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General Electric  Annual Report
General Electric Company
Fairfield, Connecticut 06828
www.ge.com
ge 2006 annual report
Invest
and
Deliver

Table of contents

  • Page 1
    Invest and Deliver ge 2006 annual report

  • Page 2
    ... Corporate Management 116 Corporate Information Performance Summary Throughout the economic cycles, GE's long-term financial goals are: organic revenue growth of 2-3X GDP; greater than 10% annual earnings growth; operating cash ï¬,ow exceeding earnings growth; and a return on average total capital...

  • Page 3
    ... of global economic environments. We have valuable leadership businesses that are positioned to capitalize on global trends. Our organic growth capabilities and disciplined financial execution prepare a strong leadership team to deliver each and every day. This is your GE. ge 2006 annual report 1

  • Page 4
    ... Michael A. Neal, Vice Chairman, GE and Chairman, GE Capital Services Jeffrey R. Immelt, Chairman of the Board & Chief Executive Officer Robert C. Wright, Vice Chairman of the Board & Executive Officer, GE John G. Rice, Vice Chairman, GE and President & Chief Executive Officer, GE Infrastructure

  • Page 5
    ...- in 2006. You can only believe one thing if you run GE or own GE stock: Consistent earnings and cash ï¬,ow growth, with expanding returns, increase shareowner value. This is a long-term investment. There are no short-term tricks. We lead the Company to grow earnings and cash ï¬,ow with high returns...

  • Page 6
    ...building leadership: Infrastructure Technology. There will be $4 trillion invested in global infrastructure by 2015. GE has the broadest array of infra­ structure products, services and financing in the world. From Energy to Aviation to Transportation to Water to Oil & Gas, GE is solving customers...

  • Page 7
    ... finance and human resource processes. We have one leadership development foundation and one global research infrastructure to achieve excellent results with a common culture. We have a few Company-wide Councils, like Services, so we can share ideas with minimum bureaucracy. We compete hard and are...

  • Page 8
    ... of the competition and in synch with our customers. For investors, we have built a business that has the capability to generate 20% returns over the long term. We are building leadership in Healthcare. But, sometimes, markets move away from our strategic principles. That is the case in our Advanced...

  • Page 9
    ... Our financial services businesses are also very profitable. The returns in Commercial Finance and GE Money exceed 25%. We have great origination and excellent risk management, and our capital markets capability allows us to keep only the highest margin assets on our books. Risk management is an...

  • Page 10
    ... decades of growth ahead. 8 ge 2006 annual report Growth as a Process Technology Growth Leaders Customers Execute for Growth Innovation Globalization Commercial Excellence At GE, we launch initiatives so that we can unleash our teams' intellect to create shareowner value. Sometimes, it is...

  • Page 11
    ... a long-term commitment to training. This is how we transfer knowledge within GE. For the last two years we have trained our team on the growth leadership traits so that they could become high-performance builders. However, we recognized that building a culture to invest and deliver is a "team sport...

  • Page 12
    ...and for decades to come. DELIVERED PERFORMANCE CONSOLIDATED REVENUES (In $ billions) 2001 2006 163 EARNINGS FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGES (In $ billions) 2001 2006 20.7 CASH FROM OPERATING ACTIVITES (In $ billions) 2001 2006 25 107 17 12.6 10 ge 2006 annual report

  • Page 13
    ... COMPANY 2001 2006 A. High Growth + High Margin + Leadership • Healthcare • Infrastructure • Commercial Finance • GE Money • NBC Universal • Growth Platforms • High-Tech Industrial B. Low ROTC + Volatile • Insurance • Low-Growth Industrial B A B A ge 2006 annual report...

  • Page 14
    ... demand for infrastructure globally, growth of emerging markets, the economics of scarcity regarding natural resources, the ever-evolving opportunities of the digital age, the available liquidity in the global capital markets and the unstoppable demographics of healthcare. 12 ge 2006 annual report

  • Page 15
    ..., shown here, is just one example of GE's ability to tap into a $4 trillion global infrastructure market. Using advanced technology, the GEnx meets the soaring demand for lighter, more fuel-efficient aircraft engines in growing markets like China. Through 2006, GE had orders for more than 665 GEnx...

