings for 1988 did not include any provisions fbr

$10.7 billion, up 30% from 1987's $8.2 billion, which was business restructuring expe,ses, nor did they indude any 37% more than the $6.0 billion for 1986. The principal impact from accounting changes. Net earnings in 1987 reason for these increases has been higher levels of earning were 17% almve 1986, also as a result of solid operating assets in financing businesses plus increases in premium performance. Ilowever, analytis of 1987 results was com-and investment income ofinsurance affiliates. Yields plicated by two types of transactions that essentially (i.e., prices or interest rates paid to GEFS by its customers equaled each other in net earnings. These were a reduc-for its financing of their needs) were up in 1988 following J tion in pre-tax arxl after-tax earnings caused by unusual declines in 1987 and 1986. Note 5 presents details. and extraordinary expenses ($747 milhon after taxes), o GE's cost of goods and services sold and its selling, mainly fbr business restructuring to improve future prof-general and administrative expenses totaled $35.1 billion itability; and an increase in after-tax carnings ($720 mil-lion) from two accounting changes, one involving income taxes and the other involving overhead recorded in inven-tories, as explained in note 1. Return on share owners' equity Return on average share owners, equity of.19.4%.m 1988 improved almost one full point from 198Ts 18.5% 29,9g which also was much hetter than that for 1986-17.3%. Share owners' equity is not affected by the new consoli-4 17.5 dation method. , 15.0 12.5 10.0 hA 0 19wl 1965 1986 1987 1988 30

in 1988, equal to 90.4% of sales. Excluding the abnonnally GE empyee productivity high refrigerator compt essor warranty expense provisions (Constam dollar sales per GE employee; in thousands) in 1988, the ratio of costs to sales would have been 89.3%. sl40 Comparable cost arul expense ratios to sales fi>r 1987 and ' 125 1986 were 90.6% and 91.2%, respectively. An im[mrtant l factor in these improved cost / sales relationships has been 110 steadily improving pnxtuctivity for the last five years as de-picted in the chart on this page. There were no cor[xmite-9, level business restructuring expense provisions in 1988 to compare with the $1.0 billion provided in 1987 and the 80 4 $31 I million in 1986. Over the five years ended in 1987, j m ' 0 GE's unusual business restructuring expenses, the major objective of which has been to impr ove cost structures, 1984 1985 1986 1987 1988 aggregated atout $2.6 billion. The impact on any one year's net earnings from business restnicturing provisions Mihd dfs inn maa ns was essentially equaled by g tins f, rom sales of businesses 28.3% in 1988 compared with 34.3% in 1987 and 20.3% in that do tuyt fit the Gunpany s long-tenn growth strategy 198 I he U.S. fideral statutory rate was 34% fi>r 1988, and also, m 1987, by the cifect of the income tax and 40% for 1987 and 46% for 1986.) Ahhough the decrease inventory accounting changes. in the U.S. fideral statutory rate was the main reason for e GEIC' principal cost is interest expense, which totaled the lower effective consolidated rate in 1988, there are $4.2 billion in 1988, a 27% increase from 1987, which was numerous reasons for differences between the statutory up 59% from 1986. The increased interest expense and effective rate. Together with other infimnation about reflects the higher level of borrowings that have been used ncome tax provisions, an analysis of the differences to invest in carning assets involved in a wide variety of betw een the U.S. fedend st itutory rate and the consoli-financings made available to third parties. The composite dated rate cam be found in note 11. Interest rate incurTed fi>r GE FS' finance activities was

Dividends declared totaled $1.314 billion in 1988, or 8.39% m 1988 compared with 8.11% m 1987 and 8.49%

$ 1.46 per share. At the same time, the Company retained m 1986. The " spread,,, or difference between interest sufficient earnings to support enhanced pnxluctive capa-rates GEFS pays to its lenders and rates it charges to its bihty and to provide adequate financial resources li>r customers, increased somewhat m 1988 after narrowing in internal and external growth opIxn tunities. The f.ourth-the two pievious years. Among GEFS,other costs, the pne quarter increase of 17% m. dividends declared marked the vision for losses on f.mancmg receivables of $434 nn.liion 13th consecutive year of dividend growth. was un $141 million in 1988. At year-end 1988,GEFS, reserve coverage was equal to 2.63% of financing receiv-ables, up fnnn 2.59% at year-ends 1987 and 1986. The receivable loss provision of $558 million in 1986 was higher than normal because of energy-related write-offs.

Although relatively small, the interest of minority owners in the equity of consolidated afliliates was much higher for lx>th GE and GEFS in 1988 than in previous years. For GE, the increase was due mainly to the impact of the unnpany's recent aggressive formation ofjoint ven-tures and alliances aimed at increasing global competitive-ness. For GEFS, the increase was principally the result of GECC's selling variable rate preferred stock to thini par-ties to augment the eqtiity base.

industry segments increased deliveries to commercial customers. The strong ' Industry segment revenues arxl operating profit for the volume growth in years before 1988 resulted in higher last five years appear on the opposite page. The presenta-perating profits. The operating profit of $ 1.0 billion in tion of consolidated industry segments is in two parts, one 1988 was about 1% below the 1987 level when $72 million for GE except GEFS and one for GEFS. Consistent with of business restructuring expense is excluded from that prior years, GE revenues and operating profit continue to year. This relatively go(xl (considering the revenues include earnings of GEFS. Revenues and operating profit decline) operating profit performance was the result of for GEFS by the industry segments ir, which it conducts pr xiuctivity improvements. New orders of $9.7 billion business are presented separately with appropriate elimi. received during 1988 were up 18%, and the backlog of nation of GEFS' earnings as well as the minor effect of unfilled erders at December 31,1988 was $12.4 billion, of transactions between GE and GEFS segments. which about 40% is scheduled for completion in 1989. Consumer Pr(xlucts is no longer shown as a senarate GE e Broadcasting revenues increased 12% in 1988, industry segment inasmuch as the largest contributor to mainly because of NBC's coverage of the Summer Olym-revenues in that segment (the consumer electronics busi-pic Games. Operating profits were up 8% from 1987.The ness) was sold at the end of 1987. Consumer electronics smaller relative increase in operating profit reflected the results for prior years are now included in All Other, and cost impact and lost advertising volume from covemge of the GE Lighting business is now included in the Industrial the two major political conventions. Profitability in 1988 segment. Additional financial data as well as a detailed from network operations was flat, but TV station profit-description of each segment can be found in note 33, ability improved. The comparison of 1987 and 1986 reve-Consolidated operating profit is the principal source of nues and operating profit (both of which increased sub-GE's net earnings, and the relationship between the two stantially in 1987) reflected inclusion of a full year of NBC for the last five years is depicted in the chart on this page. in GE results in 1987 versus only seven months in 1986. Consolidated operating profit was $5.9 billion in 1988, up e industrial revenues were 6% more in 1988 than in from $4.5 billion in 1987 and $3.7 billion in 1986. Operat. 1987, which was 2% below 1986. When reviewing trends ing profit in 1987 was after absorbing $1.069 billion of in operating profit, it should be recalled that 1987 and i unusual expenses ($285 million in 1986), mainly for busi. 1986 results were depressed by business restructuring l ness restructuring to impmvc long-range competitiveness. expense provisions ($326 million in 1987 and $95 million There were no similar unusual expenses in 1988. Com. in 1986). Adjusting for the 1987 restructuring expenses, ments on each segment follow. operating profit in 1988 was up 27%. (Adjusting 1987 and e Aerospace revenues in 1988 were essentially 1986 for business restructuring expense provisions, seg-unchanged from 1987. Higher revenues in 1987 com-ment operating profit in 1987 was 6% less than in 1986.) pared with 1986 resulted from including RCA for a full The 1988 operating profit increase was led by GE Light-i year in 1987 plus other volume increases. Operating profit 'ing, which had much-improved margins on modestly 1 in 1988 also was essentially unchanged after adjusting for higher revenues. GE Transportation Systems had a good 1987's restructuring expense ($31 million). That restruc-increase in operating profit and revenues, and GE Motors turing expense more than accounted for 198Ts slight and GE Electrical Distribution and Control had better decrease from 1986. New orders of $5.6 billion received m rgins on modest revenues increases. during 1988 were up 13%, and the backlog of unfilled orders at December 31,1988 was $7.1 billion, of which approximately 50% is scheduled for completion in 1989. Consolidated operating profit and net eamings e Aircraft Engines revenues were 4% lower m. 1988 On billions) after a number of years of strong increases. The 1988 so.o decline came from the effect oflower shipment schedules for military engines that was only partially offset by ~, 4.s ) Eu i 3.6 I 2.4 i N 1.2 e operaung 3 proht 5 f, 3 r o 0 s Net earnings 1984 1985 1986 1987 1988 32

Summary ofIndusby Segments General Electric Gompany and consolidated affiliates For the ycars ended December 3) (In millions) 1988 1987 1986 1985 1984 Ravenues GE Aerospace $ 5,343 $ 5,262 $ 4,318 $ 3,085 $ 2,622 Aircraft Engines 6,481 6,773 5,977 4,712 3,835 Broadcasting 3,638 3,241 1,888 51 104 Industrial 7,061 6,662 6,770 6,916 6,648 hlajor Appliances 5,289 4,721 4,352 3,617 3,650 hiaterials 3,539 2,751 2,331 2,119 2,280 Power Systems 4,805 4,995 5,262 5,824 6,289 Technical Pnxtucts and Services 4,431 3,670 3,021 2,317 2,402 Earnings of GEFS 788 552 501 413 329 AllOther 394 3,176 3,379 1,071 1,762 Cor[mrate items arul Eliminations (1,477) (1,287) (1,077) (903) (990) 'li>tal GE 40,292 40,516 36,725 29,252 28,931 GEFS Financing 5,827 3,507 2,5!)4 2,469 2,093 Insunmce 2,469 2,206 2,017 1,329 831 Securities Broker-Dealer 2,316 2,491 1,176 AllOther 43 21 22 7 9 'Ibtal GEFS 10,655 8,225 5,814 3,805 2,933 Eliminations (858) (583) (526) (433) (422) Consolidated revenues $50,089 $48,158 $42,013 $32,624 $31,442 Operating profit GE Aerospace $ 640 $ 603 $ 608 $ 437 332 Aiicraft Engines 1,000 940 869 673 460 llroadcasting 540 500 240 20 15 Industrial 798 302 575 658 478 hlajor Appliances 61 490 462 3!)9 381 htaterials 733 507 424 330 446 1 ower Systems 503 199 354 740 549 Technical Pnxlucts and Services 481 275 112 22 (8) Earnings of GEFS 788 552 504 413 329 All Other 168 72 162 376 797 Total GE 5,715 4,440 4,310 4,068 3,779 GEFS Financing 899 636 (99) 501 444 Insurance 325 172 123 45 3 Securities llroker-Dealer 61 (23) 83 AllOther (261) (213) (168) (122) (93) Total GEFS 1,027 572 (61) 424 354 Eliminations (802) (562) (513) (420) (339) l l Consolidated operating profit 5,9 10 4,450 3,736 4,072 3,791 GE interest and financial charges (net of eliminations) (655) (635) (616) (354) (325) GE items not traceable to segments (564) (588) 7 (287) (175) Earnings before income taxes, extraordinary item and cumulative effect of changes in accounting principles $ 4,721 $ 3,227 $ 3,127 5 3,431 $ 3.291 I he noies to < onsolid,ned hnan< ial siaiements on pages 4 Mo ar e an integral part of this statement. "G F." means the lormer basis of consolidation as desciilu d in note I to the c consolidated hnancial staicments:"GLI S" means Gencial Elcen i< Fin m ial Servic es. Inc. and all of its athliates and amn-iated (ompanics. Operating profit of(W segmenis en ludes interest and other huainial < harges; operating profit of (Wl'S in< ludes the etfect of inicicut atut dist uunt, w hit h is the largesi element of GEIT operating 6 osis. 3:1

Major Appliances revenues increased 12% from 1987 upturn in 1988, particularly in gas turbine markets. When following an 8% increase from 1986. The 1988 increase comparing trends in operating profits,it should be came from higher volume (partly offset by lower prices) in recalled that 1987 and 1986 results were depressed by core appliance lines arxl from the addition of Roper Cor-business restructuring expense provisions ($264 million in poration beginning in 1988's second quar ter. The sharp 1987 and $173 million in 198G). Adjusting for the 1987 drop in operating profit in 1988 following sevem! years of restructuring expenses, operating profit in 1988 was up good increases was more than accounted for by abnor-9%. Adjusting 1987 and 1986 Ior business restructuring mally high warranty expense provisions for certain refrig-expense provisions, segment operating profit in 1987 w=

erator compressors. The problem has been corrected in 12% less than in 1986. currently manufactured pnxlucts.

Technical Products and Services revenues increased e Materials revenues were up 29% in 1988 compared 21% in both 1988 and 1987. Operating profit increased with 1987, which was 18% more than 1986. Operating sharply in both years, even taking into account the profit for 1988 increased 45% from the previous year fi>l-

$95 million of business restructuring expense in 1987. GE lowing a 20% gain from 1986. These continuing excellent Medical Systems had substantial gains in 1988 revenues performances have been led by strong volume growth in because of the acquisition of European operations (CGR) all plastics product lines. %is growth also has been accom-at the beginning of the year. Operating profit also panied by better margins. Acquisition of Borg-Warner's increased substantially on higher volume in core lines, par-chemicals businesses at the end of the third quarter of ticularly magnetic resonance and service, as well as at CGR. 1988 not only increased volume but added to operating GE Communications and Services had good margin profit and net earnings after all acquisition costs. improvements although revenues were down somewhat

Power Systems revenues were down 4% in 1988-because of the sale of Globcom early in 1988.

the fourth consecutive year oflower revenues. New order o Earnings of GEFS continued to increase in 1988. mtes and backlogs continue to be low by long-term histori-Comments on GEFS industry segments appear below. Of cal standards although there were signs of some potential GEFS' 1988 net earnings, GE Capitafs contribution was $600 million,28% more than 198Ts $470 million, which was 24% above 1986. (The 1987 amount excludes the cumulative effect of the income tax accounting change and extraordinary loss discussed in note 1.) e Financing opemting profits have increased very sub-stantially since 1986. The level of earning assets and the impact of changes in interest rates on borrowing costs and financing yields are important factors in Financing operat-4 ing profits. Earning assets increased by 30% in 1988 from 1987, which was 29% more than 1986. Fir,,cing yields increase <lin 1988 after declining during 1987. GE Capi-tafs composite annual interest rate increased 43 basis points in 1988. In 1987, the composite annual interest rate i Eaming assets of financing businesses (In billions) $45 36 i i 18 9 i i o 1984 1985 1986 1987 1988 l 34 l

decreased 30 basis [x)ints. The operating loss in 1986 was U.S. exports to external customers the result of that year's dramatic decline in oil prices, which (in billions) resulted in a substantial charge to reflect impairment of $5.0 values of certain energy-related investments. A 40 e Insurance operating profit increased sharply in 1988. 1 The principal element of the insurance segment is g J 79 Employers Reinsumnce Corporation, which has increased business volume and investment income each year since Q go 1986. Other insurance operations (which are part of GE ,g 91.0 Capital Corporation) also had improved results in 1988

y f ollowing two years of charges reflecting adverse loss 0

experience. 984 1985 1986 1987 1988 e Securities Broker-Dealer (Kidder, Pealxxly) had an operating profit in 1988 following a loss in 1987, The improvement in 1988 reflected higher investment banking past five years. Export sales by major world areas for the revenues, lower operating aix! administrative expenses, past three years are shown below, and the absence of unusual expense provisions in 1987 for business restruct urings and settlement ofinsider trading $'82,$st extemalcustomers 1988 1987 1986 charges. $i' 4

All Other GEFS consists principally of acquisition-f"*I"'B in 1

5 related interest expense not alk>cated to the segments. hiickile Fast and Africa 937 762 490 e GE items not traceable to segments aggregated a loss Americas 531 625 476 Ohn areas 240 238 124 of $564 million in 1988 and $588 million in 1987.There Total $ 1.870 $4,024 $3.709 was a small gain in 1986. This caption includes expenses such as the Cor}x> rate R&D Center and corporate staffs and income from corporate treasury activities. In 1987 anxi In addition, exports from GE operations in the United States to GE affiliates offshore were $874 million in 1988, 1988, there was much lower income from corporate-level $801 million in 1987 and $639 million in 1986. investments and nothing comparable to large gains from sale ofToshiba stock in 1986. e GE made a positive contribution of about $3.1 billion to the U.S. balance of trade in 1988. Total exports in 1988 International operations were $5.7 billion, including lx>th exports from the United e Totalinternational operations (consisting of all ""' I

I * "*
I"****"""

exlx rts from the United States plus the results of offshore ates wne R0 MHon, aiid direct im}xnts nnu a alliliates) had revenues of $ 10.8 billion anxl operating n>m extanal suppliers were $1.6 bilh,on. profit of $2.1 billion in 1988. Revenues were $9.2 billion and $8.3 billion in 1987 and 1986, respectively; and operating profit was $1.7 billion in 1987 and $1.3 billion in 1986.

