notes to consolidated financial statements Note 19 GECS Investment Contracts, Insurance Liabilities and Insurance Annuity Benefits December 31 (In millions) 2006 2005 Investment contracts $ 5,089 $ 6,034 Guaranteed investment contracts of SPEs 11,870 11,685 Total investment contracts Life insurance benefi ts (a) 16,959 14,054 17,719 13,220 Unpaid claims and claims adjustment expenses Unearned premiums Universal life benefits 2,714 740 340 1,707 401 340 Total $34,807 $33,387 (a) Life insurance benefits are accounted for mainly by a net-level-premium method using estimated yields generally ranging from 3.0% to 8.5% in both 2006 and 2005. When insurance affiliates cede insurance to third parties, they are not relieved of their primary obligation to policyholders. Losses on ceded risks give rise to claims for recovery we establish allow- ances for probable losses on such receivables from reinsurers as required. We recognize reinsurance recoveries as a reduction of the Statement of Earnings caption “Investment contracts, insurance losses and insurance annuity benefits.” Reinsurance recoveries were $162 million, $183 million and $223 million for the years ended December 31, 2006, 2005 and 2004, respectively. Note 20 All Other Liabilities This caption includes liabilities for various items including non- current compensation and benefits, deferred income, interest on tax liabilities, accrued participation and residuals, environmental remediation, asset retirement obligations, derivative instruments, product warranties and a variety of sundry items. Accruals for non-current compensation and benefi ts amounted to $17,214 million and $13,856 million for year-end 2006 and 2005, respectively. These amounts include postretirement benefi ts, international and supplemental pension benefits, and other compensation and benefit accruals such as deferred incentive compensation. The increase in 2006 reflected our adoption of SFAS 158, Employers’ Accounting for Defi ned Benefi t Pension and Other Postretirement Plans, as of December 31, 2006. We are involved in numerous remediation actions to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs at each site are based on our best estimate of undiscounted future costs, excluding possible insurance recov- eries. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low end of such range. Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop a meaningful estimate of the reasonably possible aggregate environ- mental remediation exposure. However, even in the unlikely event that remediation costs amounted to the high end of the range of costs for each site, the resulting additional liability would not be material to our financial position, results of operations or liquidity. Note 21 Deferred Income Taxes Aggregate deferred income tax amounts are summarized below. December 31 (In millions) 2006 2005 ASSETS GE $11,990 $ 9,928 GECS 8,563 6,209 20,553 16,137 LIABILITIES GE 13,944 13,661 GECS 20,780 18,684 34,724 32,345 Net deferred income tax liability $14,171 $16,208 Principal components of our net liability (asset) representing deferred income tax balances are as follows: December 31 (In millions) 2006 2005 GE Provision for expenses (a) Retiree insurance plans Non-U.S. loss carryforwards (b) Prepaid pension asset — principal plans Contract costs and estimated earnings Intangible assets Depreciation Other — net $ (7,218) (2,654) (1,214) 5,257 2,053 1,934 1,830 1,966 $ (6,521) (1,503) (731) 6,249 1,078 1,490 2,130 1,541 1,954 3,733 GECS Financing leases Operating leases Intangible assets Allowance for losses Non-U.S. loss carryforwards (b) Cash fl ow hedges Other — net 8,314 4,327 1,278 (1,763) (835) (226) 1,122 8,037 4,024 1,195 (2,025) (688) (372) 2,304 12,217 12,475 Net deferred income tax liability $14,171 $16,208 (a) Represented the tax effects of temporary differences related to expense accruals for a wide variety of items, such as employee compensation and benefi ts, interest on tax liabilities, product warranties and other sundry items that are not currently deductible. (b) Net of valuation allowances of $679 million and $890 million for GE and $203 million and $132 million for GECS, for 2006 and 2005, respectively. Of the net deferred tax asset as of December 31, 2006, of $2,049 million, $41 million relates to net operating loss carryforwards that expire in various years ending from December 31, 2007, through December 31, 2009, $698 million relates to net operating losses that expire in various years ending from December 31, 2010, through December 31, 2021, and $1,310 million relates to net operating loss carryforwards that may be carried forward indefi nitely. ge 2006 annual report 95