  • Page 16
    ... and infrastructure to ...sales outlets in 10 cities. In just two years consumer loan assets grew from $50 million to $200 million with a target of $600 million by the end of 2007. EMERGING MARKETS REVENUES 2004 (In $ billions) 2005 2006 2010* ~50 29 22 24 *Forecast 14 ge 2006 annual report

  • Page 17
    ... lack access to an adequate water supply environmental solutions We're devising innovative, sustainable solutions to the environmental challenges of esource scarcity. In 2005, GE announced its ecomagination commitment - a business strategy to develop products to meet our customers' environmental...

  • Page 18
    ...most successful online destinations for women, is an exciting new digital property that is helping us drive growth. By 2009, we project our application of digital technologies will reach $8 billion through entertainment, diagnostics, banking and the digitization of health records. 16 ge 2006 annual...

  • Page 19
    ... markets by taking an 11% stake in Genesis' initial public offering, which raised $641 million on its first day as a public company. Harnessing the power of the global capital markets, GE can con­ tinue to manage and strengthen its portfo­ lio of assets to drive growth. ge 2006 annual report 17

  • Page 20
    ...breakthrough research in biomarker devel­ opment for early diagnosis of Alzheimer's disease and software developed by Satoshi Minoshima, M.D. Ph.D., at the University of Washington, physicians can diagnose and detect neurodegenerative diseases before the onset of symptoms. 18 ge 2006 annual report

  • Page 21
    ... that these trends present by: Building businesses that are market leaders. Operating with financial rigor and discipline. Generating organic growth through the execution of new processes. And training our people with the skills to win tomorrow. GE will invest and deliver. ge 2006 annual report 19

  • Page 22
    ...to developed and emerging countries, including aviation, energy, oil and gas, rail, and water process technologies and services. GE Infrastructure also provides financing services to aviation, transportation and energy companies. SEGMENT PROFIT (In $ billions) 7.8 2005 2006 9.0 20 ge 2006 annual...

  • Page 23
    NBC Universal NBC Universal is one of the world's leading media and entertainment companies in the development, production and marketing of entertainment, news and information to a global audience. SEGMENT PROFIT (In $ billions) 2005 2006 3.1 2.9 GE Commercial Finance GE Commercial Finance ...

  • Page 24
    GE Industrial GE Industrial provides a broad range of products and services throughout the world, including appliances, lighting and industrial products; factory automation systems; high­ performance engineered plastics; security and sensors technology; nondestructive testing; and equipment ...

  • Page 25
    ... 2005 2006 3.1 3.5 GE Money is a leading provider of credit and banking services to consumers, retail­ ers and auto dealers in countries around the world, offering financial products such as private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, corporate...

  • Page 26
    ... investments have increased ROTC, positioning us to reach our goal of 20% by 2008. OPERATING PROFIT MARGIN (Excluding Pension) (%) 13.5 2004 2005 14.8 2006 2007* 15.2 ~16.2 (%) 16.2 16.6 RETURN ON AVERAGE TOTAL CAPITAL 2004 2005 2006 2007* 18.4 ~19.0 *Forecast *Forecast 24 ge 2006 annual report

  • Page 27
    ... execution and financial discipline is Transportation. In 2006, Transportation conducted 200 Lean workouts. Customers saw improved reliability and on-time delivery of GE products, while the Transportation business created additional manufacturing capacity. The team has reduced locomotive build...

  • Page 28
    .... Over the past several years we have developed a process that fuels our ability to generate consistent organic growth. We call it Growth as a Process, and it includes six capabilities: 1) Technology, 2) Customers, 3) Globalization, 4) Commercial Excellence, 5) Innovation and 6) Growth Leaders. Our...

  • Page 29
    ... to other typical gas turbine power plants of its size. This reduction in CO2 is equal to the amount of carbon dioxide absorbed by nearly 7,400 acres of forest each year. The LMS100 is just one example of how technology helps us to diversify our product portfolio and win. ge 2006 annual report 27

  • Page 30
    ... direct correlation to our customers' needs. A GE customer since 1925, FPL is one of the largest, cleanest and fastest-growing electric utilities in the U.S. Through our relationship with FPL Group, we have grown our business with FPL as well as FPL Energy, providing energy solutions across a range...

