notes to consolidated financial statements indefinitely. Deferred taxes are provided for earnings of non-U.S. affiliates and associated companies when we plan to remit those earnings. The American Jobs Creation Act of 2004 (the Act) allowed U.S. companies a one-time opportunity to repatriate non-U.S. earnings through 2005 at a 5.25% rate of tax rather than the normal U.S. tax rate of 35%, provided that certain criteria, including qualifi ed U.S. reinvestment of those earnings, were met. Available U.S. foreign tax credits related to the repatriation are reduced under provisions of the Act. Because the vast majority of our non-U.S. earnings have been permanently reinvested in active business operations, we repatriated only $1.2 billion of non-U.S. earnings. Because a U.S. tax provision at normal tax rates had been pro- vided on the majority of this amount, the result was a reduction of the 2005 GE and consolidated tax rates of approximately 0.5 percentage points. The U.S. Internal Revenue Service (IRS) is currently auditing GE’s consolidated 2000–2005 income tax returns. It is reasonably possible that both the 2000–2002 and 2003–2005 audit cycles will be completed during 2007. The effect of the completion of these audit cycles will depend on the result of the examinations. In addition, certain potential deficiency issues and refund claims remain unresolved for years prior to 2000. GE or consolidated affiliates are under audit in numerous state, local and non-U.S. jurisdictions. We believe that adequate provision has been made for all income tax uncertainties. A reconciliation of the U.S. federal statutory income tax rate to the actual income tax rate is provided below. RECONCILIATION OF U.S. FEDERAL STATUTORY INCOME TAX RATE TO ACTUAL INCOME TAX RATE Consolidated GE GECS 2006 2005 2004 2006 2005 2004 2006 2005 2004 U.S. federal statutory income tax rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% Increase (reduction) in rate resulting from Inclusion of after-tax earnings of GECS in before-tax earnings of GE — — — (15.8) (15.6) (15.4) — — — Tax on global activities including exports (17.7) (15.8) (12.3) (7.7) (5.8) (5.8) (21.6) (21.7) (14.5) U.S. business credits (1.4) (1.3) (1.1) (0.4) (0.2) — (2.1) (2.5) (2.3) IRS settlements of Lockheed Martin tax-free exchange/Puerto Rico subsidiary loss — — (3.4) — — (3.7) — — — All other — net 0.2 (0.1) — — (0.6) 0.5 0.3 1.1 (0.8) (18.9) (17.2) Actual income tax rate 16.1% 17.8% Note 9 Earnings Per Share Information 2006 2005 2004 (In millions per-share amounts in dollars) Diluted Basic Diluted Basic Diluted Basic CONSOLIDATED Earnings from continuing operations for per-share calculation (a) Earnings (loss) from discontinued operations for per-share calculation (b) $20,667 163 $20,666 163 $18,662 (1,961) $18,661 (1,950) $16,602 556 $16,601 559 Net earnings available for per-share calculation $20,830 $20,829 $16,701 $16,711 $17,158 $17,160 AVERAGE EQUIVALENT SHARES Shares of GE common stock outstanding Employee compensation-related shares, including stock options 10,359 35 10,359 — 10,570 41 10,570 — 10,400 45 10,400 — Total average equivalent shares 10,394 10,359 10,611 10,570 10,445 10,400 PER-SHARE AMOUNTS Earnings from continuing operations Earnings (loss) from discontinued operations $ 1.99 0.02 $ 1.99 0.02 $ 1.76 (0.18) $ 1.77 (0.18) $ 1.59 0.05 $ 1.60 0.05 Net earnings per share $ 2.00 $ 2.01 $ 1.57 $ 1.58 $ 1.64 $ 1.65 (16.8) 18.2% (23.9) 11.1% (22.2) (24.4) (23.4) (23.1) 12.8% 10.6% 11.6% 11.9% (17.6) 17.4% (a) Included dividend equivalents of approximately $1 million in each of the three years ended December 31, 2006. (b) Included dilutive effects of subsidiary-issued stock-based awards of approximately $11 million in 2005 and $2 million in 2004. Earnings-per-share amounts are computed independently sum of per-share amounts from continuing operations and for earnings from continuing operations, earnings (loss) from discontinued operations may not equal the total per-share discontinued operations and net earnings. As a result, the amounts for net earnings. ge 2006 annual report 85

notes to consolidated financial statements Note 10 Investment Securities 2006 2005 Gross Gross Gross Gross Amortized unrealized unrealized Estimated Amortized unrealized unrealized Estimated December 31 (In millions) cost gains losses fair value cost gains losses fair value GE Debt — U.S. corporate $ 307 $ 24 $ — $ 331 $ 307 $ 2 $ — $ 309 Equity 10 2 (1) 11 26 131 (5) 152 317 26 (1) 342 333 133 (5) 461 GECS Debt U.S. corporate 21,323 1,042 (203) 22,162 20,578 1,317 (339) 21,556 State and municipal 915 38 (4) 949 810 47 (2) 855 Mortgage-backed (a) 6,356 38 (46) 6,348 5,748 44 (56) 5,736 Asset-backed 8,066 436 (23) 8,479 8,433 205 (19) 8,619 Corporate — non-U.S. 1,664 92 (5) 1,751 2,043 209 (10) 2,242 Government — non-U.S. 1,296 105 (3) 1,398 675 91 — 766 U.S. government and federal agency 820 45 (6) 859 803 61 (5) 859 Equity 4,500 1,060 (14) 5,546 879 231 (33) 1,077 44,940 2,856 (304) 47,492 39,969 2,205 (464) 41,710(b) ELIMINATIONS (7) (1) — (8) (17) (6) — (23) Total $45,250 $2,881 $(305) $47,826 $40,285 $2,332 $(469) $42,148 (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