GE's exports to external customers totaled $4.9 bil-lion in 1988, up from 1987's $4.0 billion. The chart on this page shows the substantial growth in GE's exports for the l

35

Managements Discussion ofFinancial Resources and Liquidity Overview Statement of Financial Position This discussion of financial resources and liquidity focuses

Marketable securities carried at cost fi>r GE are cash on the Statement of Financial Position (page 26) and the equivalents and are part of GE's near-term cash manage-Statement of Cash Flows (page 28). As with the Statement ment process to be discussed in connection with cash flows.

of Earnings, the content of these two statements fbr GE GEFS' balance consists primarily of debt securities held by and GEFS is so different that most of the asset, liability its insurance affiliates in sup[xnt of their obligation to and cash flow categories do not lend themselves to simple [ml.1y holders. combination. This, of course, reflects the differences in the e Marketable securities carried at market represent nature of the businesses. primarily the investing and trading portfolio of Kidder, Although GE's manufacturing and nonfinancial senices realxxly and, to a lesse: degree, similar insurance affiliate activities involve a variety of different businesses, their activities. underlying characteristics are developing, preparing fbr

Securities purchased under agreements to resell market and selling tangible pnxlucts and senices. Risk and

(" reverse repurchase agreements") are related to the 1 rewar$ are directly related to the ability to manage those liability account: Securities sold under agreements to actmues.1 mancial levemge annes from realizing an ade-repurchase (" repurchase agreements"). These typically quate return on share owners equity with,judiaous use of represent highly liquid, short-term investments of excess lxnTowed Iunds. funds or hwmwing of such funds fmm others. At year-i GEFS is not a " captive finance company" or a vehicle for ends 1988 and 1987, ihe balances (lxith assets and liabili- " oft-balance-sheet financing"Ibr GE. In fact, very little of ties) were solely those of Kidder, Pealxxly in connection its bustaess is directly related to other GE operations. Its with its broker-dealer activities. principal businesses pmvide financing, reinsurance arxl broker-dealer senices to third parties. The underlying

GE's current receivables are mainly amounts due characteristics of these businesses involve the management from customers ($5.3 billion at December 31,1988 and of financial risk. They do not develop, manufacture and

$5.5 billion at Deccmber 31,1987). Receivables " turned sell products and senices where risk and reward hinge on over" 7.01 times m 1988 compared with 6.81 umes m customer satisfaction as with, for example, an aircraft

87. ("Tunun" ndates receivables to sales and is a engine or the delivering of a message over a TV network.

incasurement of collection efficiency. Ifigher turnover Their risk anxi rewant are related to die ability to provide indicates faster collections.) GE's trend m this area has been funds at competitive rates coupled with creative value-impnwing since 1985 as the result of vigorous manage-added senices, inent auention to anlit and collections. Other receivables These fundamental differences are rellected in the measurements, such as delinquency ratios and amounts measurements commonly used by investors, rating agen. p st aye, also haw been impmving, and the omaH condi-cies and financial analysts. These differences will become ti n of customa mavables remained excellent at the end clearer in the discussion that ibliows with respect to the of 1988. Current receivables other than amouryts owed by more significant items in the two financial statements. C"Sunnas am amounts that did not originate Irom sales of G E. pnxlucts or senices, such as advances to supph,ers m connection with large contracts. GE/S&P 500 annual dividends per share increase compared with 1983 60% a 4g aS P500 1984 1985 1986 198'T 1988 36

1 e inventories of $6.5 billion at the end of 1988 were Net earnings retained for growth slightly higher than the $6.3 billion at the end of 1987. and used for dividends (in dollars per share) Inventories turned over 4.38 times in 1988 compared with s4.o 4.25 times in 1987. As with receivables, this is a measure- %.12 ment of efficient use of resources arxl has been showing steady improvement in recent years. Principal inventory '} 2A 3 increases were in GE Aircraft Engines and GE Plastics in anticipation of higher sales. Some of the larger reductions jL %L6 occurred in GE Aerospace and from the sale of the semi-corxiuctor business. In 1988, cost of sales was charged for ~ Dg J .8 a Retained for last-in first-out (1.1FO) revaluation of $150 million because growth 4' 3

9 Jy 3; P

0 c of higher prices. The $324 million increase in the 1.lFO , nnidends 1 evaluation in 1987 was mostly related to the inventory 1984 1985 1986 1987 1988 accounting change discussed in note 1. In 1986, there was a net favorable I.IFO adjustment to cost of sales, including

Property, plant and equipment (including equipment a $51 million reduction in 1.IFO teserves because of.

le sed to others) aggregated $13.6 billion at December 31, reduced inventory levels mainly in power systems 1988 and $ 13.0 billion a year earber. GE's property, plant businesses. arxl equipment consists ofinvestments for its own pnxtuc-

GEFS' financing receivables grew to $35.9 billion in tive use, whereas the largest element of G EFS' investment 1988, an $8.0 billion (29%) increase. Note 17 includes is in equipment that is provided to third parties on operat-extensive infonnation and details alxiut these receivables.

ing leases. Details by categories ofinvestment can be fouixl Time sales and k>ans grew $7.2 billion with all principal in note 19. categories of kians up except "home and recreation financ-GE's total expenditures for new plant and equipment ing." The largest increase ($4.1 billion) was in " retailer during 1988 were $2.3 billion, bringing the total for the financing," mainly due to the acquisition of Montgomery last five years (excluding the unusually large addition by Wani's credit operations during the year. Investment in acquisition of RCA in 1986) to $ 10.5 billion. Of that five- " direct financing leases" increased $1.0 billion to $8.4 bil-year total,33% was to increase capacity; 25% was to lion from year-end 1987, and leveraged leases of $2.7 bil-incicase pnxiuctivity; 13% was to support new business lion were almut the same as at the end of the pnor year. start-ups; 13% was to replace arxl renew older equipment; Noncarning and reduced-carning financing receivables and 16% was for such other purposes as improving R&D were less than 1% ofearning assets at the end ofeach of facilities and safety and environmental protection. Of GE's the last two years. The allowance for losses that is deducted $2.3 billion current-year expenditures, about $400 million in arriving at the $35.9 billion balance increased from was attributable to acquisitions of businesses. Current-year $743 inillion at the end of 1987 to $972 million at year-end depreciation and dispositions of plant and equipment vir-1988. Details of changes in the reserve balance can be mally offset current-year additions. found in note 9. These included additions by charging GEFS added $1.5 billion to its equipment leased to operations ($434 million in 1988, $290 inillion in 1987 and others. Current-year amortization was $665 million. $558 million in 1986) and write-offs of $294 million in e intangible assets aggregated $8.6 billion at the end of 1988,$171 million in 1987 and $461 million in 1986. 1988. The majority of this consolidated total is GE's intan-Overall net loss experience as a percent of average f.manc-gibles, w hich were $7.0 billion at that date or $2.6 billion ing receivables was 0.81% m 1988,0.62% m 1987 and more than a year earh.er.The largest portion of GE's bal-1 2.02 %. 1986, a year when large energy-related write-off. m s i will and other intangibles) arose from were made. At the end of 1988, the reserve coverage on financing receivables was equal to 2.63% of the receivables balance outstarxling, up from 2.59% at the end of the pre-vious two years. In sununary, GEFS' financing receivables are in gomi conditioit arxl reserve protection is strorig. 37

the acquisition of RCA Cortmration in 1986. Increases tenn debt that is due to be paid in 1989, most ofit related during 1988 mainly reflected goalwill from the acquisi-to the RCA acquisition in 1986. GE's total debt at the end tions ofIlorg-Warner's chemicals businesses, Roper Corpo-of 1988 equated 24.9% ofits total capital compared with ration, a TV station in Miami, Fla., and final valuation of 25.1% at the end of 1987. This relationship of debt and CGR medical business assets. equity capitalis sound and is within the range of what

All other assets totaled $8.0 billion at December 31, would be expected of a strong industrially oriented finn.

1988 compared with $6.6 billion a year earlier. These are a GEFS' total borrowings were $39.6 billion at Decem-wide variety ofitems as detailed in note 21. In p;ior years, ber 31,1988, of which $28.7 billion is due in 1989 and GE's deferred tax asset was induded in this category. How. $ 10.9 billion is due in subsequent years. Comparable ever, as a result of the new consolidation, this asset is now amounts at the end of 1987 were: $30.9 billion total; shown as a " negative liabihty" under " deferred income $22.8 billion due within one year; and $8.0 billion due taxes"in the Statement of Financial Position to provide beyond that. The increases were to support the growth in proper consolidation with GEFS' deferred income tax GEFS' earning assets. As noted earlier in this discussion, l credit. GEFS' primary business is management of financial risk

Total borrowings on a consolidated basis aggregated jnv tving borrowing money at favorable rates and provid-

$45.5 billion at December 31,1988. However, borrowings ing funds to others at higher rates along with creauve must be k>oked at separately for GE and GEFS. The major value-added sen ices. GEFS' composite interest rates were debt-rating agencies evaluate the financial condition of the discussed in connection with the Statement of Earn}mgs. A entities separately because of their distinctly different busi-large p rti n f GEFS' borrowmgs is m the fonn of com-ness characteristics. Using criteria appropriate to each, merci i p per ($24.6 bilhon and $18.8 billion at the end of those major rating agencies continue to give top ratings to 1988 and 1987, respectively). Most of this commercial debt of both GE and GEFS. paper is ssued by GE Capital. Its commercial paper has GE's total borrowings were $6.2 billion at the end of inaturities f up to nine months. Fhe average remaining 1988. Long-term bon owings were $4.3 billion compared terms of GECC's commercial paper were 23 days and 36 with $4.5 billion a year ago, and short-term borrowings days at the end of 1988 and 1987, respectively. Average were $ 1.9 billion compared with $ 1.1 billion at the end of interest rates on GECC's commercial paper were 9.32% 1987. Short-tenn lx>rrowings include $ 1.2 billion of long-and 7.73% at the end of those respective years. Higher 1988 rates reflected general financial market comhuons. "inerage," the relationship of debt to equity caintal, is expected by investors to be much higher in a financial enterprise than in an industrial enterprise. GECC's ratio of debt to equity was 7.67 to 1.00 at the end of 1988 com-pared with 7.98 to 1.00 at the end of 1987. This relation-ship of debt to equity capital is believed to be sound and is appropriate for a highly rated financial services enterprise. Notes 22 and 26 provide details of short-term and long-I tenn borrowings. l I i l I Consolidated total assets ] (in billions) i $120 96 i 4 j 72 l Ki 48 ) 1984 1985 1986 1987 1988 38 i

l Statement of Cash Flows Based on past perfonnance and current expectations, in This statement replaces the fi>nner Statement of Changes combination with the financial flexibility that comes with in Financial Position to u>mply with a new Financial the highest credit ratings, GE is well positioned to continue l Aca>unting Standards Ikiard requirement. The fi>cus is on making long-term investments for future growth, includ-I cash, whereas GE's fi>nner statement had a smnewhat dif. ing selective acquisitions and investments injoint ventures, ferent orientation on " funds?"Ihe new statement empha. to enhance share owner investment. -l sizes cash flows from three broad categories -operating GEFS l f activities, investing activities and financing activities. Inas-GEFS' principal source of cash is financing activities that I much as the cash management activities of GE and GEFS involve continuing rollover of short-tenn borrowings and are separate and distinct,it is more useful to review the appropriate addition of long-tenn lx>rrowings, with a rea-separate cash flow statements than the consolidated sonable balance of maturities. Over the past three years, statement. GEFS' borrowings with 90-day or less maturities have G_E increased a total of $ 11.8 billion. New lxnrowings of GE's cash and equivalents (cash and marketable securities) $24.3 billion having maturities longer than 90 days were aggregated $ 1.9 billion at the end of 1988, a decrease of added during those years while $21.1 l'illion of such $789 million during 1988. Net cash of $773 million was longer-term lxnrowings were paid off. generated in 1987, while there was a net cash usage of GEFS' principal application of cash has been in invest- $638 million in 1986, ing activities to grow the business. Of the $22.8 billion GE's largest source of cash is its own operations. These of net investments by GEFS over the past three years, have provided an aggregate of more than $11 billion of $ 14.3 billion was devoted to additional financing receiv-cash over the last thice years. The largest ongoing uses of ables. Other principal investments during these years were cash by GE are usually expenditures fi>r new plant and $1.7 billion to acquire new businesses as GEFS expands its equipment, which aggregated $5.6 billion over the past activities and $3.1 billion for new equipment, which is three years (included in investing activities) and dividends mainly for lease to others. to share owners, which aggregated $3.5 billion during the The difference between cash used for new investments last three years (included in financing activities). Thus, and cash provided from additional borrowings has been GE's operating activities have pmvided more than enough met mainly by generation of $7.3 billion of cash from cash to cover these basic cor[x> rate activities and to gener. operating artivities for the years 19CS-1988 and from issu-ate cash for other endeavors. ante of $0.6 billion cumulative variable preferred stock by in 1986, GE paid $6.-l billion fi>r RCA ($6.1 billion GE Capital in 1988. GEFS' cash and equivalents balance excluding RCA's cash on hand at the time). This required has remained relatively stable throughout the period-Imnowing $3.4 billion oflong-tenn debt. Smne short-tenn again in keeping with its business mission. debt also was issued at the time, but it was promptly repaid In summary, based on past perfi>nnance and current by a combination of dispositions of certain RCA businesses expectations,in combination with the financial flexibility and cash provided from operations. In 1988, GE made that comes with excellent credit ratings, GEFS is well several acquisitions, the principal ones of which required lx>sitioned to continue growing its carning assets and to cash outilow of $3 billion. These acquisitions were paid for pnxtuce a gmxt rate of return on GE share owners' invest-partly fnnu cash on hand and partly from new lxinuwings. ment in GEFS. These acquisitions mor e than accounted for the $789 mil-tion reduction in cash-equivalent balances noted above. l i l l 39

l 3 Managements Discussion ofSelected Financial Data i Selected financial data summarizes on one page some data acquisition. Current total employment levels are now frequently requested about General Electric Company and slightly below where they were at the end of 1985, provides a record that may be useful in reviewing trends. although revenues have increased 54% since that year. The data on the opposite page are presented in a different GE's total backlog of unfilled orders at the end of 1988 was fonnat than in previous years. The upper portion presents $27.3 billion. Orders constituting this backlog may be can-information on the basis of the new consolidation. Follow-celed or deferred by customers (subject in certain cases to ing that are certain data that reflect GE operations with cancellation penalties). Comments on unfilled orders fbr various traditional measurements appropriate to the GE Aircraft Engines and GE Aerospace (which together industrial businesses. Finally, there is a section providing inake up over 70% of the year-end 1988 backlog) can be key infonnation and ratios pertinent to GEFS. Certain found in the discussion of Industry Segments, which additional comments and information follow. begins on page 32. About 49% of the 1988 total unfdled GE's total research and development experxlitures were orders is scheduled to be shipped in 1989 with most of the j $3.6 billion in 1988. Of this, $1.2 billion was from GE's remairxler to be shipped in the two years after that. For J own funds arxl $2.4 billion was from funds provided by comparison, about 57% of the 1987 backlog was expected customers, mainly the U.S. government. Comparable to be shipped in 1988. amounts Ior 1987 were: total expenditures-$3.0 billion; Unfilkxl orders for export of all types of products and Company-fuixled - $ 1.2 billion; and customer-funded - senices from the United States were $8.2 billion at Decem- $ 1.8 billion. The increase in customer funds in 1988 was ber 31,1988, up from $6.0 billion the year belore. The mainly Ibr GE Aerospace projects. During the years backlog of aircraft engine orders increased by almost 60% 1984-1988, GE's total R&D expenditures from all sources and made up a large majority of the 1988 unfilled export of funds aggregated almost $15 billion. orders backlog. Consolidated worldwide employrnent at the end of each inflation has not been a significant factor in consolidated of the last five years, segregated between GE arxl GEFS, is net earnings growth in recent years because of the rela-depicted in the chart below. The table on the opposite tively modest rate of price increases in the economies of page presents the same data with respect to employees the United States and of the principalIbreign countries kicated in the United States and in other countries. The where the Company has operations. increase in employees in 1986 was because of the RCA Regarding environmental matters, the operations of the l Company, like those of other companies engaged in simi-lar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection 3 laws. While it is extremely dif ficult to quantify the poten-tial impact of actions regarding environmental matters, 1 particularly remediation efforts that the Company may j undertake in the future, in the opinion of management 1 compliance with the present laws governing environmen-tal protection will not have a material effect on the Com-pany's expenditures, earnings or competitive position. Conso3 dated employment at year end (In thousands) 375 ] ~ 300 N .y j d 225 4 Y 150 l I 75 a GEFS O n GE 1984 1985 1986 1987 1988 l j ao L___-____--___-_-_

Selected FinancialData (Dollar amounts in millions; per-share amounts in dollars) 1988 1987 1986 1985 1984 l G:neral Electric Company and consolidated affiliates Revenues $ 50,089 $ 48,158 $ 42,013 $ 32,624 $ 31,442 Earnings before extraordinary loss and cumulative effect of accounting changes 3,386 2,119 2,492 2,277 2,239 Net earnings 3,386 2,915 2,492 2,277 2,239 Dividernis declared 1,314 1,209 1,081 1,020 930 Ean:ed on average share owners' equity 19.4 % 18.5 % 17.3 % 17.5 % 19.0 % Pershare Net earnings 3.75 $ 3.20 $ 2.73 $ 2.50 $ 2.47 Dividends declared 1.46 1.32 % 1.18 % 1.11 % l.02 % Stock price range 47 %-38 % 66 %-38 % 44 %-33 % 36 %-27 % 29 %-24 % Total assets 110,865 95,414 84,818 49,123 43,860 Inng-tenn Ix>rrowings 15,082 12,5)7 10,001 5,577 4,818 Shares outstarxling-average (in thousands) 901,780 911,639 912,594 910,762 907,360 Share owner accounts-average 529,000 491,000 492,000 506,000 520,000 Employees at year end Domestic 255,000 277,000 302,000 243,000 255,000 Foreign 43,000 45,000 71,000 56,000 68,000 Total e uployees 298,000 322,000 373,000 299,000 323,000 GE data Short-tenn tx>rrowings $ 1,861 $ 1,110 $ 1,813 $ 1,297 $ 1,047 long-term lx>nuwings 4,330 4,491 4,351 753 753 Minority interest 228 190 189 126 128 Share owners' equity 18,466 16,480 15,109 13.671 12,398 Total capitalinvested $ 24,885 $ 22,271 $ 21,462 $ 15,847 $ 14,326 Return on average total capital invested 16.4 % 14.7 % 13.9 % 16.2 % 17.6 % Bonuwings as a percentage of total capital invested 24.9 % 25.1 % 28.7 % 12.9 % 12.6 % Current assets $ 15,499 $ 15,739 $ 14,288 $ 12,546 $ 11,552 Current liabilities 13,419 12,671 1'.,46I 8,919 8,607 Working capital $ 2,080 $ 3,068 $ 2,827 $ 3,627 $ 2,945 Property, plant and equipment additions (other than by auluisition of RCA) $ 2,288 $ 1,778 $ 2,042 $ 1,953 $ 2,419 Year-crxl orders backlog 27,265 22,737 23,943 23,117 22,577 GEFS data Earnings before extraordinary loss and cumulative effect of accounting change 788 $ 552 $ 504 413 $ 329 Net earnings 788 1,008 504 413 329 Share owner's equity 4,819 3,980 2,994 2,302 1,874 Eamed on average share owner's equity 18.0 % 18.0% 19.7 % 19.9% 19.1 % 1 orrowings from others $ 39,593 $ 30,885 $ 23,397 $ 16,393 $ 13,402 Ratio of debt to cquity (GE Capital) 7.67:1 7.98:1 7.83:1 7.89:1 7.97:1 Earning assets of financing businesses $ 42,173 $ 32,423 $ 25,169 $ 20,169 $ 17,054 Reserve coverage on financing receivables 2.63% 2.59% 2.59% 2.57 % 2.54 % l Insurance premiums written $ 1,809 $ 1,729 $ 1,704 $ 1,092 $ 637 l Securities broker-dealer earned income 2,316 2,491 1,176 See notes I and 26 to the consolidated financial statements for inf armation alumt 1987 accounting changes and extraordinary loss, and notes 2 and 3 for inf ormanon ainut acquisitions and related matters. "GE" means the former basis of consolidanon as described in note ! to the omsolidated hnancial statements: "GEFS" means General Elcetric Finant ial Servic es. I nc. and all of its afhliates arul assot iated com panies. Transactions between GE amt GEI S have been eliminated from the " consolidated data." Share data r(flect the 2-for I sim k split in April 1987. 41