  • Page 31
    ... new regions. It's about creating a lasting presence from which to build long-term relationships. Energy does this by deploying a "company-to-country" approach -localizing application solutions to meet each region's unique needs, invest ing in businesses aligned with regional demographic trends and...

  • Page 32
    ... to major water and power generation 30 ge 2006 annual report projects. For example, this 11-megawatt solar power plant in Portugal the world's biggest photovoltaic project-is financed and owned by Energy Financial Services. This helps our customer Portugal's electric transmission company meet its...

  • Page 33
    ge 2006 annual rep

  • Page 34
    ... energy. To help meet today's increasing demand for energy stability and environmental stewardship, Energy has developed a next-generation nuclear plant design that is safe for communities, and sound for investors. The core innovation of the Economic Simplified Boiling Water Reactor (ESBWR) lies...

  • Page 35
    ... customer service levels and reducing equipment repair times. Energy is growing globally to meet the unprecedented demand for energy with record orders for wind turbines and a resurgence in gas turbine orders. The power of Growth as a Process is exponentially multiplied when executed by teams...

  • Page 36
    ..., GE invests $1 billion a year in training. GE is known for its culture of management and learning, innovation and teamwork. New training courses such as the Leadership Innovation and Growth (LIG) program ensure that our most senior leaders never stop learning by engaging them in team...

  • Page 37
    NBC Universal NBC News has a heritage for innovation that spans decades. Given today's complex environment, with news content available through an increasing number of media sources, NBC News is meeting this challenge by taking its senior talent through team training to strengthen growth strategies ...

  • Page 38
    ... 300-managed aircraft leased to 230 airlines in 70 countries, the Aviation Financial Services (AFS) team, also known as GECAS, has the international presence and strong customer relationships to adapt swiftly to shifts in this dynamic market. In 2006 this team demonstrated real results by using its...

  • Page 39
    ...Embedded Systems 2006 was a transformational year for Automation and Embedded Systems (GE Fanuc), a leader in industrial automation and productivity solutions. Following a series of acquisitions, Automation and Embedded Systems is working as a team to align strategies and to inspire employees toward...

  • Page 40
    ..., GE Healthcare, Clinical Systems 38 ge 2006 annual report 6. William H. Cary President & Chief Executive Officer, GE Money, EMEA 7. Deborah M. Reif President & Chief Executive Officer, Equipment Services 8. John G. Rice Vice Chairman, GE and President & Chief Executive Officer, GE Infrastructure...

  • Page 41
    ... Officer, Capital Solutions 34. Daniel C. Janki Vice President, Corporate Investor Relations 35. A. Louis Parker President & Chief Executive Officer, Security 36. John M. Samuels Vice President & Senior Tax Counsel 37. Jeffrey S. Bornstein Vice President & Chief Financial Officer, GE Commercial...

  • Page 42
    ...key succession plans. The Nominating and Corporate Governance Committee, comprised entirely of indepen­ dent directors, met three times to consider GE's governance charter and practices and director nominations. The Public Responsibilities Committee, in four meetings, reviewed GE's 2006 Citizenship...

  • Page 43

  • Page 44
    ... and Chief Executive Offi cer, Nuclear Threat Initiative, Washington, D.C. Director since 1997. Ann M. Fudge 4 Former Chairman and Chief Executive Offi cer, Young & Rubicam Brands, global marketing communications network, New York, New York. Director since 1999. 42 ge 2006 annual report

  • Page 45
    ... 4 Vice Chairman of the Board & Executive Officer, General Electric Company. Director since 2000. 1 Audit Committee 2 Management Development and Compensation Committee 3 Nominating and Corporate Governance Committee 4 Public Responsibilities Committee 5 Presiding Director ge 2006 annual report 43

  • Page 46
    ...and beyond. In 2006, the Company rallied its philan­ thropy resources to extend the impact to communities around the globe and focus on two central themes-education and healthcare. By integrating Foundation grants, product donations, Company contributions and volunteer resources, GE employees drove...

