notes to consolidated financial statements The following table summarizes the incremental effects of the initial adoption of SFAS 158 on our Statement of Financial Position at December 31, 2006. (In millions) Before Application of SFAS 158 SFAS 158 Adjustments After Application of SFAS 158 All other assets $ 99,809 $(2,697) $ 97,112 Total assets 699,936 (2,697) 697,239 All other liabilities 43,047 3,837 46,884 Deferred income taxes 16,886 (2,715) 14,171 Total liabilities 576,225 1,122 577,347 Accumulated gains (losses) — net Benefit plans (587) (3,819) (4,406) Total shareowners’ equity 116,133 (3,819) 112,314 Total liabilities and equity 699,936 (2,697) 697,239 See notes 6 and 7 for further details on our retiree health and life benefit plans and pension plans, respectively. Note 2 Discontinued Operations We classified GE Life, Genworth Financial, Inc. (Genworth) and most of GE Insurance Solutions as discontinued operations. Associated results of operations, financial position and cash flows are separately reported for all periods presented. Sale of GE Life In December 2006, we completed the sale of GE Life, our U.K.- based life insurance operation, to Swiss Reinsurance Company (Swiss Re) for $910 million. As a result, we recognized an after-tax loss of $267 million during 2006. GE Life revenues from discon- tinued operations were $2,096 million, $2,286 million and $708 million in 2006, 2005 and 2004, respectively. In total, GE Life loss from discontinued operations, net of taxes, was $178 million and $28 million in 2006 and 2005, respectively, compared with earn- ings from discontinued operations of $25 million in 2004. Sale of GE Insurance Solutions In June 2006, we completed the sale of the property and casualty insurance and reinsurance businesses and the European life and health operations of GE Insurance Solutions to Swiss Re for $9,297 million, including the assumption of $1,700 million of debt. We received $5,359 million in cash and $2,238 million of newly issued Swiss Re common stock, representing a 9% interest in Swiss Re. As a result, we recognized after-tax losses of $134 million and $934 million in 2006 and 2005, respectively. GE Insurance Solutions revenues from discontinued operations were $2,815 million, $7,451 million and $8,625 million in 2006, 2005 and 2004, respectively. In total, GE Insurance Solutions earnings from discontinued operations, net of taxes, were $148 million and $90 million in 2006 and 2004, respectively, compared with a loss of $2,850 million in 2005. Sale of Genworth In March 2006, we completed the sale of our remaining 18% investment in Genworth through a secondary public offering of 71 million shares of Class A Common Stock and direct sale to Genworth of 15 million shares of Genworth Class B Common Stock. As a result of initial and secondary public offerings, we recognized after-tax gains of $220 million and $552 million in 2006 and 2005, respectively, compared with an after-tax loss of $336 million in 2004. Genworth revenues from discontinued operations were $5 million, $7,908 million and $10,148 million in 2006, 2005 and 2004, respectively. In total, Genworth earnings from discontinued operations, net of taxes, were $193 million, $928 million and $444 million in 2006, 2005 and 2004, respectively. Summarized financial information for discontinued operations is shown below. (In millions) 2006 2005 2004 OPERATIONS Revenues from services $4,916 $17,645 $19,481 Earnings (loss) from discontinued operations before minority interest and income taxes $ 382 $ (1,726) $ 1,517 Minority interest — 394 200 Earnings (loss) from discontinued operations before income taxes 382 (2,120) 1,317 Income tax benefi t (expense) (38) 552 (422) Earnings (loss) from discontinued operations before disposal, net of taxes $ 344 $ (1,568) $ 895 DISPOSAL Gain (loss) on disposal before income taxes $ (75) $ 629 $ (570) Income tax benefi t (expense) (106) (1,011) 234 Loss on disposal, net of taxes $ (181) $ (382) $ (336) EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES $ 163 $ (1,950) $ 559 December 31 (In millions) 2005 ASSETS Cash and equivalents $ 2,976 Investment securities 37,633 Other GECS receivables 13,915 Other 6,542 Assets of discontinued operations 61,066 ELIMINATIONS — Total $61,066 LIABILITIES AND EQUITY Investment contracts, insurance liabilities and insurance annuity benefi ts $43,378 Other 6,385 Liabilities of discontinued operations 49,763 ELIMINATIONS (236) Total $49,527 Total accumulated nonowner changes other than earnings $ 652 Accrued liabilities of $475 million as of December 31, 2006, will be settled beginning in 2007. 78 ge 2006 annual report

notes to consolidated financial statements Note 3 GE Other Income (In millions) 2006 2005 2004 Sales of business interests $1,375 $ 630 $ 464 Associated companies 309 256 191 Marketable securities and bank deposits 280 96 92 Licensing and royalty income 221 227 145 Other items 505 555 184 Total $2,690 $1,764 $1,076 Note 4 GECS Revenues from Services (In millions) 2006 2005 2004 Interest on loans $22,568 $20,096 $17,314 Equipment leased to others 12,940 11,582 10,744 Financing leases 4,298 3,990 4,160 Fees 4,229 4,180 3,254 Real estate investments 3,138 1,919 1,637 Investment income 2,614 2,839 2,428 Premiums earned by insurance activities 2,084 2,333 2,195 Associated companies 2,079 1,320 708 Gross securitization gains 1,199 939 1,195 Other items 5,872 5,285 5,711 Total $61,021 $54,483 $49,346 Note 5 Supplemental Cost Information Total expenditures for research and development were $3,659 million, $3,425 million and $3,091 million in 2006, 2005 and 2004, respectively. The portion we funded was $2,969 million in 2006, $2,741 million in 2005 and $2,443 million in 2004. Rental expense under operating leases is shown below. (In millions) 2006 2005 2004 GE $932 $939 $874 GECS 991 993 931 At December 31, 2006, minimum rental commitments under noncancellable operating leases aggregated $2,605 million and $4,016 million for GE and GECS, respectively. Amounts payable over the next fi ve years follow. (In millions) 2007 2008 2009 2010 2011 GE $509 $434 $371 $311 $297 GECS 757 681 617 463 370 GE’s selling, general and administrative expenses totaled $13,841 million in 2006, $13,279 million in 2005 and $12,001 million in 2004. Note 6 Retiree Health and Life Benefits We sponsor a number of retiree health and life insurance benefi t plans (retiree benefit plans). Principal retiree benefit plans are discussed below other such plans are not signifi cant individually or in the 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 January 1, 2005, we amended our principal retiree benefit plans to provide that, upon retirement of salaried employees who commenced service after that date, such retirees will pay in full for their participation in the GE retiree health benefit plans. These plans cover approximately 240,000 retirees and dependents. Effective December 31, 2006, we adopted SFAS 158, Employers’ Accounting for Defi ned Benefit Pension and Other Postretirement Plans. See note 1 for the incremental effects of the initial adoption of SFAS 158 on our Statement of Financial Position at December 31, 2006. ge 2006 annual report 79