i 1 1 - Management' Discussion ofFinancial Responsibility ) s p i h The financial'information in this report, including the ' Peat hiarwick h1ain & Co. provide an objective, inde-- audited financial statements, has been prepared by man-pendent review ofmanagement's discharge ofits obliga-1 l - ~agement. Preparation of financial statements arxl related tions relating to the fairness of re[mrted operating results l l. data involves estimates arxl the use orjudgment. Account-anxi financial corxlition. Their report for 1988 appears on ] l' - ing principles used in preparing the financial statements the op[msite page. are those which are generally accepted in the United The Audit Committee of the lloard (consisting solely .j States. These principles are consistent in most important of Directors from outside GE) maintains an ongoing respects with starxiards issued by the International appraisal-on behalf of share owners - of the efTective-l Accounting Standards Committee. Where there is no sin-ness of the indepeixlent pubhc accountants, the Com-gle specified accounting principle or standanti, manage-pany's staff of corporate auditors arxl management, with ment makes a choice from reasonable, accepted respect to the financial reporting process, and of the ade-1 alternatives, using methods which it believes are pmdent quacy ofinternal financial controls. The committee also for General Electric Company and its consolidated reviews the Company's accounting policies, internal j affiliates. accounting controls, and the Annual Report atxi pro'xy j To safeguard Company assets, it is important to have a material.. { sourxl but dynamic system ofinternal financial controls i 4 and procedures that balances benefits and costs. One of the key elements ofinternal financial controls has been ,j the Company's success in recruiting, selecting, training and developing professional financial managers. Their responsibilities include implementing arxl overseeing the. John E Welch,Jr. ' financial control system, reporting on management's Chairman of the lioard and stewardship of the assets entrusted to it by share owners, Chief Executive Officer and performing accurate and proper maintenance of 1 i the accounts. h1anagement has long recognized its responsibility for - corxtucting the affairs of the Company arxl its affiliates in Dennis D. Dammerman an ethical arxl socially res[mnsible manner. General Electric Senior Vice President l Company is dedicated to the highest standards ofintegrity. Finance '{ Integrity is not an occasional requirement but a continuing commitment which is reflected in key written policy state-February 10,1989 l ments. These cover, among other subjects, [mtentially con-Ilicting outside business interests of employees, compliance with antitrust laws, and proper domestic and international business practices. h1anagement insists on maintaining the. highest standards of conduct and practices with respect to transactions with the United States gm ernment. There j is continuing emphasis to all employees that even the l appeamnce ofimpropriety can enxie public confidence l in the Company arxlin the government procurement process. Ongoing education, communication and review pmgrams are designed to create a strong compliance envi-ronment and to make it clearly understood that deviation from Company policies will not be tolerated. l l 1 42 .1

Independent Auditors' Report. L Ts Share Owners and Board of Directors of ' GeneralElectric Company 1. We have audited the accompanying statement of financial position of General Electric Company and consolidated afTiliates as of December 31,1988 and 1987 arxl the related statements of earnings arxl cash flows for each of l the years in the three-year pericxl ended December 31, 1 1988. These consolidated financial statements are the resixmsibility of the Company's management. Our respon-sibility is to express an opinion on these consolidated financial statements based on our audits. We corxtucted our audits in accordance with generally accepted auditing standards. Those staixlards require that we plan and perform the audit to obtain reasonable assur-ance alx)ut whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supixirting the amounts and disck> - sures in the financial statements. An audit also includes assessing the accounting principles used arxl 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 24-29 arxi 44 70 present fiiirly,in all material respects, the financial gx>sition of General Electric Onnpany arxl consolidated afTiliates at December 31,1988 arxl 1987, arxl the results of their operations and their cash flows for each of the years in the three-year period ended December 31,1988, in conformity with generally accepted accounting principles. As discussed in note I to the consolidated financial state-ments, in 1988 the Cmnpany changed its meth<xl ofinclu-sion of previously unconsolidated affiliates; and in 1987 .the Onngiany changed its methods of accounting for income taxes and overhead recorded in inventory. We concur with these accounting changes. d M an.orr!( h i 8: Peat Marwick Main & Co.- Stamford, Connecticut February 10,1989 I i 43 1

Notes to Consolidated Financial Statements l } Summaryof Significant Accounting Note Subject Page Note 1 SummaryofSigmficant Accounting Policies Policies 44 2 GE Acquisitions anxl Related hiatters 48 Consolidation and financial statement presentation 3 GEFS Acquisitions anxl Related h!atters 49 In 1988, GE was required to adopt two new Statements of 4 GE Other income 49 Financial Accounting Standards (SFAS): SFAS No. 94 - 5 GEFS Earned income 50 " Consolidation of All h1ajority-Owned Subsidiaries"; and 6 Supplemental Cost Details (excluding SFAS No. 95 " Statement of Cash Flows."These changes unusual expenses) 50 are in addition to changes made in 1987 to implement 7 Pensions aixi Other Retiree llenefits 51 SFAS No. 96 " Accounting fi>r Income Taxes" and to j 8 Interest arxl Other Financial Charges 52 modify GE's accounting procedures to include in inven-l 9 GEFS Allowance fi>r Losses on Financing tory certain manufacturing overhead costs previously j Receivables 52 charged directly to expense. 10 Unusual Expenses 52 1 ns H a

n. Dw consoHdataMnandal statanents now 11 Provision fi>r Income Taxes (excluding 1987 extraordinary item and cumulative effect

fI"'"*""'

""E l"E ""I"""'mpanies in which i of changes in accounting principles) 53 b"'."."' ' ' " ' ""P""Y'"*"I "'". "'"F as a f h m j ntyownershiporothenvisecontrols('alTih.ated com-12 Cash 55 pan es"). In the past, results of financial senices affiliates 13 h1arketable Securities Carried at Cost 55

P"" ff!"" *"'

"' '". (GE.F5 or GE E.M'#'."l senic '"."""'b'" ~ 14 GEFS h1arketable Securities Carried manaa at hiaiket 55 cmnpanes-wereinclu a nyhe ajuit@ asis as one Une 15 GE Current Receivables 55 s gas [wnn s e ma'r 16 GE Inventories 55 "'" "E'"" "" "#'. l senices opemmins am so 17 GEFS Financing Receivables (investment P"""" ".s an ecause hnanaa in time sales, loans and financing leases) 56 mot in natum fnnn an&ssendaHy unnlat% to o[n-c "I ""'

* "C'"# * "" E*" * " ' *I " "I '"'

18 Other GEFS Receivables from and Payables f n ncial statements were more understandable if GEFS to llrokers and Dealers 57 "# "I' *# * * ' ** " P" "IY' '. I *" * ** P ""

!"'"d that, using the new consolidation procedure 19 Property, Plant and Equipment (including size equipment leased to others) 57 "I*

net earnings and share owners equity are 20 Intangible Assets 58 unchangul f.oniH [enods presented. Ilowever, substan-21 AU Other Assets 58 naHy mom (laa h,s mjuued under dm new standard dian j t 22 Short lerm llorrowings 59 I "" '" PI# ""' " "7 23 Accounts Payable 59 "E*' "" P""I " "PI" "" """'" 24 GEFS Securities Sold but Not Yet dated statement of financial position. Purchased, at hfarket 59 25 GE All Other Current Costs and Expenses h!anagement believes it is important to preserve as Accrued 59 much as [mible the xlenuty of the principal financial data and Mawd nrasurenwms un Miich sn, am ownen and 26 long-Term Borrowings 60 odwn haw kanne accustonwd medw yens. Amint-27 GE AH Other 1.iabilities 69 28 hiinority interest in Equity of Consolidated '"d F' '""*"" "l" I'.nancial statements and notes n w are Afliliates 62 E"".mHy presented in a format that mcludes data grouped basicaHy as bHows. 29 Share Owners' Equity 63 30 Other Stock-Related Infi>nnation 63 e GE - this is essentially the fi>rmer basis of consolida. 31 Commitments and Contingent I.iabilities 64 tion except that it includes some very small financial serv-32 Supplemental Cash Flows Infinnnation Ort ices affiliates previously not consolidated. The effect of 33 Industry Segment Details 65 transactions among c ompanies within this group has been J 34 Geographic Segment Infi>nnation eliminated. Where appropriate fi>r clarification or empha-(consolidated) 69 sis, particularly in the notes, this group of entities also is j 35 Quarterly Information (unaudited) 70 referred to as "GE except GEFS."

GEFS-this affiliate owns all of the conunon stock of General Electric Capital Corporation (GECC or GE Capi-tal) and of Employers Reinsurance Corporation (ERC) 44

and 80% of the stock of Kidder, Pealxxly Group Inc. Virtually all pr xtucts financed by GECC are manufac-(Kidder, Pealx>dy). These affiliates and their respective tured by companies other than GE. affiliates are consolidated in the GEFS columns with the There is no change in method for consolidating compa-efTect of transactions among them eliminated before the nies in which GE or GEFS owns between 20% and 50% consolidated presentation. (" associated companies"). Results of these companies are o Consolidated-these columns rcpresent the adding stillincluded on a one-line basis. together of GE and GEFS. Ilowever,it is necessary to Cash flows. SFAS No. 95 now requires a Statement of - remove the effect of transactions between GE except Cash Flows in place of the fbrmer Statement of Changes in GEFS and GEFS to arrive at a consolidated total. The Financial Position. The principal result (in addition to con- " eliminations" used to arrive at these consolidated totals solidation) is to present analytical data of cash flow items are summarized below, rather than the former (bcus on changes in cash and mar-ketable securities less short-term borrowings for GE other - Eliminations (in mittions) 1988 1987 1986 than GEFS. For purposes ofimplementing this standard,. in rketable securities of GE except GEFS are treated as Statement of Eamings cash equivalents. Certain of the securities so treated have Sales ofgoods (5) $ maturities ranging between 90 and 365 days; but, as part sales of services (26) (8) (5) other income (5) 6 6 of GE's cash management program, maturities are sched-uled based on contemplated cash needs fbr the ensuing 1ir ( months. GEFS' amounts classified as " marketable secu-Total revenues (858) (583) (526) nties carried at cost and " marketable securities carried at i[es s Id ( 5) 3) market" are not treated as cash equivalents in the State-Interest and other financial ment of Cash Flows. f Prior-year statements have been estated or reclassified ot sts and expenses ( as appropriate to conform them to the presentations l Total costs and expenses. (70) (31) (22) required by SFAS Nos. 94 and 9a_. Earn.mgs before income Pensions and other retirement benefits. Accounting poli-taxes, extraordinary item and cumulative effect of cies for pensions and other retirement benefits are dis-accounting ghanges (788) (552) (504) cussed in note 7. E,xtraord, aryitem 62 income taxes. SFAS No. 96 " Accounting (br Income m Income tax accounting change (518) Taxes" was issued by the Financial Accounting Standards Net earnings $ (788) $(1.008) $ (504) 130ard in December 1987. A requirement of SFAS No. 96 Statementof FinancialPosition is that deferred tax liabilities or assets at the end of each GE current receivables $ (330) $ (37) period be determined using the tax rate expected to be in f","jI{r'l}i[ICS [g effect when taxes are actually paid or recovered. Accord-f ingly, under SFAS No. 96 rules, income tax expense provi-Investment in GEFS (4.819) (3,980) sions will increase or decrease in the same period in which lbtal assets - $(5.363) $(4.292) a change in tax rates is enacted. Previous rules required short-term borrowings 5 (170) $ (85) providing deferred taxes using rates in effect when the tax Accounts payable (264) (216) long-term horrowings (110) (11) asset or liability was first recorded without subsequent 1 Totalliabilities (544) (312) adjustment solely fbr tax-rate changes (except with respect GEFS equity (4.819) (3.980) to leveraged leases). Tbtalliabilities and equity $(5.363) $(4.292) In conformity with SFAS No. 96 transition rules, the Company elected to adopt the new income tax accounting Statement of Cash Flows Net earnings (operating during 1987. The cumulative effect toJanuary 1,1987 activities) $ (13) $ (213) $ 483 ($577 million, including $518 million fbr GEFS) of the change is shown in the 1987 columns of the Statement of ir$r$I g s I ) tow Earnings. Also, as required, quarterly earnings reported for 1987 were restated for the effect of this change on interim quarters in 1987 as ifit had occurred atJanuary 1. Restated quarterly amounts can be found in note 35. l as

GE accounting policies Origination, commitment ary' other nonrefundable fees Sales. A sale is recorded when tide passes to the customer related to fundings are deferrad and recorded in earned or when services are performed in ecordance with income on the interest method. Commitment fees related contracts. t I ans n t expected te 'oe funded and line-of-credit fees Investment tax credit (lTC). The ITC was cepealed, w,th are deferred and reorded in earned income on a straight-i some transitional exceptions, effective Janucry 1,1986. line basis over 16 period to which the fees relate. Syndica-tion fees art recorded in earned income at the time the. However, for huancial reporting purposes, GE has. deferred recognition of the ITC each year and contmues relad services are perfonned unless significant contin-gencies exist. to amortize ITC as a reduction of the provision forin%e taxes over the lives of the faciliues to which the a edit In 1987, GEFS adopted Statement of Financial apphes. Accounting Standards No. 91 " Accounting for Nonre-fundable Fees atxi Costs Associated with Originating or inventories. The values of most inver.ories are deter-Acquiring loans and initial Direct Costs of Irases," which mined on a last-in first-out, or LIFG, basis and do not modified certain accounting principles that apply to non-exceed realizable values. Effectivojanuary 1,1987, GE refundable fees and costs associated with lending and leas-changed its accounting procedr.res to include in inventory ing activities. GEFS' accounting practices with respect to certain manufacturing overhrad costs previously charged such fees and costs already confonned substantially to the directly to expense. Among t'ae more significant types of requirements of S FAS No. 91,and, accordingly, the effect manufacturing overhead in.luded in inventory as a result of adopting the new accounting standard in 1987 was not of the change are: deprecia cion of plant and equipment; material. pension and other benefiu of manufacturing employees; Kidder, Peatxxly's proprietary securities and commodi-and certain pnxluct-relate 3 engineering expenses. The ties transactions are recorded on a trade-date basis. Trad-Company believes this change was prefemble because it ing and investment securities are valued at market or provides a better matchir g of pnxiuction costs with ' estimated fair value. Unrealized gains and losses on open related revenues in repo ting operating results. In accord-contractual commitments, principally financial futures, ance with generally accr pted accounting principles, the when-issued securities and forward contracts on U.S. gov-cumulative effect of this change for periods prior toJanu-ernment and federal agency securities, are reflected in the ary 1,1987 ($281 mitmn after providing for taxes of Statement of Earnings on a tmde-date basis. Customers' $215 million)is shown separately in 1987 in the Statement tmnsactions and the related revenues and expenses are of Earnings on prge 24. There was virtually no effect from reflected in the financial statements on a settlement < late this change on 1987 results after recording the cumulative basis. Revenues and expenses on a trade-date basis are not i effect, and Ac pro fonna effect on prior-years results materially different. Investment banking revenues from was imroterial. management fees, sales concessions and underwriting fees D,reciation, depletion and amortization. The cost of are recorded on settlement date. Advisory fee revenue is S most manufacturing plant and equipment is depreciated recorded when services are substantially completed and using an accelemted methcxl based primarily on a sum-of. the revenue is reasonably determinable. the-years digits fonnula. If manufacturing plant and See "insumnce affiliates" on page 47 for infonnation ) equipment is subject to abnonnal economic conditions or with respect to earned income of these businesses. obsolescence, additional depreciation is provided. Allowance for losses on financing receivables. GEFS maintains an allowance for losses on financing receivables GEFS accounting policies at an amount which it believes is sufficient to provide ade-Methods of recording earned income. Income on all loans quate pmtection against future losses in the portfolio. For is earned on the interest meth(xl. For loan contracts on small-balance and certain large-balance receivables, the j which finance charges are precomputed, finance charges allowance for losses is determined principally on the basis are deferred at the time of contract acquisition. For loan of actual experience during the preceding three years. contracts on which finance charges are not precomputed Additional allowances are also recorded to reflect manage-l but are billed to customers, income is recorded when ment'sjudgment of additional loss [mtential. For other earned. Accrual ofinterest income is suspended when col-receivables, principally the larger loans arxl leases, the lection of an account becomes doubtful, generally after the account becomes 90 days delinquent. l Financing lease income that includes related investment tax credits and residual values is recorded on the interest meth<xt so as to pnxiuce a level yield on funds not yet recovered. Unguaranteed residual values included in lease income are based primarily on independent appraisals of the values ofleased assets remaining at expirati,n of the lease tenns. 46

allowance for losses is determined primarily on the basis of reflect deferral and amortization of costs (primarily com-management'sjudgment of net k>ss potential, including missions) of acquiring premiums, arxl net the effects of specific allowances for known troubled accounts. certain specialty reinsurance transactions. All accounts or portions thereof deemed to be uncollec-Premiums on short-duration insurance contracts are tible or to require an excessive collection cost are written reported as earned income over the terms of the related off to the allowance for losses. Small-balance accounts are reinsurance treaties or insurance policies. In general, progressively written down (from 10% when more than earned premiums are calculated on a pro-rata basis or are three months delinquent to 100% when more than 12 detennined based on reports received from reinsureds. months delinquent) to record the balances at estimated Premium adjustments under retrospectively rated reinsur-realizable value. However,if at any time during that period ance contracts are recorded based on estimated losses and an account isjudged to be uncollectible, such as in the case loss expenses, including lx>th case and incurred-but-not-of a bankruptcy, the remaining balance is written off. re[x>rted (IBNR) reserves. Revenues on long-duration l Izarger-balance accounts are reviewed at least quarterly, contracts are re;x>rted as earned when due. and those accounts which are more than three months Defen ed insurance acquisition costs are amortized as delinquent are written down, if necessary, to record the the related premiums are camed for property and casualty balances at estimated realizable value. business or over the premium-paying periods of the con-Marketable securities. Marketable securities of Kidder, tracts in proportion to anticipated premium income for life insurance business. Deferred insurance acquisition Pealxxly are carried at market value with the difference costs are reviewed for recoverability, and, for short dura-between cost and market value included in operations. tion contracts, anticipated investment income is considered Marketable debt securities held by all other GEFS affiliates are canied at amortized cost. Marketable equity securities in making recoverability evaluations. The estimated liability for outstanding losses and loss ofinsurance affiliates are carried at market value, arxl unrealized gains or losses, less applicable deferred income expenses consists of case reserves based on reports and taxes, are recognized in equity. estimates oflosses and an IBNR reserve based prinyarily on experience, except where experience is not sufhcient, Securit,es purchased under agreements to resell (reverse or the particular insur-m which case irxiustry averages f. i rrpurchase agreements) and securit.ies sold under agree-ance products are used. Estimated amounts of salvage and ments to repurchase (repurchase agreements). Repur-subrogan.on recoverable on pa.d and unpaid losses are i chase and reverse repurchase agreements are treated as deducted from outstanding losses. The liability for future fmancing transactions and are carried at the contract policy benefits of the life insurance affiliates has been com-amount at which the securities subsequently w(,ll be resold puted mainly by a net-level-premium method based on or reacquired. Repurchase agreements relate either to assumptions for investment yields, mortality and tennina-marketable securities, which are carried at market value, tions that were appropriate at date of purchase or at the or to securities obtamed pursuant to reverse repurchase time the policies were developed, including provisions for agreements. It is GEFS' policy to take possession of secun.- adverse deviations. ues subject to reverse repurchase agreements. GEFS mon-itors the market value of the underlying securities in relation to the related receivable, including accrued inter-est, and requests additional collateral if appropriate. I Depreciation and amortization. The cost of equipment leased to others on operating leases is amortized, princi-pally on a straight-line basis, to estimated net salvage value over the lease term or the estimated economic life of the equipment. Depreciation of property and equipment for GEFS'own use is recorded on either a sum-of-the-years digits or a straight-line basis over the lives of the assets. Investment tax credit (lTC). ITC associated with equip-ment on operating leases and buildings ami equipment is deferred and amortized over the lives of the undedying assets. Insurance affiliates.The accounts ofinsurance affiliates are adjusted from accounting pmctices prescribed by state insurance regulatory authorities to a " generally accepted accounting principles" hasis. The principal adjustments 47