  • Page 47
    .... Management's Annual Report on Internal Control Over Financial Reporting ... In this report our Chief Executive and Financial Offi cers provide their assessment of the effectiveness of our internal control over fi nancial reporting. Report of Independent Registered Public Accounting Firm...

  • Page 48
    ... Audit Committee oversees the scope and evaluates the overall results of these audits, and its Chairman regularly attends GE Capital Services Board of Directors, Corporate Audit Staff and Controllership Council meetings. Our global integrity policies - "The Spirit & The Letter" - require compliance...

  • Page 49
    Report of Independent Registered Public Accounting Firm To Shareowners and Board of Directors of General Electric Company We have audited the accompanying statement of financial position of General Electric Company and consolidated affiliates ("GE") as of December 31, 2006 and 2005, and the ...

  • Page 50
    ...solid core growth, disciplined risk management and successful acquisitions. The most significant acquisitions affecting Commercial Finance and GE Money results in 2006 were the custom ï¬,eet business of National Australia Bank Ltd.; Antares Capital Corp.; the Transportation Financial Services Group...

  • Page 51
    ... and the European life and health operations of GE Insurance Solutions Corporation (GE Insurance Solutions) and the sale of GE Life, our U.K.-based life insurance operation, to Swiss Reinsurance Company (Swiss Re). Also during 2006, we completed the sale of our remaining 18% investment in Genworth...

  • Page 52
    ... percentage points). The 2004 GE rate reï¬,ects two items that decreased the rate by 7.2 percentage points - settling several issues with the IRS for the years 1985 through 1999 and tax benefits associated with the NBC Universal combination. As part of the IRS settlements, 50 ge 2006 annual report

  • Page 53
    ... maturities, fund asset growth and meet contractual obligations through access to funding at reasonable market rates. Additional information about our liquidity and how we manage this risk can be found in the Financial Resources and Liquidity section and in notes 18 and 27. ge 2006 annual report 51

  • Page 54
    ... Services and Transportation Finance reported in the Infrastructure segment, and Equipment Services reported in the Industrial segment. SEGMENT REVENUES (In $ billions) 144 130 108 108 2002 2003 2004 2005 2006 159 A. Infrastructure B. Commercial Finance C. GE Money D. Healthcare E. NBC Universal...

  • Page 55
    Summary of Operating Segments General Electric Company and consolidated affiliates (In millions) 2006 2005 2004 2003 2002 REVENUES Infrastructure Commercial Finance GE Money Healthcare NBC Universal Industrial Total segment revenues Corporate items and eliminations CONSOLIDATED REVENUES SEGMENT ...

  • Page 56
    ... growth in lowertaxed earnings from global operations related to a reorganization of our aircraft leasing operations. Infrastructure orders were $51.1 billion in 2006, up from $38.4 billion in 2005. The $39.2 billion total backlog at year-end 2006 comprised unfilled product orders of $27.0 billion...

  • Page 57
    ... prices ($0.4 billion). The rise in volume related to increases in healthcare services, including the effects of the 2006 acquisition of IDX Systems Corporation and stronger equipment sales. Segment profit of $3.1 billion was 18% higher than in 2005 as productivity ($0.6 billion) and the effects of...

  • Page 58
    ... 18% investment, through a secondary public offering of 71 million shares of Class A Common Stock and direct sale to Genworth of 15 million shares of Class B Common Stock. Earnings from discontinued operations, net of taxes, in 2006 were $0.2 billion, reï¬,ecting earnings from GE Insurance Solutions...

  • Page 59
    ... 2006 were 24% higher than at the end of 2005, reï¬,ecting core growth and acquisitions in Europe, the Pacific Basin and the Americas, primarily at Commercial Finance and GE Money. Financial results of our global activities reported in U.S. dollars are affected by currency exchange. We use a number...

