management’s discussion and analysis • Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations. We face credit risk in our lending and leasing activities (see the Financial Resources and Liquidity and Critical Accounting Estimates sections and notes 1, 13, 14 and 29) and derivative financial instruments activities (see note 27). • Market risk is the potential loss in value of investment and other asset and liability portfolios, including fi nancial instruments and residual values of leased assets. This risk is caused by changes in market variables, such as interest and currency exchange rates and equity and commodity prices. We are exposed to market risk in the normal course of our business operations as a result of our ongoing investing and funding activities. Additional information can be found in the Financial Resources and Liquidity section and in notes 15 and 27. Other risks include natural disasters, availability of necessary materials, guarantees of product performance and business interruption. These types of risks are often insurable, and success in managing these risks is ultimately determined by the balance between the level of risk retained or assumed and the cost of transferring risk to others. Segment Operations Operating segments comprise our six businesses focused on the broad markets they serve: Infrastructure, Commercial Finance, GE Money, 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 performance measurement purposes. These include Aviation Financial Services, Energy Financial Services and Transportation Finance reported in the Infrastructure segment, and Equipment Services reported in the Industrial segment. SEGMENT REVENUES 2002 2003 2004 2005 2006 (In $ billions) 159 144 130 108 108 A. Infrastructure B. Commercial Finance C. GE Money D. Healthcare E. NBC Universal F. Industrial Segment profit is determined based on internal performance measures used by the Chief Executive Officer to assess the performance of each business in a given period. In connection with that assessment, the Chief Executive Officer may exclude matters such as charges for restructuring rationalization and other similar expenses in-process research and development and certain other acquisition-related charges and balances technology and product development costs certain gains and losses from dispositions and litigation settlements or other charges, respon- sibility for which preceded the current management team. SEGMENT PROFIT 2002 2003 2004 2005 2006 (In $ billions) 26.3 23.4 19.6 18.2 17.5 A. Infrastructure B. Commercial Finance C. GE Money D. Healthcare E. NBC Universal F. Industrial Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations and accounting changes. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment’s management is measured — excluded in determining segment profit, which we refer to as “operating profi t,” for Healthcare, NBC Universal and the industrial businesses of the Infrastructure and Industrial segments included in determining segment profit, which we refer to as “net earnings,” for Commercial Finance, GE Money, and the financial services businesses of the Infrastructure segment (Aviation Financial Services, Energy Financial Services and Transportation Finance) and the Industrial segment (Equipment Services). In addition to providing information on segments in their entirety, we have also provided supplemental information for certain businesses within the segments. We have reclassified certain prior-period amounts to conform to the current period’s presentation. For additional information about our segments, see note 26. 52 ge 2006 annual report

management’s discussion and analysis Summary of Operating Segments (In millions) 2006 General Electric Company and consolidated affi liates 2005 2004 2003 2002 REVENUES Infrastructure Commercial Finance GE Money Healthcare NBC Universal Industrial $ 47,429 23,792 21,759 16,562 16,188 33,494 $ 41,803 20,646 19,416 15,153 14,689 32,631 $ 37,373 19,524 15,734 13,456 12,886 30,722 $ 36,569 16,927 12,845 10,198 6,871 24,988 $ 40,119 15,688 10,266 8,955 7,149 26,154 Total segment revenues Corporate items and eliminations 159,224 4,167 144,338 3,618 129,695 4,596 108,398 5,023 108,331 3,636 CONSOLIDATED REVENUES $163,391 $147,956 $134,291 $113,421 $111,967 SEGMENT PROFIT Infrastructure Commercial Finance GE Money Healthcare NBC Universal Industrial $ 9,040 5,028 3,507 3,143 2,919 2,694 $ 7,769 4,290 3,050 2,665 3,092 2,559 $ 6,797 3,570 2,520 2,286 2,558 1,833 $ 7,362 2,907 2,161 1,701 1,998 1,385 $ 9,178 2,170 1,799 1,546 1,658 1,837 Total segment profit Corporate items and eliminations GE interest and other financial charges GE provision for income taxes 26,331 (1,251) (1,834) (2,580) 23,425 (582) (1,432) (2,750) 19,564 (11) (979) (1,973) 17,514 375 (941) (2,857) 18,188 847 (569) (3,837) Earnings from continuing operations before accounting changes Earnings (loss) from discontinued operations, net of taxes 20,666 163 18,661 (1,950) 16,601 559 14,091 2,057 14,629 (616) Earnings before accounting changes Cumulative effect of accounting changes 20,829 — 16,711 — 17,160 — 16,148 (587) 14,013 (1,015) CONSOLIDATED NET EARNINGS $ 20,829 $ 16,711 $ 17,160 $ 15,561 $ 12,998 The notes to consolidated financial statements are an integral part of this summary. INFRASTRUCTURE (In millions) 2006 2005 2004 REVENUES $47,429 $41,803 $37,373 SEGMENT PROFIT $ 9,040 $ 7,769 $ 6,797 (In millions) 2006 2005 2004 REVENUES Aviation $13,152 $11,904 $11,094 Aviation Financial Services 4,177 3,504 3,159 Energy 19,133 16,525 14,586 Energy Financial Services 1,664 1,349 972 Oil & Gas 4,340 3,598 3,135 Transportation 4,169 3,577 3,007 SEGMENT PROFIT Aviation $ 2,909 $ 2,573 $ 2,238 Aviation Financial Services 1,108 764 520 Energy 3,000 2,665 2,543 Energy Financial Services 695 646 376 Oil & Gas 548 411 331 Transportation 781 524 516 Infrastructure revenues rose 13%, or $5.6 billion, in 2006 on higher volume ($4.8 billion), higher prices ($0.3 billion) and effects of late 2006 weakening of the U.S. dollar ($0.1 billion) at the industrial businesses in the segment. The increase in volume reflected increased sales of power generation equipment at Energy, commercial and military services and commercial engines at Aviation, equipment at Oil & Gas, and locomotives at Transportation. The increase in price was primarily at Energy. Revenues also increased as a result of organic revenue growth at Aviation Financial Services ($0.7 billion) and Energy Financial Services ($0.3 billion). Intra-segment revenues, which increased $0.5 billion, were eliminated from total Infrastructure revenues. Segment profit rose 16% to $9.0 billion, compared with $7.8 billion in 2005, as higher volume ($0.7 billion), higher prices ($0.3 billion) and productivity ($0.3 billion) more than offset the effects of higher material and other costs ($0.4 billion) at the industrial businesses in the segment. The increase in volume primarily related to Energy and Aviation. Segment profit from the financial services businesses increased as a result of core growth at Aviation Financial Services ($0.3 billion), including growth in lower-taxed earnings from global operations that were more than offset by lower one-time benefits from our aircraft leasing business reorganization, and core growth at Energy Financial Services. ge 2006 annual report 53