Note ] GE Acquisitions cnd Related Matters InJune 1986, GE acquired RCA Corporation and its subsidiaries in a transaction for which the total con-During If>d8, GE completed a number of acquisitions. sideration to former RCA shareholders was $6.4 billion in l The largest of these were: cash. RCA businesses included the manufacture and sale o Roper Corporation, acquired in April for $507 mil. of a wide range ofelectronic products and related research lion cash. Roper's principal businesses were the manufac-and senices for consumer, commercial, military and space ture and sale of gas and electric mnges arxl outdoor power applications; the National Broadcasdng Company's radio garden equipment. In December, GE sold Roper's garden and television stations arxl network broadcasting services; equipment business for $295 million cash. Roper's kitchen and domestic and international message and data commu-appliance business has annual sales of about $375 million. nications senices.

Borg-Warner's chemicals businesses, acquired in Sep_

The acquisition was accounted fi)r as a purchase, and l tember fi>r $2.3 billion cash. These businesses (annual the operating results of RCA have been consolidated with sales of about $ 1.6 billion) manufacture and sell pnxtucts those of GE sinceJune 1,1986. The purchase price was complementary to GE's plastics businesses. aHocated to the assets and liabilities of RCA based on Both of these acquisitions were accounted for as pur_ ppraisal and es aluation studies completed during 1987 chases with the excess of purchase price over the estimate and to g(xxiwill ($3.7 billion), which is being amortized on j of fair values of net assets acquired recorded as go<x!will, stmight-line basis over 40 years. See note 20. Unaudited pro forma results of operations of GE except Business dispositions during 1988 included most of the GEFS for the year 1986, assuming RCA had been acquired GE Solid State (semiconductor) business; seven of NBC's at the beginning of that year, would have been sales of eight radio stations; RCA Global Communications, Inc. $38,997 million, net earnings of $2,471 million and net (a provider ofinternational communications senices); arxl earnings per share of $2.71. These pro forma operating Sadelmi-Cogepi, a fi> reign construction firm. Cash pro-results me prepared in 1986 based on estimates and ceeds from these tnmsactions aggregated about $700 mil-ssumptions including purchase price allocation. Final lion. Aggregate annual sales of these businesses were purchase price allocanon would not have changed the pro about $900 million, f nna results significantly. Such pro fonna results are not There was no material effect on GE's business from necessarily indicative of the consolidated results that would these 1988 acquisitions and dispositions. have been reported if the RCA acquisition had actually l On December 31,1987, GE and a French electronics ccurred at the beginning of 1986. company, Thomson, S.A., completed a transaction in In accordance with agreements with agencies of the which GE acquired Thomson's medical equipment busi. United States government concerning the RCA acquisi-ness (CGR) and Thomson acquired most of GE's consumer tion, GE was required to sell its small military vidicon busi-electronics business. The total transaction included cash ness (which sale was completed in 1986). received by GE of about $560 million. CGR's 1987 sales of Also sold during 1986 were activities involving audio about $800 million came mainly from digital x-ray, mam, tapes and records, carpets, an insurance subsidiary and a mography, computed tomography, ultrasound and related p rtfolio of securities investments. These transactions ] sales and service in Europe and Latin America. GE's con-were for an aggregate cash amount of about $1.4 bilhon. sumer electronics business included mainly GE and RCA bmnd television sets, VCRs and audio pnxlucts with sales Subsequent event of about $3 billion annually. GE will continue for some InJanuary 1989, GE reached agreements with General j time to receive royahy income from patents related to con-Electric Company plc. (GEC), an unrelated corporation in sumer electronics pnxiucts. Other related closings, princi-the United Kingdom, to combine European business inter-pally for offshore consumer electronics operations, took ests in appliances, medical systems, electrical controls and, place in 1988. CGR's assets and liabilities were included in potentially, gas turbines. Fourjoint ventures are contem-GE's December 31,1987 Statement of Financial Position plated with the specific corporate organizations yet to be based on preliminary, estimated data that were reviewed decided. Besides the businesses and resources to be con-and completed during 1988. Consumer electronics' assets tributed by the parties to these ventures, GE will pay to and liabilities were removed fnnn GE's 1987 year-end bal-GEC a cash consideration of approximately 1325 million ances. The net asset value of he offshore operations sold ($580 million). Subject to requisite governmental approv-to Thomson in 1988 was canied in "all other assets" at als, completion of the transactions is expected in j 1987 year end. mid-1989. Also during 1987, activities involving a "new pnxlucts" division and NBC's radio networks were sold for cash aggregating about $90 million and a note for $3 million. In addition, GE donated RCA's David Sanwff Research Center to a not-for-profit organization in 1987. j The effect of these 1987 transactions was not material. f

Note 3 CEFS Acquisitionscnd Related acquisition"). In October 1986, Kidder, Pealxxty Group Matters Inc. was organized as the holding company parent of Kidder, Peatxxly & Co. Incorporated. InJune 1988, as part of the management-led acquisition The Kidder, Peatxxly acquisition was accounted for as a of hiontgomery Ward & Co.', ?,corporated (hlontgomery purchase, and, accordingly, the purchase price was alku Ward) from hiobil Corporation., GE Capital acquired cated to the assets anxi liabilities of Kidder, Peatxxly based hiontgomery Ward's credit opecations comprising hiont-on estimates of fair market values. The excess purchase gomery Ward Credit Corporation (MW Credit) and certain price over estimated fair value of net assets acquired related assets (collectively with hiW Credit, MW Credit (g(xxiwill) is being amortized on a straight-line basis over Operations) for a cash purchase price of $718 million. 30 years. GE Capital and Kidder, Peabody acquired 40% and 10%, If the Kidder, Peatxxly acquisition had occurred onJan-respectively, of Montgomery Ward's common stock for a uary 1,1986, management estimates that earned income cash purchase price of $4 million and $1 million, respec-and net earnings of GEFS for the year ended December tively. In addition, GE Capital and Kidder, Pealxxly paid 31,1986 would have been $6,691 million and $516 mil-cash of $82 million and $8 million, respectively, for pre-tion, respectively. Such results are not necessarily indicative ferred stock in hiontgomery Ward. The management-led of those that might have occurred tnd the acquisition acquisition of Montgomery Ward was panially financed taken place at the beginning of 1986. There would not by GE Capital in the form of a $275 million subordinated have been any significant pro forma effect on consolidated loan. net earnings per share from this transaction. The acquisition of the h1W Credit Operations was accounted for as a purchase, and, accordingly, the pur-FGIC Corporation chase price was allocated to the assets and liabilities of htW During h1 arch 1988, GE Capital increased its investment Credit Operations based on estimates of fair value. The in FGIC Corporation (FGIC) by purchasing common excess purchase price over estimated fair value of net stock and convertible preferred stock of FGIC from certain assets acquired (goodwill) is being amortized on a straight-institutionalinvestors for $74 million in cash. After con-line basis over 20 years. version of all the preferred stock into common stock in If the preceding transactions had occurred onJanu-September 1988, GE Capital owned 38% of FGIC's out-ary 1,1988 orJanuary 1,1987, management estimates standing common stock. In November and December that GEFS results of operations for the years ended 1988, GE Capital entered into separate agreements with December 31,1988 and 1987 would have been as follows. four institutional investors providing for the purchase by GE Capital of an additional 44% of the outstanding FGIC (In millions) 1988 1987 common stock for $283 million in cash. Although subject Earned income $10.889 $8,702 to regulatory approvals, these purchases are expected to Earnings before extraordinary item be completed during the first quarter of 1989, at which and cumulative effect of change m time GE Cap,tal intends to acquire the remaining out-i accounting principle 784 579 Net camings 784 1,035 standing common stock of FGIC. The above unaudited pro fonna infonnation has been prepared based on assumptions that management deems Note 4 GEOtherincome appropriate, but the results are not necessarily indicative of those that might have occurred had the acquisitions taken Other income of GE except GEFS is summarized in the place at the beginnings of the respective years. The results table below, l of h!W Credit Operations have been consolidated with on inimons) 1988 1987 1986 GEFS since the date of acquisition. There would not have been any significant pro fi>rma effect on consolidated net Royahy and technical I carnings per share from this transaction. agreements $ 359 $ 283 $ 232 Marketable securities and bank i In J uly and December 1987, GECC acquired the out. fl companies standing capital stock of D&K Financial Corporation As 2 (D&K) and Gelco Coi poration (Gelcc), respecti,ely, for an Cusmmer financing 38 52 78 aggregate purchase price of approximately $535 million. Other investments Interest 13 15 62 110th entities are in the business ofleasing vehicle fleets Dividends 8 4 11 and other equipment, Fhe acquisitions were acmunted Ior other sundry items 45 101 269 l as purchases. Results of operations of the acquired corix" $ 680 $ 649 $1,010 l rations have been incluckxl in GE Capital since their respective dates of acquisition and are not material. Other sundry items included gains of $8 million in 1987 OnJune 11,1986, GEF5 acquired for approximately pared with gains of $178 million in 1986 from sales of $600 milh,on in cash and notes an 80% interest in Kidder, 3 I"."."Y" '""E passive investment in equity Pealxxly & Co. Incorporated (the " Kidder, Pealxxty secunnesof FoshibaC,orporauon. 49

1 ) 1 - 5 a== =-He anepted acmunting principles, the cumulative effect of a j change in tax rates from the rates assumed for a leveraged GEFS earned income is summarized in the table below, lease is recognized in the first accounting period ending on (In millions) 1988 1987 1986 or after the date on which legislation affectir.g the tax rate becomes law. For leveraged leases, this accounting effect Time sales, k>an, investment and was a reduction in 1986 earned income from financing F,m,otherincome $ 5,986 $ 4,475 $ 3,008 leases, which was more than offset by a decrease in the ancmgleases 870 738 <01 Operatinglease rentals 1,372 536 321 1986 provision for income taxes, as shown.m the follow.mg Premium arxlcommission income table. ofinsurance affiliates 1,802 1,748 1,582 Commissions arxl fees ofsecurities (in millions) 1986 broker-dealer 625 728 364 GEFS carned income from Reduction in earned income - financing leases operations 10,655 8,225 5,976 Investment tax credit $ 97 Effect on investment in leveraged Other 75 leases of change in tax-rate 172 assumptions (172) Sale of stock by nonconsolidated Reduction in income tax provision i Change in investment m leveraged leases 35 i affihate 10 Additional effect of tax-rate change 357 $10.655 $ 8,225 $ 5,814 392 The Tax Reform Act of 1986 provided for a reduction in corporate tax rates from 46% in 1986 to 40% in 1987 and 34% in 1988 and subsequent years. Under generally Detailsof aernedincome Direct financing leases leveraged leases Total financing leases - from financing leases (In millions) 1988 1987 1986 1988 1987 1986 1988 1987 1986 Deferred income amortized Investment tax credit $ 20 $ 31 $ 68 $ 3 $ 16 $ 46 $ 23 $ 47 $114 Other 676 572 463 103 71 49 779 643 512 696 603 531 106 87 95 802 690 626 Gains on realized residual values 39 44 32 29 4 43 68 48 75 Farned income-financing leases $735 $647 $563 $135 $ 91 $138 $870 $738 $701 Noncancellable future rentals due from customers for $675 million; 1990-$431 million; 19C 1 - $276 million; equipment on operating leases as of December 31,1988 1992-$195 million; 1993-$111 mil' ion; and $281 mil-l totaled $1,969 million and are due as follows: 1989-lion thereafter. - 6 **--* c-=*-**= =-' --* j Supplemental cost details are shown in the table below. Supplementalcost details 1988 1987 1986 (In millions) GE GEFS Total GE GEFS Total GE GEFS Total 1 Emplayee compensation, including Social Security taxes and other benefits $11,690 $1,052 $12,742 $12,139 $959 $13,098 $11,775 $620 $12,395 Selling, general and administrative expense 6,244 6.244 5,979 5,979 5,963 5,963 Depreciation, depletion and amortization of plant and equipment induding equipment leased to others 1,522 744 2,266 1,544 369 1,913 1,460 365 1,825 Company-fmxhxl research and development 1,155 1,155 1,194 1,194 1,300 1,300 Maintenance and repain 839 839 840 840 803 803 Social Security taxes 751 68 819 727 69 796 725 43 768 Rentalexpense 700 160 860 657 123 780 564 68 632 Advertising 413 66 479 495 51 546 481 24 505 Taxes, except Social Security and those on mcome 374 77 451 289 82 371 288 28 316 50 ___-_______-_-_D

Nota 7 Pan:i:n3cndOtturRetireeBenefits future senice perimi of employees. Prior-service cost for changes in pension benefits which are alhicable to previous GE and its afTiliates s[xmsor a number of pension and periods of senice are amordzed in the same manner. other retiree benefit plans.This note sununarizes impor-Actuarial assumptions for the principal pension plans tam financial aspects of GE's obligations for these plans. include 8.5% for both the assumed discount rate used to Measurements of obligations arxl costs are based on actu-detennine the present value of future benefits and the arial calculations involving various assumptions as to expected long-tenn rate of return on plan assets. The future events. assumed rate of average future increases in pension bene-fit compensation is 6.5%. Principalpension plans Employer costs for the principal pension plans in 1988 The principal pension plans are the GE Pension Plan (GE recognized the impact of plan design changes in 1988 and Plan) and the GE Supplementary Pension Plan (Supple-continued favorable investment perfonnance. Details of mentary Plan). The RCA Retirement Plan (RCA Plan) was cost for the principal pension plans follow. merged with the GE Pension Plan at the eixi of 1988. Amounts and comments about the GE Plan in this note fnstgp ncipalpensionplans include the RCA Plan fromJune 1,1986. Other pension plans are s[xmsored by domestic and foreign afliliates, but Benefit cost for senice during the these are not considered to be significant individually or in ye r-- net of employee contnbutions $ 300 $ 385 $ 349 the aggregate to GE's financial pos.. ition. Interest cost on projected benefit The GE Plan covers substantially all employees in the obligation 1,232 1,187 1,074 Recognized return on plan assets (1,460) (1,293) (1,067) United States, including aI>I3roximately 50% of GEFS Net amomzation (299) (254) (213) employees. Generally, benefits are based on the greater of Net pension cost 5 (227) $ 25 $ 143 a fbrmula recognizing career earnings or a formula recog-l Detail f tui n i an assets nizing length of senice and final average earnings, liene. fits are funded through the GE Pension Frust. At the end Recognized return on plan assets (1,460) (1.293) (1,067) of 1988, approximately 218,900 employees were covered. Unrecognized return on plan assets 5 801 $ (56)$1,672 appmximately 118,000 fonner employees with vested rights were entitled to future benefits and approximately lleginning in 1989, employee contributions ($147 mil-149,300 retirees or beneficiaries were receiving benefits. lion for 1988) will no longer reduce benefit costs as contri-The Supplementary Plan is an unfunded plan providing butions will be used to provide additional pension benefits. supplementary retirement benefits primarily to higher-Recognked return on plan assets is detennined by level, longer-senice management and professional applying the expected long-tenn rate of return to the mar-employees in the United States. At the end of 1988, about ket-related value of assets. 3,600 employees were eligible for this plan, and about Funding policy for the GE Plan is to contribute amounts 3,900 retirees or beneficiaries were receiving benefits. sullicient to meet minimum funding requirements set GE adopted Statement of Financial Accounting Standards fonh in U.S. employee benefit and tax laws plus such addi-(SFAS) No. 87 for pension accounting effectiveJanuary 1, tional amounts as GE may detennine to be appropriate 1986. SFAS No. 87 requires use of the pmjected unit credit from time to time. GE made no contribution in 1988 cost methal to determine the projected benefit obligation because the funding status of the GE Plan precluded cur-and plan cost. The projected benefit obligation is the actu-rent tax deduction and would have resulted in an excise arial present value of the [mrtion of pmjected future bene-tax. fits that is attributed to employee senice to date. The The funding status of an ongoing plan may be meas-benefit cost for ser me during the year is the portion of the ured by comparing the market-related value of assets with projected benefit obligation that is attributed to employee the projected benefit obligation. The market-related value sen ice during the year. This cost method recognizes the of assets is based on amortized cost plus recognition of effect of future compensation and senice in projecting the market appreciation and depreciation in the portfolio over future benefits, and it had been used for the GE Plan five years. GE believes the market-related value of assets is before adoption of SFAS No. 87. a more realistic measure than current fair market value in addition SFAS No. 87 establishes a " transition gain." because the market-related value reduces the impact of This is the excess atJanuary 1,1986 of the current fair short tenn market fluctuations. The funding status for the market value of plan assets over the plan's pnjected bene-principal pension plans follows. fit obligation. This transition gain is being amortized over 15 years except that such excess for the RCA Plan was h." r' " ji ipalpension plans recognized as an asset in accounting for the RGA Market-related valuc of assets $19,308 $17,663 acquisition. Pnktal hendt obligation 15,473 15.494 Gains and losses that occur because actual experience differs fmm that assumed are amortized over the average 51