  • Page 60
    ... During 2006, we completed the acquisitions of ZENON Environmental Inc. at Infrastructure; IDX Systems Corporation and Biacore International AB at Healthcare; iVillage Inc. at NBC Universal; Banque Artesia Nederland N.V., Arden Realty, Inc., the custom ï¬,eet business of National Australia Bank Ltd...

  • Page 61
    ...(0.7% of outstanding receivables) at December 31, 2005. Delinquency rates on managed Commercial Finance equipment loans and leases and managed GE Money financing receivables follow. December 31 2006 2005 2004 Commercial Finance GE Money 1.22% 5.05 1.31% 5.08 1.40% 4.85 ge 2006 annual report 59

  • Page 62
    ...rates of GE Capital commercial paper were 48 days and 5.09% at the end of 2006, compared with 45 days and 4.09% at the end of 2005. The GE Capital ratio of debt to equity was 7.52 to 1 at the end of 2006 and 7.09 to 1 at the end of 2005. See note 18. EXCHANGE RATE AND INTEREST RATE RISKS are managed...

  • Page 63
    ... their customer-related CFOA. The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for the wide range of materials and services necessary in a diversified global organization. GE operating cash payments increased by $7.3 billion in 2006 and...

  • Page 64
    ..., were funded by the proceeds of the sale of GE Insurance Solutions and from the Genworth secondary public offerings. During 2006, GECS and GECS affiliates issued $82 billion of senior, unsecured long-term debt and $2 billion of subordinated debt. This debt was both fixed and ï¬,oating rate and...

  • Page 65
    ... related to non-consolidated SPEs were $0.6 billion. • Under terms of other agreements in effect at December 31, 2006, specified downgrades in the credit ratings of GE Capital could cause us to provide up to $1.1 billion of funding. One group of consolidated SPEs holds high quality investment...

  • Page 66
    ... are re-leased, current lease terms have changed or a specific lessee's credit standing changes. We consider market conditions, such as the global shortage of commercial aircraft in 2006. Estimates of future rentals and residual values are based on historical experience and information received...

  • Page 67
    ...ï¬,ect market interest rate conditions, we increased our discount rate for principal pension plans at December 31, 2006, from 5.50% to 5.75% and reduced the discount rate at December 31, 2005, from 5.75% to 5.50%. To determine the expected long-term rate of return on pension plan assets, we consider...

  • Page 68
    ...reported research and development expenditures, but also amounts for improving our existing products and services, and the productivity of our plant, equipment and processes. On this basis, our technology expenditures in 2006 were $5.7 billion. GE'S TOTAL BACKLOG of firm unfilled orders at the end...

  • Page 69
    ... Earnings before accounting changes Net earnings Shareowner's equity Total borrowings Ratio of debt to equity at GE Capital Total assets Transactions between GE and GECS have been eliminated from the consolidated information. (a) Indicates terms are defined in the Glossary. (b) Excludes employees of...

  • Page 70
    ... 31 (In millions; per-share amounts in dollars) 2006 2005 2004 REVENUES Sales of goods Sales of services Other income (note 3) GECS earnings from continuing operations GECS revenues from services (note 4) GECS commercial paper interest rate swap adjustment Total revenues COSTS AND EXPENSES (note...

  • Page 71
    ... to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates" columns. ge 2006 annual report 69

  • Page 72
    ...principally trade accounts Progress collections and price adjustments accrued Dividends payable Other GE current liabilities Long-term borrowings (note 18) Investment contracts, insurance liabilities and insurance annuity benefits (note 19) All other liabilities (note 20) Deferred income taxes (note...

  • Page 73
    ... to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates" columns. ge 2006 annual report 71

  • Page 74
    ... continuing operations at end of year SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION Cash paid during the year for interest Cash recovered (paid) during the year for income taxes The notes to consolidated financial statements are an integral part of this statement. 72 ge 2006 annual report

  • Page 75
    ... to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates" columns. ge 2006 annual report 73

  • Page 76
    ...: Infrastructure, Commercial Finance, GE Money (formerly Consumer Finance), Healthcare, NBC Universal and Industrial. For segment reporting purposes, certain GECS businesses are included in the industrial operating segments that actively manage such businesses and report their results for internal...