notes to consolidated financial statements Note 22 Minority Interest in Equity of Consolidated Affiliates Minority interest in equity of consolidated affi liates includes com- mon shares in consolidated affiliates and preferred stock issued by GE Capital and by affiliates of GE Capital. Preferred shares that we are required to redeem at a specified or determinable date are classified as liabilities. The balance is summarized as follows: December 31 (In millions) 2006 2005 Minority interest in consolidated affi liates NBC Universal $4,774 $4,597 Others(a) 1,572 2,073 Minority interest in preferred stock (b) GE Capital — 70 GE Capital affiliates 1,232 1,314 Total $7,578 $8,054 (a) Included minority interest in partnerships, common shares of consolidated affi li- ates and consolidated, liquidating securitization entities. (b) The preferred stock primarily pays cumulative dividends at variable rates. Dividend rates in local currency on the preferred stock ranged from 3.28% to 5.49% during 2006 and 1.94% to 5.38% during 2005. Note 23 Shareowners’ Equity (In millions) COMMON STOCK ISSUED 2006 $ 669 2005 $ 669 2004 $ 669 ACCUMULATED NONOWNER OTHER THAN EARNINGS CHANGES Balance at January 1 $ 3,137 Investment securities — net of deferred taxes of $111, $(307) and $503 Currency translation adjustments — net of deferred taxes of $(1,417), $646 and $(1,314) Cash flow hedges — net of deferred taxes of $75, $493 and $75 Benefit plans — net of deferred taxes of $(2,533), $(159) and $(184)(a) Reclassifi cation adjustments Investment securities — net of deferred taxes of $(279), $(100) and $(142) Currency translation adjustments Cash flow hedges — net of deferred taxes of $(60), $(494) and $(55) 297 3,776 599 (3,532) (520) (127) (376) $ 8,156 (231) (4,315) 724 (217) (206) (3) (771) $ 4,079 677 3,936 203 (421) (265) — (53) Balance at December 31(b)(c) $ 3,254 $ 3,137 $ 8,156 OTHER CAPITAL Balance at January 1 $ 25,227 $ 24,265 $ 17,497 Gains on treasury stock dispositions and other(d) 259 962 4,615 Issuance of subsidiary shares (d)(e) — — 2,153 Balance at December 31 $ 25,486 $ 25,227 $ 24,265 RETAINED EARNINGS Balance at January 1 $ 97,644 $ 90,580 $ 82,014 Net earnings 20,829 16,711 17,160 Dividends(d) (10,675) (9,647) (8,594) Balance at December 31 $107,798 $ 97,644 $ 90,580 COMMON STOCK HELD IN TREASURY Balance at January 1 $ (17,326) $ (12,762) $ (24,597) Purchases (d) (10,512) (6,868) (1,892) Dispositions (d)(f) 2,945 2,304 13,727 Balance at December 31 $ (24,893) $ (17,326) $ (12,762) TOTAL EQUITY Balance at December 31 $112,314 $109,351 $110,908 (a) The 2006 change includes transition effect related to adoption of SFAS 158 of $(3,819) million, net of taxes of $(2,715) million. See note 1 for further information regarding SFAS 158. (b) Included accumulated nonowner changes related to discontinued operations of $(9) million, $652 million and $1,878 million at December 31, 2006, 2005 and 2004, respectively. (c) At December 31, 2006, included reductions of equity of $838 million related to hedges of our investments in financial services subsidiaries that have functional currencies other than the U.S. dollar and $129 million related to cash fl ow hedges of forecasted transactions, of which we expect to transfer $120 million to earnings in 2007 along with the earnings effects of the related forecasted transaction. (d) Total dividends and other transactions with shareowners reduced equity by $17,983 million in 2006 and $13,249 million in 2005 and increased equity by $10,009 million in 2004. (e) Related to the 2004 combination of NBC with Vivendi Universal Entertainment LLLP (VUE) whereby 20% of NBC Universal’s common stock was issued to a subsidiary of Vivendi S.A. (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