. A schedule reconciling the pnjected benefit obligation Notr 8 Interest and Other Financial Charges for principal pension plans with GE's recorded pension liability is shown below, GE. Interest capitalized, principally on major property, Reconciliation of projected benefit obligation with pension pl nt and equipment projects, was $11 million in 1988, liability for principal pension plans $23 milhon m 1987 arxl $38 milhon _m 1986. Decernleer 31 On millions) 1988 1987 GEFS. GEFS interest and discount expense reixnted in the Projected benent obligation $15,473 $15,494 Statement of Earnings is net ofinterest income on tempo-j Less current fair market value of trust assets (21,502) (20,088) rary investments of excess funds ($285 million, $165 mil-Unrecognized SFAS No. 87 transition gain 1,847 2,000 lion and $53 million in 1988,1987 and 1986, respectively) j ience gains 3,3i[3 2, and c pitalized interest of $16 million, $4 million and er r c g i eir t x Unrecognized prior-service cost i14 (265) $8 million, respectively, for 1988,1987 and 1986. l Recorded prepaid pension assets 1,177 573 Recorded pension liability $ 412 $ 379 Note Q GEFS Allowance for Losses on i The portion of the projected benefit obligation repre. Financing Receivables senting the accumulated benefit obligation amounted to $ 14,073 million and $13,176 million at the end of 1988 GEFS allowance for losses on financing receivables repre-I and 1987, respectively, and the vested benefit obligation sented 2.63% and 2.59% of total financing receivables at was $ 13,895 million and $ 12,835 million at the end of year-ends 1988 and 1987, respectively.The table below 1988 and 1987, respectively. These amounts are based on shows the activity in the allowance for losses on financing compensation and service to date, receivables during 1986 through 1988. Trust assets consist mainly of common stock and fixed (In millions) 1988 1987 1986 income investments. Included at year-end 1988 was GE U"I conunon stock valued at $ 139 million held in connection Add."fC l3 "" 'Y I $ 743 $603 $ 492 iuons charged to operauons 434 290 558 with an m. dexed portfob. o-Net transfers related to companies Other unrecognized net experience gains resulted prin-acquired and sold 89 21 14 cipally from favorable investment performance. Amounts written off (2M) (17l) (461) Unrecognized prior-service cost includes the effect of Balance at December 31 5972 5743 $ 603 January 1,1988 benefit increases to GE pensioners and 1988 benefit changes affecting active employees. Amounts written offin 1988 were approximately Principal retiree health care and life insurance plans 0.81 % of average financing receivables outstanding during GE and its alliliates sponsor a number of plans providing the year, compared with 0.62% and 2.02% of average retiree health care and life insurance benefits. GE's aggre-financing receivables outstanding during 1987 and 1986, respectively. gate cost for the principal plans, which cover substantially all employees in the United States, was $302 million in ] 1988, $278 million in 1987 and $84 million in 1986.The Note 10 ua is a a - costs for 1988 and 1987 were significantly higher than for 1986 due to favorable nonrecurring changes in 1986 when GE. Unusual expenses in prior years were provisions for the assumed discount rate used to determine the present corporate restructuring- $1,027 million in 1987 and value of future life and health benefits was increased. $311 million in 1986. These were fi>r the expenses of refi>- Generally, employees who retire after qualifying for cusing a wide variety of business and marketing activities optional cady retirement under the GE Plan are eligible to and reducing foreign and domestic risk exposures. These participate in retiree health care and life insurance plans. provisions include costs of rationalizing and improving a licalth care benefits for eligible retirees under age 65 and large number of pnxluction facilities; rearranging pnxluc-eligible dependents are included in costs as covered tion activities among a number of existing plants; and expenses are actually incurred. For eligible retirees and reorganizing, phasing out or otherwise concluding other s[x>uses over age 65, the present value of future health activities no longer considered essential to the conduct of care benefits is funded or accrued and is included in the Company's business. costs in the year the retiree becomes eligible li>r benefits. The present value of future life insurance benefits for eh.- GEFS.GEFS had provisions of $91 million in 1987 for l 1 gible retirees is funded and is included in costs in the year

E"""".". restructuring activities, including amounts related to msider trading charges and business ofa ement.

Most retirees outside the Um. d States are covered restructuring activities of Kidder, Pealxxty. te by government health care prognuns, and GE's cost is not significant. 52

Nota } } Provillen for incama Taxes (sxcluding 1987 extracrdinzry it:m and cumul:tiva effect of chrngtsin ecccunting principlse) Provision for income taxes 1988 1987 1986 (In millions) GE GEFS Total GE GEFS Total GE GEFS Total Estimated amounts payable (recoverable) $1,311 $ (32) $1,279 $1,246 $ (212) $1,034 $ 1,358 $ (831) $ 527 Deferred tax expense (benefit) from " temporary differences" (152) 274 122 (71) 231 160 (120) 656 536 Investment credit defermi (amonized)- net (63) (3) (66) (87) 1 (86) (38) 2 (36) Effect of change in tax-rate (392) (392) assumptions forleveraged leases $ 1.096 $ 239 $1.335 $ 1.088 $ 20 $1.108 $1.200 $ (565) $ 635

"Fstimated amounts payable" includes amounts items making up deferred U.S. federal income tax pro-applicable to foreignjurisdictions of $344 million, visions are substantially different in nature for GE except

$197 million and $198 million in 1988,1987 and 1986, GEFS and GEFS. Accordingly, the principal" temporary respectively, difference" items are summarized separately in the e General Electric Cmnpany files a consolidated U.S. following table. federal income tax return that includes GEFS. GEFS' pn> Deferred income tax expense (benefit) vision for estimated taxes recoverable.mcludes.its effect on from temporary differences the consolidated tax return. The amount of taxes recover-(in millions) 1988 1987 1986 able as reported by GEFS has been reduced to the extent GE except GEFS of consolidated investment tax credit carryforwards of Tax over lx>ok depreciation 5 34 $ 18 $ 87 $168 million and $275 million at December 31,1987 and Margin on installment sales (4) (16) (33) Provision for warranties (149) 9 (27) 1986, respectively. Investment tax credit carryforwards of I0 $168 million and $107 million realized in 1988 and 1987, $[ly'f""h',' I*'"'I""5 g, respectively, were reflected as reinstatements of def erred pI) 020) tax balances. GEFS e Deferred income taxes rellect the impact of"temlxF Financing lease income 287 338 573 rary differences" between the amount of assets and liabili. Deferred commitment fees 2 15 (Il) Intens and discount expenses (4) 16 28 ties for financial reporting purposes and such amounts as Deferred expenses and other measured by tax laws and regulan.ons. Fhese" temporary adjustments of insurance differences" are determined in accordance with Statement afuliates (75) (30) 33 of Financial Accounting Standards No. 96 (see note 1) Financing lease income of nonc nsolidated joint ventures (6) 11 commencing in 1987 and are more inclusive in nature State and local taxes 6 (3) (8) than, timing differences,, as determmed under previously Depreciation of buildings and applicable generally accepted accounting principles. equipment (2) (24) 13 Deferred income taxes for 1986 have not been restated. Operating leases (58) (27) (28) Tax transfer leases 7 (29) 26 Provision for losses (65) (106) (74) Earnings of associated companies 29 4 5 Tax credit carryforwards recognized as reinstatement (reduction) of deferred income taxes 168 107 83 Other-net (21) (24) 5 274 231 656 $122 $_160 $536 l "Other-net" includes the tax effects of a number of temporary differences such as those related to various por-tions of transactions involving business dispositions and restructuring expense provisions. 53

i o De U.S. investment tax credit (ITC) was repealed, - A reconciliation from the consolidated provision for j with some transitional exceptions, effectiveJanuary 1, income taxes that would have resulted using the U.S. fed-1986. Ilowever, because ofits use of the deferral method eral statutory rate to the actual provision is shown below. of accounting for the ITC, GE has an unamortized balance Differences between expected U.S. federal statutory remaining. As a result of the accounting change m 1987, tax-rate provision and actual tax provision unamortized ITC is treated as a temporary difference Ihr (in millions) 1988 1987 1986 deferred tax accounting. GE's remaining unamortized ITC Expected consolidated tax balance was $ 149 million, net of deferred tax at year-erxl provision at statutory rates $1,605 $1.291 $1.438 1988, and will be added to income in future years. Increase (reductioniin taxes

See note 5 for furtherinformation about the 1986 resulting from GE I"

5il," ,{",;jgs 3 " effect of change in tax-rate assumptions for leveraged 7l -d leases-cumulative effect of accounting

The U.S. federal statutory tax rate on corporations change)in before-tax income was 34% in 1988, down from 40% in 1987 atxl 46% in on an after-tax hasis (268)

(221) - (232) i Varying tax rates of other 198(i. Data alxiut " effective tax rates,"i.e., provision for afliliates (principally foreign) (115) (117) (80) income taxes as a percentage of earnings before income Amm tization ofinvestment tax ] taxes, extraordinary item arxl cumulative effirt of credit (70) (88) (87) accotating changes, follow. Inmme t xes at capital gains rate (18) (54) Varying rates on unusualitems 2a (14) Effective tax rates (before extraordinary item and cumulative Current-year effect ofincome tax effect of accounting changes) accounting change 133 1988 1987 1986 All other-net 25 91 (31) (428) (195) (498) GE 24.5 % 33.9 % 32.5 % GEFS 23.3 3.5 (a) Increase (reduction)in taxes Consolidated 28.3 34.3 20.3 resulting from GEFS Amortization ofinvestment tax (a) Calculation of an effective tax rate for 1986 is not meaningful for credit on financing and GEFS, whic h sustained a pre-tax loss of $61 million in that year and operating leases (17) (27) (17) had a credit tax provision of $565 million. A significant factor in Dividends received which are not GEFS' 1986 operations was a required change in tax-rate assump-fully taxable (17) (13) (20) tion for leveraged leases in accordance with the Tax Reform Act of income from tax-exempt 1986 as eliscussed in more detail in note 5. marketable securities (101) (112) (108) Income taxes at capital gains rate (14) (4I) Fresh-start provision of insurance afTiliates (22) Change in tax-rate assumptions for leveraged leases (note 5) (14) (31) (357) All other-net 64 (12) 6 (110) (209) (537) Eliminations 268 221 232 Attual consolidated tax provision $1.335 $1,108 $ 635

Provision has been made Ihr U.S. federalincome I

taxes to be paid on that portion of the undistributed earn-ings of afTiliates and associated companies expected to be remitted to the parent company. Undistributed earnings intended to be reinvested indefinitely in affiliates arxl asso-ciated companies totaled $1,097 million, $1,318 million and $ 1,063 million at the end of 1988,1987 and 1986, respectively. It is estimated that (breign tax credits would approximately offset the U.S taxes payable if these earn-ings were to be distributed.

liased on the hication (not taxjurisdiction) of the business providing goods or services, consolidated domes-tic income belbre taxes, extraordinary item and cumulative effect of changes in accounting principles was $3,936 mil-lion in 1988, $2,710 million in 1987 and $2,516 million in 1986. The corresponding amounts fbr foreign-based oper-ations were $785 million, $517 million and '$611 million in each of those years, respectively.

- 54

{h GElnvetoria Note { Cash Note Deposits restricted as to usage arxl withdrawal or used as December 31 (in millions) 1988 1987 partial compensation for short-term borrowing arrange-ments were not material for either GE except GEFS oi Raw materials and workin process $ 5,603. $ 5,515 GEFS. See notes 22 arxl 26 for related information about Finishal goods 2.863 2,546 Unbilled shipments 246 280 credit lines arxl compensating balances. 8,712 8,341 tess revaluation to LIFO (2,226) (2,076) LIFO value ofinventories $ 6,486 $ 6,265 Note } } Marketable Securities Carried at Cost LIFO revaluations increased $150 million in 1988 pri-marily because of price increases. LIFO revaluations Carrying value of marketable securities for GE except increased $324 milhon m, 1987, mostly related to the GEFS was substandally the same as market value at year-accounting change described in note 1, but decreased crxis 1988 arxl 1987. Market value of GEFS' securities car-ried at amortized cost was $5,537 million arxl $4,592 mil- $104 million in 1986. Included in these changes were decreases of $23 million, $22 million arxl $51 million lion at December 31,1988 and 1987, respectively. (1988,1987 and 1986, respectively) due to lower inventory levels. In 1988 arxl 1987, there was a net current-year price Note 14 aers= 6

6i s iti c rried increase but in 1986 there was a price decrease, Aix)ut at Market 86% of totalinventories is valued using the L.IFO mettux!

ofinventory accounting. December 31 (In millions) 1988 1987 U.S. government and federal agency securities $2,433 $1,822 State arKl municipal securities 215 426 Corporate stocks, boixis arxl foreign securities 2,441 1,752 $5,089 $4,000 At December 31,1988, the carrying value of equity securities carried at market value included unrealized gains and unrealized losses of approximately $19 million and $30 million, respectively. A significant [x>rtion of securities carried at market value at December 31,1988 was pledged as collateral for f bank loans and repurchase agreements. In addition, Kid-der, Pealxxty lx>rrows and leixis securities to obtain financ-ing arxl to facilitate the securities settlement process. Note 15 asc -ata i 6i - December 31 (In millions) 1988 1987 Receivable from: Customers $5,289 $5,463 Associated companies 160 155 1 Others 1,857 1,374 7,306 6,992 Irss allowance for losses (196) (210) $7,110 $6,782 55

Note- } f GEFS Financing Receivables (laestment in time sales, loans and financing leases)

" Time sales and loans" represents transactions in a December 31 (In millions) 1988 1987 variety of forms, including time sales, revolving charge Time sales and loans and credit, mortgages, installment loans, intermediate-Commercial real estate financing

$ 7,114 $ 6,131 term kians, arKI Tevolving loans secured b) business assels etail fI ar and m ndat rily redeemable preferred stock. The portfo-r ,4 11ome and recreation financing 1,888 2,011 lio includes time sales and loans carried at the principal Equipment sales financing 1,826 1,502 amount on which finance charges are billed periodically, Other 1,208 1,126 and time sales and kians acquired on a discount basis car. 26,770 19,560 ried at gross lx>ok value, which includes finance charges. Deferred income (983) (1,000) e "Financm.g leases"c nsists of direct financing and Time sales and kians-net of deferred income 25,787 18,560 leveraged leases of aircraft, ra Iroad rolling stock, automo-Investn.ent in financing leases biles and other transportation equipment, data processing Direct financing leases 8,433 7,410 equipment, medical equipment, and other manufacturing, Irveraged leases 2,691 2,704 power generation, mining and commercial equipment and 11,124 10.114 facilities. As the sole owner of assets under direct financing 36,911 28,674 leases and as the equity participant in leveraged leases, less allowance for losses (972) (743) GEFS is taxed on totallease payments received and is enti- $35,939 $27,931 tied to tax deductions based on the cost of leased assets and tax deductions for interest paid to third-party participants. GEFS also is entitled generally to any investment tax credit j on leased equipment and to any residual value ofleased assets. Investments in direct financing and leveraged leases represent unpaid rentals and estimated unguaranteed residual values of leased equipment, less related deferred income and principal and interest on notes and other instruments representing third-party participation. Because GEFS has no general obligation on such notes and other instruments represendng third-party participa-tion, such notes and other instruments have not been included in liabilities but have been offset against the related rentals receivable. GEFS' share of rentals receivable is subordinate to the share of the other participants who also have a security interest in the leased equipment. l Additional detail ofinvestment in financing leases at December 31,1988 and 1987 is shown below, investment in financing leases Direct Total hnancing leases Irveraged leases knancing leases December 31 (In millions) 1988 1987 1988 1987 19M8 1987 f otal minimum ! case payments receivable $ 10,109 $ 8,660 $10,745 $11,171 $20,854 $19,83 I T less principal and interest on third-party nonrecourse debt (7 N 3) (8,36I) (7,893) (8,361) Rentals receivable 10,109 8,660 2.852 2,810 12,961 11,470 Estimated unguaranteed residual value ofleased assets 1,102 853 817 855 1,919 1,708 less deferred income (a) (2,778) (2,103) (978) (961) (3,756) (3,064) investment in financing leases 8,433 7,410 2,691 2,704 11,124 10,114 less allowance for losses (121) (115) (74) (137) (195) (252) less deferred taxes arising from financing leases (1.218) (940) (2,406) (2.397) (3,624) (3,337) Net investment in financing leases 5 7,094 5 6,355 $ 211 5' 170 $ 7,305 $ 6,525 (a) Total hnancing lease deferred income is net of delerrest initial direct costs of $33 milhon and $17 million for 1988 and 1987, res)>ectively. l so