  • Page 77
    ... terms, credit policies and other observable environmental factors. ge 2006 annual report 75 GECS revenues from services (earned income) We use the interest method to recognize income on all loans. Interest on loans includes origination, commitment and other non-refundable fees related to funding...

  • Page 78
    ... specific credit or collec­ tion issues that might indicate an impairment. For larger balance, non-homogenous loans and leases, this survey first considers the financial status, payment history, collateral value, industry conditions and guarantor support related to specific customers. Any...

  • Page 79
    ... accident and health insurance, we report premiums as earned income over the terms of the related agreements, generally on a pro-rata basis. For traditional long-duration insurance contracts including term, whole life and annuities payable for the life of the annuitant, we report premiums as earned...

  • Page 80
    ... on our retiree health and life benefit plans and pension plans, respectively. OPERATIONS Revenues from services $4,916 $17,645 $19,481 Note 2 Discontinued Operations We classified GE Life, Genworth Financial, Inc. (Genworth) and most of GE Insurance Solutions as discontinued operations...

  • Page 81
    ...aggregate. We use a December 31 measurement date for our plans. PRINCIPAL RETIREE BENEFIT PLANS provide health and life insurance benefits to employees who retire under the GE Pension Plan with 10 or more years of service. Eligible retirees share in the cost of healthcare benefits. Effective...

  • Page 82
    ... the average future service of employees. FUNDING POLICY. We fund retiree health benefits on a pay­as­ Balance at January 1 Actual gain on plan assets Employer contributions Participant contributions Benefi ts paid (a) Balance at December 31 (a) Net of Medicare Part D subsidy of $75...

  • Page 83
    ...of short-term holdings which may be rated A2/P2. GE common stock represented 6.1% of trust assets at year-end 2006 and 2005 and is subject to a statutory limit when it reaches 10% of total trust assets. Our recorded balances for retiree benefit plans are as follows: RETIREE BENEFIT ASSET (LIABILITY...

  • Page 84
    ... future service of employees. FUNDING POLICY for the GE Pension Plan is to contribute amounts PROJECTED BENEFIT OBLIGATION Principal pension plans (In millions) 2006 2005 Other pension plans 2006 2005 sufficient to meet minimum funding requirements as set forth in employee benefit and tax...

  • Page 85
    ... 31 (In millions) 2006 2005 Plan fiduciaries of the GE Pension Plan set investment policies and strategies for the GE Pension Trust. Long-term strategic invest­ ment objectives include preserving the funded status of the plan and balancing risk and return. These plan fiduciaries oversee the...

  • Page 86
    ... to ongoing operations and, at December 31, 2006, were approximately $47 billion. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax lia­ bility that would be payable if such earnings were not reinvested 84 ge 2006 annual report

  • Page 87
    ... 2006 GECS 2005 2004 U.S. federal statutory income tax rate Increase (reduction) in rate resulting from Inclusion of after-tax earnings of GECS in before-tax earnings of GE Tax on global activities including exports U.S. business credits IRS settlements of Lockheed Martin tax-free exchange/Puerto...

  • Page 88
    ...- $(469) 21,556 855 5,736 8,619 2,242 766 859 1,077 41,710(b) (23) $42,148 Total (a) Substantially collateralized by U.S. residential mortgages. (b) Included $16 million in 2005 of debt securities related to consolidated, liquidating securitization entities. See note 28. 86 ge 2006 annual report

  • Page 89
    .... Proceeds from investment securities sales amounted to $12,394 million, $14,047 million and $11,685 million in 2006, 2005 and 2004, respectively, principally from the short-term nature of the investments that support the guaranteed investment contracts portfolio. ge 2006 annual report 87

  • Page 90
    ... 154 15,816 (758) $15,058 December 31 (In millions) 2006 2005 Infrastructure NBC Universal Healthcare Industrial Corporate items and eliminations Less allowance for losses Total Loans, net of deferred income Investment in financing leases, net of deferred income Less allowance for losses (note 14...

  • Page 91
    ... of aircraft, railroad rolling stock, autos, other transportation equipment, data processing equipment, medical equipment, commercial real estate and other manufacturing, power generation, and commercial equipment and facilities. As the sole owner of assets under direct financing leases and as the...