Experience has shown that a substantial portion of $26,019 million and $ 19,914 million, respectively, and the receivables will be paid prior to contractual maturity. ratio of cash collections to average financing receivables Accordingly, the maturitics of time sales arxl loans atxl was 72,5% and 72.8%, respectively, Contractual maturities rentals receivable at December 31,1988 shown in the table of time sa!cs and loans atxt rentals receivable at Decem-helaw are not to be regarded as forecasts of future cash her 31,1988 are shown in the following table, collections During 1988 and 1987, cash collections were 1994 ContracMI maturities (In millions) Total 1989 1990 1991 1992 1993 and aher l Yimesalesandloans Commercial real estate financing $ 7,114 89 $ 240 $ 432 $ 1,004 $ 2,036 $ 3,308 Conut.crcial and irulustrialloans 7,269 1,305 '761 1,007 716 658 2,822 Retailer financing 7,465 5,360 1,705 347 30 13 10 Iloms and recreation financing 1,888 744 154 140 125 114 611 Equipment sales financing 1,826 618 505 326 195 111 7I Other 1,208 257 188 59 52 42 610 26,770 8,373 3,553 2,311 2,127 2,974 7,432 Hentals receivable Direct financing leases 10,109 2,683 2,197 1,505 1,183 664 1,877 leveraged leases 2,852 7_4_ 119 138 148 154 2,219 12,961 2,757 2,316 1,643 1,331 818 4,096 $39,731 $11,130 $ 5,869 $ 3,954 % 3,458 $ 3,792 $11,528 } Q Property, Plant and Equipment { 8 OtherGEFS Receivables from and Note Note Payables to Brokers and Dealers (including equipmentleased to others) Included in other receivables atxt cther liabilities of GEFS are amounts receivable from and payable to bmkers and necember 31 (In millions) 1988 1987 dealers in connection with Kidder, Pealxxty's normal trad-ing, lending and bonuwing of securities. At December 31, Originalcost GE 1988 and 1987, amounts consisted of the following. Land and improvement $ 260 $ 232 Daember 31 (In millions) 1988 1987 lluildings, structures and related equipment 4,250 4,127 Irwiuded in other receivables hiachinery and equipment 12,957 12,616 Securities failed to deliver $ 132 $ 220 leasehold costs and manufacturing Deposits paid for securities borrowed 1,226 1,38b plant under construction 1,126 796 Other, principally clearing organizations 32 59 Oiland gas preperties 764 80i $1.390 $1,667 19,357 18,572 GEFS Included in other I, abilities Securities failed to receive $ 451 $ 198 Buildings and equipment 745 485 Deposits received for securities loaned 903 1,056 Equipment leased to others Vehicles 1,564 1 fig 8 Other, principally dearing organizations 48 74 Railroad rolling stock 1,038 907 $1,402 $1,328 hiarine shipping containcts 857 513 Aircraft 618 216 Data pnwessing equipment 355 345 Other 634 408 5,811 4,542 $25J68 $23,114 Accumulated depreciation, depletion and amortization GE $ 9,997 $ 9,317 gel >S 1.560 824 $ 11,557 $10,141 GEFS' accumulated amortization of equipment leased to others was $1,321 million and $658 million at Decem-ber 31,1988 and 1987, respectively. Amortization during 57

1988,1987 and 1986 was $665 million, $316 million atxl Nsts } { AllOthsr Asseta $327 taillion, respectively. At December 31,1988, GE except GEFS had minimum ne< ernher 31 (in millions) 1988 1987 rental commitments under imncancelable operating leases GE aggregating $3,058 million. Amounts payable over the I" next five years are: 1989-$452 million; 1990-$410 mil-t$1 companies (induding lion; 1991 -$367 million; 1992- $320 million; and 1993 - advances of $29 million and $270 million. $45 million) $ 647 $ 826 At December 31,1988, GEFS had minimum rental hiiscellaneous investments (at cost) conunitments under noncancellable operating leases aggre-rr d i 202 .169 gating $787 inillion. Anmunts payable over the next five Other 175 631 years are: 1989- $134 inillion; 1990-$112 million; 1991 hfarketable equity securities 72 90 -$95 million; 1992-$65 million; anxl 1993 -$55 million. Funds hekt for business development 81 Less allowance for losses (100) (75) 996 1,722 Note f.,0 'at asibi ^== *- Recoverable engmeenng costs on govertunent contracts 752 791 bing-term receivables 675 569 Decemler 31 (In millions) 1988 1987 .relesision program costs 352 480 GE I)eferred charges 318 416 G<xx1will $6,423 $3,820 Realestate development projects 73 130 Other intangibles 561 610 Customer financing 73 71 Other 205 144 6,984~ 4.430 GEFS G<xxlwill 1,364 1,106 GEFS Other intangibles 204 212 Investment in associated companies (including advances of $389 million 1,568 1.318 and $184 million) 1,145 755 $8.552 $5.748 Miscellaneous investments (at cost) 393 143 Ilroker-dealer cash and securities gy[", ; ;,(h["(K"I"'i'"(;,,,,, $:) 2j K"' Accumulated amortization of GE's g(xxlwill was $318 nullion and $301 million at December 31,1988 arnt 1)eferred charges 225 182 1987, respectively. Accumulated amortization of other Real estate pmpenies 122 82 intangibles (br GE was $455 million and $365 million at other 888 266 Decemher 31,1988 and 1987, respectively. The largest GE 3.418 1.705 g(xxlwill and other intangibles were from the RCA acquisi- $8,039 $6,601 tion, for which gmxiwill is being amortized on a straight-line basis over 40 years. The increase in gomlwill since For GE, the estimated realizable value of miscellaneous December 31,1987 was mainly from acquisitions of Roper investments was about the same as cost at year end. The Corporation, llorg-Warner's chemicals businesses and aggregate market value of marketable equity securities, WlVJ41iami, and final valuation of CGR assets. These which are carried at cost, was $72 million and $86 million balances also are being amortized over 40 years. All other at year-ends 1988 and 1987, respectively. Gross unrealized GE intangibles and g(xxlwill are being amortir.i over gains and losses were eat h $15 million at Dec-mber 31, shorter peri <xis as appropriate, ranging from one year to 1988. 20 years. The National Ilroadcasting Company (N11C, an affiliate Accu nulated amortization of GEFS' gmxlwill was of GE) capitalizes program costs (including rights to $133 million and $82 million at Decernber 31,1988 and broadcast) when paid or when a program is ready for 1987, respectively. Accumulated amortization of GEFS' broadcast, if earlier. These costs are amortized based u[xm other intangibles was $73 million and $56 million at projected rever.ucs or expensed when a program is deter-December 31,1988 and 1987, respectively. The increase in mined to have no value. GEFS' gomlwill since December 31,1987 represented pri-At year-end 1988, N15C had approximately $1.24 billion marily gmxlwill related to auto auctions previously not of commitments to acquire broadcast material or the rights consolidated and gmxlwill arising from the acquisitions of to broadcast television programs that require payments Gelco and MW Credit Operations. GEFS' intangible assets over the next five years. are being amortized over various periods not longer than 30 years. GEFS'other intangibles represent principally the value ofinsurance-in-force related to Employers Reinsur-ance's property and casualty reinsurance business, which is being amortized on a stmight-line basis over its estimated life of approximately 16 years. 58 l

Nats [ ShsrtTarmBarrowings Nots ] Accounts P=y bis Amount and average rate at December 31 Dec ember 31 (In millions) 1988 1987 1988 1987 GE (In millions) Amount Rate Amount Rate Trade accounts $1,939 $2.105 Collected for the account ofothers 180 279 GE Other 17 231 Notes with trust 2.136 2,615 departments $ 337 8.5% $ 320 6.6%- GEFS Affihate bank Accounts and drafts payable 4.132 3.329 h>rrowings (principally foreign) 261 25.7 364 35.2 Eliminations (264) (216) Other. including $6.Ont $5,728 current lx>rtion of long-term ix>rrowings 1,263 426 1.861 1,110 GEFS Note GEFS Securities Sold but Not Yet Commercial paper 24,591 9.32 18,790 7.77 Purchased, at Market Ilanks 1,987 9.34 1,650 8.11 Current portion of long-term borrowings 790 1.118 December 31 (in millions) 1988 1987 Notes wnh trust departments 990 8.48 965 6.78 U.S. government and federal agency Passlxoks and securities $1,560 $1,000 mvestment State and municipal securities 9 16 certificates 373 325 Corporate stocks, bonds arxl foreign 28.731 22.848 securities 519 391 Eliminations (170) (85) $2.088 $1,407 $30.422 $23.873 The average balance of short-term borrowings for GE Note 25 GE AllOtherCurrentCostsand except GEFS, excluding the current portion oflong-term Expenses Accrued lxinuwings, was $ 1,416 million in 1988 (calculated by averaging month-end balances for the year) compared At year-ends 1988 and 1987, this account included taxes with an average balance of $1,492 million in 1987. The accrued of $ 1,568 million and $1,382 million, respectively, maximum balances in these calculations were $2A44 mil-nd compensation and benefit accruals of $982 million and lion at the end of September 1988 and $2,048 million at $777 milli n, respectively. Also mcluded are amounts fi>r the end of June 1987.The average worldwide efTective pn> duct warranties, estimated costs on shipments billed to interest rate fi>r the year 1988 was 15%; fi>r 1987, it was customers and a wide variety of other sundry items. 139. These average rates represent total short-term inter-est incurred divided by the average balance outstanding. Although the total unused credit available to GE through banks and commercial credit markets is not readily quanti-fiable, confirmed credit lines of about $1.3 billion had been extended by 48 banks at year-end 1988. Substantially all of these lines also are available fi>r use by GECC and GEFS in addition to their own credit lines (see note 26). The average daily balance of GEFS' borrowings, exclud-ing the current portion oflong-term lx>nuwings, was $27,889 million in 1988 compared with $20,147 million for 1987. The December 5,1988 balance of $30,385 mil-tion was the maximum balance in 1988. The October 21, 1987 balance of $23A63 million was the maximum bal-ance in 1987. The average short-term interest rate, exclud. ing the cunent portion oflong-tenu debt, was 7.96W for 1988, representing short-term interest expense divided by the average daily b. dance, compared with 7.259. for 1987.

i J '** 2 6 * ~ l December 31 (in millions). '1988 1987 GE $ 4,330 $ 4,491 GEFS 10,862 8,037 ' FJiminations. (110) (11) $15,082 $12.517 l Outstarxling balances in long-term borrowings for GE at December 31,1988 and 1987 are as follows. GE long-term borrowings December 31 (In millions) 1988 1987 7%% Notes Due 1989 $ - $ 500 (a) The Company has entered into certain contracts which result in a 6%% Notes Due 1989 500 fixed U.S. dollar interest cost of 7.671 12%% Australian Dollar Notes Due 1989 (a) 108 (b) Debt originally incurred by RCA but for which GE is now the (C) P",hgor. 1 b L 16%% Notes Due 1987-1989 (b) 35 ""P"I ""d I"'C'F F"% C""I"" 'e) denonu,n led in Euro- ' 5%% Notes Due 1972-1991 13 19 6%% Notes Due 1991. 500 500 lwan Cun ency Umu. In connntion with this issue, GE entered mto aJapanese yen currency and interest-rate swap agreement under which GE assumes a fixed yen liability (22,262 million) for l 7%% E.uro-dollar Notes D.ue 1991 300 300 5.30% Sinking FurxlDebentures Due payment of principal in 1992 and pays interest in yen to the 1973-1992 28 34 commercial bamk counterparts at s<miewhat below the six-month i 12%% Notes Due 1992 (b) ; 100 100 ' LIBOR yen rate. 7% Notes Due 1992 250 250 (d) Notes are yen 35 billion at a fixed exchange rate of yen 180.41 = -l ~' 7% per cent. Notes Due 1992 (c) 178 $ U.S.1.00. 5%% Eurwyen Notes Due 1993 (d) 194 194 (C) !nduding aniortization of originalissue discount, the effective 4%% Euro-dollar Discount Notes '"'. nest rates are: 4 %% notes-7.41%,2%% notes-7.661 Due 1993 (c) 200 200 ""P" "" "'"#8' I Cf"I*" '"I 9%% Notes Due 1993 (f) 528 dollars. In connectmn with this issue, GE entered into currency and interest. rate swap agreements under which GE assumes (1) a 2%% Discount Notes Due 1994 (e)(g) 150 150 6xed Dutch guilder liability (632 million) and (2) a fixed German ' 7% Euro-dollar Extendible Notes mark liability (373 million) for payment of principal in 1993 and Due 1998(h)(i) 200 200 pays interest in the respective currencies to the commercial bank ' 8%% Debentures Due 1985-2004 217 217 counterparts at somewhat helow the respective currency three-8% Eunxiollar Extendible Notes month LiBOR rate. Due 2006(i)(j) 300 300 (g) Accmnpanied by sale of 3.570,000 warrants expiring December ' 3989 ' llas an'anged br o; pons on its simlin order 7%% Euro-do!!ar Extendible Notes sl'iar 8%% Sinkm,6 (i)(k'g F. I Due 200 300 300 dude any dilution from excrose of the warrants. und Debentures Due 2016 300 300 (h) Interest rate subject to annual adjustment at the Company's Industrialdevelopment lxxxis 262 225 option beginning in 1989. Allother 310 59 (i) At annual rate adjustment dates, notes are redeemable in whole $4,330 $4,491 or in part at the option of the Company or repayable at the opnon of the holders at face value plus accrued interest. J (j) Interest rate subject to annual adjustment at the Company's option beginning in 1993. { (L) Interest rate subject to annual adjustment at the Company's option beginning in 1991. .i "All other" includes original issue ptemium and dis- $ 1,233 million in 1989, $51 million in 1990,$824 million counts, an adjustment to bring RCA borrowings at acquisi-in 1991, $572 million in 1992 and $952 million in 1993, tion date to fair market value, and a variety of borrowings These amounts ate after deducting debentures which by affiliates and parent components with various interest have been reacquired for sinking-futxl needs. rates and maturities. long-term lx>rrowing maturities during the next five years, including the portion classified as current, are 1 l 60

Outstanding balances in long-term bormwings for GEFS at December 31,1988 and 1987 are as follows. GEFS long-term borrowings Deremtwr 31 (in millions) 1988 1987 Senior Master notes (a) $ 181 $ 187 (a) Notes have a rolling 13-month or 15-month maturity and hear 6.39% Notes Due 1990 (b) 50 50 interest based principally on GE Capitars 180-day open-market 6.51% Notes Due 1990 (c) 72 72 notes. 8% Notes Due 1990 100 100 (b) Principalamtinterest(15.00% coupon rate)denominatedin 8.125% Notes Due 1990 100 100 Australian dollars. In connection with this issue, GEFS entered 8.875% Notes Due 1990 200 200 into a U.S. dollar currency and interest-rate swap agreement under which GEFS assumes a fixed U.S. dollar liability for pay-10% Notes Due 1990 200 I.rinci alin 1990 arul pays interest in U.S. dollars to the 7.75% Notes Due 1991 250 "y"j'iernaH>ank counterpane at E3M on the UA donar P P C Cc 8.25% Notes Due 1991 600

i (c) Princihal and interest denominated in New Zealarut dollars. Co 9.75% Notes Due 1991 98 100 11% Notes Due 1991 200 Ixin interest is 200 basis points below the New Zealand 90-day 12.75% Notes Due IW1 126 150 bank bill rate reset quarterly. In connection with this issue, GEFS 13.625% Notes Due 1991 150 entered into a U.S. dollar currency arul interest-rate swap agree-7.125% Notes Due 1992 250 250 ment under which GEFS assumes a fixed U.S. dollar liability for 8.75% Notes Due 1W2 300 300 payment of principal in 1990 and pays interest in U.S. dollars to 8.75% Notes Due 1992 250 the commercial bank counterparts at 6.51 % on the U.S. dollar 9.50% Notes Due 1992 250 250 Edhih'Y-

'""'"'d[i 4 Zero Cou;xm Notes Due 1992 (d) 357 400

p i n t

ninated in Canadian dollars. In con-9% Notes Due 1993 1,000 nection with this issue,GEFS entered into a pound sterling cur-10.25% Notes Due 1993 (c) 143 rency and interest-rate swap agreement under which GEFS Zero Coupm Notes Due 1993 (d) 374 400 assumes a fixed pound sterling liability for payment of principal Zero Coupm Notes Due 1994 (f) 171 200 in 1993 and pays a floating rate ofinterest in pound sterling to 12% Notes Due 1994 117 200 the commercial bank counterparties. 9.5% Notes Due 1995 300 (f) Discounted to yield 14.47%. (g) No stated maturity date. Issuer calls and investor puts available at Zero Coupm Notes Due 1995 (f) 432 500 10-year intervals. Principal denominated in Swiss francs, but 7.250% Notes Due 1996(g) 153 153 gel S can hma the ultimate retirement to no more than $ 153 Zero Coupm Notes Due 1996(h) 551 600 fome ht Weanntenalat W ',"fi.f". Annualinterest e 9.95% Notes Due 1998 125 10.375% Notes Due 2(XX)(i)(j) 186 200 (h) Discounted to yield 12.04%. 10.25% Notes Due 200C (i) 200 (i) Extendible notes. GEFS will reset interest rates at end ofinitial 5.50% Notcs Due 2001 (k) 385 500 and each subsequent interest pericxt. At each rate-reset date, 11.75% Notes Due 2005 137 200 holders may redeem notes at f ace value plus accrued interest. 9.75% Notes Due 2005 (i)(1) 156 200 Extendible notes are included in the current portion of long-term debt when the interest-tate-reses date is within one year. 8.75% Notes Due 2007 (m)(n) 500 500 @ The 10.375% initialinterest rate applies until February 20.1990. 9.375% Notes Due 2007 (i)(o) 106 300

)

D ""'*d '". yield 15.80%. 8% Notes Due 2011 (i)(p) 250 250 m e M5% nunahnterest rag appues unt@ctober 9. W92. 6.75%' Notes Due 2011 (i)(tl) "50 950 (m) Remarketed reset notes. Fhe mterest rate w 11 be reset at end of 8.25% Notes Due 2011 (i)(r) 250 250 initial and subsequent interest periods (2 5 years) pursuant to an 8.75% Notes Due 2011 (i)(s) 300 300 established formula agreed to by GEFS and the remarketing 7.50% Notes Due 2018 (t) 500 urrierwriter. 8.25% Notes Due 2018 (m)(u) 500 (n) The 8.75% initialinterest rate applies until December 15.1990. Floating Rate Notes Due 2048 (v) 164 (o) The 9.375% initialinterest rate applies until October 15,1990. Other notes due 1988-2024 1,440 1,319 (p) The 8% initialinterest rate applies until Mar h 1,1990. less unamortized discount (1,136) (1.466) W The 6.75% jn!tjal jnterest rate applies until November 1,1991. (r) The 8.25% mitial mterest rate apphes unal March 1,1993. i l Total senior 10.538 7,765 (s) The 8.75% initialinterest rate applies until March 4,1993. 56 inMal interest rate appUes unty March (t) eset notes ic Subordinated 15,1991.The interest rate will be reset on March 15th m every 8.125% Notes Due 1988-92 15 20 third year thereafter to a rate equal to 108% of the three-year 4.85% Notes Due 1990 25 25 treasury rate. 8.125% Notes Due 1991 25 25 (u) The 8.25% initialinterest rate applies until May 1,1991. 12.25% Notes Due 1992 78 79 (v) The rate of interest payable on each note is a variable rate. The 7.85% Notes Due 1993 12 12 interest rate is based on the commercial paper rate cach month. 8.25% Notes Due 1997 50 50 Interest on the notes is payable at the option of GEFS cither Other notes due 1988-2004 119 61 annually or semiannually. Total subordinated 324 272 Totallong-term notes $10.862 $ 8.037

long-term borrowing maturities during the next five
In December 1987, GE Capitalinitiated a debt extin-years, including the current [mrtion of notes payable after guishment program to use the proceeds from the issuance one year, are: 1989- $790 million; 1990 - $ 1,320 mil-of new long-tenn debt to repurchase or redeem approxi-tion (including $181 million of notes having a rolling 13-mately $1.1 billion of existing debt at market prices or month or 15-month maturity); 1991 - $1,226 million; 1992- $1,472 million; and 1993 - $ 1,610 million.