  • Page 92
    ... Finance GE Money Infrastructure Other BALANCE AT DECEMBER 31 188 1,533 - 9 1,730 Commercial Finance GE Money Infrastructure Other Total 893 3,715 44 28 $ 4,680 See note 13 for amounts related to consolidated, liquidating securitization entities. 90 ge 2006 annual report

  • Page 93
    ... principally comprised trademarks, tradenames and U.S. Federal Communications Commission licenses. Land, buildings and equipment Equipment leased to others Aircraft (c) Vehicles Mobile and modular space Railroad rolling stock Construction and manufacturing All other Total (a) Estimated useful lives...

  • Page 94
    ... and other 2005 Acquisitions/ purchase accounting adjustments Dispositions, currency exchange and other (In millions) Balance January 1 Balance December 31 Balance January 1 Balance December 31 Infrastructure Commercial Finance GE Money Healthcare NBC Universal Industrial Total $10,166 10...

  • Page 95
    ... 4,457 36,752 GE Commercial paper U.S. Non-U.S. Payable to banks Current portion of long-term debt Other GECS $ 1,097 1 319 32 763 2,212 5.35% 3.74 5.61 5.32 $ 497 1 358 129 142 1,127 4.40% 2.85 3.99 4.84 Investments Real estate (b) Assets held for sale (c) Associated companies Cost method...

  • Page 96
    ...by 75 banks at year­end 2006. Included in this amount was $50.4 billion provided directly to GECS and $9.5 billion provided by 16 banks to GE, to which GECS also has access. The GECS lines include $28.6 billion of revolving credit agreements under which we can borrow funds for periods exceeding...

  • Page 97
    ...) 2006 2005 Deferred Income Taxes Aggregate deferred income tax amounts are summarized below. Investment contracts Guaranteed investment contracts of SPEs Total investment contracts Life insurance benefi ts (a) Unpaid claims and claims adjustment expenses Unearned premiums Universal life...

  • Page 98
    ... (Vivendi) as partial consideration for Vivendi's interest in VUE. (f) In 2004, included 341.7 million shares valued at $10,674 million issued in the Amersham acquisition, and 119.4 million shares valued at $3,765 million sold to partially fund the NBC and VUE combination. 96 ge 2006 annual report

  • Page 99
    ... value), but has not issued any such shares as of December 31, 2006. Note 24 Other Stock-Related Information We grant stock options, restricted stock units (RSUs) and perfor­ mance share units (PSUs) to employees under the 1990 Long-Term Incentive Plan as described in our current Proxy Statement...

  • Page 100
    ... non-cash transactions include the following: In 2006, in connection with our sale of GE Insurance Solutions, Swiss Re assumed $1,700 million of debt, and GE received $2,238 million of newly issued Swiss Re common stock. See note 2. In 2005, NBC Universal acquired IAC/InterActiveCorp's 5.44% common...

  • Page 101
    ...) $ Increase in loans to customers Principal collections from customers - loans Investment in equipment for financing leases Principal collections from customers - financing leases Net change in credit card receivables Sales of financing receivables ALL OTHER INVESTING ACTIVITIES $ $(376,050...

  • Page 102
    ...Property, plant and equipment additions(b) For the years ended December 31 2006 2005 2004 Depreciation and amortization For the years ended December 31 2006 2005 2004 Infrastructure Commercial Finance GE Money Healthcare NBC Universal Industrial Corporate items and eliminations Total $100,237 233...

  • Page 103
    ... interest-only payments or those with below market introductory rates. We orig­ inate such loans either for our portfolio or for sale in secondary markets. The portfolio was geographically diverse, with Europe and North America the most significant market segments. ge 2006 annual report 101

  • Page 104
    Insurance - credit life Certain insurance affiliates, primarily in GE Money, issue credit life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid. As part of our overall risk management process, we cede to third parties a portion of this associated ...

  • Page 105
    Counterparty credit risk We manage counterparty credit risk, the risk that counterparties will default and not make payments to us according to the terms of the agreements, on an individual counterparty basis. Thus, when a legal right of offset exists, we net certain exposures by counterparty and ...