61

redemption premiums in excess of the net carrying Nota ]7 GE AllOtharLiabilitiss amounts. This resulted in an after-tax loss of $62 million (net of $39 million tax credit) that was reported as an For GE except GEFS, this account includes noncurrent extraordinary item in the consolidated Statement of Earn-compensation and benefit accruals at year-ends 1988 and ings for the year 1987. The extinguishment were com-1987 of $ 1,516 million arxl $1,449 million, respectively, pleted during the first quarter of 1988. Other noncurrent liabilities include amounts fi>r pnxluct e At Ikember 31,1988, GE Capital had established warranties, deferred incentive compensation, deferral lines of credit aggregating $11,835 million with 182 banks, investment tax credit, deferred income and a wide variety including $9,805 million of revolving credit agreements of other sundry items. with 124 banks pursuant to which GE Capital has the right to borrow furxis for perkxis exceeding one year. In addi-tion, at December 31,1988, approximately $ 1,235 million Note % MinorityInterestin Equityof Consolidated Affiliates I of GE's credit lines were available for use by GE Capital. A total of $3,900 million of these lines also was available for use by GE Financial Services. During 1988, GEFS did not tjecemtier 31 (In minions) 1988 1987 borrow under any of these credit lines. GE $228 $190 GEFS compensates banks fi>r credit fiicilities in the fi>rm GEFs 753 112 of fees or a combination of balances and fees as agreed to $9si $302 with the bank. o At December 31,1988, Kidder, Pealxxly had estab-The increase of $641 million in minority interest in lished lines of credit aggregating $3,968 million, of which equity of consolidated GEFS affiliates in 1988 was due pri- $333 million was available on an unsecured basis. Borrow-marily to issuance by GE Capital of six thousand shares of ings from banks were primarily unsecured demand obliga- $100 par value variable cumulative preferred stock for net tions, at interest rates approximating broker call loan mtes, proceeds of approximately $600 million. Dividend rates on to finance inventories of securities and to facilitate the this preferred stock during 1988 ranged from 5.70% to securities settlement pmcess. 8.38%. e At December 31,1988, GE Financial Services had interest-rate swap agreements outstanding in the notional principal amount of $799 million under which GE Finan-cial Services agreed to pay interest at fixed rates ranging from 12.40% to 14.38% in exchange fi>r interest at floating mtes (1.lBOR) on the notional amounts. GE Financial Senices also had interest-rate swap areements in the notional principal amount of $300 million urxler which GE Financial Services agreed to pay interest at floating I rates (LillOR) and receive interest at fixed rates ranging from 7.81% to 8.32%. I (32

Nsta [ Shire Ownsrs' Equity Ir. April 1987, GE share owners authorized (a) an increase in the number of authorized shares of common GE preferred stock up to 50,000,000 shares ($1.00 par stock from 550,000,000 shares each with a par value of value) is authorized, but no such shares have been issued. $1.25 to 1,100,000,000 shares each with a par value of Authorized shares of common stock (par value $0.63) total $0.63; (b) the split of each previously issued common 1,100,000,000. share, including shares held in treasury, into two shares of common stock each with a par value of $0.63; and (c) an Shares of GE common stock December 31 (in thousands) 1988 1987 1986 iticrease in the number of anthorized shares of preferred stock from 2,000,000 shares with a par value of $ 1.00 per Issued 926,561 926,561 926,561 share to 50,000,000 shares w. h a par value of.$1.00 per it In treasury (24.448) (23,6I I) (14,774) s iam sliardata haw ken a@usted for this change. Outsta!Kling 902,116 902.953 911.790 The effects of translating to U.S. dollars the financial statements of foreign affiliates whose functional currency GL. hare owners, equity is as follows. .is the hical currency are m.cluded.m other capital.Cumula-s GE share owners' equity live foreign currency translation adjustments were on miluons) 1988 1987 1986 $137 million, $176 million atxl $31 million of additions to other capital at December 31,1988,1987 atxl 1986, Common stockissued Balancejanuary I $ 584 $ 579 $ 579 respectively. Adjustment for sto(k split 5 Balance December 31 $ 584 $ 584 $ 579 Note % OtherStock-Relatedinformation Other capital BalanceJanuary l $ 878 $ 733 $ Gil Adjustment for stock split, (5) Stock option plans, appreciation rights and perfi>rmance icy translation uniu are derribed in the Company's current Proxy State-1o u ment. Requirements Ior stock option shares may be met Unrealized gains (losses) on securities held by insurance within certain restrictions either from unissued or treasury affiliates 18 (33) (6) shares. During 1988, options were granted to 1,347 em-G,ai s(los s) on treasury stock ployees. As of December 31,1988, a total of 444 individu. Other 8 als were eligible to receive class-grant options, and ad exempt salaried employees were eligible for special option Balance December 31 $ 823 $ 878 $ 733 grants. A total of 2,218 persons held options exercisable at Retained eamings the end of 1988 or m the future. BalanceJanuary 1 $15,878 $14,172 $12,761 Net eamings 3,386 2,915 2,492 Stock optioninformation Average per share Dividends declared (1.314) (1,209) (1.081) lialance December 31 $17,950 $15.878 $14.172 option Market Shares subjcct (Shares.m thousands) to opnon prne pnce Common stock held in treasury Balance atJanuary 1,1988 18,613 $33.95 $44.13 Ba!ancejanuary 1 $ 860 $ 375 $ 310 Options granted 3.232 43.83 43.83 Purchases 387 8 16 348 Options exercised (1,578) 22.23 43.48 Dispositions Options surreixlered on Employee savings plans (213) (148) (109) exercise of appreciation Sux k options and rights (91) 28.01 45.01 appvciation rights (77) (96) (71) Options tenninated (240) 41.62 Employee sto(k Balance at December 31,1988 19.936 36.41 41.75 ownerslup plan (11) (39) (41) Dividerul reinvestmerit arul share purchase plan (19) (42) (33) Outstanding options and rights expire and the award Contribution to GE period for outstatuling per-fi>rtnance units ends on variotis Pension Trust (25) (26) dates fromjanuary 1,1989 to December 16,1998. Shares C,onversion of long-term available fi>r granting add..itional options at the etxl of 1988 debt (1) (24) (7) Incentive compensation were i 1,936,568 (15,148,114 at the etxl of 1987). plans (5) 13 4 Balan(e December 31 $ 891 $ 860 $ 375 63

I Note 31 CommitmentsandContingent 0 Details of" net increase in GEFS financing receiv-Liabilities ables" follow, At December 31,1988, there were no known contingent (I" 'nillio"5) 1988 1987 1986 liabilities (induding guarantees, pending litigation, taxes increasein loans to and other claims) that, in the opinion of management, customers $(23,731) $(18,990) $(18,795) would be materialin relation to General Electric Company Principal collections from and consolidated alliliates' financial [x>sition, nor were in j"" there any material commitments outside the normal gipment for financingleases (5,031) (3.117) (1,632) course of business. Principal collections on financing leases 3,974 2,291 1,399 Net change in credit card Note [ SupplementalCash Flows receiv bles (957) (181) (72) Information $ (5,913) $ (4,627) $ (3,779) e "All other operating activities"in the Statement of e GEFS'"all other investing activities" includes the Cash Flows are principally adjustments to current and fi>llowing. noncurrent accruals of costs and expenses, amortization of (in millions) 1988 1987 1986 premium and discount on debt, and adjustments to assets such as amortization of goodwill and intangibles, GEFS e Information alx>ut ac<1uisitions and dispositions can ""hriIi( "f " ' k sc bis be fbund in notes 2 and 3, alliliates $(3,188) $(3,769) $(3,565) e Cash used in each of the last three years included the I)ispositic>ns of marketable secunues by insurance ibliow.mg, affiliates 2,334 2,624 2,709 Other (1,153) (137) (761) (In millions) 1988 1987 1986 $(2,007) $(1,282) $(1,617) Interest (paid) GE $ (640) $ (577) $ (407) e GEFS'" debt having maturities more than 90 days" GEFS (4,030) (3,301) (1,916) ,mcludes the following, $(4,670) $(3.878) $(2,323) Income taxes (paid) recovered (In millions) 1988 1987 1986 (fedenal, foreign, state and kical) Newly issued debt GE $(1,284) $(1,096) $(1,546) Short-term (91-365 days) $ 5,916 $ 5,546 $ 4,701 GEFS 251 403 912 long-term senior 3,936 1,927 1,584 $(1,033) $ (693) $ (604) I"ng-term subordinated 58 Proceeds-nonrecourse, leveraged lease debt 381 345 (90) e Details of" net change in certain broker-dealer $ 10,291 $ 7,818 $ 6.195 accounts"are shown below. Repayments and other reductions (in millions) 1988 1987 1986 Short-term $ (6,220) $ (5,836) $ (4,283) (, O (52Q (%6) I""M'#"""#""'. Marketable securities of term sulxwdmated (6) (20) (158) broker-dealer $(1,009) $1,826 $(1,472) I,"""P"I "I*#"'* - E Securities Imrchased nonrecourse, umi r agreements to gg ) 73 7 7) leveraged lease debt (261) (263) (251) Securities sold under $ (8,771) $ (6.645) $ (5,648) agreements to repurchase 677 117 5,331 Securities sold but not yet purchased 681 (2,i18) 560 $ (573) $ (103) $(1,298) 64

Nets % Indu:trySegmentDetaila Revenues (In millions) For the years ended December 31 Total revenues intersegment revenues External revenues 1988 1987 1986 1988 1987 1986 1988 1987 1986 GE Aerospace $ 5,343 $ 5,262 $ 4,318 $ 166 $ 78 $ 73 $ 5,177 $ 5,184 5 4,245 Aircraft Engines 6,481 6,773 5,977 119 48 57 6,362 6,725 5,920 llroadcasting 3,638 3,241 1,888 2 3,638 3,241 1,886 Industrial 7,061 6,662 6,770 706 708 763 6,355 5,954 6,007 Af ajor Appliances 5,289 4,721 4,352 5,289 4,721 4,352 hfaterials 3,539 2,751 2,331 40 32 34 3,499 2,719 2,297 Power Systems 4,805 4,995 5,262 126 125 185 4,679 4,870 5,077 Technical Pnxtucts and Senit es 4,431 3,670 3,021 161 337 160 4,270 3,333 2,86I Earnings of GEFS 788 552 504 788 552 504 All other 394 3,176 3,379 4 16 394 3,172 3,363 Corporate items and Eliminations (1,477) (1.287) (1,077) (1,318) (1,332) (1,290) (159) 45 213 Total GE 40.292 40,516 36,725 40,292 40,516 36,725 GEFS Financing 5,827 3,507 2,594 5,827 3,507 2,594 Insurance 2,469 2,206 2,017 2,469 2,206 2,017 Securities llroker Dealer 2,316 2,491 1,176 2,316 2,491 1,176 AllOther 43 21 27 43 21 27 Total GEFS 10,655 8,225 5.814 10,655 8,225 5.814 Eliminations (858) (583) (526) (858) (5"3) (526) Consolidated revenues $50,089 $18,158 $12.013 $50,089 $48,158 $42,013 Assets Property, plant and equipment (including equipment leased to others) (In millions) At December 31 For the years ended December 31 Depreciation, depletion and Additions amortization 1988 1987 1986 1988 1987 1986(a) 1988 1987 1986 GE Aerospace $ 3,838 $ 3,913 $ 2,253 $ 208 $ 178 $ 311 170 $ 151 $ 111 Aircraft Engines 5,164 5,066 4,553 234 242 332 251 242 191 Ilroadcasting 4,104 3,9 18 3,464 147 115 388 70 64 31 Industrial 3,729 4,011 4,267 301 274 370 249 315 307 hiajor Appliances 2,284 1,529 1,576 215 118 101 105 93 97 hiaterials 7,130 3,901 3,587 757 378 600 252 202 255 Power Systems 2,531 3,266 3,457 127 118 127 138 162 173 Technical Products and Services 3,183 3,873 2,751 203 235 856 168 170 183 I investment in GEFS 4,819 3,980 2,991 AllOther 1,122 2,016 2,193 5 72 417 17 62 56 Corporate items and Eliminations 3,379 2,707 3,316 91 48 175 102 83 53 Total GE 41,283 38,300 31,411 2,288 1,778 3,680 1,522 1,544 1,460 GEFS Financing 44,874 34,163 25,867 1,738 503 701 695 325 337 Insurance 7,849 6,481 5,517 26 3 4 6 4 4 Securities Broker-Dealer 21,891 20,011 22,181 19 60 40 39 98 13 All Other 331 721 258 14 13 19 11 12 11 Total GEFS 74.915 61,406 53,823 1,797 579 764 744 369 365 Eliminations (5,363) (4,292) (3,416) Consolidated totals $110,865 $95,414 $81,818 $ 4,085 $ 2,357 $ 4,444 $ 2,266 $ 1,913 $ 1,825 (a) includes $1,638 milhon atquired with RCA. 65

o Revenues include income from all sources: i.e., fi>r o Br adcasting consists primarily of the National GE,lx>th sales of pnxlucts arx! services to customers arxl llroadcasting Company (NilC), which is the current leader "other income"; fi>r GEFS, "carned income" as described in in network television. NilC's principal businesses are the note 1. In general, it is GE [x>licy to price sales from one furnishing within the United States of network television Cornpany comixinent to armther as neady as }n actical to services to affiliated television stations, the pnxluction of equivalem cormncicial selling prices. Somewhat nmre than live and recorded television programs and the operation, one-fifth of GE's external sales are to agencies of the U.S. under licenses from the Federal Communications Com-government, GE's largest single customer. Most of these mission (FCC), of seven VIIF television broadcasting sales were aen> space and aircraft engine pnxtucts arxl stations. The NilC Television Network is one of three scivices. competing major national commercial broadcast television e Operating profit by industry segment is on page 33 networks and serves nmre than 200 regularly affiliated sta-of this rejmrt. tions within the United States.The television stations NilC j e Effective with 1988, GE ceased re[x>rting results fi>r wns and operates are k>cated in Chicago, Clevelarut Den-the fi>rmer Consurner Pnxlucts segment inasmut h as the ver, los Angeles, Miami, New York aixl Washington, D.C. largest contributor to revenues in that segment was the llroadcasting operations are subject to FCC regulation arxl consumer electronics business, which was transferred to station licensing. NilC also had owned arxl operated eight Thomson, S.A. at the end of 1987. Consuiner electronics mlin broadcasting stations. Ilowever, seven of the nulio results fi>r prior years are now classified as All Other. The stations were sohl in various transactions during 1988 with remaining businesses in the fi>rmer Consumer Pnxlucts sale of the last one expected in 1989. NilC is currently segment are now inchided in other segments: 1 ighting in aparuling its operations,includir g investment and pro-the Irxiustrial segment; Denver aix! Miami television sta-gnunming activities in cable television. 1 tions in the lit oadcasting seginent; atul licensing activities e industrialetxompasses IIictory automation pnxlucts, in All Other. Prior data fi>r these segments have been rmtors, electrical equipment fi>r imlustrial and commercial adjusted for comparability. A description of each of the construction, GE Supply Company, trans[mrtation systems Company's industry segments fi>llows. anxilighting products. Customers fi>r many of these pnxt-ucts and services include electrical distributors, original i GE equipment manufacturers aixl industrial end users. Fac-e Aerospace pnxlucts and services encompass electron-tory automation pnxlucts cover a broad range of electrical ics, avionic systems, military vehicle equipment, automated and electronic pnxlucts, mcluding drive systems, with test systems, computer software, armament systems, mis-emphasis on manufactming and ahanced engineering sile system comImnents, simulau. >n systems, spacecraf t, automation applications. Motors and motor-related pnxi-communication systems, radar, sonar and systems integra-ucts consist mainly of. appliance motors and controls but " " *Clm arga sim of.moton hn a bn>apange of. tion. Most acrospace sales are to agencies of the United States government, principally the Department of Defense induun. l usen. Momr pnxlugs a7 up sMun M, and a and the National Aeronautics and Space Administration. aboan> sold externally. Electncal distnbution and control equipment is sold f or mstallation in conunercial, mdustrial e Aircraft Engines and replacement paits are manufac-and residential facilities. GE Supply operates a nationwide tured and sold by GE fi>r use in military and conunercial network of elcctrical supply houses. Transjx atation sys-aircraft, for use in naval ships and fi>r use as industrial tems include diesel-electric and electric h>comotives, transit inwer sources. GE's military engines are used in a wide pn> pulsion equipment, motorized wheels fi>r off-highway variety of aircraft that includes fighters, bombers, trans-vehicles, such as those used in mining operations, ami ports and helicopters. CF6 engines are used in the drilling devices. Locomotives are sold principally to McDonnell Douglas IX:-10, the Airbus Industrie A3(X) domestic and li> reign railroads, while mai Lets fi>r of her and the llocing 747. More advanced CF6 engine matels pn> ducts imlude state and urban tnmsit authorities and have been selected to imwer the Ikicing 747 and 767, the industrial users.1.ighting pnxtucts incitale a wide variety Airbus hxlustric A310, A300-600 and A330,and the oflamps-incandescent, fluorescent, high intensity dis-McDonnell Douglas MD-11. Of growing importance is charge 3alogen and specialty - as well as wiring devices the CFM56 engine family pnxtucedjointly by GE and and partz pnxlucts. Markets and customers are princi-SNECM A of Fram e aml marketed through their CFM pally in the United States,although fi> reign markets also are Internationaljoint venture. Apphcations mclude the served. These mai kets are extremelv varied, ranging fnnn { ik>eing 737-300,737-400 and 737-500, and the re-engined t theing KC-135 military tanker. Advaixed CFM56 engine mmlels are used for the Airbus Industrie A320 and will be offered on the long. range Airbus hulustric A310. GE also pnxhx esjet engines fk)r executive aircntIt alxl legional conunater airlines. l l 66 _____.______t--_.._

household consumers to conunercial and industrial end logs continue to be low by long-tenn historical standards users and original equipment manufacturers. Through despite some improvement during 1988. GE management most of 1988 the Irxlustrial segment also included semi-continues vigorous efforts to improve cost-competitiveness conductor operations, inost of which were sold in the and to adapt pnxlucts and marketing to the changing envi-fi>urth quarter. ronment. Sicam turbine-generators are sold to the electric