  • Page 106
    ...; credit card receivables; and trade receivables. Examples of these assets include loans and leases on manufacturing and transportation equipment, loans on commercial property, commercial loans, and balances of high credit quality accounts from sales of a broad range of products and services to...

  • Page 107
    ... fair value. The following table summarizes data related to securitization sales that we completed during 2006 and 2005. (Dollars in millions) Equipment Commercial real estate Credit card receivables Other assets DISCOUNT RATE (a) 8.9% $ (10) (21) 11.7% $ (5) (9) 2.3% $ (7) (14) 31 $ 58 121...

  • Page 108
    ... other assets of the customer or associated company. The length of these credit support arrangements parallels the length of the related financing arrangements or transactions. The liability for such credit support was $146 million at December 31, 2006. Product warranties We provide for estimated...

  • Page 109
    ... each quarter's per-share amount may not equal the total per-share amount for the respective year; and the sum of pershare amounts from continuing operations and discontinued operations may not equal the total per-share amounts for net earnings for the respective quarters. ge 2006 annual report 107

  • Page 110
    ...and programming activities in multimedia and the Internet. Industrial Major appliances and related services for products such as refrigerators, freezers, electric and gas ranges, cooktops, dish­ washers, clothes washers and dryers, microwave ovens, room air conditioners and residential water system...

  • Page 111
    ...years ended December 31, 2006 GE consolidated revenues as reported Less the effects of Acquisitions, business dispositions (other than dispositions of businesses acquired for investment) and currency exchange rates Insurance Energy The May 2005 SFAS 133 correction GECS commercial paper interest rate...

  • Page 112
    ... $104,546 $95,711 2,985 - $92,726 $71,342 925 - $70,417 $59,154 1,007 - $58,147 (a) Used for computing return on average shareowners' equity and return on average total capital invested shown on page 67. (b) On an annual basis, calculated using a five-point average. 110 ge 2006 annual report

  • Page 113
    ... of the 2006 and 2004 Olympics broadcasts, the May 2005 SFAS 133 correction and the GECS commercial paper interest rate swap adjustment, which if included would overshadow trends in ongoing revenues. Similarly, we believe that investors would find it useful to compare our ge 2006 annual report 111

  • Page 114
    ... cash paid for income taxes in the current accounting period. Also referred to as "actual tax rate" or "tax rate." EQUIPMENT LEASED TO OTHERS Rental equipment we own that is ownership position in a corporation (a stock), a creditor relation­ ship with a corporation or governmental body (a bond...

  • Page 115
    .... RETURN ON AVERAGE SHAREOWNERS' EQUITY Earnings from and services, plus inventories, less trade accounts payables and progress collections. continuing operations before accounting changes divided by average total shareowners' equity, excluding effects of discontinued ge 2006 annual report 113

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    ... & Chief Executive Officer, China Kathryn A. Cassidy Vice President & GE Treasurer James A. Colica Vice President, Global Risk Management, GE Capital Robert L. Corcoran Vice President, Corporate Citizenship Richard D'Avino Vice President & Senior Tax Counsel, GE Capital 114 ge 2006 annual report

  • Page 117
    ... Chain David L. Joyce Vice President & General Manager, Commercial Engines Roger N. Seager Vice President, Sales Paul McElhinney Vice President, Legal Operations Bradley D. Mottier Vice President, Engine Services NBC Universal Jeffrey A. Zucker President & Chief Executive Officer, NBC...

  • Page 118
    ...South Carolina. Shareowner Services To transfer securities, write to GE Share Owner Services, c/o The Bank of New York, P.O. Box 11002, New York, NY 10286-1002. For shareowner inquiries, including enrollment information and a prospectus for the Direct Purchase and Reinvestment Plan, "GE Stock Direct...

  • Page 119
    ...Printing: Cenveo Anderson Lithograph Visit our interactive online annual report at www.ge.com/annual06 Thanks to the customers, partners and GE employees who appear in this annual report for contributing their time and support. This document was printed on paper that contains from 10% to 100% post...

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