Major Appliances includes kitchen and laundry equip-utility irxlustry, to the U.S. Navy and, fbr cogeneration, to ment such as refrigerators, ranges, microwave ovens, prit ate industrial customers. Marine steam turbines and freezers, dishwashers, clothes washers and dryers, and pn> pulsion gears also are sold to the U.S. Navy. Gas tur-room air conditioners. These are sold under GE, Hotpoint bines are used principally as packaged power plants for and Monogram bnuxis and, increasingly, under private electric utilities and (br industrial cogeneration and bnuxis fi>r retailers. Distribution of appliances using the mechanical drive applications. Centrifugal compressors RCA bnmd is planned in 1989. GE microwave ovens and are sold for application in gas reinjection, pipeline services nx)m air corr 9ioners are mainly sourced from fi> reign and such pnx ess applications as refineries and anunonia suppliers while invesunent in Company-owned domestic plants. Although there have been no nuclear plant orders in the United States since the mid-1970s and international fitcilities is focused on refrigemtors, dishwashers, ranges and home laundry equipment. Acquisition of Roper Cor, activity has been very low, GE continues to invest in

[x> ration in April 1988 added to GE's pnxluctive capacity advanced techtmlogy development arxl to fbcus its and broadened its pnxtuct offerings, including gas ranges. resources on refueling and sening its installed lx>iling-A large [xntion of major appliance sales is to a variety of water reactors. Power delivery pnxtucts include tnms-retail outlets with a significant jxntion of sales of certain fonners, relays, electric load management systems, [mwer products such as laundry equipment and refrigerators conversion systems and meters, principally for electric util-being for replacement of older products. The other princi. ities. Installation, engineering and repair services include pal market consists of residential building contractors who management and technical expertise fbr large projects, install major appliances in new dwellings. A nationwide such as [wwer plants; maimenance, inspection, repair and service network supports GE's appliance business. rebuilding of electrical apparatus pnxiuced by GE anxi e Materials includes high-perfbnnance engineered plas-pn; on-site engineering anxi upgrading of already mstalled pnxtucts sold by GE and others; and environmen-tics used in applications such as substitutes fbr metal and t I systems (br utihues. An affiliate providing international glass in automobiles and as housings for computers and construction services was sold at the beginning of 1988. other business equipment; silicones; superabrasives such as man-made diamonds; and laminates. Atarket opportuni.

Technical Products and Services consists of technology ties for many of these products are created by functional operations providing pnxtucts, systems and services to a replacement that provides customers with an improved variety ofcustomers. Businesses in this segment include material at lower cost.These materials are sold to a diverse medical systems and services, conununications and infor-customer base (mainly manufiicturers)in the United States mation senices, and certain other specialized services.

and abroad. Acquisition of the chemicals businesses of hiedical systeins indude magnetic resonance (h!R) scan-Borg-Warner Cor[mration at the end of 1988's third ners, computed tomography (CT) scanners, x-ray, nuclear quarter provides GE with a new pnxtuct-ABS resins,a imaging, ultrasound, and other diagnostic equipment and family of thermoplastic resins used by custom molders and sup;mning services sold to domestic and fbreign hospitals major original equipment manufiicturers for use in a vari. and medical fiicilities. GE Americom, the leading domestic ety of applications, including fabrication of automotive satellite canier, operates seven domestic satellites provid-parts, computer enclosures, major apphance parts and ing distribution senices for cable television, broadcast tele-vision and radio, and voice, video and wideband data pipe. The acquisition also adds tec hnical and manufactur. ing strength and domestic and offshore marketing liicilities senices to agencies of the federal government. Common and expertise that complement GE's existing businesses. canier senices of Americom are subject to regulation by hiaterials also includes Ladd Petroleum Cor[xnation, an the FCC. GE's mobile communications pnxtucts consist oil and natural gas developer and supplier with operations mainly of mobile and hand-held two-way radios, cellular mainly in the United States. telephones and land-mobile cellular systems fbr a variety f business and government customers. Information serv-e Power Systems serves woddwide utility, industrial and dW h m ad M erd sme govenunent2d customers with pnxiucts for the genenition,

- P by GE Inf ormation Senices, GE Consulting Senices arxl transmission and distribution of electricity and with related installation, engineering and repair senices. Ahhough GE remains a leader in most [mwer systems products, domes-tic amt fbreign mar kets have been declining fbr a number l

of years. Worktwide competition continued to intensify in 1988 with poter nally im;mrtant new combinations by for-eign ami domestic competitors. New order rates and back-M

i ' the GE Computer Service opemtion. These include third-party investors; and commercial and residential real enhanced computer-lxtsed communications services, such estate financing. Acquisition of Montgomery _ Ward & Co/s as data network services, electronic messaging and elec-credit operations inJune 1988 added to GECC's earning tronic data interchange, which are offered to commercial assets, particularly in credit card operations. GE Capital and industrial customers through a worldwide network; also is an equity investor in certain other service axi finan-application software packages; custom system design arxl cial senices organizations and [mrticipates in leveraged programming services; and indeperxlent maintenance and buyouts. Although leasing has been a major factor in rental / leasing services fi>r minicomputers and microcom-GECC's growth in recent years, GECC has actively changed puters, electronic test instruments and data communica-its investment portfolio to place greater emphasis on asset tions equipment. A separate services component provides ownership, management and operation. Virtually all prod-a variety of specialized services to government customers. ucts financed by GECC are manufactured by companies . RCA Glohcom and assets of The Calma Company were other than GE, sold during 1988. e insurance consists mainly of ERC, a multiple-line o Earnings of and investment in GEFS are shown on a property and casualty reinsurer that writes alllines of rein- "one-line" basis in GE's segment data but are eliminated in surance other than title and annuities. ERC reinsures I consolidation. A separate discussion of GEFS segments property and casualty risks written by more than 1,000 l appears below. domestic and ihreign insurers ami augments its fi> reign e All Other for peri (xis prior to 1988 consists mostly of business through subsidiaries located in the United King-i former consumer electronics operations (principally video dom and, sinceJanuary 1988, in Denmark. By way of and audio pmducts, including operations acquired from other subsidiaries, ERC writes property aix! casualty rein-RCA in 1986). Other historical data reflect miscellaneous surance through brokers arxl provides reinsurance broker-Ibrmer RCA activities no longer owned by GE and, in 1985 age services. ERC also writes certain specialty lines of aixi 1984, ihe remaimler of mining activities of GE's fbr. insurance on a direct basis, principally excess workers' mer affiliate, Utah International Inc. Ongoing operations compensation fbr self. insurers, libel and allied torts, and include a small affiliate that is an equity investor in selected errors ami omissions coverage ihr insurance agents and real estate development projects and a few residual invest. brokers. It is licensed in all states of the United States, the j ments of a venture capital cor}mration, most of whose District of Columbia, certain provinces of Canada amt in portfolio was sold in 1987. otherjurisdictions. ERC's business is generally subject ' regulation by various insurance regulatory agencies. GEFS

1. esser insurance activities of GEFS include cutain GECC j

affiliates that provide private mortgage insurance, life .l'he business of General Electric l..mancial S.ervices, Inc. reinsurance and, for GE.CC customers, credit life and cer-t l (GEFS) consists of. he ownersh.ip of three afTiliates that,. tam types of property / casualty insurance. together w. h the.ir alliliates and other m. vestments, consu-it tute General Electric Company's principal financial serv.

Securities Broker Dealer represents Kidder, Pealxxly, ices activities. GEFS owns all of the common stock of which is a major investment banking and securities firm.

General Electric Capital Corporation (GECC) and of Principal businesses include securities underwriting; sales Employers Reinsumnce Corix> ration (ERC) and owns 80% and trading of equity and fixed income securities; financial of Kidder, Pealxxty Group Inc. (the other 20% is held by futures activities; advisory services Ibr mergers, acquisi-or on behalf of certain Kidder, Pealxxly officers). tions and other corporate finance matters; merchant bank-For industry segment purposes, Financing consists solely ing; research services; and asset management. These of activities of GECC; Insurance consists principally of services are provided in tlye United States and abroad to activities of ERC but also includes certain insurance enti. d mesuc and foreign busmess enuues, governments, gov. i ties owned by GECC: Securities Broker-Dealer consists ernment agencies, and individual and institutional inves-entirely of K'idder, Pealxxly's operations; and All Other is tors. Kidder is a member of the principal domestic l mainly GEFS' corporate activities not identifiable with spe, securities and comnuxlities exchanges and is a primary cific industry segments. dealer in United States govermnent securities. Certain Additional information ainut each GEFS segment afTiliates of Kidder, Pealxxty are subject to the rules and poi;ows, regulations of various federal, state and industry regula-tory agencies that apply to securities broker-dealers, e Financing aco...vities of.GECC include time sales, mcluding the U.S. Secun..ues and Exchange C,ommission, revolving credit and inventory financing f.or retad mer-U.S. C,ommela. y Futures f,rading C,omnu..onal Assoc ssion. I chants (major appliances, television sets, furniture and Stock Exchange, Nan. nes Dealers other home l.unushings, and personal computers); auto-and the Chicago I oard of.I. de. ra mobile leasing and automobile inventory financing; home and recreation financing (principally time sales and dealer inventory financing of mobile homes); commercial and imiustrial h>ans and equipment sales financing provided through leases, time sales and loans; leasing services for s

N ts M. Gsographic S:gmsntInform: tion (cenzclidatsd) Revenues (in millions) For the years eixled December 31 Total revenues Intersegment revenues External resenues 1988 1987 1986 1988 1987 1986 1988 1987 1986 United States $46,3GI $45,160 $38,828 $ 874 $ 801 $ 639 $45,490 $41,359 $38,189 Other areas of the world 5,576 4,894 4.387 977 1,095 563 4,599 3,799 3,82l Interwmpany eliminations (1,851) (1,896) (1,202) (1,851) (1,896) (1,202) Total $50,089 $48,158 $42,013 $50,089 $18.158 $ 12,013 Operating profit Assets For the years ended Deccinber 31 At December 31 1988 1987 1986 1988 1987 1986 United States $ 4,911 $ 3,715 $ 2,989 $102,327 $89,480 $80,831 Other areas of the world 1,009 72a e40 8,411 6,027 4,090 Intercompany eliminations (10) 10 7 (103) (93) (103) Total $ 5,910 $ 4.450 $ 3,736 $110,865 $95,414 $84,818 U.S. revenues include GE exports to external customers, foreign operation liabilities, minority interest in equity ami and royalty and licensing income from foreign sources, GE interest in equity were $6,188 million, $142 million GEFS' 1986 and 1987 operations were virtually allin the and $2.311 million, respectively. The amounts were United States and, although GEFS' offshore activity $3,196 million, $111 million and $2,720 million,iespec-began to increase in 1988, non-U.S. operations were not tively, at December 31,1987; and they were $1,871 mil-significant. lion, $ 112 million aml $2,107 million, respectively, at Revenues, operating profit and assets associated with December 31,1986, foreign operations are shown above. At year-end 1988, U.S. exports to external customers (In milhons) 1988 1987 1986 Europe $1.805 $1,253 $1,634 Pacific Basin 1,357 1,146 985 Middle East and Africa 937 762 490 Anrricas 531 625 476 Other areas 240 238 124 Total $ 1,870 $4,024 $3,709 l l 69

N2ta 35 =m -i=waaam First quarter Second quarter Third quarter Fourth quarter (Dollar amounts in millions; per-share 1988 1987 1987 1988 1987 1987 1988 1987 1987 1988 1987 1987 l amounts m dollars) original restated original restated original restated pro forma reponed l Consolidated operations Net earnings $ 725 $ 624 $1,177 $ 835 $ 720 $ 679 $ 815 $ 703 $ 661 $1,011 $ 868 $ 398 Per share 0.80 0.68 1.29 0.93 0.79 0.74 0.90 0.77 0.73 1.12 0.96 0.44 Dividerxis declared Per share 0.35 0.315 0.35 0.33 0.35 0.33 0.41 0.35 Earnings before extraordinary item j and cumulative i effect of account. ing changes 725 343 319 835 720 679 815 703 661 1,011 353 460 Per share 0.80 0.37 0.35 0.93 0.79 0.74 0.90 0.77 0.73 1.12 0.40 0.51 Common stock mar-Let price - high 47 % 55% 44 % 56 % 44 % 66% 46 % 62 % l -low 40 43 % 38 % 49 39 53 % 42 % 38 % Selected data GE Sales of pnxlucts and services 7,975 8,315 9,245 9,560 9,306 9,404 12.298 12,036 Gross profit from sales 1,978 2,048 2,365 2,359 2,349 2,022 3,270 3,229 Unusual expenses (hefore tax) (308) (58) (54) (607) GEFS Earned income 2,411 2,048 2,465 1,976 2,717 1,970 3,062 2,231 Operating profit 246 214 223 168 230 147 328 43 Unusualexpenses (before tax) (54) (37) Extraordinary item (after tax) (62) For GE, gross profit from sales is sales of g<xxis and accounting changes by: first quarter- $24 million (2 cents services less cost of goods and services sold, arul it is before per share); secorxl quarter- $41 inillion (5 cents per unusual expenses. For GEFS, operating profit is as pre-share); third quarter- $42 million (4 cents per share); sented on page 33 of this report, and it includes unusual and fourth quarter-$31 million (4 cents per share). In

expenses, order to provice adequate data for comparing 1988 and Secorxi, third-and fi>urth-quarter 1988 net earnings 1987 results by quarter, amounts in the table above for the included negative effects ($23 million - 2 cents per share, first three quarters of 1987 are shown befi>re arxl after the

$43 million - 5 cents per share and $231 million - 26 restatements, and for the fourth quarter are shown " pro cents per share, terpectively) of expenses atxl accruals for fonna" as they would have been if the entire effect of the abnonnally high warranty costs li>r certain refrigerator accounting change had been recorded in that quarter compressors. when the decision to adopt was made. In the fourth quarter of 1987, the Company elected to Separately, first-quarter 1987 net earnings included the adopt thenjust. issued Statement of Financial Accounting cumulative positive effect ($281 million,31 cents per Standards No. 96 pertaining to accounting for income share) toJanuary 1,1987 of changing inventory account-taxes. The cumulative effect tojanuary 1,1987 on net ing; arxl fi>urth41uarter 1987 net earnings included an earnings was $59 million (6 cents per share) for GE and extraordinary loss ($62 million,7 cents per share) on early $518 million (57 cents per share) for GEFS. In accordance extinguishment of debt by GECC. with SFAS No. 96 transition rules, it was necessary to After taxes, unusual items (mainly husiness restructur-3 restate first-quarter 1987 for this cumulative effect even ing expenses) in 1987 plus the extraordinary item were though the decision to adopt could not be made until year-somewhat more than the total positive impact on net earn-end 1987. Also, as required, earnings for each of the ings for the year from accounting changes. interim quarters of 1987 had to be restated as if adoption had occurred atJanuary 1,1987. The effect of these restaternents was to reduce total nel carnings and earn-ings before extraordinary item arul cumulative effect of 5 70

Ccrporate Headquarters Form 10-K and Other Reports General Electric Company The financial infonnation in this rep irt, in the opinion of 3135 Easton Turnpike management, substantially confonns with or exceeds the Fairfield, Conn. OG131 information required in the "10-K Report" to be submitted to the Securities and Exchange Com'nission at the eix! of """" * *** *I"8 March. Certain supplemental infonnation is in that report, I he 1989 Annual Meeting of the General Electnc however, arxl copies without exhib.its will be ava.lable, i C.ompany will be held on Wednesday, April 26, at the without charge, from: Corporate Investor Communica-Hyatt Regency G,reenville m. Greenv.lle, S.C. tions, General Electric Company, Fairfield, Conn. 06431. j i Dividend Reinvestment Plan Copies of the General Electric Pension Plan, the Sum-Share owners who have one or more shares of GE stock mary Annual Report for GE employee benefit plans sub-registered in their names are eligible to invest cash up to ject to the Employee Retirement income Security Act of $ 10,000 per month and/or reinvest their dividends in the 1974, and other GE employee benefit plan documents and GE Dividerxl Reinvestment and Share Purchase Plan. infonnation are available by writing to Corporate Investor For an authorization fonn arxl prospectus, write to: Communications and specifying the information desired. GE Share Owner Services, P.O. Box 206, Schenectady, GE Financial Services has a separate Annual Report, N.Y.12301-0206. and both it and GE Capital Corporation file Fonn 10-K 1 "I*)rts with the Securities and Exchange Commission. Principal Transfer Agent and Registrar Cop.ies of these w[nts may be couuned fmm: General The Bank of New York Electric Financial Services, Inc., P.O. Box 8300, Stamford, Attn: Receive & Deliver Department Conn. MM Church Street Station The Annual Reports of the General Electric Foundations P.O. Box 11002 also re available on request. New York, N.Y. 10249-1002 Product Information Stock Exchange information For infonnation ahmt M consuma pmducts and se In the United States, GE common stock is listed on the New York Stock Exchange (its principal market) and on ices, c H pe Answa Cent # at (8M) 6242MO. For

f nnati n about GE technical, commercial and indus-the Boston Stock Exchange. GE common stock also is tn 1 pr xlucts and services, call the GE Business Informa-listed on certain foreign exchanges, including The Stock tion Center at (518) 438-6500. For infonnation about the Exchange, lorxion atxl ihe Tokyo Stock Exchange.

vaned financi i pr ducts and services offered by GE Capi-As of December 8,1988, there were about 532,000 t 1Cortmration, call (800)243-2222. share owners of record. l l' L l O 1989 General Electric Company Printed in U.S A. l l Note: Unless otherwise indicated by the context, the tenns "GE." " General Electric" and "Compan>" are used on the basis of con-solidation desaibed on page 41. sta tut $ sticmc, Q, Gi;aial l RCA aie registered trademar ks of General Electric Company; j h and N15C are registered trademarks of National thoad-(asting Company. Inc.; @ atal

indicate iegistered and unreg-istered trade arul ser vit e mai ks.

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